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Input Use and Price Elasticity of Demand

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Select a good or service (input) used by your firm or by you when performing your job.

a. Select two factors (for example revenue, technology, or the relative price of a substitute input) and discuss how a change in each would alter the use of the input.

b. For this input is your firm's price elasticity of demand relatively elastic or inelastic?

c. What will the MARKET demand for this input be in five years and briefly why?

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INPUT USE AND PRICE ELASTICITY OF DEMAND: EFFECT OF FACTOR CHANGES

For this report, the input is beef, a raw material used in the production of hamburger. Analysis will be made on the following:
1. Effects of changes in the following in its use:
1.1 revenue and

An increase in revenue will encourage the producer to produce more because the change in revenue would mean an increase in demand for hamburger. This would result to an increase in the use of the inputs used in the production of hamburger, one of which is beef.
1. 2 relative price of a ...

Solution Summary

This report deals with input demand or use and how it is affected by changes in factors such as revenue and price of a substitute product. It was emphasized that increase in revenue would encourage the producer to produce more, resulting to an increase in the demand for a certain input. However, a decrease in the price of a substitute product may result to a decrease in the demand for the inputs used in the production. Unlike consumer items, the demand for production inputs may not be price elastic.This report further noted that in the long run, demand for certain inputs may decrease because the producer would have adequate time to apply backward integration growth strategy.

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Microeconomics - I need to 2 questions answered a paragraphn on each question or 10 sentences on each

Need 2 questions by today friday 11/6/09 by midnight eastern standard time ohio time.

1. Describe and estimate the price elasticity of demand for a good or service of your company, or a company of interest to you. (Not your learning team good or service though!) ? Estimate the price elasticity of demand by guessing at the effect of a 10% price change on the sales level. Formulate how the assumed 10% price change and the change in sales level are the only two facts you need to estimate a price elasticity. ? Determine if the good or service tends to be elastic or inelastic, and the reasons why. ? Connect your estimate of price elasticity of demand to pricing decisions of the company: should it raise or lower prices so as to maximize total revenues? ? Speculate how our analysis changes if we are maximizing profits rather than revenues. ? Estimate the income elasticity of demand by guessing at the effect of a 10% income change on the sales level. Formulate how the assumed 10% income change and the change in sales level are the only two facts you need to estimate the income elasticity. ? Determine if the good or service tends to be an inferior good or a normal good; if a normal good determine if it is a necessity or a luxury; and finally, explain the reasons why.

2.
Describe and estimate the production for a good or service your company produces (or a company of interest to you). ? Describe the product, typical volumes, and typical prices ? Describe the form of ownership of your firm: sole proprietorship, partnership, corporation, non-profit corporation, government enterprise, government agency, cooperative, association, franchise ? Describe the inputs used in the production process: buildings, equipment, vehicles, labor (specialized skills or unskilled), land, raw materials ? Describe the technology of the production process: automated or labor intensive, non-automated capital intensive, land intensive ? Define the short run and the long run by identifying the inputs (or input) that define(s) and give examples of increasing marginal returns and diminishing marginal returns. ? If you have time and interest: ? Describe the method of control of inputs in your chosen firm: hierarchy, team production, worker discretion, quantitative or qualitative goals (on intermediate measures (cost reductions, sales contacts, orders) or final output [profits, sales volume, total revenues), direct monitoring; Describe the kind and degree of departmentalization: functional, multidivisional, matrix ? Describe the degree of integration in the firm: vertical and horizontal ? Describe future trends in the technologies, input supplies, and organizational form for your chosen firm

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