final - U.C. Berkeley Extension Name: Gopi Patel Fall 2010...

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U.C. Berkeley Extension Name: Gopi Patel Fall 2010 Date: November 09, 2010 Financial Statement Analysis and Valuation Final Exam Each question is 20 points. There are 5 questions total. Partial points will be provided as necessary. 1. The substitutability of a particular good/service can play havoc on a company’s sales. This is formally defined as elasticity of a good/service. The elasticity/substitutability changes for 4 reasons. The 4 reasons are stated below, briefly describe/explain them. a) The larger the time interval – elasticity is likely to increase with the time horizon. The reason behind the same is that the behavior, preferences and taste of the consumer changes along with the time. With change in time the preferences changes, which states an elastic demand of goods. b) Broader definition - there are wide range of availability of goods and services i.e. wide range of substitutes are available which is likely to increase the elasticity of goods. c) Depends on the size relative to a person’s budget - there is a particular portion of the income which consumer devotes for purchasing goods, if the price of a particular goods
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final - U.C. Berkeley Extension Name: Gopi Patel Fall 2010...

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