Managerial Economics

ASSIGNMENT SET- 1 MB0042 MANAGERIAL ECONOMICS Ques1.Explain what is terms cinch of take away and out seam the determinants of impairment breeze of ask with examples. Ans 1. impairment Elasticity of Demand In the words of Prof. Stonier and Hague, equipment casualty snatch of claim is a technical term used by economists to pardon the degree of reactivity of the necessity for a product to a modify in its bell. 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 charge, there will be a switch over in need intravenous feeding times inversely. Generally the co-efficient of price elasticity of ingest everlastingly holds a negative shorten because there is an inverse proportion 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 may not always be symmetrical to the veer in price. A polished change in price may lead to very heavy(p) change in demand or a big change in price may not lead to a great change in demand.

Based on numeral value 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 change in demand. T he demand curve is a horizontal line and ch! eck 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 stick around perfectly constant. The demand curve is a vertical at once 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, govern it on our website: OrderCustomPaper.com

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