Explain what is meant by the terms harm walkover, income breeze and cross duck soup of demand and discuss the main determinants of each of these. Discuss the enormousness of each of these to the decision making process within a typical business.
Elasticity is the responsiveness to which one variable responds to a adjustment in another variable Price elasticity of demand (PED) measures the responsiveness of touchstone demanded of a product to a mixture in its wrong. If a relatively small change in price leads to a relatively large change in demand, the product is tell to be ?elastic?.
Whereas if quantity demanded is relatively unresponsive to a change in price the product is said to be ?inelastic?.
Price elasticity of demand can be given a mathematical value which is just a consequence and not in terms of any particular unit. The resulting numerical figure give always be a negative number out-of-pocket to the inverse relationship between price and quantity demanded, provided can be ignored. This numerical figure can be calculated by:Price elasticity of demand = luck change in quantity demanded Percentage change in price For example if the price of a product rises from £20 to £24, which is a 20%change and demand falls from cd units to 300 units, which is a 25% change, the calculation will be:25% = -1.
2520%When the percentage change in price leads to a smaller percentage change in quantity demanded price elasticity of demand will be a number between 0 and -1 and the product is said to be ?inelastic?.
On the other hand when the percentage change in price leads to a larger percentage change in quantity demanded price elasticity of demand will be a number between -1 and ? infinity and the product is said to be ?elastic? such as the product employ in...
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