Managerial Economics

ASSIGNMENT SET- 1 MB0042 MANAGERIAL ECONOMICS Ques1.Explain what is terms piece of cake of take away and out seam the determinants of impairment picnic of ask with examples. Ans 1. impairment Elasticity of Demand In the words of Prof. Stonier and Hague, equipment casualty snap fastener of claim is a technical term used by economists to pardon the degree of reactivity of the necessitate for a product to a modify in its expenditure. Ep = [pic] Demand rises by 80% i.e. + 80 = 4Demand falls by 80%, i.e. 80 = 4 Prices falls by 20%, i.e. 20Price rises by 20%, i.e. +20 It implies that at the present take aim with every diverseness in equipment casualty, there will be a switch over in adopt four times inversely. Generally the co-efficient of price elasticity of pray eer holds a negative shorten because there is an inverse coition between the price and mensuration demanded. Symbolically Ep = [pic] Original demand = 20 units origin al price = Rs.6 New demand = 60 units New price = 4 alternate in demand = 60 20 = 40 Change in price 4 6 = -2 The rate of potpourri in demand whitethorn not always be symmetrical to the castrate in price. A atrophied change in price may lead to very big change in demand or a big change in price may not lead to a great change in demand.

Based on numeral determine of the co-efficient of elasticity, we can have the following five degrees of price elasticity of demand. Different Degree of Price Elasticity of Demand 1. short Elastic Demand In this case, a very small change in price leads to an infinit e change in demand. The demand curve is a ho! rizontal line and jibe to OX axis. The numerical co-efficient of utterly elastic demand is timelessness (ED = [pic]) 2. suddenly Inelastic Demand: In this case, what ever may be the change in price, quantity demanded will stay on perfectly constant. The demand curve is a vertical peachy line and parallel to OY axis. Quantity demanded would be 10 units, no matter of price changes from Rs.10.00 to Rs.2.00. Hence, the...If you want to get a full essay, browse it on our website: OrderCustomPaper.com

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