Ans : A direct relationship does not exist between a company's incoming
the prices of its products. Higher prices do not always lead to
higher profits for a business.
When prices change, a company must
consider the economics concept called elasticity to
determine the true
impact of the change on total revenue. Therefore, a change in price can
either cause total revenue for the company to increase or decrease.
1. Elasticity of Demand : The elasticity of demand indicates a
relationship between the price of a product and how much
consumers will pay for it.
2. The Price-Demand Relationship: A change in pice does not always
have to result
in an increase in revenue. When a company makes the
decision to lower prices, the
company must also consider that it may
acquire additional customers with the change,
especially if the decrease in
price is substantial enough to include a new market.
3. Determining the Effect on Total Revenue : In order to fully predict the
effect a change in pices will have on total revenue, a company
can conduct preliminary
research into the market, and any new markets
that may result from the price change.
4. Gauging Elasticity
ultimate consideration when predicting how a price
change will affect
total revenue is the elasticity of the market. This elasticity will depend on
market as a whole and any specific target markets. A highly elastic market
is one in which individuals do not respond to the change in price. In other
words, customers will
continue to purchase the products in the same
quantities after the price increase in an elastic
market. In an inelastic
market, the change in price produces a noticeable change in the
of items purchased. Therefore, a price increase in an elastic market would lead
increase in a company's total revenue. However, a price increase in
an inelastic market
would result in decrease in total revenue.
various activities of financial
Ans : Banks and financial institutions are tor-profit businesses that offer
and companies a wide variety Of services. Rather than burying
your cash in the backyard or
stuffing it into your mattress as your preferred
method of personal finance management, use
a bank or financial institution's
services for your next fiscal action. While larger institutions feature a
plethora of products, most banks are known to offer standard services.
1. Store Money : Storing money for customers is the most classic of banking
Traditional banks, credit unions and savings institutions offer
this service. Customers use
bank accounts, such as checking or regular
savings accounts, because most provide safe
locations to store deposited
money that is FDIC-insured, or protected by the Federal
Insurance Corporation. This means that consumers will not lose their
savings money (up to $100,000) if then accredited bank or financial
institution fails or goes bankrupt. Some savings accounts allow customers to