1.0 Introduction
According to business dictionary, elasticity is a responsive measured in price or quantity. It is also a sensitivity of quantity towards changes of price and it is measured using the elasticity concept with a diagram of demand and supply curve. Why is this important? The importance is to explain the consumer and sellers respective behavior in the market; and also to show the intersection between demand and supply. The general calculation is shown below:
Percentage (%) of change in quantity
Elasticity = Percentage (%) of change in determinant
There are few reasons why elasticity is measured using percentage (%), it’s allows subject measured in different units and also changes in quantity due to change of price in currency value. Problems can be avoided in determining size of unit used. The changes can only be seen if an initial value is provided; for example if the price of the item is RM4 and RM1.20 additional will be significant but if the price is RM48.90 then the RM1.20 is insignificant change. Basically if an initial price is higher and changes are small, then the changes is insignificant, why is this happening? The answer is some consumer can’t really see the different in the price change. There are items that can be elastic and items that can be substitute for example mineral water, chocolate etc. but item that can’t be substitute is petrol, coffee, cigaretteetc.; these are item even the price increase the demand is still the same as everybody that owns a car need petrol, if you are addicted to cigarette, even the price increase you will still buy it.
Elasticity that is normally used is divided to four types which is; price elasticity of demand, price elasticity of supply, income elasticity o...
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... when income starts from RM2,501 and above per annum is within 1– 27%. For non-resident individuals they are taxed at a flat rate of 27%. Where as tax that need to be paid by income of companies is subject to corporate tax at the rate of 25%. Tax for small and medium enterprises (SME) is only calculated from the first RM500,000 with taxed at 20%, and after will be taxed at 25%. For those who carry out petroleum operation is charged at 38%. Sales tax in Malaysia are from 5% to 10%, this mostly apply to those are in food business. For alcoholic and non-alcoholic compound preparations used for making beverages are at 20%. Because taxes return is the most importance one, the government has to make sure that tax payer pays. In order to make sure that people pays tax, government need to show them the importance of them paying and what it can do for the country.
McGuigan, Moyer & Harris (2014) price elasticity of demand measured by the changes that affect at least one-factor price, advertising, promotion, packaging or income levels (p.64). However, my supervisor needs the elasticities for each independent variable using the regression equation above and adding values, P= 500, PX= 600, I= $5,500, A= $10,000, M=5,000. Adding the P, PX, I, A, and M value to the regression table: QD= - 5,200 – 42(500) + 20(600) + 5.2(5,500) + 0.20(10,000) + 0.25(5,000) = 17,650. McGuigan, Moyer & Harris (2014) describes the price elasticity of demand ratio of the percentage change in quantity demanded to the percentage change in price if all other factors of demand continue to be untouched (p.72).
Prices are based upon the price elasticity of demand in each given market. In other terms, this means that during ladies night at the local bar, it costs more for men to have a beer than women simply because these bars find it o.k. to charge females less, as a way to draw more females to the business on a specific night.
Even though, the only substitutes for gasoline are public transportation, which isn’t always accessible, or electric cars, which is still considered a recent technology. If you’re living in a suburb in Chicago with good public transportation, you could start using these options to get to your destination, this would reduce your demand for gas by a lot. Yet, if you live in a suburban area, you would be more reliant on a vehicle, and your demand for gas would become inelastic. The short and long term demands for goods and services can vary, and this affects elasticity. For example, if the person’s gas demand was inelastic in the short-term, this could eventually become elastic in the long term. This person could buy a car that has better mileage, or buy an electric car which doesn’t require gasoline. For most products, long-term demands happen to be more elastic than short-term demands. Since gasoline is with a finite supply, it would eventually run out in the long-term. Yet, in the short-term inelasticity tends to overcome compared to the long-term. If we all drove vehicles that could go 50 mpg or greater gasoline would still be
Arcading to Michael Hollihan (1982) Relative price are supposed to reflect real forces such as changes in tastes and technology, while the changes in the aggregate price level would reflect monetary changes since price is
Elasticity is the responsiveness of demand or supply to the changes in prices or income. There are various formulas and guidelines to follow when trying to calculate these responses. For instance, when the percentage of change of the quantity demanded is greater then the percentage change in price, the demand is known to be price elastic. On the other hand, if the percentage change in demand is less than then the percentage change in price; Like that of demand, supply works in a similar way. When the percentage change of quantity supplied is greater than the percentage change in price, supply is know to be elastic. When the percentage change of quantity supplied is less then the percentage change in price, then the supply then demand is known to be price inelastic.
(a) Ballpoint pens: The price elasticity of demand of ballpoints pens tends to be elastic. Now, what does it mean when an item is elastic? Well, according to the textbook, Microeconomics, written by McConnell, Brue, Flynn, it states,” When price and total revenue move in opposite directions, demand is elastic”(pg. 126, para.1). What this means is that when price goes up, demand goes down and when price goes down, demand goes up. A product like a ballpoint experiences elastic demand because it has many substitutes and has high competition which normally tends to help the consumer because there are many companies who produce the same product and this helps keep the price of the product low.
I consider a bottle of water is one of my low elasticity goods. The bottle of water contains a few reasons why it is an inelastic good. First, it is inelastic because this good is considered a necessity good. The reason why it is necessary because as human being, water is the most important factor that the human body is organized with 70% of water. Second, it is inelastic because this good is not considered as luxury. People have to drink a water in order to live, so water cannot be luxury to every one. Lastly, this good is inelastic because the bottle of water is cheap that most people could buy without consideration. People, for instance, buy the bottle of water at any store when they are thirsty. Since this is inelastic for me that
Malaysia is located in the south-eastern Asia, bordering Thailand and northern one-third of the island of Borneo, bordering Indonesia, Brunei, and the South China Sea, south of Vietnam. Due to its locations, it has been colonised since the late 18th centuries by many countries. Since 1965, Malaysia has had one of the best economic records in Asia, with GDP average of 6.5% growth for almost 50 years. The economical development especially boosted during 1981 and 2003 under the governance of Prime Minister Mahathir bin Mohamad. Malaysia succeeded in diversifying its economy from dependence on exports of raw materials to expansion in manufacturing, services, and tourism. Also, the current Prime Minister continues to pursue pro-business policies .
When demand is elastic as with Coca Cola products price changes affect total revenue. When the price increases revenue decreases and when the price decreases revenue increases. For Coca Cola if they notice a decrease in revenue they would offer products at a discount to increase revenue. They do this quite often with sales such buy 2 20 oz. bottles for $3 instead of the normal $1.89 each price
Can anyone imagine what will happen to Malaysia after a few more decades? Debt crisis in Malaysia is getting more severe due to lack of management among individuals. Serious debt crisis might lead to bankruptcy to our country. Nation leaders should lead others away from debt. If this scenario continues, Malaysia might follow the footstep of Greece, Spain, Italy, and Portugal. Debt crisis can be avoided by providing trainings and courses to the employees, improve individual personal finance management and filtering candidates in hiring process.
Jali, N.H.M., M. Redzuan, A.A. Saman, and I.H.M. Rashid. 2010. Malaysian Studies: Nationhood and Citizenship. Petaling Jaya: Prentice Hall.
That is, it is sensitive to price change, and also to the quantity demanded. This means that if many people are consuming a good, the demand is greater than if less people are consuming the good. To further clarify, take the example of attending college. In an environment where most of an individual's peers are going to attend college, the individual will see college as the right thing to do, and also attend college to be like his peers. However, in an environment where most of an individual's peers are not going to attend college, the individual will have a decreased demand for college, and is unlikely to attend.
Malaysia biggest problem is the environmental pollution. Although people already know how harmful these things are but they still go on. The three main pollution that happen in Malaysia are air pollution, water pollution and land pollution. Mostly pollution effect by the air conditional that release CFC’s gasses, rubbish that been thrown to the rival and open burning. All of this pollution will be link to all kind of diseases, sickness, bacteria and virus. For an example lung cancer that will happen to people cause by breathing the polluted air that been create by Malaysian themselves.
One method that Toyota can consider is using the price elasticity of demand to determine whether to increase or decrease the sale price of their automobiles. The responsiveness or sensitivity of consumers to a price change is measured by a product's price elasticity of demand (McConnell & Brue, 2004). Market goods can be described as elastic or inelastic goods as change in quantity demanded for that good. If demand is elastic, a decrease in price will increase total revenue. Even though a lower price would generate lower sales revenue per unit, more than enough additional units would be sold to offset lower price (McConnell & Brue, 2004). In a normal market condition, a price increase leads to a decreased demand, and a price decrease leads to increased demand. However, a change in income affecting demand is more complex.
There are two forms of constitution involves in Malaysia which is Federal Constitution and State Constitution.