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Code MB 0026
The formula used to calculate the percentage change in quantity demanded is:
= (24-30)/30 = -0.2
Calculating the Percentage Change in Price of Good 2
It means if the price of the price of the one pdrt increases then the demand for
another pdt decreases it means this good are substitute goods.
The formula used to calculate the percentage change in quantity demanded is:
Ans: Graphing a demand curve begins with two perpendicular lines forming a
right angle. The y-axis, or vertical line, represents “price” as the dependent
variable, and the x-axis, or horizontal line, represents the “quantity demanded”
as the independent variable. Price increments move up along the outside of the
y-axis with the highest price nearest the top. Quantity increments move from
left to right just below the x-axis line with the lowest figure nearest to the 90°
point of the angle. The increment spacing at both lines is such that straight
lines drawn from each price across and upwards from each quantity will form
perfect graph squares on the inside of the angle; that is, there is equal spacing
between the units on the x- and y-axes. The demand points (i.e., the
correlative quantity for each price at which there is a buyer) are now plotted
within the graph to correspond to both a price on the y-axis and a quantity on
the x-axis. By connecting the points, the demand curve is formed. The points
along the demand curve show how the quantity demanded depends on the
price of the goods. Since price will always have a negative effect on consumer
demand, all demand curves will have a downward slope.
A shift or change in the slope of the curve due to influential factors other
than price is called a "change in demand." These factors, or determinants,
affect the consumer’s willingness to buy and, therefore, the "quantity
demanded." Obvious determinants would include fluctuating income, personal
3. Q A firm supplied 300 pens at the rate of Rs 10. Next month , due to
a rise in the pries to Rs 22 /Pen the supply of the firm increase to 5000
pens . Find the elasticity?
Ans:
5000-3000 X 10 = 0.55
= 22-10 3000
Ans:
5Q. What is Cyert and March’s behavior theory? What are the demerits?
Ans:
The behavioral approach, as developed in particular by Richard Cyert and
James G. March of the Carnegie School places emphasis on explaining how
decisions are taken within the firm, and goes well beyond neo-classical
economics. Much of this depended on Herbert Simon’s work in the 1950s
concerning behavior in situations of uncertainty, which argued that “people
possess limited cognitive ability and so can exercise only ‘bounded rationality’
when making decisions in complex, uncertain situations.” Thus individuals and
groups tend to ‘satisfies’— that is, to attempt to attain realistic goals, rather
than maximize a utility or profit function.
Cyert and March argued that the firm cannot be regarded as a monolith,
because different individuals and groups within it have their own aspirations
and conflicting interests, and that firm behavior is the weighted outcome of
these conflicts. Organizational mechanisms (such as ‘satisficing’ and sequential
decision-taking) exist to maintain conflict at levels that are not unacceptably
detrimental. Compared to ideal state of productive efficiency, there is
organizational slack.
Demerits:-
They solve out problems and wait for another. For example, when there
are conflicts, the authors let the firm to set these conflicts as constraints
and solve out a possible solution. As another example, the firm makes
decision on some given problems and waits for other problems to come.
In my own view this could be a major weak point for this Theory.
Prof. Boumal has developed two models: 1st is Static Model and 2nd is Dynamic
model
1. The model is applicable to a particular time period and the model does
not operate at different periods of time.
3. The demand curve of the firm slope downwards from left to right.
Dynamic Model: