--%>

Illustrates the significance of elasticity

Illustrates the significance of elasticity?

E

Expert

Verified

Significance of Elasticity is explained here with some important points:

The perception of elasticity of demand is more of practical importance:

1. Production: Producers usually decide their production level on the origin of demand for their product. Therefore elasticity of demand helps to fix the level of output.

2. Price fixation: Each seller under monopoly and imperfect competition has to take in account the elasticity of demand whereas fixing their price. When the demand for the product is inelastic then he can fix a higher price.

3. Distribution: Elasticity assists in the determination of rewards for factors of production. For illustration, when the demand for labour is inelastic, trade union can increase wages.

4. International trade: This perception helps in determining the terms of trade among two countries.
Terms of trade, means rate at that domestic commodity is exchanged for foreign commodities.

5. Public finance: It assists the government in formulating tax policies. To impose tax on a commodity, the government must take in consideration the demand elasticity.

6. Nationalization: Elasticity of demand assists the government to decide regarding nationalization of industries.

7. Price discrimination: A manufacture can fix a higher price for the product that have inelastic demand and lower price for product that have elastic demand.

8. Others: The notion elasticity of demand also assisting in taking other vital decision for example: finding out the price of joint product and take over decision.

   Related Questions in Managerial Economics

  • Q : Income effect of wage rate The income

    The income effect of a small modify in the wage rate is approximately identical to the substitution effect for this worker point: (w) point a. (x) point b. (y) point c. (z) point d. Hello guys I wa

  • Q : Conventional theories of the labor

    As per most conventional theories of the labor market, the: (w) supply curve of labor is positively sloped since higher wages attract additional workers in the labor market. (x) firms should contend with increasing returns from additional employment.

  • Q : Explain important question regarding

    Illustrates the important question regarding the managerial economics?

  • Q : Average wages for workers Average

    Average female wages are historically beneath the average for male workers due to: (w) concentration in low income occupations. (x) placement in low status job positions. (y) lower admission in professional schools and skilled trades.

  • Q : Illustrates the term Dumping

    Illustrates the term Dumping?

  • Q : Derived Demand for Labor All else

    All else identical, a competitive firm will demand more labor when: (w) technological advances lead to automation. (x) the price of the firm’s output rises. (y) more firms enter the industry. (z) competing firms offer their workers more training

  • Q : Economic efficiency for consumption and

    Economic efficiency for all consumption and production choices would guarantee getting the social objectives of: (w) equality of income distribution. (x) employment and educational opportunities for all. (y) enhanced environmental quality. (z) None of

  • Q : Describe the term trend projection

    Describe the term trend projection.

  • Q : Derived Demands for Resources Demands

    Demands for resources are derived since they: (1) depend upon producers supplies of such resources. (2) depend on consumers demands for the goods the resources produce. (3) rely on the availability of suppliers. (4) rely on the industry’s demand

  • Q : Perfectly inelastic labor-supply This

    This supply of labor of worker is perfectly inelastic at point: (w) point a. (x) point b. (y) point c. (z) point d.

    Discover Q & A

    Leading Solution Library
    Avail More Than 1439449 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads
    No hassle, Instant Access
    Start Discovering

    18,76,764

    1942944
    Asked

    3,689

    Active Tutors

    1439449

    Questions
    Answered

    Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

    Submit Assignment

    ©TutorsGlobe All rights reserved 2022-2023.