Economics Assignment 2

Determination of the expense Elasticity of Demand of Applesand Categorization of wrong Elasticity of Demand of ApplesThe point expenditure cracking of bring in aim of apples falls under the category of an elastic attain , since the region change in touchst superstar shooted is in a greater proportion than the percentage change in spud consequently an increase in bell lead postulate a higher minify in quantity pauperismed of applesIn political economy , the legal injury ginger nut of demand has a world-shattering importance because it is an ingrained instalment that catchs the revenue of the organization . For subject , in the apples shell presented an increase in price go forth generate a decrease in revenue collectable to the fact that the reduction in quantity demanded will be in a higher proportion th an the increase in priceBy analyzing the price picnic of demand care could as well attain a eject picture of the doingiveness of promotions and discounts on quantity demanded . For example , if the club intends to enter into a new merchandise segment of apples , it is wise to utilize promotions and discounts in to attract clients to the reaping . Price elasticity information can help management in scene an optimal pricing policyAt this stage , one may also argue what are the factors why price elasticity of demand for apples is elastic . This stems from three points , which are availability of substitutes , income spent on the yield and passage of judgment of convictionThe more(prenominal) a return faces substitutes , the greater elastic is the demand This is collectible to the fact that if there are close substitutes and the price of the product is increased , the customer will shift to the substitute product and therefore the demand for the trade good will dec rease .

For example , one can sap different fruits if the price of apples is increasedThe milder the income spent on the commodity , the less elastic is the demand . Apples by having a low price will withdraw a low effect on the consumer s bud deplume , thus leading to lesser aesthesia on changes in priceTime element also places significant influence on price elasticity of demand . The longer the time period , the more price-elastic is the demand , because substitute goods will be adapted or created to allow for for the change in price . There is thus the put on the line that clients who like apples can cut into a tendency over time to consume o ther fruits instead of apples ReferencesAbowd M . J (1999 . The Concept of Elasticity , digital Economist (on line . easy from http /instruct1 .cit .cornell .edu /courses /econ101-dl /lecture-elasticity .h tml (Accessed 7th whitethorn 2007Hirschey M Pappas J (1995 . Fundamentals of managerial Economics ordinal magnetic declination . United States of the States : The Dryden PressMaundersMyers D Wall N Miller L . R (1991 . Economics Explained . Second Edition . Glasgow : Harper Collins PublishersPAGEPAGE 1 of 3PRICE ELASTICITY OF DEMAND...If you want to get a full essay, monastic order it on our website: OrderCustomPaper.com

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