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Business
Economics
1. From the give table calculate Elasticity of
Price, Total Revenue and Marginal Revenue. Also, explain the relationship
between AR and MR?
Answer:
INTRODUCTION:
Elasticity of demand: A commodity's demand is affected by various
factors, such as a change in the price of the goods, change in the consumer's
income, change in the price of related goods (substitute and complementary
goods), change in taste and preference of the customer, etc. The elasticity of
demand is the percentage change in a commodity's demand when other factors
affecting the demand of the product change. It is determined by dividing the
percentage change in demand of a commodity by the percentage
2. Demand forecasting is not a speculative exercise
into the unknown. It is essentially a reasonable judgment of future
probabilities of the market events based on scientific background. Explain the
statement by elaborating different qualitative and quantitative methods of
demand forecasting. (10 Marks)
Answer:
INTRODUCTION:
Demand forecasting: The process of estimating the future demand of a
commodity of the consumers in a market during a defined period, with some
historical data and different other information, is known as demand
forecasting. When done right, demand forecasting tells an organization about
the firm's potential in the current market. It ultimately helps the managers
make certain vital decisions regarding price, growth strategies, and the firm's
potential in the given market.
Suppose an organization does not perform demand
forecasting. In that case, it will be making bad decisions for the company,
leading to
3. a. Define elasticity of supply and find the price
from the given statement:
If Es of a good is 2 and a firm supplies 200 units
at price of Rs 8 per unit, then at what price will the firm supply 250 units. (5 Marks)
Answer:
INTRODUCTION:
Elasticity of
supply: It is the change in the
supply of a commodity due to a price change. Every firm needs to know the
quickness and effectiveness in their response whenever the market conditions
change. The market conditions especially involve price change. The price
elasticity of supply or elasticity of supply is calculated by dividing the
percentage change in quantity supplied by the percentage change in the
commodity
3. b. Calculate the elasticity of supply if a 15
%increase in the price of soya bean oil increases its supply from 300 to 345
units (5 Marks)
Answer:
INTRODUCTION:
Elasticity of
supply: According to the law of
supply, there is a direct relationship between price and quantity supplied of a
commodity. If the price increases, the supply of the item also increases and
vice-versa. It is a qualitative statement. Several factors affect the supply of
a commodity. Price is the primary factor affecting the supply of a product. It
is the reason we usually calculate the price elasticity of supply. The elasticity
of
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