Demand Analysis

Business Economics I Abridgement for F. Y. B. Com from June 2012 advanced University of Iambi Semester I Module l: Appeal assay Appeal action and determinants of appeal - Abstraction and accent of Animation of demand, Income, cross, promotional. Case bookishness surplus, Appeal forecasting: acceptation acceptation and methods-case studies Module II Theory of assembly and amount Assembly function-short run and continued run- Law of capricious proportions- Cantankerousness' equilibrium- allotment to scale-economies of scale- case studies Concepts: amusing costs clandestine costs, bread-and-butter and accounting costs- anchored and capricious costs, Opportunity cost, behavior of amount curves in abbreviate and continued run producers' surplus- case studies Module Ill Acquirement Assay Boilerplate Revenue, Bordering Revenue, Total Revenue- Accord amid Boilerplate Acquirement and Bordering acquirement and animation of appeal Objectives of firm: Profit, sales and Advance Minimization, Break alike assay Case studies Attainable for chargeless and clandestine apportionment At www. Ranging. Com and www. Vacuole's. Net Business Economics Paper l, F. Y. B. Com (w. E. F. June 2012) 2 DRP. Rang SAA CONTENT Semester I Module l: Appeal assay Appeal action Determinants of appeal Customer surplus Animation of demand, Income, cross, promotional. Case connected forecasting Module II Theory of assembly and amount Assembly action Law of capricious accommodation Squanto- producers' equilibrium- allotment to calibration Economies of calibration Abstraction of costs Behavior of abbreviate amount curves Behavior of continued run amount curves Producers' surplus Case studies Module Ill: Acquirement Concepts Accord amid AR and MR. Objectives of close Break alike assay 3 Absorption takes its toll!! Syllabus was attainable to Authors and Publishers fore, colleges and agents knew. Appropriately adjournment in revising. Sincere affliction Dear Student friends... During these canicule of absorption it becomes actual difficult to acquisition advice on web which is relevant, authentic, as able-bodied as free. We acquire that ability should be chargeless and attainable to all those who need. With this ambition the notes, which are originally brash for the acceptance of Faze College, Iambi, are fabricated attainable to all, afterwards any restrictions. These addendum will be advantageous to all the F. Y. B. Com acceptance of University of Iambi, who will be autograph their Business Economics Paper l, Semester I examinations on or afterwards March 2012. Distance Education acceptance are brash to accredit the recommended syllabus. This is neither a argument book nor an aboriginal assignment of research. It is simple account material, complied to advice the acceptance readily acquire the accountable and address the examinations. We no way intend to alter argument books or any advertence material. This is absolutely for bookish purposes and do not acquire any bartering value. Feel chargeless to use and share. We accost your opinions and suggestions on this endeavor. DRP. Proof. Rang SAA [email protected] Com June 2012 4 Module l: Appeal assay Appeal action Appeal refers to the admiration backed by accommodating account of the client and accommodating to pay a price. Appeal action provides the accord amid the abundance accepted and assorted factors chargeless it. In the appeal function, the abundance appeal is the abased capricious and the factors actuate appeal are absolute variables. The appeal action relates the abundance demanded-Q, as an aftereffect of several factors like price-P, income-Y, advertising-A, and tax-T. Abundance demanded, Q = f (P,Y,A,T/F) Yet while belief the accord as a law, it assumes all factors to be connected and isolates one above determinant. The article of befitting alternative factors connected by appliance one above account for the purpose of basic a law is alleged as coteries Paramus. Factors chargeless abundance accepted Following are the factors chargeless abundance accepted : Price: Amount is above agency and abundance demanded. Ђ Taste, fashions and preferences: The abundance accepted depends on tastes that are personal, fashions that are the alien influences on tastes and the preferences that are alleged out of accustomed alternatives. Income: Assets and abundance accepted are absolutely related. Abundance accepted increases with accretion assets and anchor versa. Ђ Amount of accompanying goods: There are two types of accompanying goods- acting appurtenances and commutual goods. 5 Acting appurtenances are those which accord agnate utility. The amount of acting appurtenances anon influences the appeal for good. Complementary appurtenances are those which accord account in combination. These are Joint acceptable that acquire commutual appeal The amount of commutual appurtenances alongside influences the appeal for a good. Availability of accompanying goods: The availability of acting and commutual appurtenances aftereffect the abundance demanded. Taxation: taxation increases the price. The aftereffect is that of accretion price. Ђ Advertising: Announcement increases the demand. At the aforementioned amount or the customer may appeal added goods. Seasons: There are assertive appurtenances area the burning is seasonal. So the appeal changes with alteration season. Ђ Utility: Appurtenances with assorted account acquire beyond demand. This is because use and appliance access with utility. Animation of Appeal Animation of appeal measures acuteness of changes in the abundance of a article for changes in the price, assets or the amount of a accompanying commodity. Accordingly, it is alleged amount elastic, assets animation or cantankerous amount animation of demand. Factors chargeless animation of appeal Following are the factors chargeless animation of demand: 1 . Amount : Appurtenances tend to be added adaptable at college prices and beneath adaptable at lower prices 6 2. Nature of article : Appurtenances of comfortable burning are added adaptable than for capital appurtenances 3. Durability : abiding appurtenances are added adaptable than semi abiding appurtenances and perishables. 3. Account : Multi account appurtenances are added adaptable than distinct adaptable goods. 4. Agency and application accepted factors of assembly are beneath adaptable than aerial amount appurtenances and absolute admired inputs. 6. Government action : The government can change the animation of appeal by abundantly alteration tax on a commodity. 7. Announcement : Ample announcement account makes appeal actual elastic. 8. Fashion and addiction : Appurtenances which are of accepted burning and accepted appearance are beneath adaptable than aloof and accepted gods. 9. Accumulation and amount of accompanying appurtenances : the amount and availability of commutual and acting appurtenances affect the animation of a commodity. Acceptation of animation of appeal 1. Amount assurance : Abstraction of animation is actual important in assurance of price. 2. Taxation : The government considers animation for the purpose of levying tax on a product. 3. Artefact architecture : Amount animation is advised for architecture of a product. Multi-utility appurtenances acquire college animation and can get college price. 4. Marketing: Business strategies are based on elasticity. The ambition consumers, affairs motives and amount are bent as per elasticity. 5. Advertising: Promotional animation is important in chargeless announcement budget. 6. Customer surplus : The balance of account over amount is customer surplus. Animation determines customer surplus. Amount Animation of appeal Amount animation of appeal measures commensurable changes in the affection of article for commensurable changes in the price. Price animation relates abundance accepted and the price. Amount animation is abstinent as The amount animation has a abrogating value, because the amount decreases for an access in the abundance demanded. Business Economics Paper l, F. Y. B. Com (w. E. F. June 2012) 8 pep = 1, Unitary elastic, advertence animation pep ; 1, Relatively elastic, affluence appurtenances pep ; 1, Relatively inelastic, all-important appurtenances ep = m, Perfectly elastic, academic ep = O, Perfectly inelastic, academic The amount of animation changes with alteration admiration of abundance changes for hanges in the price. Larger the admiration greater will be the elasticity. No change in the abundance the animation will be zero. For awful acute quantity, the 9 Assets Animation of appeal Amount animation of appeal measures commensurable changes in the affection of a article for commensurable changes in the income. Assets animation relates abundance accepted and the income. 10 With an access in the assets the customer increases the consumption. This happens in case of accustomed goods. Incase of inferior appurtenances with access in the assets the customer degrease the consumption. This is alleged abrogating assets effect. For accustomed appurtenances the amount of assets animation is absolute for inferior appurtenances it is negative, eye = 1, Unitary elastic, advertence animation eye ; 1, Relatively elastic, affluence appurtenances eye ; 1, Relatively inelastic, all-important appurtenances ey ; O, Inferior appurtenances ey = O, Perfectly inelastic, academic ey = m, Perfectly elastic, academic absolute assets aftereffect absolute assets aftereffect absolute assets aftereffect abrogating assets aftereffect 11 Cantankerous Amount Animation of Appeal Amount animation of appeal measures commensurable changes in the affection of one article for commensurable changes in the amount of a accompanying commodity. Cross Amount animation relates abundance accepted of one article and the amount of a accompanying commodity. The amount of cantankerous amount animation depends on the blazon of accord amid the ex. O, Acting appurtenances When the amount of X increases, the appeal for x decreases, the customer increases the appeal for Y. Since, X and Y are substitutes. 12 Acting gods are those appurtenances which accord agnate utility. Since the appurtenances accord agnate account the customer can absorb one in the abode of the other. ex. = O, Altered appurtenances If the amount of X access the appeal for Y charcoal banausic this is because the appurtenances are altered and absolute in burning and utility. Point Animation of Appeal According to Lucas all appurtenances tend to be adaptable at college prices and breakable at lower prices. This assumption can be apparent geometrically on a appeal ambit application point animation of appeal method. It is arrangement of lower articulation to the high segment. The animation access as it moves aloft the appeal ambit to the left. The appeal ambit is continued on both abandon so as to accomplish a appropriate bend triangle. Afresh the animation at point is abstinent as E= Lower articulation High articulation BC ABA or So e = 1, Unitary elastic, advertence animation e = O, Perfectly inelastic, academic e ; 1, Relatively elastic, affluence appurtenances e ; 1, Relatively inelastic, all-important appurtenances e = Perfectly elastic, academic 13 Promotional Animation of Appeal article for commensurable changes in the promotional budget. Price animation relates sales and the promotional budget. Promotional animation is a authoritative apparatus of accumulated accommodation making. It enables the action to adjudge whether a sales advance account is adorable or not in agreement of breeding accumulated incomes and sales. An adaptable promotional animation agency that the sales are in beyond accommodation than the promotional account and desirable. If the promotional animation is beneath than one that breakable it agency that the promotional account has bootless in announcement commensurable sales, appropriately undesirable. The promotional account may acquire apparatus like media, advertising, sales promotions, chargeless samples, gifts, promotional offers etc. Customer Surplus Customer surplus is the balance of Account fatigued over the amount paid. According to the law of appeal the amount decreases with accretion quantity. This is because the account abatement with in creasing burning as per the law of abbreviating bordering utility. A customer pays the amount according to the account fatigued on the aftermost commodity. This amount is compatible for all the beforehand units. In this action the customer derives surplus account over the amount paid on beforehand units. This surplus account is alleged the Customer Surplus. Customer surplus = Account acquired - amount paid 14 Customer surplus is the balance of account acquired by consumer. The ambassador surplus is the surplus of amount answerable by the ambassador over the accumulation price. The accumulation ambit shows that the amount increases with accretion quantity. The amount is answerable as per the aftermost assemblage produced, admitting the ambassador receives a surplus over the accumulation price. This is alleged producers' surplus. The producers' surplus can be added by abbreviation customer surplus. This is alleged customer exploitation. Assumptions 1. The abstraction believes in the law of abbreviating bordering account 2. The law of appeal is advised for chargeless the price. . The amount charcoal uniform. 4. The accumulation of appurtenances is uniform. 5. The tastes of the customer abide connected 6. There is absolute competition. Limitations The abstraction of customer surplus has several limitations due to its adamant assumptions. 1. The account can not be abstinent 2. Customer surplus can not be calmly quantified. 3. Bazaar imperfections abjure customer surplus to the consumer. 4. Marketing techniques access customer surplus by assuming greater account and afresh in bulge price. 5. Customer surplus encourages the government to burden tax. Applications: Customer surplus is a actual advantageous abstraction activated in marketing, abate architecture and pricing. 1. It helps in chargeless the price. Beyond the customer surplus, greater the achievability of accretion the price. 2. The Government can actuate tax based on customer surplus. 3. Under monopoly, the ambassador accuse altered prices for the aforementioned article depending on the customer surplus. It helps on amount discrimination. . Necessities acquire beyond customer surplus than affluence goods. 5. Customer surplus helps in appeal forecasting. Appeal forecasting Appeal forecasting refers to approaching bazaar situation. Appeal forecasting is an important address of accumulated accommodation making. It enables a close adjudge aloft a article for assembly amid several or helps in compassionate the approaching bazaar of a accustomed product. Attributes and acceptation of appeal forecasting 1. Appeal forecasting starts with defining the artefact or the artefact mix. This will depend on the attributes of close and its accumulated image. . Once the artefact is absitively the anticipation will now call the affairs objectives of the product. The affairs objectives will actuate the ambition citizenry for whom the artefact is actuality produced. 3. The affairs objectives will access the artefact design, the amount and ultimately, the price. 4. Depending on the artefact design, the inputs are drawn. The factors charge to be alien or domestically procured. The appeal anticipation will accommodate the sources and the costs. 5. To ascertain the bazaar affairs the artefact is articular with the artefact cycle. The artefact may accord to any of the states of artefact cycle: interdiction, growth, competition, stagnation or Business Economics Paper l, F. Y. B. Com (W. E. F. June 2012) 16 decay. The date to which the artefact belongs will actuate the alternative of the artefact and forecast. 6. Specialized inputs and activity may crave efforts in accretion and training. 7. The assembly and commitment agenda is fatigued depending on the market. Melancholia acceptable may acquire altered commitment agenda as compared with a approved acceptable of consumption. 8. The amount is absitively and the banknote flows are estimated. The sales, acquirement profits, costs and the ante of acknowledgment are estimated for aeon of three to bristles years. 9. The bazaar is declared with account to accident of competition, Government policy, approaching prospects. In case of any accident the accessible methods of advantageous accident will be indicated. Such appeal anticipation will be advantageous forecasting depends on the attributes of artefact and attributes of firm. The action differs allowance close to close and artefact to product. 1. The appeal anticipation has to aboriginal accede the accumulated policy. The artefact to be produced depends on the close and the attributes of bazaar angel it carries. . There afterwards the access to appeal anticipation changes amid an absolute close and a new firm. An absolute close will acquire actual abstracts which can be acclimated for approaching analysis, area as a new close has to accomplish accordant abstracts from the market. 3. Depending on the product, close and bazaar the adjustment of appeal forecasting will be selected. Thus a archetypal is congenital with all appropriate parameters. 4. The altruism banned are defined. These are the accurateness levels of the forecast. The accurateness akin will actuate whether to acquire or adios the model. 5. The Archetypal goes for sample testing in a bound arena to see all the bare advice is got. The balloon run will advice in authoritative modifications to the model, if charge be. 6. When the archetypal is successful, the beyond abstraction is conduced and the after-effects are analyzed. 7. Finally, the anticipation will accommodate projected banknote flows for bristles years to come. Notes, definitions are accustomed calm with accident and methods to accident management. A abundant description on the bazaar trends and the affairs of the abate to be marketed is appended. Business Economics Paper l, F. Y. B. Com (w. . F. June 2012) 17 Methods of Appeal forecasting There are altered types of appeal anticipation anniversary meant for a specific cold and has a specific abstracts claim and ha specific advice to offer. The methods of appeal forecasting can be classified into two groups: A. Statistical or Quantitative methods of appeal forecasting B. Survey methods of appeal forecasting A. Quantitative OR Statistical methods of Appeal forecasting Quantitative methods of appeal forecasting charge a ample abstracts abject for analysis. It is added ill-fitted for beforehand firms with actual data. Quantitative methods accommodate authentic after-effects but abilities in assay and estimation will it added effective. Some of the quantitative methods are changeless and accede alone bound variables. The alive forecasts use awful developed algebraic accoutrement of assay and accommodate authentic and dependable results. 1. Beeline blueprint Beeline blueprint is the simplest of quantitative methods of appeal forecasting activated on time alternation data. It assumes a connected amount of change of sales and based on the change coefficient, the ales for any approaching year is estimated. Illustration Given, antecedent sales (a) of 1 500 bags and an anniversary access (b) of 500 tons, the out put can be estimated for any approaching year, with the equation: Sales, Y = a + bat, Area a is the antecedent sales, b is the anniversary accepted change and t is the time period. The projected sales afterwards 5 years will be sales, Y = 1500+( 500 x 5) = 1500 + 2500 = 3,500 The beeline blueprint a changeless adjustment of quantitative appeal forecasting. It assumes a connected amount of change. Though it is not the best authentic method, it is frequently acclimated as basic estimate. 18 2. Trend band Seasonality is a appropriate of time alternation data. It prevents the acceptance of any liner adjustment of appeal ahead casting. For this reason, the abstracts needs to be adapted for the seasonality afore any adjustment is applied. The seasonality is time alternation abstracts can be adapted in altered ways. One adjustment is applying the statistical adjustment of trend applicable or atomic squares method. A trend band is adapted in such a address that the absolute variations are aforementioned as the abrogating variations. In alternative words the trend should be an boilerplate of the melancholia changes. In there words the trend band should be so adapted that the aboveboard of the deviations is least. 19 3. Affective averages The seasonality is time alternation abstracts can be adapted by applying the statistical adjustment of affective averages. The date is advised to aboriginal acquisition out the aeon of seasonality. Afresh a affective boilerplate is affected by demography boilerplate of that period, sequentially, anniversary year. Anniversary year one beforehand ascertainment is alone and a afterwards ascertainment is included. This way, the set of averages of the advertence aeon is computed. Normally, afterwards applying the affective averages the trend becomes clear. If he trend can not be begin the affective averages is afresh with altered time aeon or on the aforementioned aeon again. In the analogy a affective boilerplate of three years is activated and the trend is brought out. 4. Corruption blueprint Corruption blueprint deals with the affiliation amid the abundance accepted and the factors chargeless it. The action begins with the appeal action Abundance demanded, Sq = f( P, Pc,T,A) Once the appeal action is identifies the attributes of aftereffect is describes and the acuteness of affiliation is able in agreement of figures. Afresh the corruption blueprint is casting as an ascribe achievement affiliation 20

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