Assignment 3 ECO
Cheryl Thomas Strayer University
Assignment 3/Long-Term Investment Decisions
Dr. Camille Castorina
August 30, 2014
One of the most important long term decisions for any business relates to investment. Investment is the purchase or creation of assets with the objective of making gains in the future. Typically investment involves using financial resources to purchase a machine/building or other asset, which will then yield returns to an organization over a period of time. Planning investments involves thinking about a range of issues that have a bearing on where you ultimately decide to put your money. These issues will vary according to your particular age, circumstances and attitude to risk, and thinking about them carefully before you start making commitments will help you avoid some potentially costly mistakes.
1. Outline a plan that managers in the low-calorie microwaveable food company could follow when selecting pricing strategies for making their products as inelastic as possible. Provide a rationale for your response. Pricing the product to reach out the current and potential customers is crucial for the managers. It is their understanding and decisions that are going to determine the success of any business. A major strategy that ensures that customers are retained with the product is to make the product inelastic employing pricing and other strategies. However, before we explain the strategies to make low-calorie microwavable food inelastic, we must understand the meaning of elasticity. Elasticity or price elasticity is a measure of quantity demand responded when price is changed, that is, it a measure of responsiveness of the consumer due to price change. It is measured as the ratio of the percentage change in the quantity demanded and percentage change in price. If the elasticity of demand is greater than one, we say that demand is elastics, if it is less than one, we say that demand is inelastic, if
Assignment 3/Long-Term Investment Decisions
Dr. Camille Castorina
August 30, 2014
One of the most important long term decisions for any business relates to investment. Investment is the purchase or creation of assets with the objective of making gains in the future. Typically investment involves using financial resources to purchase a machine/building or other asset, which will then yield returns to an organization over a period of time. Planning investments involves thinking about a range of issues that have a bearing on where you ultimately decide to put your money. These issues will vary according to your particular age, circumstances and attitude to risk, and thinking about them carefully before you start making commitments will help you avoid some potentially costly mistakes.
1. Outline a plan that managers in the low-calorie microwaveable food company could follow when selecting pricing strategies for making their products as inelastic as possible. Provide a rationale for your response. Pricing the product to reach out the current and potential customers is crucial for the managers. It is their understanding and decisions that are going to determine the success of any business. A major strategy that ensures that customers are retained with the product is to make the product inelastic employing pricing and other strategies. However, before we explain the strategies to make low-calorie microwavable food inelastic, we must understand the meaning of elasticity. Elasticity or price elasticity is a measure of quantity demand responded when price is changed, that is, it a measure of responsiveness of the consumer due to price change. It is measured as the ratio of the percentage change in the quantity demanded and percentage change in price. If the elasticity of demand is greater than one, we say that demand is elastics, if it is less than one, we say that demand is inelastic, if
References: Mankiw, G. N., (2012). Principles of Microeconomics (6th ed.) . Cengage Learning McGuigan, J. R., Moyer, R. C., & Harris, F. H. deB. (2014). Managerial economics: applications, strategies and tactics (13th ed.). Stamford, CT: Cengage Learning Nicholson, W. (2012). Microeconomic Theory: Basic Principles and Extensions (11th ed.). USA: Cengage Learning. Samuelson F. W. & Marks, G.S. (2012). Managerial Economics (7th ed.). Wiley Varian, H. R. (2011). Intermediate Microeconomics: A Modern Approach (8th ed.). NY: Norton