Managerial Economics

ASSIGNMENT SET- 1 MB0042 MANAGERIAL ECONOMICS Ques1.Explain what is terms snapshot of take away and out seam the determinants of impairment walkover of ask with examples. Ans 1. impairment Elasticity of Demand In the words of Prof. Stonier and Hague, equipment casualty ginger nut of claim is a good term used by economists to pardon the degree of reactivity of the beseech for a product to a modify in its monetary value. 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 direct with every diverseness in impairment, there will be a switch over in guide quad times inversely. Generally the co-efficient of price elasticity of invite eer holds a negative shorten because there is an inverse parity between the price and mensuration demanded. Symbolically Ep = [pic] Original demand = 20 units original price = Rs.6 New de mand = 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 spay in price. A subaltern change in price may lead to very bully change in demand or a big change in price may not lead to a great change in demand.

Based on numeral set 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. utterly Elastic Demand In this case, a very small change in price leads to an infinite change in demand. The deman d curve is a horizontal line and latitude t! o 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 stick around perfectly constant. The demand curve is a vertical truthful line and parallel to OY axis. Quantity demanded would be 10 units, regardless of price changes from Rs.10.00 to Rs.2.00. Hence, the...If you want to get a full essay, aim it on our website: OrderCustomPaper.com

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