Final answer:
The amount of product a company expects to sell during a specific period at a specified level of marketing activity is the sales forecast. Understanding sales forecasts and price elasticity of demand is essential for businesses to calculate total revenue and make strategic pricing decisions. The correct option is e)
Step-by-step explanation:
The amount of product a company expects to sell during a specific period at a specified level of marketing activity is called the sales forecast. A forecast involves an estimation or prediction of future sales based on a variety of factors including past trends, market analysis, and economic conditions. Understanding and predicting the sales forecast is critical for making informed business decisions about production, budgeting, and strategic planning.
Relating to the concept of total revenue, companies must understand price elasticity of demand which plays a significant role in determining the optimal pricing strategy for maximizing revenue. Total revenue is calculated as the product of price and quantity (Total Revenue = Price x Quantity).
If demand is elastic, companies generally lower prices to sell more units, while inelastic demand suggests that raising prices could lead to higher revenue. This elasticity affects the sales forecast as it directly impacts the expected quantity of product sold at different price points.