Ans HOI product Maa mustard oil s price elasticity of demand is 093132 ie

# Ans hoi product maa mustard oil s price elasticity of

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Ans: HOI product Maa mustard oil s price elasticity of demand is -0.93132 i.e inelastic as price elasticity of demand is less than one. It states with the large change in price the quantity demanded will change with small margin Total Revenue is the product of price and quantity demanded. When demand is elastic as price goes down total revenue increases and when demand is unit elastic then decrease in price doesn’t affect total revenue and if demand is inelastic then with further decrease in price total revenue will decrease. As Maa mustard oil s price elasticity is inelastic that means with the decrease in price ,total revenue will also decrease vice versa ..Total revenue has a direct relationship with price in case of inelastic products. Q4.What is optimum price at which total revenue can be maximized for Maa mustard oil if the competitors’ prices do not incre ase in october2015 (scenario 1)? If competitors increase their price by around 6% as suggested in case (scenario 2), what would be the optimum price ? Does the company benefit if competitors increase their price ? perform all calculation under the assumption of no increase in promotional expenditure in the next month and 1% increase in the per capita income of consumer ? Ans: Q (demand_Maa) = 5024.753 - 136.6168 (own_price)+ 117.4078 (compe_price) -0.2823(inc_per_capita)+ 7.8651 (pro_exp)--------(1) A.T.Q Prediction of October 2015 optimum price where total revenue can be maximized Scenario 2 compe_price = 109.14