Business Economics NMIMS Assignment Solution June 2022

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Business Economics NMIMS Assignment Solution June 2022

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Business Economics NMIMS Assignment Solution June 2022

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NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Business Economics
Internal Assignment Applicable for June 2022 Examination

 

1. Assume that a consumer consumes two commodities X and Y and makes five combinations
for the two commodities:
TABLE BELOW

Internal Assignment Applicable for June 2022 Examination
Combination Units of X Units of Y
A 25 3
B 20 5
C 16 10
D 13 18
E 11 28

Calculate Marginal rate of Substitution and explain the answer. (10 Marks)

Answer 1: Introduction:In economics, it’s important to know how the production and consumption of goods work together. Many economists and analysts think about things like supply and demand and the input and output of production. One common economic metric is the marginal rate of substitution (MRS), which looks at how similar two products are to each other. The marginal rate of substitution in economics is the number of new goods that people are willing to buy instead of a similar good, as long as the new products meet the same needs as the old ones. It’s an important metric that many people use to look at and figure out what customers do when they buy things. Economists use the MRS to figure out how easy it is for one product to replace another similar one. It looks at the rate of change between products to figure out how easy it is for one product to replace another.

2. Elaborate the term Total Revenue and Marginal revenue also calculate TR and MR in the
given table (10 Marks)
Price Output (In Units ) Total Revenue Marginal
Revenue
20 1
18 2
16 3
14 4
12 5

 

Answer 2: Introduction:People who work for a company make money when they sell their goods and services at a certain price. The first thing on any income statement is revenue, which will lead to net income after expenses are taken out. People who sell goods and services make total revenue, which is the total amount they make from all their sales. People figure out how much money they make by multiplying the total amount of goods and services sold by their prices. Marginal revenue is how much money you make when you sell one more thing or service. Companies will keep making and selling more goods and services until they make more money than they spend.

Marginal Revenue : Marginal revenue (MR) is an economic term that businesses use to make the most money. Marginal revenue is how much money is made for each extra unit sold compared to how much it costs to make that extra unit (MC). This helps businesses balance their production output with their costs in order to make the most money.

  • Marginal Revenue = Change in Revenue / Change in Quantity

3.a. From the given Demand Schedule for air tickets, calculate elasticity of demand.
(5 Marks)
Price of Air Ticket
(Per Ticket)
Quantity Demanded (Tickets per month)
1,00,000 5,000
1,20,000 3,500

Answer 3(a) Introduction:Elasticity of demand is the relationship between how much people want a product and how much the price changes. It is an economic measure of how much people want an item when the price changes by 1%. It is also called price elasticity of demand because the price of a product or service is the most common way to measure it in economic terms. Elasticity of demand uses a standard formula to measure how much a product’s demand changes when the price changes or other economic factors change. This helps businesses figure out how to price and sell their goods.

 

3.b. Elaborate the term Elasticity of Supply and explain any three factors that determines
elasticity of supply

Answer 3(b) Introduction :The law of supply tells us which way things are going to change. If the price goes up, more people will want to buy. But the law of supply can’t tell you how much more people will buy when the price goes up. To measure this change, we need the concept of elasticity of supply, which tells us how many units are sold when the price changes.Elasticity of supply is a measure of how quickly the quantity of a commodity is changed when its own price changes. It can also be called the percentage change in the amount of goods sold divided by the percentage change in the price.

It can be done by using the following formula to figure it out:

ES = % change in quantity supplied/% change in price

Symbolically,

ES = ∆Q/Q ÷ ∆P/P = ∆Q/∆P × P/Q

 

 

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