We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Economic And Management - Essay Example

Comments (0)
This paper intends to define the concept of elasticity and the concept of price elasticity of demand. At first deals with explaining what Price Elasticity of demand (PED) is and what factors determines PED of a good. Then after giving this basic knowledge it relates the scenario with the concept of PED and total revenue.
Download full paper

Extract of sample
Economic And Management

Download file to see previous pages... Elasticity is an easy way of enumerating cause and effect correlations. It is described normally as a mathematical measure of the responsiveness of one economic variable (the dependant variable) following a change in another influencing variable (the independent variable), ceteris paribus.
Now we shall understand what Price Elasticity of demand (PED) is, it is the measure of responsiveness of demand for a good following an alteration in its own price. If demand is elastic, then a little transform in price will consequence in a comparatively big change in amount demanded. However, if price increases by too much and quantity demanded descends vaguely, then demand would be price inelastic. (Hubbard and O'Brien, 2008)
If co-efficient of PED = 0, it means that demand is perfectly inelastic. This means that any change in price whether increase or decrease does change the quantity demanded. Hence making its demand curve a vertical line in price(x axis) to quantity(y axis) space.
If co-efficient of PED is between 0 and 1, when we get values of PED between 0 and 1 than we say PED to be inelastic this means that percentage change in demand is lesser than percentage change in price. Producers know that the change in demand will be proportionately smaller than the percentage change in price. ...
Producers know that the change in demand will be proportionately smaller than the percentage change in price. Therefore Demand curve will be a very steep slanting line in price(x axis) to quantity(y axis) space.
If co-efficient of PED = 1, when a percentage change in price changes the percentage of quantity demanded by the same proportion the PED is said to be unitary elastic. For example a 10% rise in the price of apples causes a 10% fall in its quantity demanded.
If co-efficient of PED > 1, when the value of PED exceeds 1 then demand is said to be elastic, which means that a % change in price causes the quantity demanded to change by more than proportionate. For example a 10% rise in prices of apples cause its quantity demanded to drop by 15%. (Lipsey & Chrystal, 2007; Sloman, 2006)

Factors Determining Price Elasticity of Demand:
Now let us take a look at the key factors that determines the PED for goods and services. They are as follows:
The range of near substitutes for a product / attractiveness of the good- the more the number of substitutes of a good the more elastic would be its demand because consumers can easily turn to other alternative good. For example coke's perfect substitute is Pepsi, and therefore if coke raises its price people will turn to Pepsi instead. And the more the product is unique the more inelastic would be its demand. (Tucker, 1999; Samuelson & Nordhaus, 2001)
The fee of toggling amid different products - there may be noteworthy dealings expenses caught up in changing among dissimilar goods and services. For example, mobile phone service suppliers may incorporate penalty clauses in agreements or persevere on 12-month ...Download file to see next pagesRead More
Comments (0)
Click to create a comment
The Economic Considerations Of Information Security And Its Management
The economic considerations of information security and its management. A lot of research work has been carried out to understand the causes of system failures. Most of the studies acknowledged that a lot of security systems were failed due to some misplaced reasons.
3 Pages(750 words)Essay
Difference between Chinas economic management style and the Western style
China is unquestionably among the world’s largest and fastest growing economies (Watson, 1994, p. 48). Since opening its markets to the rest of the world in 1979, China’s economic growth has experienced a persistent upward trajectory (Tsui & Lau, 2002, p.
20 Pages(5000 words)Essay
Financial Management during Economic Downturn
It is to be noted in this context that the task of financial management cannot be confined merely to cash management. Rather, the scope of financial management includes all financial resources such as receivables and payables. Management of all financial resources assume great importance as it has rightly been coined as the life blood of business.
5 Pages(1250 words)Essay
Influence of Non-economic Environments on Management Effectiveness
The organization should have a flexible business strategy with the allowance for quick alteration of its business decisions considering the change in non-economic factors. The particular elements of this factors are not under the firm’s control (like environmental conditions) or are just partially depended on the business will (human resources).
9 Pages(2250 words)Essay
Describe the period of Globalization in international economic management
The era of globalization had many implications on the monetary system of the world. Before globalization, Bretton Woods and Interdependence
4 Pages(1000 words)Essay
Effective Management of Training and Development in an Economic Downturn
Firms are faced with excess supply and with lack of demand firms are forced to cut down on prices to sustain their margins and beat the competitors. This reduces the profit margins of firms and reduces their profitability. Under these circumstances firms are forced to
68 Pages(17000 words)Essay
Petroleum Economic and Oil field management 2013-2014
Because of the promises that the natural gas industry holds, governments in Asia, Europe and America have introduced reforms to promote efficiency and attract private investment to the natural gas industries. However,
8 Pages(2000 words)Essay
Petroleum Economic and Oil field management
When the elasticity of the supply is static, the supply curve slopes upward and the supplier’s income splits between economic rent and opportunity cost. When the supply is inelastic, the supply curve becomes vertical and when it is elastic, the curve goes horizontal. It is
6 Pages(1500 words)Essay
Petroleum Economic and Oil field management
The future expectations with respect to demand and supply for oil will influence prices. Supply and demand are balanced by responses to the current price movements where complexity in the evolution of underlying expectations is likely to influence prices in the
6 Pages(1500 words)Essay
Management Project Economic Analysis
With reference to the economic analysis, FCI has a total of 16.53 M$ that comprises of 14.53 M$ ISBL and 2.0 M$ OSBL. As such, cash flow statement indicates that the payments will be rendered in full amounts within three years. Both the furnace and heat exchanger use ISBL while the feed tank uses OSBL.
1 Pages(250 words)Essay
Let us find you another Essay on topic Economic And Management for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us