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Business Economics
1.
Demand
forecasting in an organization plays a vital role in business organizations. It
provides reasonable data for the organization's capital investment and
expansion decisions. Keeping the above statement into consideration. Discuss
the various steps involved in demand forecasting (10 Marks)
Introduction:
"Demand estimating (forecasting) may be
characterized as a method of determining values for demand in future
periods," creates Evan J. Douglas. Demand forecasting is estimating future
demand for a firm's products or services. It is referred to as sales forecasting
since it includes anticipating an organization's future sales figures. Demand
forecasting helps a company make business choices such as intending the
manufacturing process, obtaining raw materials, managing cash, and determining
the pricing of its products. Organizations can anticipate demand either
internally by
2.
From
the given hypnotically table Calculate Total Cost, Average Fixed Cost, Average
Variable cost, and Marginal Cost. (10
Marks)
|
Quantity |
Total Fixed Cost |
Total Variable Cost |
Total Cost |
Average Fixed Cost |
Average Variable Cost |
Average Total Cost |
Marginal Cost |
|
0 |
100 |
0 |
|
|
|
|
|
|
1 |
100 |
20 |
|
|
|
|
|
|
2 |
100 |
30 |
|
|
|
|
|
|
3 |
100 |
40 |
|
|
|
|
|
|
4 |
100 |
50 |
|
|
|
|
|
|
5 |
100 |
60 |
|
|
|
|
|
Introduction:
Organizations incur miscellaneous expenses on
various activities for manufacturing services and products, such as acquiring
basic materials, paying labor salaries/wages, and purchasing or leasing
machines and buildings. These expenditures represent the company's cost of
generating its services and products. The quantity of sources required for
manufacturing items and services is referred to as the cost. The sum of the
cash values of the inputs multiplied by their specific costs is referred to as
the cost of production.
3.
a. Suppose
the monthly income of individual increases from Rs 20,000 to Rs 25,000 which
increase his demand for clothes from 40 units to 60 units. Calculate the income
elasticity of demand. (5 Marks)
Introduction:
Even if the product's price stays the same, an
increase in consumer earnings increases demand for it. The term "earnings
elasticity of demand" refers to the amount of demander's responsiveness to
consumer income. The proportion of the percentage adjustment in the amount
demanded to the percentage adjustment in income is what Watson refers to as
"revenue flexibility of demand." Richard G. Lipsey claims that
"earnings elasticity of demand" refers to how responsively demand
3.
b. Assume
that a business firm sells a product at the price of Rs 500. The firm has
decided to reduce the price of the product to Rs 400. Consequently, the demand
for the product is raised from 20,000 units to 25,000 units. Calculate the
price elasticity of demand. (5 Marks)
Introduction:
Price
elasticity of demand is a measure of the change in the quantity requested of a
product due to a modification in the product's market value. Simply put, it is
the percentage modification in the required amount divided by the price modification.
It can be specified numerically as:
Price
elasticity of demand = Proportionate change in the quantity demanded/
Proportionate change in Price
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