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Demand is Indirectly Related to the Price - Purchasing And Selling Power - Management Case Study Assessment Answer
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Management Case Study Assessment Answer
TASK: Elasticity is can be described as sensitivity or responsiveness, or how the price of certain good can change the demand of that particular good. Demand is indirectly related to the price which means when the price of good increase the demand for goods decrease itself. Elasticity can be broken into categories: elastic demand, where the demand of good changes based on the price, an inelastic, where the demand will not change regardless of the price. Certain markets have different elasticity’s depending on good in the market. The price elasticity of demand measures how responsible quantity demanded is to a price change. More changes in price lead to a large percentage changes in the quantity demanded, more the demand is said elastic. The price elasticity of demand is unit elastic which means that there is equal change in quantity demanded and price, elastic which refers to greater change in quantity demanded as compare to the price and finally inelastic which refers to less change in quantity demanded though there would be a greater change in price these are referred to the necessity goods. In order to calculate the price elasticity of demand, there are some determinants to take in consideration. The price elasticity of demand depends on the availability of close substitutes, the proportion of income spent on the good, and the amount of time people has to adapt to a price change. The economic measures of how much the quantity demanded changes when the price changes is called price elasticity of demand. This response can be calculated by divided the percentage in quantity by the percentage change in price. It is always end up negative. Determinants that affect price elasticity of demand include the number and closeness of substitute goods, the proportion of income spent on the good and the time period. They are directly related to the elasticity coefficient. Price elasticity of supply is a measure of how much the quantity supplied changes when the price changes in a certain market. It is the ratio of the percentage change in quantity supplied to the percentage change in price. The formula to calculate the price elasticity is the percentage change in quantity supplied divided by percentage change in price. It is usually positive. Some of the determinants of price elasticity of supply are availability of raw materials, inventories, transportation and etc. Supply is determined whether elastic or inelastic depends on two main determinants: the ability of sellers to change the amount of the good they produce when the price changes and the time period. Same as price elasticity of demand the price elasticity unit elastic (which is equal to 1), inelastic (which means less than 1) and elastic (that is equal to one). In conclusion I would say that price elasticity of demand and price elasticity of supply plays a very important role in setting up the equilibrium for a market of a product. Price elasticity of demand is most important from the view of the customer as the price mainly affect the end user. Whereas in price elasticity of supply increase in price benefits the supplier because it helps them to generate a great amount of revenue. So to setup the economy the economist has to look both of the elasticity because they need to understand both the buyer and seller (purchasing and selling power). To develop a good economy the economist should make sure both the parties are happy.This Management Assignment has been solved by our Management experts at onlineassignmentbank. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.