Economic Principles and Decision Making : Doc
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Added on 2021-01-02
Economic Principles and Decision Making : Doc
Added on 2021-01-02
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Economic Principles andDecision Making
Table of ContentsINTRODUCTION...........................................................................................................................3Problem A........................................................................................................................................3Q1)...............................................................................................................................................3Q2)...............................................................................................................................................4Problem B........................................................................................................................................4Q1) ..............................................................................................................................................5Q2) ..............................................................................................................................................6Q3.................................................................................................................................................7Q4.................................................................................................................................................7Problem C........................................................................................................................................8Q1) ..............................................................................................................................................8Q2)...............................................................................................................................................8CONCLUSION ...............................................................................................................................9REFERNENCES ...........................................................................................................................10M2 Variance Analysis..................................................................................................................1.........................................................................................................................................................1
INTRODUCTIONEconomic is related to the production, promotion, distribution and consumption ofdifferent goods and services. Economic means examine of human behaviour, businesses firm,government bodies and country of how they make choices to utilize goods and resources so thatwants and needs are fulfilled of customer and achieve maximum profit. Decision making is theprocess of choosing best option from the available choices by weighting positive and negativeaspect of each one (Ballestero and Romero, 2013). Economic principle help in decision makingprocess as manager can identify the trade-off so that trade can be better for company. Theyfigure out the cost of different product about how much have been invested and what is therecovery amount. With the help of economic activity market trends can be easily measured andcompared. In this project report, importance of elasticity has been discussed to Schmeckt Gut as theintroduce Schmeckt besser energy bar. Project also covers calculation of price elasticity ofdemand at various prices and cross elasticity with Fly High’s energy bar. Problem AQ1)Elasticity is an important aspect in economic as it means the demand for goods and servicesis the level to which it change in reaction to changes in conditions. In addition, it is defines as thelevel or degree to which the demand for product, or supply of particular goods and serviceskeeps on changing to the certain changes in price of these product. It has various importanceswithin an organisation as management easily understand about the market trends and currentsituation of economy. As Schmeckt Gut plans to introduce the Schmeckt Besser energy bar onthe market the various importance of elasticity help board to known deeply about marketcondition, completion and demand for their product. As earlier defined, elasticity ispredominantly used to assess the change in customer demand as a result of change in a good orservice prices (Chao and Huntington, 2013).Flexibility or elasticity is an economic impression used to calculate the transform in thecumulativequantity demandedfor product in relative to price fluctuation of that good or service.Manufactured goods are measured to beelasticif the quantity demand of these result changesradically when its price increases or decreases. On the other hand, manufactured goods are
measured to be inelastic if the quantity demand of the product changes very minute when itsprice fluctuates. For example, energy bar is a product that is highly inelastic. For healthconscious those eat ebergy bar at regular interval, the demand for this is so great that valueincreases have very minute result on the quantity demanded. Price decreases also do not affectthe quantity demanded; most of those who ate energy bar aren't investment out for a lower priceand are by now assembly purchase.Formula to calculate elasticity is: % change in quantity / % change in price.Q2)As a suggestion to Schmeckt Gut Research Department they should understand the markettrends, customer demand and value of energy bar in market. They should understand differentelasticity, to make sure that Schmeckt Besser energy adapt the market condition and fulfilcustomer needs. Importance of different elasticity is been describe to board of company:Elasticity of demand: The elasticity of demand is a profitable standard that calculate theamount of customer reaction to changes in quantity demanded as a outcome of a pricerevolutionize, as long as all other variable factors are equal. It has various importances such as,help to determine of production Level,ascertain the price of product,helps in price unfairness bymonopolist,to ascertain the prices of factors of manufacture,helps to forecast demand and alsohelp to find out the prices of joint, substitute product (Smith, and Winterhalder, 2017).Elasticity of supply: It is defined as the calculation of degree of reaction of quantitysupplied to a transform in possess price of the product. It is also defined as the percentage changein quantity supplied divided by percentage change in price. High elasticity specify the supply isreceptive to changes in prices, low elasticity state that price changes are less compassion and noelasticity means there is no relation between product and services. There are various importanceto company like housing supply, ease trade facility, help in renewable sources of energy, anddetermine the government invention in market etc.Problem BTotal revenue: Revenue is defined as the total amount or money that an organisation isgoing to receive during a specific period of time. These amounts are also commonly known as
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