Question

After you graduate from university, you find a job in a company that produces good X. You are working in a competitive market. Your boss asks you to compute the price elasticity of demand, income elasticity of demand, cross-price elasticity of demand, and the price elasticity of supply. The question is: how your boss will benefit from computing each of these elasticities. Explain in detail with an example for each case.

I need the answer minimum 500 words.

Answer 1

Answer:

price elasticity of demand= % change in amount requested/% change in price

Imcome elasticity of demand = % change in amount requested/% change in salary

Cross price elasticity of demand = % change in amount requested of good/% change in the cost of good Y

Price elasticity of supply = % change in amount supply/℅ change in price

Here organization manager's is a provider so organization will deliver great x here organization will get advantage if the interest is splendidly inelastic this implies shoppers have no substitute and friends will charge as much as possible this will profit organization.

On account of salary elasticity of interest if flexibility is more that is pay versatility of interest is more prominent than individuals have more pay to spend this will profit organization.

On account of cross elasticity of interest the more the cost of related great the more is the interest for good that the organization needs to sell guess organization needs to sell great x and ther is a related decent y if cost of y increments than the interest for good x will increments and this will profit organization.

On the off chance that elasticity of supply is more prominent than 1 than this will profit organization guess a merchant is selling a decent cost flexibility of his great is more prominent this implies vender will get better yield by selling his great and something else is that in the event that he have more cash subsequent to selling those great than this will likewise builds his venture.