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Assignment on Economics for Business

   

Added on  2020-04-07

11 Pages1685 Words52 Views
Running head: ECONOMIC FOR BUSINESSEconomics for BusinessName of the StudentName of the UniversityAuthor Note

1ECONOMICS FOR BUSINESS Table of ContentsIntroduction:....................................................................................................................................2Microeconomic Indicators:..............................................................................................................2Elasticity of demand:...................................................................................................................2Consumers’ Preference:...............................................................................................................3Cost of production:......................................................................................................................4Supply and Demand dynamics:...................................................................................................6Macroeconomic Indicators:.............................................................................................................6Aggregate Demand and Aggregate Supply:................................................................................6Monetary and Fiscal Policies:......................................................................................................8Currency Exchange Rate:............................................................................................................8Conclusion:......................................................................................................................................8References......................................................................................................................................10

2ECONOMICS FOR BUSINESS Introduction: Economic parameters play significant roles in influencing the market dynamics of anycountry and the world as a whole and therefore, they also have significant implications on theactivities and outcomes of the commercial organizations of an economy. Therefore, it is ofutmost importance for the commercial enterprises, to take into the different microeconomic andmacroeconomic factors, which can have effects on their overall success, while forming theirbusiness policies and market strategies (Baumol & Blinder, 2015). The report takes into accountthe role of the economic indicators like elasticity, cost of production, consumer’s preference,aggregate supply and demand dynamics and other micro and macroeconomic factors on theperformance of the concerned enterprise, XYZ Company. Microeconomic Indicators: Various microeconomic factors are there which can affect the overall performance andprofitability of the organization, depending upon the nature of good or service the company isoffering to the consumers. A few of these factors are elaborated as follows: Elasticity of demand: The term elasticity, in economics, refers to the degree to which the demand for acommodity or service is responsive to the change in price of the same. Generally, thecommodities which are necessary in nature and do not have many substitutes, experience lesselasticity as their demand does not change significantly with changes in the price. On the otherhand, those commodities, which have close substitutes and are not required for basic sustenance

3ECONOMICS FOR BUSINESS per se are highly elastic as their demand significantly changes with price alterations (Rios,McConnell & Brue, 2013). Figure 1: Types of demand elasticity(Source: As created by the author)As can be seen from the above diagram, in case of elastic demand, the decrease in price,increases the demand from Q0’ to Q1’, whereas the same price decrease leads to a relativelysmaller increase in demand (Q0 to Q1) in case of inelastic demand. Implication- The Company should take into account the elasticity of demand for its product fordesigning its pricing structure.

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