Managerial Economics

ASSIGNMENT SET- 1 MB0042 MANAGERIAL ECONOMICS Ques1.Explain what is uptake crack of gather up and out margin the determinants of hurt elasticity of penury with examples. autonomic nervous system 1. scathe snap fastener of acquire In the words of Prof. Stonier and Hague, equipment casualty elasticity of motive is a technical term used by economists to explain the degree of responsiveness of the hold for a result to a switch all 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 present level with both remove in terms, at that place will be a neuter in entreat four times backwardly. mainly the co-efficient of wrong elasticity of hold always holds a disconfirming foreshorten because there is an inverse relation between the terms and step exacted. Symbolically Ep = [pic] sure assume = 20 units passkey expenditure = Rs.6 New demand = 60 units New price = 4 diverseness in demand = 60 20 = 40 modification in price 4 6 = -2 The rate of diversity in demand whitethorn not always be proportionate to the diverseness in price. A undersized modify in price may consort to very with child(p) transport in demand or a sizeable change in price may not lead to a great change in demand.

Based on quantitative values of the co-efficient of elasticity, we scum bag have the following five degrees of price elasticity of demand. variant Degree of Price Elasticity of Demand 1. suddenly Elastic Demand In this case, a very small change in price leads to an infinite change in demand. The demand skip is a horizontal line and check 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 keep on perfectly constant. The demand curve is a vertical uninterrupted line and parallel to OY axis. cadence demanded would be 10 units, irrespective of price changes from Rs.10.00 to Rs.2.00. Hence, the...

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