Bus 207 Exercise Example Essay

a. This particular industry has a constantly increasing cost. There will be an increase in the demand for input factors for one key reason. Every day, new companies will be introduced into this market of remodeling, economic profits being the encouraging factor. Because of this, there will be a bid up on input prices for the companies in the industry of remodeling. “When a market is characterized by a large number of small producers, the demand curve facing the manager of each individual firm is horizontal at the price determined by the

Workplace romances are now one of the challenges that organizations of all sizes have to address. How they address them varies from organization to organization. Some businesses and organizations strictly prohibit them in any form or fashion, while others prohibit them when the participants are in certain roles within the organization. Some companies have chosen not to address the issue at all and others are using a more formal method of documenting and mitigating the risk they feel these relationships pose. One of the methods of documenting, and potentially mitigating, this

1. A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump-sum of $10mln, or in parts, where $5.5mln can be provided in year 1, and another $5.5mln can be provided in year 2.

1. Brockwell left his boat at Lake Gaston Sales to be repaired. Brockwell was required to sign a form that states that Lake Gaston Sales has no responsibility for any loss to any property in or on the boat. After the repair, Brockwell is missing electronic equipment and other items of his are damaged. Lake Gaston Sales is using an Exculpatory Clause. In some cases an exculpatory clause is may be unenforceable. Items damaged and stolen from Brockwell’s boat could be a result from Lake Gaston’s Sales’s negligence of taking care of and respecting customer property. This Exculpatory Clause likely will not be enforced because it is seeks

availability of substitutes, and justify how you determine the price elasticity of demand for your firm’s product. b) Explain the factors that affect consumer responsiveness to price changes for this product, using the concept of price

Suppose that the advertising budget is restricted to 31 units. Determine the level of advertising (in units) that maximizes sales subject to this budget constraint.

As you collect the information for Assignment 1 and Assignment 2, remember that in Assignment 3 you must prepare a presentation for your Chief Executive Officer.

13. If price elasticity of demand = -1.5 and price decreases by 20 percent, then

According to Gitman, the goal of the firm, and therefore of all managers and employees, is to maximize the wealth of the owners for whom it is being operated (2009). The financial manager is responsible for acquiring sources of financing and allocate amongst competitive investment alternatives. The ultimate goal is to invest in projects yielding higher returns than amount of financing used to invest, so profits can be used satisfy claims and increase shareholder wealth. The issues facing financial managers are therefore to 1) increase sources of financing from investors and 2) increase shareholder wealth while maintaining a

When the local used bookstore prices economics books at $15 each, it generally sells 70 books per month. If it lowers the price to $7, sales increase to 90 books per month. Given this information, we know that the price elasticity of demand for economics books is about

Based on the above description, forms of elasticity will affect business decisions and pricing strategies differently depending on the nature and type of products or services being offered. Business organizations whose product offerings have elastic and perfectly elastic price elasticities of demand should not attempt to raise prices of their products because it will cause the quantity demanded and consequently total revenues to drop drastically. Businesses can there use the price elasticities of demand to determine whether the proposed changes in their prices will raise or reduce their total revenue. The following expression may be useful in helping business organizations to determine the impacts of elasticities on their total revenues based on the suggested price changes.

Elasticity is a measure of the responsiveness of demand to changes in the price of a good or service. In the case of Steam Scot, when the price rises from 4 to 5, demand falls from 60,000 to 40,000 units. The original equilibrium market price of 4 pounds resulted in demand of 60,000 units and this generated revenue of 240,000 pounds. When the prices increased to 5 pounds the resulting demand is 40,000 units, and this generates total revenue of 200,000 pounds. When market price changes from 4 pounds to 5 pounds 40,000 pounds of revenue are lost in this indicates an elastic price elasticity of demand.

The market research department has undertaken some research indicating that by lowering the ticket price the demand will increase. It has been proposed that the ticket price is decreased to $280. It has been estimated that this will increase passenger numbers to 212 per flight. This will alter the level of revenue; it will also alter costs that are dependant on the number of passages meaning the food and beverage costs, and the travel agent commission which is dependant on the ticket prices. The adjusted operating income per flight is shown in table 2.

Since Blinkie’s Donut Emporium offers several different products, we decided to calculate the price elasticity of demand for their main product sold; donuts. Elasticity is determined by the percentage change in quantity demanded divided by the percent of change in the product price. The initial quantity demanded, being 5,000 sales a month later turned into 4,500 sales a month in response to the price change from $1 to $1.50. A $.50 cent increase in price led to a decrease in total quantity of donuts sold by 500. The percentage of change is a 50% increase in price along with a percent of change in quantity of -10%. Elasticity then becomes -10/50 giving us an elasticity of -.2, but since elasticity is always positive, the negative sign is disregarded. The number .2 elasticity is very close to being unitary elastic but still inelastic, meaning that the demand changes according to price at an almost equal rate. Therefore, we recommend that Blinkie’s Donut Emporium does not raise or lower the price to enhance sales, but keeps the price the same. They can increase the price by a few cents, but we believe leaving the price as is can avoid the loss of regular customers from a practical standpoint.

Since we getting coefficient of arc elasticity is equal to -1.36 so that the price elasticity of demand is elastic.