Economics principle and decision making assignment

Added on - 24 Apr 2021

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Running head: ECONOMIC PRINCIPLE AND DECISION MAKINGEconomic principle and decision-makingName of the universityName of the studentAuthor Note
1ECONOMIC PRINCIPLE AND DECISION MAKINGTable of ContentsProblem A:.................................................................................................................................2Answer 1:...............................................................................................................................2Answer 2:...............................................................................................................................2Problem B:.................................................................................................................................3Answer 1:...............................................................................................................................3Answer 2:...............................................................................................................................4Answer 3:...............................................................................................................................4Answer 4:...............................................................................................................................5Problem C:.................................................................................................................................5Answer 1:...............................................................................................................................5Answer 2:...............................................................................................................................6References:.................................................................................................................................7
2ECONOMIC PRINCIPLE AND DECISION MAKINGProblem A:Answer 1:To start a business, it is essential for the business owner to understand about theconcept of elasticity as it helps the concerned person to measure the change in quantitydemanded of a commodity when its own price changes. Elasticity of that product can also bemeasured based on income of its consumers and prices of its related commodities that are,substitute and complementary products (Soderbery, 2015). Hence, this concept can help thebusiness owner to earn profits. For elastic goods, a small change in its price can affect itsdemand significantly in a negative direction. Hence, sellers of elastic goods cannot chargehigher price. On the other side, for inelastic products, change in price cannot influence itsdemand to a large extend. Hence, in this context, this concept of elasticity can help the Boardof Schmeckt Gut to charge the price of its product after analyzing nature of elasticity, whichin turn, can help the company to compete with others in the market.Answer 2:The Board can instruct the Schmeckt Gut research Department to conduct a marketresearch on other companies, who also provide energy bars to their customers. By analyzingthe price trend and its corresponding demand for energy bar of each company, Schmeckt Gutcan understand about the nature of elasticity of that product in market (Liu & Tomsovic, 2015).After increase in price of that specified product by a small amount, if the demanded quantitydecreased by a significant amount, then it can be said that the product has elastic demand inmarket. In this situation, the specified company can charge lower price at the time ofintroduction of their products into the market. On the other hand, if it is observed that changein price of this specified product cannot influence its corresponding demand to a large extend,then it can be said that the product has inelastic demand curve (Schwartz et al., 2016). Under
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