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Business Economics
September 2021 Examination
1. “Demand forecasting is an important tool for predicting the demand for an organization’s products or services in a specified time period in the future” Enumerate any three needs for demand forecasting and discuss the steps involved in demand forecasting. (10 Marks)
Answer 1.
Introduction:
Demand forecasting is the process of projecting the future demand for a good or service from customers over a specific period. When a company forecasts the demand for goods and services in the current market environment, it uses historical demand or historical data from previous market conditions.
The demand for a product or service plays an integral part in the decision-making process of a business. Demand forecasting assists an organization in meeting its objectives
2. From the given table calculate TR, MR and AR and highlight the relationship between total revenue (TR) and marginal revenue (MR). (10 Marks)
| Quantity | Price |
| 50 | 200 |
| 60 | 150 |
| 70 | 100 |
| 80 | 50 |
| 90 | 10 |
Answer 2.
Introduction:
The term “revenue” refers to an organization’s income or sales revenues. Total revenue, marginal revenue, and average revenue are the three forms of revenue that can be generated.
Total revenue: Total revenue, also known as TR, is the amount of money collected by a company through the sale of its output. Prices are multiplied by the number of units sold, yielding the method for determining total revenue. Consider the following scenario: If a
3. A. The disposable income of Mehta family increases from Rs 5000 to Rs 15,000. As a result, the family’s demand for milk and milk goods has increased from 30 liters to 60 liters per month. Calculate the income elasticity of demand. (5 Marks)
Answer 3a.
Introduction:
The elasticity of demand: The elasticity of demand is defined as the change for a commodity or service due to changes in the factors impacting the market for the item or service. According to the rate at which the rate of change in demand due to changes in demand-affecting factors
3. B. A drop in the price of lemons from Rs 100 per kg to Rs 60 per Kg increases the quantity demanded from 1.75 to 7 kg per week. Calculate the price elasticity of demand. (5 Marks)
Answer 3b.
Introduction:
The elasticity of demand: A commodity’s elasticity of demand is defined as the change for a thing that occurs due to a change in the factors that influence the need for the entity. The price of goods, the cost of alternative or complementary items, the client’s income, and the client’s taste and preference are all elements
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