assignment eco551

8/8/2019 Assignment Eco551

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HOMEWORK-1

ECO552

NAME - RAMAN KR JHA

COURSE MBA HON.

ROLL - RQ1002A30

REG - 11001859


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Ans- 1

Elasticity of beverage products like coke is always greater than one. This

means that a slight change in the price of the product decreases the

demand for that product to a great extent. So while introducing a new

product we should keep its price same as the substitute goods available

in the market.

Ans-3


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Demand and supply helps in determining the price in the market. For the

lower price the demand can be increased which will help in capturing

the market. If the company wants to sell the mobiles at the higher cost &

producing limited edition of the phones because the opportunity cost is

high in such a case if the demand of the mobiles raises the price willincrease. Once the price increases the quantity supplied of product also

need to be increased.

So to maintain the market supply as per creating the higher demand

price must be determined to compete with other companies

Ans -6:

1.In the first case i.e. there will be movement along the curve by

the removal of quotas on the importation of foreign clothes

2. the increase in income will cause shift in demand curve

3.cut in industrys cost of production will cause movement

along the demand curve

Ans-7:

With the sudden increase in demand of chocolate will increase the

supply of chocolate. The increase in demand of chocolate will cause

increase in demand of milk, because it is a chief component of

chocolate. This increase in demand of milk will cause increase in price

of the chocolate

Ans -10:

Though on average the effect will be nil, but for the household where the

consumption is more new program will be worse for them and the

household where the consumption is less than the average they will have

no effect of it.


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Ans-11

The concepts of elasticity are very useful for both business unit as well

as government department. we can study them as follows:

a) In business unit it helps in:1. Planning,

2. Price estimation

3. Change in prices of products

4. Production

5. Decision making

b) In government department it helps in

1.Planning2.Taxation3.Project estimation4.Policy making

Ans12:

i. Demand as seen by the seller : According to seller increase indemand causes increase in supply

ii. Demand as seen by the buyer : According to buyer increase indemand causes increase in price

Ans- 13:

i. A statistics class and an economics class is substitute for eachother if they will be taken at the same time.

ii. Tennis balls and tennis racket is complementary to eachother.

iii. A plane trip and a train trip to the same destination issubstitute for each other.

iv. Bread and eggs are sometime substitute and sometimecomplimentary to each other as bread can be eaten with


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something else as well as egg can be also eaten with

something else

v. Steak and lobster are complimentary to each otherAns-14;

a curve that shows the relationship between income and demand.

Normally as income rises, so demand rises also, but it can happen, as in

the case of low value goods, that when income rises demand falls as

purchasers switch to higher-priced products.

He might increase his consumption of food & clothing or might

switch to the costlier products.

Ans -16

If the elasticity of soft drinks are more than 1. It shows the product is
http://upload.wikimedia.org/wikipedia/en/1/1f/Consumer_constraint_choice_income_shift.svg


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completely elastic in nature. So during sale forecast he should be very

cautious as a slight increase in price may decrease the demand a lot.

Ans-18

The demand will increase significantly as there is decrease in sale priceas well as the appreciation in the us dollar will also increase the demand.

Now they can have more books in the same price

Ans-19

Yes this change imply upward- sloping demand curve as we see due to

increase in demand from 5000 to 5500 there was increase in the fee from

4000 to 8000

Ans-20:

i. Burger and Tomato ketchup are complementary goods as bothare eaten simultaneously and cannot be eaten separately.

ii. Television set and videocassette recorder are complementary toeach other as for operating videocassette recorder we need tv

set.

Rice and potatoes they are neither complementary nor substitute

assignment eco551

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