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For good which are substitutes (eg. Tea and coffee), the increase in price of one product leads to an increase in demand for others and this therefore gives a positive figure for cross elasticity of demands. For complementary goods like DVD player and DVDs, the cross elasticity of demand is a negative figure since when the demand for one product goes up, the quantity demanded of the complement also falls. The most major determinant of demand in such cases is price of the substitute / complement good.
Income elasticity of demand is an economic concept which measures the responsiveness in the quantity demanded of a product to a change in the the income level of a person. It can simply be measured by the formula : percentage change in quantity demanded / percentage change in income level.
There are two types of goods, normal goods and inferior goods. The demand for normal goods goes up as income rises and this gives a positive income elasticity of demand. Then there are inferior goods, the demand for which goes down as income level rises (eg. People would prefer eating chicken meat as compared to raw onions when their income rises) and they result in a negative figure for income elasticity of demand.
Our product, the Magpie has a price elasticity of demand of 2.7. What this figure means is that the demand of this product is highly sensitive to a change in its price. To put it very simply, if the price of Magpie goes down by 1% then its demand would go up by 2.7% and viceversa.
It is somewhat difficult to change the price of the products that have an elastic demand as such a step might cause the demand to fall my a huge margin. Same is the case with Magpie. In this case an increase in price might mean we lose out our sales to out competitors and this face a decline in profits. It also means that if we decrease out prices we would be able to sell a
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Q. What size is your business? How many employees are there? A. My name is Steven Somers and I run Shelfstore Ltd, which is a low scale furniture manufacturing company located in New York City. Shelfstore Ltd was founded in 1965 by Mr. John McDonough. There are 85 employees working in it at the moment.
“Economics is the study of allocation of scarce resources, choices, and opportunity costs” (Department of Economics: Description and Mission of Department par. 1). The choices are made mainly for two purposes- consumption and production. The major economic principles that influence the choice of a society with the view point of a consumer are utility analysis, indifference curve analysis, and demand theories.
10 hours/unit 15 hours/unit INDIA 12 hours/unit 12 hours/unit Here, it can be seen that if U.S. concentrates only on the production of clothing and India produces only food (i.e. both the nations follow specialization), and then exchange their commodities, both the nations will be able to gain from this set up.
For most people, for whom driving is a necessary part in their daily lives, even an increase in the price of petrol or diesel would not stop them from driving. In the case of cabbages, as there are many alternatives available, it is not a necessity for people, an increase in its price would result in an increased fall in the quantity demanded.
These principles are observable in any given business situation. The company chosen to demonstrate these principles in action is B.P. BP is a public limited company that provides a variety of energy-related goods and services. As an international leader in oil and gas exploration and provision, BP’s business practices offer great insight into successfully utilizing the principles of finance.
Since tomatoes have been destroyed, the supply of tomatoes has dropped significantly. The situation is even made worse by the fact that there was delayed planting. Because of reduction in supply, the supply curve will shift from S1 to S0 and the demand curve will remain unchanged.
The product can also imply to the services, which it is rendering to the consumers. As in the case of SleepWell, its products consist of bedding. For the products to fetch higher value, they must be of quality since
Any accountant or managers is therefore expected to know these important accounting principles. For the topic, the article that I will be working on is called, ‘’The Houghton Mifflin Harcourt Journal’’, written by the
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