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Business Economics
1. From the give table calculate Elasticity of Price, Total Revenue and Marginal Revenue. Also, explain the relationship between AR and MR?
Answer:
INTRODUCTION:
Elasticity of demand: A commodity’s demand is affected by various factors, such as a change in the price of the goods, change in the consumer’s income, change in the price of related goods (substitute and complementary goods), change in taste and preference of the customer, etc. The elasticity of demand is the percentage change in a commodity’s demand when other factors affecting the demand of the product change. It is determined by dividing the percentage change in demand of a commodity by the percentage
2. Demand forecasting is not a speculative exercise into the unknown. It is essentially a reasonable judgment of future probabilities of the market events based on scientific background. Explain the statement by elaborating different qualitative and quantitative methods of demand forecasting. (10 Marks)
Answer:
INTRODUCTION:
Demand forecasting: The process of estimating the future demand of a commodity of the consumers in a market during a defined period, with some historical data and different other information, is known as demand forecasting. When done right, demand forecasting tells an organization about the firm’s potential in the current market. It ultimately helps the managers make certain vital decisions regarding price, growth strategies, and the firm’s potential in the given market.
Suppose an organization does not perform demand forecasting. In that case, it will be making bad decisions for the company, leading to
3. a. Define elasticity of supply and find the price from the given statement:
If Es of a good is 2 and a firm supplies 200 units at price of Rs 8 per unit, then at what price will the firm supply 250 units. (5 Marks)
Answer:
INTRODUCTION:
Elasticity of supply: It is the change in the supply of a commodity due to a price change. Every firm needs to know the quickness and effectiveness in their response whenever the market conditions change. The market conditions especially involve price change. The price elasticity of supply or elasticity of supply is calculated by dividing the percentage change in quantity supplied by the percentage change in the commodity
3. b. Calculate the elasticity of supply if a 15 %increase in the price of soya bean oil increases its supply from 300 to 345 units (5 Marks)
Answer:
INTRODUCTION:
Elasticity of supply: According to the law of supply, there is a direct relationship between price and quantity supplied of a commodity. If the price increases, the supply of the item also increases and vice-versa. It is a qualitative statement. Several factors affect the supply of a commodity. Price is the primary factor affecting the supply of a product. It is the reason we usually calculate the price elasticity of supply. The elasticity of
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