Economic Principles and Decision Making Assignment Solution

This economics assignment solution delves into the application of economic principles, specifically focusing on elasticity and its implications for business decision-making. The assignment analyzes the importance of understanding price elasticity of demand for a company launching a new product, like an energy bar, and how this understanding impacts consumer behavior and market entry strategies. It explores suggestions for a smooth product launch, considering factors such as substitute products, advertising, branding, and product quality. Furthermore, the assignment examines market structures, including oligopoly and perfect competition, and proposes research tasks for understanding consumer preferences to optimize product development and market domination. The solution provides a comprehensive overview of economic concepts and their practical application in a business context, supported by relevant references.

Running head: Economic Principles and Decision Making
ECONOMIC PRINCIPLES AND DECISION MAKING
Name of Course
Course Name
Name of the student

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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

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Economic Principles and Decision Making
sense that advertisement is one of the important factors that actually determines the consumer
preference for some goods. Generally, the new product will definitely require awareness among
the special group of customers who can afford the product. Since it is a offbeat product thus it
will be having bit high price than the normal price. Thus, only few consumers having high
income will be able to purchase the products. Branding the products will be important in the
sense that through branding the company will be aiming to make the consumers about the pros
and cons of the product. In order to increase the development of the marketing of the products
the company will be mainly dealing with the improvement in the product quality and marketing
of the products it is important to indulge them in the marketing. However, in order to continue
with the performance, the company needs to indulge the improvement in the quality of the raw
materials and all time availability of the products in the market throughout the year. It is
important in the sense that it will definitely a concern for the company to increase the quantity
supplied.
Problem C
1. Suggestion for smooth entry in the market
The market of the energy bar is oligopolistic in the short run but in the end, the market of
the energy bar is competitive in nature. This is because of the fact that in the end many new
substitute companies will be coming and investing in the economy. Through the incorporation of
the perfect competition, it is important for the company to indulge in the resource utilization in
an effective way. Through the incorporation of the indulgement, it is important for the company
to enter the market setting the price way below the market rate.

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Economic Principles and Decision Making
2. Specific task of the research team
In order to get hold of the market data, it is important for the company to make a survey
on the consumers regarding the tastes and preference of the consumers and the flavors and
composition of the energy bar they would like to taste from the market in the form of new energy
bars. This is important in the sense that through the survey the company will understand the
demand of the consumers and they will be able to bring the products that has been desired by the
customers. This will allow them to increase the market consumption and will allow the company
to increase the domination in the market.

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Economic Principles and Decision Making
Reference list
Emas, R. (2015). The concept of sustainable development: definition and defining
principles. Brief for GSDR, 1-3.
Frederiks, E. R., Stenner, K., & Hobman, E. V. (2015). Household energy use: Applying
behavioural economics to understand consumer decision-making and
behaviour. Renewable and Sustainable Energy Reviews, 41, 1385-1394.
Rivalan, M., Winter, Y., & Nachev, V. (2017). Principles of Economic Rationality in
Mice. Scientific reports, 7(1), 17441.
Wilkinson, T., Sculpher, M. J., Claxton, K., Revill, P., Briggs, A., Cairns, J. A., ... & Walker, D.
G. (2016). The international decision support initiative reference case for economic
evaluation: an aid to thought. Value in health, 19(8), 921-928.