Managerial Economics
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Managerial Economics

on

  • 7,681 views

PPT of Managerial Economics By Prof. Manju Shree Naidu on topic Cost Curves at GIM, Gitam University, Vizag

PPT of Managerial Economics By Prof. Manju Shree Naidu on topic Cost Curves at GIM, Gitam University, Vizag

Statistics

Views

Total Views
7,681
Views on SlideShare
7,667
Embed Views
14

Actions

Likes
2
Downloads
429
Comments
3

1 Embed 14

http://www.slideshare.net 14

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Managerial Economics Presentation Transcript

  • 1. Elasticity??? What and Why?
  • 2. • Degree of responsiveness of demand to the change in its determinants • Crucial role in business-decisions
  • 3. Few more…… 1. Price elasticity 2. Cross Elasticity 3. Income Elasticity 4. Advertisement Elasticity 5. Elasticity of price expectations
  • 4. Price Elasticity??? What is it? • Definition: Responsiveness or sensitiveness of demand for a commodity to the changes in its price • Percentage change in demand / Percentage change in price
  • 5. How to do? ∆Q ∆P ∆Q P Ep = ------- ÷ ------- = ----- x ----- Q P ∆P Q Where Q = Original quantity demand P = Original Price ∆ Q = New Quantity demanded – Original quantity demanded ∆ P = New Price – Original Price
  • 6. Problem: The price of product Bread is Rs. 20/-, quantity demanded is 1000 packets and the price increased from Rs. 20/- to Rs. 30/-, the quantity demanded is decreased from 1000 packets to 850 packets. ∆Q P 850-1000 20 Ep = ------- x ----- = ----------- x ------- 1000 ∆P Q 30-20 Ep = -0.3 Ep < 0 - Relatively inelastic in nature as there is slight variation in demand even though there is rise in price
  • 7. Determinants of Price Elasticity • Availability of substitutes • Nature of commodity • Weight age in the total consumption • Time faction in adjustment of consumption patterns • Range of commodity use • Proportion of market supplied
  • 8. Types of Price Elasticity There are 5 types of Price Elasticity • Perfectly Elasticity of Demand • Perfectly Inelasticity of Demand • Unitary Elasticity of Demand • Relatively Elasticity of Demand • Relatively Inelasticity of Demand
  • 9. Perfectly Elasticity of Demand •E = Infinity •Eg: Medicines
  • 10. Perfectly Inelasticity of Demand •E = 0 •Eg: Suger
  • 11. Unitary Elasticity of Demand •E = 1
  • 12. Relatively Elasticity of Demand •E > 1 •Eg: Mobiles, Gold
  • 13. Unitary Elasticity of Demand Relatively Inelasticity of Demand • E=1 •E < 1 •Eg: Inferior goods
  • 14. Applications • Relationship between price and total revenue • Determining what goods to tax • Analyzing time tags in productive • Behaviour of a firm