Economic Principles and Decision Making

Running head: Economic Principles and Decision Making
ECONOMIC PRINCIPLES AND DECISION MAKING
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Economic Principles and Decision Making
Table of Contents
Problem A........................................................................................................................................2
1) Importance of the topic elasticity and explaining this to the board of Schmeckt Gut................2
2. Suggestions to ensure smooth entry of the product in the market...............................................2
Problem C........................................................................................................................................3
1. Suggestion for smooth entry in the market..................................................................................3
2. Specific task of the research team...............................................................................................4
Reference list...................................................................................................................................5

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Economic Principles and Decision Making
Problem A
1) Importance of the topic elasticity and explaining this to the board of Schmeckt Gut
The topic of elasticity is important in the sense that it will determine the degree of
responsiveness from both the perspective of consumer and producer. Through the incorporation
of the price elasticity of demand, the consumers will be willing to understand the development of
degree of responsiveness they will be able to identify the quantity of goods that will be
demanded at a given price. The consumers will be able to understand the degree of change in
quantity demanded due to one unit change in price (Emas, 2015). The elasticity is important in
the sense that through the establishment in the elasticity the consumer basket will be determined.
The Schmeckt Gut need to launch the product in the market in a different manner. The
price should be kept within the affordable range of the consumers. It is important in the sense
that since the energy bar is one necessary goods. The energy bar is the luxury goods in the sense
that most of the energy bars helps in the minimization of hunger (Frederik et al. 2015). Thus if
the price is too high then the consumers will not pay and the company will be losing huge
potential market. First, they need to identify the potential group of customers for which the
product is unit elastic or inelastic in nature.
2. Suggestions to ensure smooth entry of the product in the market
In order to make a smooth entry of the products, the company will look for the substitute
products by checking the cross-price elasticity. If any substitute products are not there then the
company will have no problem in introducing the product. Secondly, the company will be
looking in to the advertisement of their energy bars (Rivalan et al. 2017). This is important in the