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HOMEWORK-1

ECO552

NAME - RAMAN KR JHA

COURSE – MBA HON.

ROLL - RQ1002A30

REG - 11001859
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
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 will
increase. 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 industry’s 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.
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. Planning
2. Taxation
3. Project estimation
4. Policy making

Ans – 12:

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


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

Ans- 13:
i. A statistics class and an economics class is substitute for each
other if they will be taken at the same time.
ii. Tennis balls and tennis racket is complementary to each
other.
iii. A plane trip and a train trip to the same destination is
substitute for each other.
iv. Bread and eggs are sometime substitute and sometime
complimentary to each other as bread can be eaten with
something else as well as egg can be also eaten with
something else
v. Steak and lobster are complimentary to each other

Ans-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
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 price
as 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 both
are eaten simultaneously and cannot be eaten separately.
ii. Television set and videocassette recorder are complementary to
each other as for operating videocassette recorder we need tv
set.
Rice and potatoes they are neither complementary nor substitute