This document provides an overview of demand and supply analysis concepts including:
- Definitions of key terms like market, demand, individual vs market demand, determinants of demand, demand curves, law of demand, supply, determinants of supply, law of supply, and market equilibrium.
- Descriptions of different types of demand like organization vs industry demand, autonomous vs derived demand, short-term vs long-term demand.
- Explanations of concepts like demand schedules, demand functions, exceptions to the law of demand, law of diminishing marginal utility, and demand curves.
- Discussions of elasticity including definitions of price elasticity, income elasticity, cross elasticity, and promotional
This document discusses key concepts related to demand and elasticity. It defines demand, types of demand, individual and market demand, and determinants of demand. It also covers the demand curve and function, law of demand, demand schedule and exceptions. For elasticity, it defines price, income, and cross elasticity. It discusses types of price elasticity including perfectly elastic/inelastic and unit elastic demand. Finally, it covers methods for measuring price elasticity including total outlay, proportional, and point methods.
Demand analysis is important for business success as sales depend on market demand. Failure to properly estimate demand can negatively impact business, as seen with Kellogg's and McDonalds in India in the 1990s. Demand serves several purposes including sales forecasting, product planning, and determining pricing. The law of demand generally states that as price increases, quantity demanded decreases, and vice versa. However, there are some exceptions including Giffen goods, goods with snob appeal, and situations involving speculation. A demand curve graphically shows the relationship between price and quantity demanded.
Chapter Two ppt.pdf managerial economicshamdiabdrhman
The document discusses the concept of demand in economics. It defines demand and explains the key factors that determine demand, including price, income, tastes, and expectations about future prices. It also describes the law of demand, which states that quantity demanded is inversely related to price, assuming all other factors remain constant. The document outlines different types of demand curves and schedules, and exceptions to the basic law of demand under certain market conditions.
Demand analysis involves studying how the quantity demanded of a product responds to changes in its price, income levels, and prices of related goods. There are several concepts studied including:
1. The law of demand which states that quantity demanded is inversely related to price. Elasticity of demand measures the responsiveness of quantity demanded to price changes.
2. Demand is classified as consumer vs producer goods, autonomous vs derived demand, durable vs perishable goods and more.
3. Elasticity of demand is influenced by factors like availability of substitutes, income levels, necessity of the good. It is important in output and price determination.
4. Different types of elasticity include income elasticity, measuring
The document discusses demand analysis and forecasting. It defines demand and outlines the key determinants and types of demand, including price demand, income demand, and cross demand. It also explains the law of demand and its assumptions. Methods of measuring price elasticity of demand are described, including the total expenditure method, point method, and arc method. The significance and levels of demand forecasting are discussed. The main methods of demand forecasting are the survey method, including expert opinion surveys and consumer interviews, and statistical methods.
This document defines demand and discusses the different types of demand. It explains that demand is expressed in relation to price and time period. The key types of demand discussed are individual demand, market demand, ex-ante and ex-post demand, and joint demand. Determinants of demand include price, income, tastes/preferences, prices of related goods, expectations, credit availability, population, income distribution, and government policy. The law of demand and exceptions to it are explained. Movement along and shifts of the demand curve are also summarized.
This document discusses demand theory and related concepts. It begins by defining demand as a buyer's willingness and ability to pay for a quantity of goods or services. It then covers the theory of demand, including its development by economists like Walras, Marshall, and Arrow. The document discusses the concept of effective demand and different types of demand like direct, derived, competitive, complementary, composite, and perishable versus durable. It also covers determinants of demand like price, income, tastes, expectations, and advertising. The law of demand and demand schedules and curves are explained. Exceptions to the law of demand like Giffen and Veblen goods are also mentioned.
- A market is where buyers and sellers interact to determine price and quantity for goods and services. The demand side refers to consumers and how much they are willing to pay.
- Firms produce goods and services and households consume them. The circular flow shows the relationship between firms and households in input and output markets.
- Demand is affected by price, income, wealth, tastes, expectations and prices of related goods. The law of demand states that as price increases, quantity demanded decreases.
This document discusses key concepts related to demand and elasticity. It defines demand, types of demand, individual and market demand, and determinants of demand. It also covers the demand curve and function, law of demand, demand schedule and exceptions. For elasticity, it defines price, income, and cross elasticity. It discusses types of price elasticity including perfectly elastic/inelastic and unit elastic demand. Finally, it covers methods for measuring price elasticity including total outlay, proportional, and point methods.
Demand analysis is important for business success as sales depend on market demand. Failure to properly estimate demand can negatively impact business, as seen with Kellogg's and McDonalds in India in the 1990s. Demand serves several purposes including sales forecasting, product planning, and determining pricing. The law of demand generally states that as price increases, quantity demanded decreases, and vice versa. However, there are some exceptions including Giffen goods, goods with snob appeal, and situations involving speculation. A demand curve graphically shows the relationship between price and quantity demanded.
Chapter Two ppt.pdf managerial economicshamdiabdrhman
The document discusses the concept of demand in economics. It defines demand and explains the key factors that determine demand, including price, income, tastes, and expectations about future prices. It also describes the law of demand, which states that quantity demanded is inversely related to price, assuming all other factors remain constant. The document outlines different types of demand curves and schedules, and exceptions to the basic law of demand under certain market conditions.
Demand analysis involves studying how the quantity demanded of a product responds to changes in its price, income levels, and prices of related goods. There are several concepts studied including:
1. The law of demand which states that quantity demanded is inversely related to price. Elasticity of demand measures the responsiveness of quantity demanded to price changes.
2. Demand is classified as consumer vs producer goods, autonomous vs derived demand, durable vs perishable goods and more.
3. Elasticity of demand is influenced by factors like availability of substitutes, income levels, necessity of the good. It is important in output and price determination.
4. Different types of elasticity include income elasticity, measuring
The document discusses demand analysis and forecasting. It defines demand and outlines the key determinants and types of demand, including price demand, income demand, and cross demand. It also explains the law of demand and its assumptions. Methods of measuring price elasticity of demand are described, including the total expenditure method, point method, and arc method. The significance and levels of demand forecasting are discussed. The main methods of demand forecasting are the survey method, including expert opinion surveys and consumer interviews, and statistical methods.
This document defines demand and discusses the different types of demand. It explains that demand is expressed in relation to price and time period. The key types of demand discussed are individual demand, market demand, ex-ante and ex-post demand, and joint demand. Determinants of demand include price, income, tastes/preferences, prices of related goods, expectations, credit availability, population, income distribution, and government policy. The law of demand and exceptions to it are explained. Movement along and shifts of the demand curve are also summarized.
This document discusses demand theory and related concepts. It begins by defining demand as a buyer's willingness and ability to pay for a quantity of goods or services. It then covers the theory of demand, including its development by economists like Walras, Marshall, and Arrow. The document discusses the concept of effective demand and different types of demand like direct, derived, competitive, complementary, composite, and perishable versus durable. It also covers determinants of demand like price, income, tastes, expectations, and advertising. The law of demand and demand schedules and curves are explained. Exceptions to the law of demand like Giffen and Veblen goods are also mentioned.
- A market is where buyers and sellers interact to determine price and quantity for goods and services. The demand side refers to consumers and how much they are willing to pay.
- Firms produce goods and services and households consume them. The circular flow shows the relationship between firms and households in input and output markets.
- Demand is affected by price, income, wealth, tastes, expectations and prices of related goods. The law of demand states that as price increases, quantity demanded decreases.
DEMAND ANALYSIS For MBA Students Supply Chain.pptaviatordevendra
1) Demand is defined as the quantity of a good or service consumers are willing and able to purchase at a given price during a specific time period. It is affected by factors like price, income, tastes, prices of related goods, and number of consumers.
2) There are two types of demand functions - generalized which relates quantity demanded to multiple factors, and ordinary which relates it only to price while holding other factors constant.
3) Elasticity measures the responsiveness of quantity demanded to changes in its own price or other economic variables. It indicates whether demand is elastic, inelastic, or unitary elastic.
Demand refers to effective demand backed by willingness and ability to purchase. The demand curve slopes downward to show an inverse relationship between price and quantity demanded. According to the law of demand, other things remaining constant, quantity demanded increases when price decreases as consumers will purchase more due to the income and substitution effects and the good attracting new consumers. Demand analysis is used for production planning, sales forecasting, inventory control, and economic policymaking.
This document provides an overview of demand analysis. It defines key demand concepts like individual demand, market demand, direct vs derived demand, recurring vs replacement demand, complementary vs competing demand, demand function, demand schedule, demand curve, and law of demand. It outlines the assumptions and possible exceptions to the law of demand. Finally, it discusses how demand analysis serves important managerial purposes like sales forecasting, demand manipulation, product planning, and determining pricing policy.
This document provides an overview of demand analysis and forecasting. It defines demand, discusses different types of demand like price demand and income demand. It explains the law of demand, assumptions of the law of demand, demand schedule, demand curve, individual demand and market demand. Factors determining demand are also discussed. The document then covers demand forecasting including its meaning, objectives, types, steps involved and factors influencing demand forecasting like types of goods, competition level, price of goods, technology and economic viewpoint.
This document discusses the theory of demand and supply. It defines demand and explains factors that influence demand such as price, tastes, income, prices of related goods, and expectations. The relationship between price and quantity demanded can be shown through demand schedules, curves, and functions. It also discusses the concepts of market demand, determinants of demand, elasticity of demand including price elasticity and its measurement. The document then defines supply and the law of supply, and explains supply schedules, curves and functions which show the relationship between price and quantity supplied.
1) Demand refers to how much of a good or service consumers are willing and able to purchase at different prices. It is determined by factors such as price, income, tastes, prices of related goods.
2) The law of demand states that, all else equal, as price increases consumers will purchase less of a good, and as price decreases they will purchase more. This relationship is depicted by the downward sloping demand curve.
3) Supply refers to how much producers are willing to provide or sell of a good at different prices. The law of supply states that, all else equal, as price increases producers will supply more of a good and as price decreases they will supply less, depicted by an upward
The document discusses demand analysis and the determinants of demand. It begins by defining demand and explaining that demand refers to an effective desire backed by an ability and willingness to pay. It then discusses the objectives of demand analysis as forecasting sales, manipulating demand, appraising salesmen's performance, and watching competitive trends. The key determinants of demand discussed include price of the product and related goods, consumer income, tastes/preferences, advertising, consumer expectations, and availability of credit. The law of demand and exceptions are also explained.
Best PPT on Chapter Demand from economics for Students.DhruvArora87
The document discusses the concept of demand, including:
- Demand is the quantity of a commodity a consumer is willing and able to buy at a given price over a period of time.
- Individual demand depends on price of the good, income, tastes/preferences, and related goods' prices. Market demand also depends on population size/composition, season/weather, and income distribution.
- Demand functions and schedules show the relationship between quantity demanded and influencing factors. The law of demand states an inverse relationship between price and quantity demanded when other factors remain constant. Exceptions to the law include Giffen goods and necessities.
The document discusses the concept of demand, including the three conditions for demand, types of demand (price, income, cross), and nature of demand. It provides examples of different types of demand including consumer vs producer goods, autonomous vs derived demand, durable vs perishable goods, firm vs industry demand, and short run vs long run demand. The document also discusses demand functions, the law of demand and its assumptions, exceptions to the law of demand, and the significance of the law of demand.
This document discusses demand and its determinants. It defines demand and explains that demand arises from desire, ability to pay, and willingness to pay. It then lists the key determinants of demand as: price of the product, income, prices of related goods, tastes/preferences, expectations of future prices, and economic conditions. It provides examples for how each determinant influences demand. The document also discusses the law of demand, demand curves/schedules, demand functions, assumptions and exceptions to the law of demand, and different types of demand like individual vs market demand. Finally, it explains concepts of elasticity of demand including price, income, and cross elasticity.
Demand analysis(determinants,change and law).pptxVivekKumar614401
This document provides an overview of demand analysis. It defines demand and explains that demand is relative to both time and price factors. It then discusses different types of demand such as individual vs market demand, autonomous vs derived demand, and short-term vs long-term demand. The document also examines the determinants that influence demand, such as price, income, tastes and preferences. It introduces the concept of demand schedules and curves. Finally, it covers the law of demand and some exceptions to this law.
This document defines key concepts in microeconomics related to demand and supply, including elasticities. It explains the laws of demand and supply, and how non-price factors can cause shifts in demand and supply curves. It also defines different types of elasticities including price elasticity of demand, cross elasticity of demand, income elasticity of demand, and price elasticity of supply. Examples are provided to illustrate these concepts.
This document discusses demand analysis and supply analysis. It defines demand as a relationship between price and quantity demanded, outlines the three things essential for desire to become effective demand, and describes the three alternative ways to express demand: demand function, demand schedule, and demand curve. It then discusses factors that affect demand, types of demand, and exceptions to the law of demand. The document also defines supply, outlines the law of supply, and explains how supply curves depict the relationship between price and quantity supplied. It concludes by interpreting how changes in demand and supply can shift the equilibrium price and quantity in a market.
The document discusses several key economic concepts:
1) Opportunity cost refers to the potential benefit that is lost when choosing one alternative over another. It represents the cost of the next best alternative forgone.
2) Production possibility curves illustrate the tradeoffs between producing different goods with limited resources. They show the maximum output combinations of two goods an economy can produce.
3) Microeconomics analyzes individual decision-making units like consumers and firms, while macroeconomics examines entire economies on a large scale.
4) Demand and supply determine price levels based on how much of a good buyers want and how much sellers offer. Their interaction results in market equilibrium.
This document provides an overview of demand and supply. It defines demand as the desire and ability to purchase goods coupled with a willingness to pay. Demand depends on factors like price, income, tastes, and size of the population. The law of demand states that, all else equal, demand increases as price decreases. Supply is defined as the quantity of a good producers are willing and able to sell at a given price. The main determinants of supply are the price of the good, prices of related goods, number of firms, and technology. The document also discusses demand curves, elasticity, exceptions to the law of demand, and measurements of elasticity.
BASIC LAWS OF CONSUPTION AND DEMAND ANALYSIS.pptDrSamsonChepuri1
The document discusses key concepts in demand analysis and consumer behavior, including:
1) It outlines the basic laws of consumption, including the law of diminishing marginal utility, the law of equi-marginal utility, consumer surplus, indifference curves, and consumer equilibrium.
2) It then covers demand analysis, defining demand, the demand function, factors that influence demand, and the law of demand.
3) Finally, it discusses elasticity of demand - how responsive demand is to changes in price and other factors. It defines different types of elasticities and factors that influence elasticity.
The document discusses why demand curves slope downward. It provides four reasons: 1) the income effect, as lower prices increase purchasing power and demand, 2) the substitution effect, as consumers substitute cheaper goods, 3) new consumers can now afford the good at lower prices, and 4) alternative uses of goods increase as prices fall. Equilibrium in markets occurs where the supply and demand curves intersect, establishing an equilibrium price and quantity.
This document discusses the principles of demand and supply. It begins by outlining the chapter's objectives which are to explain the law of demand and supply, factors affecting demand and supply, analyze prices of commodities, and discuss market structures. The document then provides details on the basic principles of demand and supply, including definitions of demand, the law of demand, and factors that shift the demand curve. It also discusses the definition of supply, the law of supply, and factors that shift the supply curve. Finally, it explains the concept of market equilibrium.
This document discusses the principles of demand and supply. It begins by outlining the chapter's objectives which are to explain the law of demand and supply, factors affecting demand and supply, analyze prices of commodities, and discuss market structures. The document then provides details on the basic principles of demand and supply, including definitions of demand, the law of demand, and factors that shift the demand curve. It also discusses the definition of supply, the law of supply, and factors that shift the supply curve. Finally, it explains the concept of market equilibrium.
This document provides an overview of demand analysis concepts including:
- Defining supply, demand, and equilibrium price.
- Describing the determinants of demand such as price, income, tastes.
- Explaining the concepts of individual demand, market demand, demand curves, and how demand is influenced by price changes versus other factors.
- Introducing the key elasticity concepts including price elasticity, income elasticity, and cross elasticity and how they measure responsiveness of demand.
The document lays out the essential framework for understanding how the interaction of supply and demand determines market prices in the short and long run.
This document provides an introduction to managerial economics. It defines managerial economics and discusses its scope and relationship to other disciplines. Basic economic concepts for decision making like opportunity cost, incremental principle, and discounting principle are covered. The roles and responsibilities of managerial economists in business are described, including assisting with planning, analysis, and advising management. The document also discusses economic objectives of firms, scarcity of resources, efficiency, and the role of government in economic development through fiscal and monetary policy.
The document discusses key aspects of the Indian economy:
- It is a developing economy characterized by low per capita incomes, heavy population pressure, and a predominance of agriculture. Unemployment and poor technology are also issues.
- Agriculture forms the backbone of the economy, engaging a large portion of the working population. However, most Indians live below the poverty line.
- The economy is growing but faces challenges such as unequal income distribution and lack of job opportunities. Projections place GDP growth at around 5-7% annually.
- International organizations monitor the economy and Human Development Index, which factors in life expectancy, education and income to rank countries. Inequality is also an important consideration.
DEMAND ANALYSIS For MBA Students Supply Chain.pptaviatordevendra
1) Demand is defined as the quantity of a good or service consumers are willing and able to purchase at a given price during a specific time period. It is affected by factors like price, income, tastes, prices of related goods, and number of consumers.
2) There are two types of demand functions - generalized which relates quantity demanded to multiple factors, and ordinary which relates it only to price while holding other factors constant.
3) Elasticity measures the responsiveness of quantity demanded to changes in its own price or other economic variables. It indicates whether demand is elastic, inelastic, or unitary elastic.
Demand refers to effective demand backed by willingness and ability to purchase. The demand curve slopes downward to show an inverse relationship between price and quantity demanded. According to the law of demand, other things remaining constant, quantity demanded increases when price decreases as consumers will purchase more due to the income and substitution effects and the good attracting new consumers. Demand analysis is used for production planning, sales forecasting, inventory control, and economic policymaking.
This document provides an overview of demand analysis. It defines key demand concepts like individual demand, market demand, direct vs derived demand, recurring vs replacement demand, complementary vs competing demand, demand function, demand schedule, demand curve, and law of demand. It outlines the assumptions and possible exceptions to the law of demand. Finally, it discusses how demand analysis serves important managerial purposes like sales forecasting, demand manipulation, product planning, and determining pricing policy.
This document provides an overview of demand analysis and forecasting. It defines demand, discusses different types of demand like price demand and income demand. It explains the law of demand, assumptions of the law of demand, demand schedule, demand curve, individual demand and market demand. Factors determining demand are also discussed. The document then covers demand forecasting including its meaning, objectives, types, steps involved and factors influencing demand forecasting like types of goods, competition level, price of goods, technology and economic viewpoint.
This document discusses the theory of demand and supply. It defines demand and explains factors that influence demand such as price, tastes, income, prices of related goods, and expectations. The relationship between price and quantity demanded can be shown through demand schedules, curves, and functions. It also discusses the concepts of market demand, determinants of demand, elasticity of demand including price elasticity and its measurement. The document then defines supply and the law of supply, and explains supply schedules, curves and functions which show the relationship between price and quantity supplied.
1) Demand refers to how much of a good or service consumers are willing and able to purchase at different prices. It is determined by factors such as price, income, tastes, prices of related goods.
2) The law of demand states that, all else equal, as price increases consumers will purchase less of a good, and as price decreases they will purchase more. This relationship is depicted by the downward sloping demand curve.
3) Supply refers to how much producers are willing to provide or sell of a good at different prices. The law of supply states that, all else equal, as price increases producers will supply more of a good and as price decreases they will supply less, depicted by an upward
The document discusses demand analysis and the determinants of demand. It begins by defining demand and explaining that demand refers to an effective desire backed by an ability and willingness to pay. It then discusses the objectives of demand analysis as forecasting sales, manipulating demand, appraising salesmen's performance, and watching competitive trends. The key determinants of demand discussed include price of the product and related goods, consumer income, tastes/preferences, advertising, consumer expectations, and availability of credit. The law of demand and exceptions are also explained.
Best PPT on Chapter Demand from economics for Students.DhruvArora87
The document discusses the concept of demand, including:
- Demand is the quantity of a commodity a consumer is willing and able to buy at a given price over a period of time.
- Individual demand depends on price of the good, income, tastes/preferences, and related goods' prices. Market demand also depends on population size/composition, season/weather, and income distribution.
- Demand functions and schedules show the relationship between quantity demanded and influencing factors. The law of demand states an inverse relationship between price and quantity demanded when other factors remain constant. Exceptions to the law include Giffen goods and necessities.
The document discusses the concept of demand, including the three conditions for demand, types of demand (price, income, cross), and nature of demand. It provides examples of different types of demand including consumer vs producer goods, autonomous vs derived demand, durable vs perishable goods, firm vs industry demand, and short run vs long run demand. The document also discusses demand functions, the law of demand and its assumptions, exceptions to the law of demand, and the significance of the law of demand.
This document discusses demand and its determinants. It defines demand and explains that demand arises from desire, ability to pay, and willingness to pay. It then lists the key determinants of demand as: price of the product, income, prices of related goods, tastes/preferences, expectations of future prices, and economic conditions. It provides examples for how each determinant influences demand. The document also discusses the law of demand, demand curves/schedules, demand functions, assumptions and exceptions to the law of demand, and different types of demand like individual vs market demand. Finally, it explains concepts of elasticity of demand including price, income, and cross elasticity.
Demand analysis(determinants,change and law).pptxVivekKumar614401
This document provides an overview of demand analysis. It defines demand and explains that demand is relative to both time and price factors. It then discusses different types of demand such as individual vs market demand, autonomous vs derived demand, and short-term vs long-term demand. The document also examines the determinants that influence demand, such as price, income, tastes and preferences. It introduces the concept of demand schedules and curves. Finally, it covers the law of demand and some exceptions to this law.
This document defines key concepts in microeconomics related to demand and supply, including elasticities. It explains the laws of demand and supply, and how non-price factors can cause shifts in demand and supply curves. It also defines different types of elasticities including price elasticity of demand, cross elasticity of demand, income elasticity of demand, and price elasticity of supply. Examples are provided to illustrate these concepts.
This document discusses demand analysis and supply analysis. It defines demand as a relationship between price and quantity demanded, outlines the three things essential for desire to become effective demand, and describes the three alternative ways to express demand: demand function, demand schedule, and demand curve. It then discusses factors that affect demand, types of demand, and exceptions to the law of demand. The document also defines supply, outlines the law of supply, and explains how supply curves depict the relationship between price and quantity supplied. It concludes by interpreting how changes in demand and supply can shift the equilibrium price and quantity in a market.
The document discusses several key economic concepts:
1) Opportunity cost refers to the potential benefit that is lost when choosing one alternative over another. It represents the cost of the next best alternative forgone.
2) Production possibility curves illustrate the tradeoffs between producing different goods with limited resources. They show the maximum output combinations of two goods an economy can produce.
3) Microeconomics analyzes individual decision-making units like consumers and firms, while macroeconomics examines entire economies on a large scale.
4) Demand and supply determine price levels based on how much of a good buyers want and how much sellers offer. Their interaction results in market equilibrium.
This document provides an overview of demand and supply. It defines demand as the desire and ability to purchase goods coupled with a willingness to pay. Demand depends on factors like price, income, tastes, and size of the population. The law of demand states that, all else equal, demand increases as price decreases. Supply is defined as the quantity of a good producers are willing and able to sell at a given price. The main determinants of supply are the price of the good, prices of related goods, number of firms, and technology. The document also discusses demand curves, elasticity, exceptions to the law of demand, and measurements of elasticity.
BASIC LAWS OF CONSUPTION AND DEMAND ANALYSIS.pptDrSamsonChepuri1
The document discusses key concepts in demand analysis and consumer behavior, including:
1) It outlines the basic laws of consumption, including the law of diminishing marginal utility, the law of equi-marginal utility, consumer surplus, indifference curves, and consumer equilibrium.
2) It then covers demand analysis, defining demand, the demand function, factors that influence demand, and the law of demand.
3) Finally, it discusses elasticity of demand - how responsive demand is to changes in price and other factors. It defines different types of elasticities and factors that influence elasticity.
The document discusses why demand curves slope downward. It provides four reasons: 1) the income effect, as lower prices increase purchasing power and demand, 2) the substitution effect, as consumers substitute cheaper goods, 3) new consumers can now afford the good at lower prices, and 4) alternative uses of goods increase as prices fall. Equilibrium in markets occurs where the supply and demand curves intersect, establishing an equilibrium price and quantity.
This document discusses the principles of demand and supply. It begins by outlining the chapter's objectives which are to explain the law of demand and supply, factors affecting demand and supply, analyze prices of commodities, and discuss market structures. The document then provides details on the basic principles of demand and supply, including definitions of demand, the law of demand, and factors that shift the demand curve. It also discusses the definition of supply, the law of supply, and factors that shift the supply curve. Finally, it explains the concept of market equilibrium.
This document discusses the principles of demand and supply. It begins by outlining the chapter's objectives which are to explain the law of demand and supply, factors affecting demand and supply, analyze prices of commodities, and discuss market structures. The document then provides details on the basic principles of demand and supply, including definitions of demand, the law of demand, and factors that shift the demand curve. It also discusses the definition of supply, the law of supply, and factors that shift the supply curve. Finally, it explains the concept of market equilibrium.
This document provides an overview of demand analysis concepts including:
- Defining supply, demand, and equilibrium price.
- Describing the determinants of demand such as price, income, tastes.
- Explaining the concepts of individual demand, market demand, demand curves, and how demand is influenced by price changes versus other factors.
- Introducing the key elasticity concepts including price elasticity, income elasticity, and cross elasticity and how they measure responsiveness of demand.
The document lays out the essential framework for understanding how the interaction of supply and demand determines market prices in the short and long run.
This document provides an introduction to managerial economics. It defines managerial economics and discusses its scope and relationship to other disciplines. Basic economic concepts for decision making like opportunity cost, incremental principle, and discounting principle are covered. The roles and responsibilities of managerial economists in business are described, including assisting with planning, analysis, and advising management. The document also discusses economic objectives of firms, scarcity of resources, efficiency, and the role of government in economic development through fiscal and monetary policy.
The document discusses key aspects of the Indian economy:
- It is a developing economy characterized by low per capita incomes, heavy population pressure, and a predominance of agriculture. Unemployment and poor technology are also issues.
- Agriculture forms the backbone of the economy, engaging a large portion of the working population. However, most Indians live below the poverty line.
- The economy is growing but faces challenges such as unequal income distribution and lack of job opportunities. Projections place GDP growth at around 5-7% annually.
- International organizations monitor the economy and Human Development Index, which factors in life expectancy, education and income to rank countries. Inequality is also an important consideration.
This document provides an overview of key concepts in logistics and supply chain management. It defines logistics as the management of the flow of goods and information from origin to consumption. It also discusses related topics like transportation, warehousing, inventory control, and supply chain management. The document aims to explain the end-to-end process of moving products from suppliers to customers in the most efficient way.
This document discusses various topics related to entrepreneurship including:
1. Entrepreneurs challenge the unknown by recognizing opportunities where others see chaos and catalyzing change.
2. Common misconceptions about entrepreneurship include that it only requires a great idea, is easy, is risky, and is only found in small businesses.
3. Entrepreneurship is a mindset involving seeking opportunities, taking risks, and having tenacity to push ideas forward. It permeates an individual's innovative approach to business.
The document discusses the different modes of transport including rail, road, air, water, pipeline, and multimodal transport. It provides details on each mode, highlighting advantages such as flexibility for road transport, lowest overall cost for rail transport, and speed of delivery for air transport. It also notes disadvantages for each mode like inflexibility and inability to stop at intermediary points for rail transport and high costs for air transport. Key factors that influence the choice of transport mode are identified as the nature of materials, volume, distance, speed, security, and cost.
This document discusses various modes of transportation including rail, road, water, air, pipeline, and multimodal transport. It provides details on the characteristics, advantages, and disadvantages of each mode. Rail transport is best for heavy loads over long distances but has limitations around flexibility. Road transport has the most extensive networks but is expensive for long distances. Water transport has low costs but slow speeds. Air transport provides fast delivery but is very costly. Pipelines are only for transporting fluids over long distances. Multimodal transport combines two or more modes for a single journey.
Multimodal transportation in India evolved from Indian Railways' efforts in the 1960s to containerize goods and move cargo in specialized containers. Standard ISO containers began being used in the 1970s. CONCOR was established in 1988 to take over existing ICD networks. The Multimodal Transport Act was passed in 1993 to establish liability regimes. Major manufacturing hubs contributing to exports are located in northern states like Punjab and Haryana, as well as Gujarat, Maharashtra, and Tamil Nadu. Sagarmala aims to enhance India's logistics performance through port modernization and connectivity improvements. Key components of multimodal transport include ICDs for cargo consolidation/deconsolidation and CFSs for handling less than container
Multimodal Transportation Concept and Framework.pdfManojMba2
The document discusses various transportation concepts including unimodal, intermodal, combined, and multimodal transport. It defines these terms and compares their advantages and disadvantages. The document also examines the roles of multimodal transport operators and how they differ from agents, with operators assuming principal responsibility under contracts of carriage.
Six Sigma is a methodology for eliminating defects and driving processes towards near perfection through a data-driven approach. It aims for no more than 3.4 defects per million opportunities by following a four phase approach of measuring processes, analyzing for understanding, improving processes to reach higher sigma levels, and controlling through ongoing monitoring. Six Sigma projects use one of two five phase methodologies, DMAIC which focuses on improving existing processes and DMADV which focuses on designing new processes.
MRP, MRP II, and ERP systems are all used for inventory management and production planning but differ in scope. MRP focuses on scheduling materials for production. MRP II adds additional business functions like finance and HR. ERP is the most comprehensive, integrating all core business functions across an entire organization for real-time visibility and collaboration between departments. It offers automation, a single database, common interface, and integration of critical functions. Facility location and layout are also important considerations for production planning. Location selection involves choosing a country, region, and site based on operating factors. Layout refers to the internal configuration of a facility to optimize material and work flow.
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This compilation is ideal for anyone looking to enhance their understanding of innovation management and drive meaningful change within their organization. Whether you aim to improve product development processes, enhance customer experiences, or drive digital transformation, these frameworks offer valuable insights and tools to help you achieve your goals.
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2. IDEO’s Human-Centered Design
3. Strategyzer’s Business Model Innovation
4. Lean Startup Methodology
5. Agile Innovation Framework
6. Doblin’s Ten Types of Innovation
7. McKinsey’s Three Horizons of Growth
8. Customer Journey Map
9. Christensen’s Disruptive Innovation Theory
10. Blue Ocean Strategy
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13. The Double Diamond
14. Lean Six Sigma DMAIC
15. TRIZ Problem-Solving Framework
16. Edward de Bono’s Six Thinking Hats
17. Stage-Gate Model
18. Toyota’s Six Steps of Kaizen
19. Microsoft’s Digital Transformation Framework
20. Design for Six Sigma (DFSS)
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These materials are perfect for enhancing your business or classroom presentations, offering visual aids to supplement your insights. Please note that while comprehensive, these slides are intended as supplementary resources and may not be complete for standalone instructional purposes.
Frameworks/Models included:
Microsoft’s Digital Transformation Framework
McKinsey’s Ten Guiding Principles of Digital Transformation
Forrester’s Digital Transformation Framework
IDC’s Digital Transformation MaturityScape
MIT’s Digital Transformation Framework
Gartner’s Digital Transformation Framework
Accenture’s Digital Strategy & Enterprise Frameworks
Deloitte’s Digital Industrial Transformation Framework
Capgemini’s Digital Transformation Framework
PwC’s Digital Transformation Framework
Cisco’s Digital Transformation Framework
Cognizant’s Digital Transformation Framework
DXC Technology’s Digital Transformation Framework
The BCG Strategy Palette
McKinsey’s Digital Transformation Framework
Digital Transformation Compass
Four Levels of Digital Maturity
Design Thinking Framework
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Chapter-2.new.ppt
1. UNIT II: DEMAND AND SUPPLY ANALYSIS
Demand Analysis; Law of Demand, Exceptions to the law of
Demand, Determinants of Demand. Elasticity of Demand-
Price, Income, Cross and Advertising Elasticity;
measurement of Elasticity of Demand.; Law of Supply,
Supply Elasticity; Analysis and its uses for managerial
decision making- Pricing methods.
2. Market
• Market refers to the interaction between sellers
and buyers of good (or service) at a mutually
agreed upon price.
3. Demand
Demand is defined as that want, need or desire
which is backed by willingness and ability to buy
a particular commodity, in a given period of
time.
4. Types of Demand (DD)
i. Individual and Market Demand
ii. Organization and Industry Demand
iii. Autonomous and Derived Demand
iv. Demand for Perishable and Durable Goods
v. Short-term and Long-term Demand
5. Individual and Market Demand
• Individual demand can be defined as a quantity
demanded by an individual for a product at a
particular price and within the specific period of
time. For example, Mr. X demands 200 units of a
product at Rs. 50 per unit in a week.
• The total quantity demanded for a product by all
individuals at a given price and time is regarded
as market demand.
• Market demand is the aggregate of individual
demands of all the consumers of a product over a
period of time at a specific price, while other
factors are constant.
6. Organization and Industry Demand
• The demand for the products of an organization
at given price over a point of time is known as
organization demand.
• For example, the demand for Toyota cars is
organization demand. The sum total of demand
for products of all organizations in a particular
industry is known as industry demand.
• For example, the demand for cars of various
brands, such as Toyota, Maruti Suzuki, Tata, and
Hyundai, in India constitutes the industry’
demand. The distinction between organization
demand and industry demand is not so useful in
a highly competitive market.
7. Autonomous and Derived Demand
• The demand for a product that is not associated
with the demand of other products is known as
autonomous or direct demand. The autonomous
demand arises due to the natural desire of an
individual to consume the product.
• For example, the demand for food, shelter,
clothes, and vehicles is autonomous as it arises
due to biological, physical, and other personal
needs of consumers. On the other hand, derived
demand refers to the demand for a product that
arises due to the demand for other products.
8. Demand for Perishable and Durable
Goods
• The goods are divided into two categories,
perishable goods and durable goods. Perishable
or non-durable goods refer to the goods that have
a single use. For example, cement, coal, fuel, and
eatables. On the other hand, durable goods refer
to goods that can be used repeatedly,
• durable goods need replacement because of their
continuous use. The demand for perishable goods
depends on the current price of goods and
customers’ income, tastes, and preferences and
changes frequently
9. Short-term and Long-term Demand
• Short-term demand refers to the demand for
products that are used for a shorter duration of
time or for current period. This demand
depends on the current tastes and preferences of
consumers.
• The long-term demand of a product depends on
a number of factors, such as change in
technology, type of competition, promotional
activities, and availability of substitutes.
10. Determinants of Demand
• Price of the product
• Income of the consumer
• Price of related goods
• Taste and preferences
• Advertising
• Consumer expectation of future Income and
price
• Population
• Growth of economy
• Consumer Credit
11. Demand Function
When we express the relation between demand
and its determinants mathematically, the
relationship is known as demand function.
It can be said that demand for a product X (Dx)
is a function of :
Dx= f (Px, Y, P0, T, A, E, N)
• Dx= Demand for commodity x;
• Px= Price of the given commodity x;
• Y= Income of the individual consumer;
• T= Tastes and preferences;
• F= Expectation of change in price in the future;
12. Law of Demand
• Other things remaining constant, when price of a
commodity rises, the demand for that
commodity falls and when the price of a
commodity falls, the demand for that
commodity rises.
13. Demand Schedule
Demand schedule is the list or tabular statement
of the different combinations of price and
quantity demanded of a commodity.
Demand schedule for Apple:
Price (per kg) Demand P.kg
150 20
200 15
250 10
300 5
15. Exceptions to the law of Demand
Giffen Goods: Display direct price demand
relationship
Snob Appeal: Veblen goods have snob value for
which the consumer measures the satisfaction
derived not by their utility value, but by their
social status.
16. Law of diminishing Marginal Utility
As per law of
diminishing marginal
utility, the utility
derived from every
next unit (marginal
unit) of a commodity
consumed goes on
falling.
17. Supply
Supply refers to the quantities of a good or
service that the seller is willing and able to
provide at a price , at a given point of time.
18. Determinants of Supply
• Price of Commodity
• Cost of Production
• State of Technology
• Number of Firms
• Government Policies
19. Law of Supply
Other things remaining same, the higher the
price of a commodity, the greater is the quantity
supplied.
20. Market Equilibrium
• Equilibrium refers to a state of balance that can
occur in a model showing a tendency of no
change. The point on which market demand and
market supply intersects is known as Market
Equilibrium.
21. • Consumers and producers react differently to
price changes. Higher prices tend to reduce
demand while encouraging supply, and lower
prices increase demand while discouraging
supply.
• Economic theory suggests that, in a free market
there will be a single price which brings demand
and supply into balance, called equilibrium
price. Both parties require the scarce resource
that the other has and hence there is a
considerable incentive to engage in an exchange.
22. • Equilibrium price is also called market clearing
price because at this price the exact quantity that
producers take to market will be bought by
consumers.
23. Example
The weekly demand and supply schedule for a brand of soft drink at
various prices (between 30p and Rs.1.10p) is shown opposite.
PRICE (Rs)
QUANTITY
DEMANDED
QUANTITY
SUPPLIED
1.10 0 1000
1.00 100 900
90 200 800
80 300 700
70 400 600
60 500 500
50 600 400
40 700 300
30 800 200
25. Equilibrium
• As can be seen, this market will be in
equilibrium at a price of 60p per soft drink. At
this price the demand for drinks by students
equals the supply, and the market will clear. 500
drinks will be offered for sale at 60p and 500
will be bought - there will be no excess demand
or supply at 60p.
26. • Demand contracts because at the higher price, the income
effect and substitution effect combine to discourage
demand, and demand extends at lower prices because the
income and substitution effect combine to encourage
demand.
• In terms of supply, higher prices encourage supply, given
the supplier's expectation of higher revenue and profits,
and hence higher prices reduce the opportunity cost of
supplying more. Lower prices discourage supply because
of the increased opportunity cost of supplying more.
• The opportunity cost of supply relates to the possible
alternative of the factors of production. In the case of a
college canteen which supplies cola, other drinks or other
products become more or less attractive to supply
whenever the price of cola changes. Changes in demand
and supply in response to changes in price are referred to
as the signaling and incentive effects of price changes.
28. Elasticity of Demand
Elasticity of demand measures the degree of
responsiveness of the quantity demanded of a
commodity to a given change in any of the
determinants of demand.
change in quantity demanded due to a
change in price is large. An inelastic demand is
one in which the change in quantity demanded due
to a change in price is small
Proportionate change in quantity demanded of commodity X
Elasticity of Demand: -------------------------------------------------------------------
Proportionate change in demand determinants
29. Types of Elasticity of demand
1. Price elasticity of demand
2. Income elasticity of demand
3. Cross elasticity of demand
4. Promotional elasticity of demand
30. 1. Price Elasticity of Demand
Price elasticity of demand measures the
proportionate change in quantity demanded of a
commodity to a given change in its price.
Proportionate changes in quantity demanded
= ----------------------------------------------------
Proportionate changes in Price
32. 1. Perfectly Elastic Demand:
• When a small change in price of a product
causes a major change in its demand, it is said to
be perfectly elastic demand.
• In perfectly elastic demand, a small rise in price
results in fall in demand to zero, while a small
fall in price causes increase in demand to
infinity.
33. • From the Figure it can be interpreted
that at price OP, demand is infinite;
however, a slight rise in price would
result in fall in demand to zero. It can
also be interpreted from Figure that
at price P consumers are ready to buy
as much quantity of the product as
they want. However, a small rise in
price would resist consumers to buy
the product.
• Though, perfectly elastic demand is a
theoretical concept and cannot be
applied in the real situation.
However, it can be applied in cases,
such as perfectly competitive market
and homogeneity products. In such
cases, the demand for a product of an
organization is assumed to be
perfectly elastic.
From an organization’s point of view,
in a perfectly elastic demand
situation, the organization can sell as
much as much as it wants as
consumers are ready to purchase a
large quantity of product. However, a
slight increase in price would stop
the demand.
34. 2. Perfectly Inelastic Demand
• It can be interpreted from Figure that
the movement in price from OP1 to
OP2 and OP2 to OP3 does not show
any change in the demand of a
product (OQ).
• The demand remains constant for any
value of price. Perfectly inelastic
demand is a theoretical concept and
cannot be applied in a practical
situation. However, in case of
essential goods, such as Salt, the
demand does not change with change
in price. Therefore, the demand for
essential goods is perfectly inelastic.
35. 3.Relatively Elastic Demand
• Relatively elastic demand refers
to the demand when the
proportionate change produced
in demand is greater than the
proportionate change in price of
a product. The numerical value
of relatively elastic demand
ranges between one to infinity.
• Mathematically, relatively
elastic demand is known as
more than unit elastic demand
(ep>1). For example, a small
decrease in price from P1 to P2
leads to proportionately greater
increase in quantity demanded
from Q1 to Q2. (Luxuries)
36. 4. Relatively Inelastic Demand
• Relatively inelastic demand is one
when the percentage change
produced in demand is less than
the percentage change in the price
of a product.
• For example, if the price of a
product increases by 30% and the
demand for the product decreases
only by 10%, then the demand
would be called relatively inelastic.
The numerical value of relatively
elastic demand ranges between
zero to one (ep<1). Marshall has
termed relatively inelastic demand
as elasticity being less than unity.
37. 5. Unitary Elastic Demand
• When the proportionate change
in demand produces the same
change in the price of the
product, the demand is referred
as unitary elastic demand. The
numerical value for unitary
elastic demand is equal to one
(ep=1).
• From Figure, it can be
interpreted that change in price
OP1 to OP2 produces the same
change in demand from OQ1 to
OQ2. Therefore, the demand is
unitary elastic.
39. Income Elasticity of Demand
• Income elasticity of demand measures the
degree of responsiveness of demand for a
commodity to a given change in consumer’s
income.
Proportionate change in quantity demanded of commodity X
Ey = -------------------------------------------------------------------------
Proportionate change in Income of Consumer
Types:
Positive Income Elasticity, Zero Income Elasticity, Negative Income elasticity
40. Cross Elasticity
“Cross elasticity of demand is the rate of change
in quantity associated with change in the price
of related goods”
Proportionate change in the quantity
demanded of commodity X
Ec= -------------------------------------------
Proportionate change in the price of
commodity Y
41. Promotional Elasticity
• Advertising (or promotional) elasticity of
demand measures the effect of incurring an
“expenditure” on advertising, vis-a-vis.
Proportionate change in quantity demanded X
Ea = ---------------------------------------------------------
Proportionate change in advertising expenditure
42. Measuring Price Elasticity of
Demand
• The following points highlight the top four methods
used for measuring elasticity of demand. The methods
are:-
1. Total Outlay Method
2. Proportional Method
3. Geometric Method
4. Arc Method
43. Total Outlay Method
• The term ‘outlay’ means the amount expended
by the consumer and the outlay is the revenue of
the seller.
• This method envisages a measurement based
upon the total outlay of the consumer.
• If, for example, his total outlay on a particular
product P is Rs.X and if the management takes a
decision to reduce or increase the price, it would
be evident that there would be an increase or
decrease in the total revenue of the firm.
44. Sl.No Price of the
product (in Rs)
Number of
Units
bought
Total Outlay
In (Rs)
1 60 4 240
2 50 4 200
3 40 5 200
4 30 8 240
When the price was Rs.60, the consumer bought 4 units of x. When the
price was reduded to Rs.50, he still bought 4 units. In the first case, the
toal outlay was Rs.240. in the second case, it was Rs.200. In other
words, ther is fall in the total outlay, indicating that the elasticity is less
than unity. Betweeb 2 abd 3, the total outlay is Rs.200. this is a case of
unit elasticity. Between 3 and 4, the total outlay has increased from
Rs.200 to Rs.240; that is, more than unity.
45. Proportional Method
• This is refers to point elasticity. Under this method, the
percentage change is compared to the percentage
change in the quantity demanded; in other words, the
ratio is the change in the quantity demanded to the
change in the price. The formula is written as follows:
Proportionate change in the amount demanded
Price elasticity = -------------------------------------------------------
Proportionate change in price
Alternatively = Change in quantity demanded Change in price
------------------------------------ ÷ -----------
Amount demanded Price
46. The Percentage Method
The price elasticity of demand is measured by its
coefficient (Ep). This coefficient (Ep) measures
the percentage change in the quantity of a
commodity demanded resulting from a given
percentage change in its price.
• Where q refers to quantity demanded, p to price and Δ to change. If
EP>1, demand is elastic. If EP< 1, demand is inelastic, and Ep= 1,
demand is unitary elastic.
• With this formula, we can compute price elasticities of demand on
the basis of a demand schedule.
47. Let us first take combinations B and D.
(i) Suppose the price of commodity X falls from Rs. 5 per kg. to
Rs. 3 per kg. and its quantity demanded increases from 10
kgs.to 30 kgs.
Then
This shows elastic demand or elasticity of demand greater than
unitary.
48. 2. The Point Method
Prof. Marshall devised a geometrical method for
measuring elasticity at a point on the demand curve. Let
RS be a straight line demand curve in Figure. 2. If the
price falls from PB ( = OA) to MD ( = OC), the quantity
demanded increases from OB to OD.
• Elasticity at point P on the RS demand curve
according to the formula is:
• EP = Δq/Δp x p/q
• Where Δq represents change in quantity demanded, Δp
changes in price level while p and q are initial price and
quantity levels.
49.
50. • With the help of the point method, it is easy to
point out elasticity at any point along a demand
curve. Suppose that the straight line demand
curve DC in Figure. 3 is 6 centimeters. Five
points L, M, N, P and Q are taken on this
demand curve.
• The elasticity of demand at each point can be
known with the help of the above method.
• Let point N be in the middle of the demand
curve. So elasticity of demand at point
51.
52. • We arrive at the conclusion that at the mid-
point on the demand curve, the elasticity of
demand is unity.
• Moving up the demand curve from the mid-
point, elasticity becomes greater. When the
demand curve touches the Y- axis, elasticity is
infinity.
• Ipso facto, any point below the mid-point
towards the A’-axis will show elastic demand.
Elasticity becomes zero when the demand curve
touches the X -axis.
53. 3. The Arc Method:
• We have studied the measurement of elasticity at a point
on a demand curve. But when elasticity is measured
between two points on the same demand curve, it is
known as arc elasticity. In the words of Prof. Baumol,
“Arc elasticity is a measure of the average
responsiveness to price change exhibited by a
demand curve over some finite stretch of the
curve.”
54. • Any two points on a demand curve make an arc. The area between P
and M on the DD curve in Figure. 4 is an arc which measures
elasticity over a certain range of price and quantities. On any two
points of a demand curve, the elasticity coefficients are likely to be
different depending upon the method of computation. Consider the
price-quantity combinations P and Mas given in Table 2.
If we move in the reverse direction from M to P, then
55. • Thus the point method of measuring elasticity at two points on a
demand curve gives different elasticity coefficients because we used
a different base in computing the percentage change in each case.
To avoid this discrepancy, elasticity for
the arc (PM in Figure 4) is calculated by
taking the average of the two prices [(p1 +
p2 )½] and the average of the two
quantities [(q, +q2 )½]. The formula for
price elasticity of demand at the mid-
point (C in Figure 4) of the arc on the
demand curve is
56. • On the basis of this formula, we can measure arc
elasticity of demand when there is a movement either
from point P to M or from M to P.
• From P to M at point P, p1 =8, q1 = 10, and at point M,
p2 = 6, q2 = 12.
Applying these values, we get
57. • Thus whether we move from M to P or P to M
on the arc PM of the DD curve, the formula for
arc elasticity of demand gives the same
numerical value.
• The closer the two points P and M are, the more
accurate is the measure of elasticity on the basis
of this formula.
• If the two points which form the arc on the
demand curve are so close that they almost
merge into each other, the numerical value of
arc elasticity equals the numerical value of point
elasticity.
58. 4. The Total Outlay Method
• Marshall evolved the total outlay, or total revenue or total
expenditure method as a measure of elasticity. By
comparing the total expenditure of a purchaser both
before and after the change in price, it can be known
whether his demand for a good is elastic, unity or less
elastic.
• Total outlay is price multiplied by the quantity of
a good purchased:
Total Outlay = Price x Quantity Demanded.
• This is explained with the help of the demand schedule in
Table.3.
59.
60. i) Elastic Demand:
Demand is elastic, when with the fall in price the total expenditure
increases and with the rise in price the total expenditure decreases.
Table.3 shows that when the price falls from Rs. 9 to Rs. 8, the total
expenditure increases from Rs. 18 to Rs. 24 and when price rises from
Rs. 7 to Rs. 8, the total expenditure falls from Rs. 28 to Rs. 24.
Demand is elastic(Ep > 1) in this case.
(ii) Unitary Elastic Demand:
When with the fall or rise in price, the total expenditure remains
unchanged, the elasticity of demand is unity. This is shown in the
table when with the fall in price from Rs. 6 to Rs. 5 or with the rise in
price from Rs. 4 to Rs. 5, the total expenditure remains unchanged at
Rs. 30, i.e., Ep = 1.
61. (iii) Less Elastic Demand:
Demand is less elastic if with the fall in price,
the total expenditure falls and with the rise in
price the total expenditure rises. In Table 3
when the price falls from Rs. 3 to Rs. 2, total
expenditure falls from Rs. 24 to Rs 18, and when
the price rises from Re. 1 to Rs. 2. the total
expenditure also rises from Rs. 10 to Rs. 18. This
is the case of inelastic or less elastic demand, Ep
< 1.
62. Demand Forecasting-Definition
“ Demand Forecasting is an estimate of sales in
dollars or physical units for a specified future
period under a proposed marketing plan”
-American Marketing Association
63. Demand Forecasting
• Demand forecasting as the scientific and
analytical estimation of demand for a product
(good or service) for a particular period of time”
Categorisation by level of Forecasting:
• Firm (Micro) Level
• Industry Level
• Economy (Macro level)
64. Categorisation by Time Period:
1. Short term Forecasting
2. Long term Forecasting
Categorisation by Nature of Goods:
1. Consumer Goods
2. Capital Goods
65. Demand Forecasting
Subjective Methods of Demand forecasting :
• Consumer Opinion Survey
• Sales Force Composite
• Experts’ Opinion Method
- Group Discussion
- Delphi Technique
The Delphi method is a process used to arrive at a group opinion or decision by
surveying a panel of experts
• Market Stimulation
66. Market Morphology/ Market Structure
• Nature of competition
• Nature of product
• Number and size of buyers
• Freedom to Enter into or Exit from the market
68. Perfect Competition
• Number of firms are Very large
• Nature of product is Homogeneous
(Undifferentiated)
• Number of buyers are very large
• Freedom of Entry and Exit is Unrestricted
Examples:
Agricultural commodities, shares, Unskilled
labour.
69. Monopolistic Competition
• Number of firms are many
• Nature of products are differentiated
• Number of buyers are many
• Freedom of entry and exit is unrestricted
Examples:
Retail stores, detergents
70. Oligopoly
• Number of firms are few
• Nature of products are undifferentiated or
differentiated
• Number of buyers are few
• Freedom of entry and exit is restricted
Examples:
Car, Computers, Universities
71. Monopoly
• Number of firm is single
• Nature of product is unique
• Number of buyers are many
• Freedom of entry and exit is restricted
Examples:
Indian Railways, Microsoft
72. Monopsony
• Number of firms are many
• Nature of products are undifferentiated or
differentiated
• Number of buyers are also single
• Freedom of entry and exit is Not applicable
Example:
Indian Defence Industry
73. Consumer behaviour
• Consumer behaviour is the study of how
individual customers, groups or organizations select,
buy, use, and dispose ideas, goods, and services to
satisfy their needs and wants. It refers to the actions
of the consumers in the marketplace and the
underlying motives for those actions.
• Marketers expect that by understanding what causes
the consumers to buy particular goods and services,
they will be able to determine—which products are
needed in the marketplace, which are obsolete, and
how best to present the goods to the consumers.
74. Consumer Equilibrium
• A consumer is said to be in
equilibrium when he feels that he
“cannot change his condition
either by earning more or by
spending more or by
changing the quantities of
thing he buys”. A rational
consumer will purchase a
commodity up to the point where
price of the commodity is equal to
the marginal utility obtained from
the thing.
• If this condition is not fulfilled the
consumer will either purchase
more or less. If he purchases
more, MU will go on falling and a
situation will develop where price
paid will exceed MU. In order to
avoid negative utility, i.e.,
dissatisfaction, he will reduce
consumption and MU will go on
increasing till P = MU.
75. Theoretical approaches to the study of consumer
behavior
• Economic Man
• Psychodynamic
• Behaviorist
• Cognitive
• Humanistic
76. Economic Man
• In order to behave rationally in the economic
sense, as this approach suggests, a consumer
would have to be aware of all the available
consumption options, be capable of correctly
rating each alternative and be available to select
the optimum course of action
77. Psychodynamic Approach :
• The psychodynamic tradition within
psychology is widely attributed to the work of
Sigmund Freud (1856-1939) (Stewart 1994).
• This view posits that behaviour is subject to
biological influence through ‘instinctive forces’
or ‘drives’ which act outside of conscious
thought (Arnold, Robert sonet al.1991).
• While Freud identified three facets of the
psyche, namely the Id, the Ego and the
Superego (Freud 1923)
78. • The id is the primitive and instinctual part of
the mind that contains sexual and aggressive
drives and hidden memories.
• The super-ego operates as a moral conscience;
and
• The ego is the realistic part that mediates
between the desires of the id and the super-ego.
79. Behavioural approach :
Human thoughts were regarded by Watson as ‘covert’
speech (Sternberg 1996), and strict monism was adhered
to (Foxall 1990). Between 1930 and 1950 Skinner
founded ‘Radical Behaviourism’ which acknowledges the
existence of feelings, states of mind and introspection,
however still regards these factors as epiphenomenal
• (Skinner 1938);(Nye 1979). The assumed role of
internal processes continued to evolve in subsequent
decades, leading to more cognitive approaches with a
new branch of study ‘Cognitive Behaviourism’
• claiming that intrapersonal cognitive events and
processes are causative and the primary irreducible
determinants of overt behaviour (Hillner 1984, p107).
80. Cognitive Approach:
• The cognitive approach ascribes observed action
(behaviour) to intrapersonal cognition. The
individual is viewed as an ‘information processor’
(Ribeaux AND Poppleton 1978).
• This intrapersonal causation clearly challenges the
explicative power of environmental variables
suggested in Behavioural approaches, however an
influential
• role of the environment and social experience is
acknowledged, with consumers actively seeking and
receiving environmental and social stimuli as
informational inputs aiding internal decision making
(Stewart 1994).
81. Humanistic Approach: start from the assumption that
every person has their own unique way of perceiving and
understanding the world and that the things they do only make
sense in this light.
• Consequently, the kinds of questions they ask about people
differ from those asked by psychologists from other
approaches.
• Whereas other approaches take an objective view of people,
in essence asking about them, ‘what is this person like?’
humanistic psychologists’ priority is understanding people’s
subjectivity, asking ‘what is it like to be this person?’ As a
result, they reject the objective scientific method as a way of
studying people.
• Humanistic psychologists explicitly endorse the idea that
people have free will and are capable of choosing their own
actions (although they may not always realize this). They also
take the view that all people have a tendency towards growth
and the fulfillment of their potential.
82. Production, Factors of Production,
Output
• The transformation of inputs into outputs.
• Factors of production refers to the goods and
services which assist the production process.
• Goods and services produced called ‘Output’.
83. Classification of factors of production
• Land: All natural resources such land area, air,
lakes, water and minerals.
• Labour: Physical or mental activities carried
out by human beings for monetary value.
• Capital: The part of man-made wealth which is
used to further produce wealth.
• Entrepreneurship: A person who combines
the three factors of production, initiates the
process of production and also bears the risk.
84. Production Functions
Production function refers to a statement of the
functional relationship between inputs (factors of
production) and output (goods and services).
Q= f (K,L,M, etc.)
Where,
Q= the amount of output per unit of time
K,L,M, = Land, Labour, Capital
85. Short-run and Long-run Production
Functions
Both short run and long run actually depends on the
inputs (factors of production) which can vary in
production. There are two types of inputs:
1. A fixed input is an input where the quantity does
not change according to output. E.g: Machinery,
land, buildings, tools, equipment, etc.
2. A variable input is an input where the quantity
changes according to output, e.g: raw materials,
electricity, fuel, transportation, communication, etc.
86. • The short run time frame has at least one input
which is fixed, but other inputs vary. The output
can be varied by changing the quantities of one
or a few inputs.
e.g: capital (buildings, equipment, tools, etc) is a
fixed resource. Output can be increased by
varying labour.
• The long run time frame, on the other hand, has
inputs which are all variable. In the long run,
firms can alter the inputs to increase the output.
87. Short-Run Production Function- One
fixed input and one variable
Suppose that only two inputs are used in
production: Capital and labour
Q= f (L,K) where K Quantity of capital is
fixed.
Law of Diminishing Marginal Returns:
States that as more of a variable input is used,
with other technology and input remaining
fixed, the marginal product of the variable input
will eventually decline.
88. • Total Product (TP): The amount of output
produced when a given amount of input is used.
• Average Product (AP): Obtained by dividing the
TP by the amount of input used.
• Marginal Product (MP): The change in the TP of
input, corresponding to an additional unit
change in its labour. Marginal product is the
additional to total product When one more unit
of labour is employed.
92. ISO Quant Analysis & ISO Quant Curves
• The term ‘ISO Quant’ is derived from ‘Iso’
(equal) and ‘Quant’ (quantity).
• An Isoquant or isoproduct represents all the
possible combinations of variable input
that are used to generate the same level of
output (Total Product)
95. ISOQUANT MAP
• An isoquant map is a number of isoquants that
are combined in a single graph.
96. Long-Run Production Function –All
Inputs are variables
• In the long run, all inputs are variables. A firm
can expand its scale of production by increasing
all inputs, such as more labour, equipment,
buildings, plants, machinery, etc.
• The law of returns to scale applies in the long
run. This law refers to the effects of changes in
the quantities of all inputs is called returns to
scale.
97. • Increasing Returns to Scale: Output
increased by greater proportion than input.
Fig:
98. • Constant Returns to Scale: Output increased
by same proportion with input.
99. • Decreasing Returns to Scale: Output
increased by lesser proportion than input.
100. Economies of Scale
• Economies of scale are benefits or advantages
a firm enjoys as it grows larger, whereas
diseconomies of scale are the problems or
disadvantages faced by the firm as it grows
larger.
101. Internal Economies of Scale:
1. Labour economies
2. Managerial economies
3. Marketing economies
4. Technical economies
5. Financial economies
6. Risk-bearing economies
7. Transport and storage economies
102. External economies of scale:
1. Economies of Govt., Action
2. Economies of Concentration
3. Economies of Information
4. Economies of Marketing
103. Internal & External Diseconomies
• Labour diseconomies
• Management problems
• Technical difficulties
• Scarcity of raw materials
• Wage Differentials
• Concentration problemsi
104. Cost Analysis
Implicit and Explicit costs:
Implicit cost is the value of input services that are
used in production which are not purchased in the
market.
Explicit cost is the value of resources purchased
for production( it includes both economic and
accounting costs)
Opportunity Cost of a particular product is the
value of the forgone alternative product.
Social cost is the total cost of production of a
product, and includes direct and indirect costs
incurred by society.
E.g: Contamination of rivers by industrial wastage
105. Sunk Cost refers to the cost that a firm cannot
recover from the expenditure it has made. Sunk
costs are only counted in accounting cost, not
economic cost.
E.g: A firm has purchased a specialized machine
for the purpose of production. The machine
purchased is designed only for specific work, with
no alternative use. The purchase of such
machinery is thus a sunk cost for the firm.
106. Cost curves in the Short Run
Short-run costs:
Total Fixed Cost (TFC) refers to the input that
are independent of output. TFC has no relationship
with output. Its remains constant throughout the
production period.
Total Variable Cost (TVC) refers to the cost of
input that changes with the output. TVC is incurred
on the purchase of variable inputs.
Total Cost (TC) is the sum of cost (all inputs)-
fixed and variable inputs used to produce goods
and services.
108. • Average Fixed Cost (AFC) is the fixed cost
per unit of out. It declines continuously as output
increases, due to the spreading of fixed costs.
• Average Variable Cost (AVC) is the variable
cost per unit of output. The average variable cost
is obtained when the total variable cost is divided
by the total output.
• Average Total Cost (ATC) is the total cost per
unit of output. The average total cost is also
obtained by adding the average fixed cost and
average variable cost
110. Marginal cost
• Marginal Cost (MC) refers to the change in
total cost (or total variable cost) that results
from producing another unit of output.
• In other words, the marginal cost is defined as
the additional cost incurred in producing an
additional unit.
111.
112.
113.
114. Iso cost line
• The isocost is similar to the budget line in the
indifference curve analysis.
• An isocost line shows various combinations of
two inputs. i.e. Capital and labour, which can be
purchased with a given amount of money for a
given total cost.
115. Long-run Average cost Curve
• The long run is a period which involves only
variable factors and not fixed cost.
• In the long run the firm cannot adjust its fixed
cost, since there is no fixed cost.
• In the long run, only the average total cost is
important and considered by a firm during its
decision making process.
• The long run is the period where firms decide
and plan how to minimize the average total cost.
116. • A long-run average cost (LRAC) curve is a curve
that shows the minimum cost of producing any
given output, when all the inputs are variable.
• LRAC curve is derived from a series of short-run
average cost (SAC) curves.
• Tangential points of these SAC curves are joined
to form the LRAC curve.
• When the firm has a plant relating to SAC1, total
output is Q1, suppose the demand increases and
the firm wants to increase its output from Q1 to
Q2, the firm can still operate on the same plant
(SAC1) to produce Q2, but the average total cost
will increase from point A to point B
117. • However, by expanding the output as in SAC2,
the output of Q2 can be produced at a lower
average cost, at point C. SAC3 refer to plants of a
higher capacity.
• If the firm wants to produce an output of Q3, it
will face two possible options, either to use plant
SAC2 or plant SAC3.
• Plant SAC3 will be the better choice as the firm
will incur lower costs) In the long run, the firm
will select the plants which gives the lowest
average cost at a given output level.
• The LRAC curve is also U-shaped due to the law
of returns to scale.
118. • Price is the value that is put to a product or
service and is the result of a complex set of
calculations, research and understanding and
risk taking ability. A pricing strategy takes into
account segments, ability to pay, market
conditions, competitor actions, trade margins
and input costs, amongst others
• Economic pricing is a pricing strategy that
gives products that have low production
costs a lower price.
119. • Price Skimming
• Price skimming occurs when a company sets an artificially high
price for a product or service, but knows that competitors will soon
enter the product or service arena.
• Penetration Pricing
• Penetration pricing sees products or services priced much lower
than their actual value in order to make an entrance into the market
• Premium Pricing
• Premium pricing is used for products or services that are clearly of a
higher luxury value than anything else on the market.