Managerial Economics

ASSIGNMENT SET- 1 MB0042 MANAGERIAL ECONOMICS Ques1.Explain what is terms cracking of take away and out seam the determinants of impairment snapshot 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 technological term used by economists to pardon the degree of responsiveness of the requirement for a product to a modify in its toll. 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 expense, there will be a switch over in occupy 4 times inversely. Generally the co-efficient of price elasticity of pray constantly holds a negative shorten because there is an inverse analogy between the price and mensuration demanded. Symbolically Ep = [pic] Original demand = 20 units original 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 diverseness in price. A menial change in price may lead to very outstanding 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. dead Elastic Demand In this case, a very small change in price leads to an infinite c hange in demand. The demand curve is a horiz! ontal line and parallel of latitude to OX axis. The numerical co-efficient of utterly elastic demand is infinity (ED = [pic]) 2. suddenly Inelastic Demand: In this case, what ever may be the change in price, quantity demanded will expect perfectly constant. The demand curve is a vertical right away 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, station it on our website: OrderCustomPaper.com

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