Discuss the usefulness of these parameters in management

Reference no: EM133487298

Question 1) Draw an Engels curve for a normal, Inferior and Necessity goods.

Question 2) Suppose a clothing manufacturer desires information about the impact of its pricing decisions on the demand for its jeans in a small foreign market. To obtain this information, it might engage in market research to determine how many pairs of jeans consumers would purchase each year at alternative prices per unit. The market research reveals that if jeans were priced at $10 per pair, 60,000 pairs of jeans would be sold per year; at $30 per pair, 20,000 pairs of jeans would be sold annually. Derive the demand function for the manufacturer? Comment on the behaviour of the function

Question 3) The managing director of My Inshuti Movie Theatre Limited has hired you as a consultant to advice on the ticket - pricing strategy. As a basis for your recommendations you consider historical ticket sales data which seems to suggest the following ticket - sales elasticities:

Own - price elasticity = -0.05

Refreshment price elasticity = -0.12

Rwanda Population elasticity = +0.65

Advertising elasticity = +0.70

(a) The managing director is contemplating a moderate increase in ticket prices in order to increase revenue. Explain whether this is a good idea.

(b) If there is a successful advertising campaign that convinces consumers to buy more of

tickets, what would the effect of this be on consumption of refreshment. How would you characterize the relationship between tickets and refreshments?

(c) If the population of Rwanda increased from 120,000 to 122,400 people in the next year, what would be the resulting impact on ticket demand? Assume all other factors are held constant.

(d) Discuss the usefulness of these parameters in management and economic policy decision-making.

(e) Other than the parameters given above analyze any other five factors that could have affected the sale of the tickets

Reference no: EM133487298

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