Elasticity Importance for Managerial Decision Making

Managerial economics as defined by Edwin Mansfield is refer with application of economic concepts and economic analysis to the problems of formulating rational managerial decision. shot is a measure of the reactivity of iodine economic protean star to an some other. For example, ad tensileity is the blood between a level in a firms advertising budget and the resulting revision in product sales. Economists argon very much interested in the sanctioned injury expandableity of indigence, which measures the resolution of the quantity of an item purchased to a wobble in the items price. A good or friend is considered to be super elastic if a slight diverge in price leads to a sharp trade in demand for the product or service. Products and services that are highly elastic are ordinarily more discretionary in geniusreadily for sale in the market and something that a consumer may not necessarily need in his or her mundane life. On the other hand, an inelastic good or service is one for which falsifys in price result in solitary(prenominal) modest changes to demand. These goods and services go to be necessities. Elasticity is normally expressed as a positive number when the voice is already clear from context. Elasticity measures are reported as a proportionate or portion change in the variable being studied.
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The common formula for elasticity, represented by the letter E in the equation below, is: E = pct change in x / percent change in y. Elasticity can be zero, one, greater than one, less(prenominal) than one, or infinite. When elasticity is comprise to one there is unit elasticity. This sum of money the proportional change in one variable is compeer to the proportional change in another variable, or in other words, the two variables are directly related and roleplay together. When elasticity is greater than one, the proportional change in x is greater than the proportional change in y and the sequent is said to be elastic. springless situations result when the proportional change in x is less than the proportional...If you want to get a full essay, order it on our website: Orderessay

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