Using Arc elasticity method

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Business Economics
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Business Economics
1. The manager of a company was analyzing the trend of the products of its company
(Commodity Y) getting replaced by another substitute product available in the market
which gives the same level of satisfaction to the consumers. Calculate the rate of
Marginal Rate of Substitution and analyze the result.
Combination Units of Commodity Y Units of Commodity X Total Utility
a.40 10 U
b.25 14 U
C.17 19 U
d.10 27 U
e. 7 38 U
2. Neha has just completed her MBA and joined a startup company. The company was
planning to launch a new product in the market so the management wanted to
understand the different factors that can impact the demand and supply of their
products in the market. Help Neha to prepare a report on the factors impacting demand
and supply of products in the market.
3. Alpha Ltd market share was declining due to high competition in the market so it
decided to enter a new segment. It wanted to determine the relationship between
change in the quantity demanded of the product due to change in the price of the
product in the market. Assume that at the price of 100, the demand for the product is
400 units. If the price of the product increases to 120, the demand decreases to 250
units. Calculate the price elasticity:
a) Using Arc elasticity method
b) Using Percentage method
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