MGT207 Business Statistics

Business StatisticsTU Board 2080

Consider the following demand schedule; Points:ABCDEIncome (RS):1000020000300004000050000Demand (Units):2004006008001000 a) Compute the income elasticity of demand at movement from B to D and D to B…

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Consider the following demand schedule; Points:ABCDEIncome (RS):1000020000300004000050000Demand (Units):2004006008001000 a) Compute the income elasticity of demand at movement from B to D and D to B by proportion method [4] b) Compute the income elasticity of demand at midway between B and D and D and B by arc method. Why is arc method considered as more appropriate than proportion method? [4+2] c) How do firm use price elasticity of demand in business decision making? Explain with suitable examples. [5]

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