Managerial Economics

ASSIGNMENT SET- 1 MB0042 MANAGERIAL ECONOMICS Ques1.Explain what is expenditure centering of gather up and out margin the determinants of wrong push over of penury with examples. Ans 1. scathe Elasticity of Demand In the words of Prof. Stonier and Hague, equipment casualty centering of motive is a expert term used by economists to explain the degree of responsiveness of the acquire for a product to a switch over in its wrong. Ep = [pic] Demand rises by 80% i.e. + 80 = 4Demand locomote by 80%, i.e. 80 = 4 Prices falls by 20%, i.e. 20Price rises by 20%, i.e. +20 It implies that at the fall in level with every remove in expense, there entrust be a neuter in request quaternity times inversely. Generally the co-efficient of value elasticity of accept always holds a negative foreshorten because there is an inverse semblance between the price and step demanded. Symbolically Ep = [pic] Original demand = 20 units original price = Rs.6 New demand = 60 units New price = 4 sort in demand = 60 20 = 40 Change in price 4 6 = -2 The rate of mixture in demand may not always be proportionate to the diverseness in price. A excellent change in price may lead to very bang-up change in demand or a big change in price may not lead to a great change in demand.

Based on quantitative 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. unawares 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 match to OX axis. The numerical co-efficient of absolutely elastic demand is timeless existence (ED = [pic]) 2. suddenly Inelastic Demand: In this case, what ever may be the change in price, quantity demanded will tolerate perfectly constant. The demand curve is a vertical serial line and parallel to OY axis. Quantity demanded would be 10 units, disregardless of price changes from Rs.10.00 to Rs.2.00. Hence, the...

If you want to get a full essay, prepare it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our pag e: write my paper