BG540 Unit 3 Price Elasticity of Demand and Total Revenue Paper
Question Description
Unit 3 [GB540: Economics for Global Decision Makers]1 of 2Assignment: Price Elasticity of Demand and TotalRevenueIt is highly recommended that you review the Seminar presentation located in the Seminar areabefore beginning the Assignment.According to the law of demand, if price increases, quantity demanded of a good or service willdecrease or vice versa. Price elasticity of demand tells us how much quantity demanded willdecrease when price increases or how much quantity demanded will increase if price decreases.On the other hand, according to the law of supply, if the price increases, quantity supplied of a goodor service will increase. Similarly, if price decreases, quantity supplied will decrease. The degree ofsensitivity (responsiveness) of production/supply to a change in price is measured by the concept ofprice elasticity of supply.Total revenue is calculated as the quantity of a good or service sold multiplied by its market price.Thus, it is a measure of how much money a company makes from selling its product. The coreobjective of a firm is maximizing profit. One of the ways to maximize profit is increasing total revenue.The firm can increase its total revenue by selling more items or by raising the price. Among others,this depends on the nature of the price elasticity of demand. Moreover, the length of time is animportant factor in determining price elasticity of demand and supply.Course outcome(s) practiced and assessed in this Assignment:GB540-2: Examine microeconomic tools for purposes of problem solving, analysis, and decisionmaking.Directions Explain the relationship between the price elasticity of demand and total revenue. What are theimpacts of various forms of elasticities (elastic, inelastic, unit elastic, etc.) on businessdecisions and strategies to maximize profit? Explain your responses using empirical examples,formulas, and graphs. Is the price elasticity of demand or supply more elastic over a shorter or a longer period oftime? Why? Give examples. What are the impacts of government and market imperfections (failures) on the priceelasticities of demand and supply?Criteria Your Assignment should have a cover sheet with the following information: Title of the paper,Your Name, Course Number and Section Number, and Date It must be a minimum of 5-pages long (excluding title page, references, etc.) Be sure to include the criteria located in the rubric below within your paper.Unit 3 [GB540: Economics for Global Decision Makers]2 of 2 It must be APA formatted with citations to your sources and your last page should list allreferences used. Review the APA formats found in the Writing Center. You must use a variety of two objective, high quality, and current sources. Peer reviewedarticles, articles published in journals, textbooks, and library resources found in the Library areexamples of high quality resources. Note that Wikipedia, Investopedia, etc. are not considered as reliable resources for thisresearch.Directions for SubmittingSubmit your Assignment to the Unit 3 Assignment Dropbox by the end of Unit 3.GB540 Unit 3 Assignment: Price Elasticity of Demand and Total RevenueContent and AnalysisPointsPossiblePointsEarnedExplained the relationship between the price elasticity of demandand total revenue. Provided the impacts of various forms ofelasticities (elastic, inelastic, unit elastic, etc.) on businessdecisions and strategies to maximize profit. Explained usingempirical examples.45Determined whether the price elasticity of demand or supply ismore elastic over a shorter or a longer period of time. Provided anexplanation. Gave examples.25Provided the impacts of government and market imperfections(failures) on the price elasticities of demand and supply.255-pages in length. 10Included at least two reliable references. 6Writing style, grammar, and APA formatting.14Total 125
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