这是用户在 2024-6-25 15:02 为 https://app.immersivetranslate.com/word/ 保存的双语快照页面,由 沉浸式翻译 提供双语支持。了解如何保存?

Microeconomics for Business Decisions Econ1001
商业决策的微观经济学 Econ1001

Workshop Three

Elasticity Concepts

Workshop Three Elasticity Concepts

Question One What is ‘elasticity ?

Define elasticity and why is the concept is so important for business decisions?

Elasticity is defined as how sensitive one variable is to the change in another. In microeconomics it is how much will quantity demanded or quantity supplied change in proportion to a change in another variable, typically price or income.

Relevancy of elasticity for business decisions:

Businesses (i.e. firms, corporations, government utilities, etc.) need to know how sensitive their customers’ demand is to a price change. If customers are very price sensitive (meaning a price increase will cause proportionally more decrease in quantity sold [ e.g. an increase in 5% of the firm’s products causes say a 10% decrease in sales]), then the firm needs to be very cautious about its pricing; for example it might be reluctant to pass on a rising cost of production to customers.
企业(即公司、公司、政府公用事业等)需要了解客户需求对价格变化的敏感程度。如果客户对价格非常敏感(这意味着价格上涨将导致销售数量按比例减少[例如,公司产品增加 5% 会导致销售额下降 10%]),那么公司需要非常谨慎地定价;例如,它可能不愿意将不断上升的生产成本转嫁给客户。

Businesses involved in producing and selling price elastic goods and services are often more vulnerable to recessions compared with those involved with less price elastic goods and services.

Provide some examples of products where consumers are generally price sensitive (e.g. products where demand is elastic) and other examples where consumers are generally less price sensitive (e.g. products where demand is inelastic).

Elastic demand: A price rise will result in a proportionally more decrease in the quantity demanded for that product.

Examples: restaurant meals, overseas holidays (for the average person), etc.

Inelastic: A price rise will result in a proportionally less decrease in the quantity demanded for that product.

Examples: petrol, electricity (at least in short to medium term); medical procedures (because often a necessity and no substitute), etc.

Question Two Price elasticity calculations

Calculate price elasticity and provide interpretations of the elasticity results (i.e. what business decisions can be made, given the elasticity number [called a coefficient])
计算价格弹性并提供弹性结果的解释(即,在给定弹性数 [称为系数] 的情况下可以做出哪些业务决策)

The price of oranges falls by 10% and the quantity of oranges demanded increases from 500 to 600. Use the percentage change method (%∆Q / %∆P)
橙子价格下降了10%,橙子需求量从500个增加到600个。使用百分比变化法 (%∆Q / %∆P)

Learning note: [ B – A / A ] x 100 is the percentage change. For example, if quantity demanded was 500 and then increases to 600, this is a 20% increase.
学习说明:[ B – A / A ] x 100 是百分比变化。例如,如果需求量为 500,然后增加到 600,则增加 20%。

[ 600 - 500 / 500] x 100 = [100 /500] x 100 = 0.2 x 100 = 20%


Take absolute value….=2

If absolute value > 1…….product is price elastic
如果绝对值> 1....... 产品是价格弹性的

If absolute value < 1…….product is price inelastic
如果绝对值< 1....... 产品是无弹性的

Therefore product is price elastic.

Question Three Income elasticity calculations

Calculate Income elasticity when consumers’ incomes increase by 5% and the quantity of oranges demanded increases from 500 to 515.
当消费者收入增加 5% 且橙子需求量从 500 增加到 515 时,计算收入弹性。

EY=%∆Q%∆I=+3%+5%=+0.6 [normal good]

If the income elasticity of demand for wine is 2, then a 5% increase in consumers' incomes will lead to a _______ % increase in quantity demanded

Ey = %change Q / % change income
= ? / + 5%
? = +10%

Therefore a 10% increase in quantity demanded.
因此,需求量增加了 10%。

Question Four Cross-price elasticity

Calculate cross-price elasticity when the price of apples falls from $1 to $0.80 (80 cents) and the quantity of oranges demanded falls from 500 to 450. Interpret the result: are apples and oranges substitutes or complements in this case?
当苹果价格从 1 美元下降到 0.80 美元(80 美分)并且橙子需求量从 500 下降到 450 时,计算交叉价格弹性。解释结果:在这种情况下,苹果和橙子是替代品还是补充?

EC=%∆Q oranges%∆P apples=-10%-20%=+0.5 [SUBSTITUTES]

The price of butter increases from a $10 to $12.50 a kilogram and the demand for bread falls by 20%. Calculate cross-price elasticity. Interpret the result: are butter and bread substitutes or complements in this example?

EC=%∆Qbread%∆Pbutter=-20%+25%=-0.8 [COMPLEMENTS]

Question Five

A local cinema reduces its ticket price from $10 to $8. The quantity demanded of tickets soon increases from 1000 to 1400 tickets per week. What is the price elasticity of demand? Use the percentage change method (%∆Q / %∆P). Note for price elasticity the absolute value is taken.
当地一家电影院将票价从 10 美元降至 8 美元。门票需求量很快从每周 1000 张增加到 1400 张。需求的价格弹性是多少?使用百分比变化法 (%∆Q / %∆P)。请注意,对于价格弹性,取绝对值。

Percentage method:

+40%/ -20% = -2
Which is interpreted as Ed = 2
解释为 Ed = 2

In the example above, explain whether the cinema’s total revenue will increase or decrease as a result of the ticket price decrease. Briefly explain why will it increase or decrease

The total revenue (P x Q) will increase.

Explanation: Because it is elastic (> 1) then the price decrease will cause quantity demanded to increase by proportionally more than the price decrease.

Could also use the numbers given to demonstrate:

Total Revenue before price decrease: $10 x 1000 = $10, 000.

Total Revenue after price decrease: $8 x 1400 = $11, 200. (So an increase in TR of $1,200)
降价后的总收入:8 美元 x 1400 = 11, 200 美元。(因此 TR 增加了 1,200 美元)

Question Six

The Vice Chancellor of a university is concerned about increasing costs, and decides to raise tuition fees in an attempt to increase university revenue. Briefly explain (i.e. 2 or 3 sentences) whether you think this move will accomplish the Vice Chancellor’s objective. (Hint: what is the relationship b/w elasticity and total revenue?)
一所大学的副校长担心成本增加,决定提高学费,试图增加大学收入简要说明(即 2 或 3 句话)你是否认为此举会实现副校长的目标。(提示:黑白弹性和总收入有什么关系?

Depends on the price elasticity of fees.

For a prestigious institution (e.g. Oxford, Harvard, etc.) students may not be that price sensitive so the VC’s strategy is correct in this case.

But for an average university that is not in the top league and is facing fierce global competition, or a university (e.g. in a large city) with nearby competing institutions that do not raise their fees, then students may be much more price-sensitive. Thus the strategy of raising fees could actually decrease revenue because there might be a large decrease in quantity demanded.

End of Workshop Set Three