Answer 1)

Unit of Output 1 2 3 4

Total Total Revenue Cost 10 5 30 18 50 70 29 38

Total Profit 10-5=5 30-18=12

Average Profit 5/1=5 12/2=6

50-29=21 21/3=7 70-38=32 32/4=8

Marginal Profit nil 12-5/21=7 21-12/32=9 32-21/43=11

Formulas to determine total profit, average profit and marginal profit:Total profit= Total revenue- Total cost Average profit = Total profit/unit of output Marginal profit = change in total profit / change in unit of output

Incrementalism
Incrementalism is concerned with reasoning that involves estimating the impact of decision alternatives. The two basic concepts included in incremental analysis is as follows :1) Incremental cost (IC) 2) Incremental revenue(IR) Incremental cost involves change in total cost because of change in the level of investment and out put . On the other hand incremental revenue is defined as the change in total revenue because of changes in the level of output, prices etc. The IR and IC help the manager to take various decisions . decisions are taken , taking into consideration that IR>IC. A decision is considered profitable only in the following cases:1) if increase in revenue is more then increase in cost . 2) if decrease in cost is more then decrease in revenue. 3) A decision is profitable if it reduces some cost more then it increases others

4) It decreases some resources more then it decreases others.

Marginalism
The concept of margin is quite popular and important in Economics. Equilibrium solution are determined through marginal adjustments. For example, in formal economic theory we learn that a business firm makes a decision to produce by equating marginal revenues(MR) with marginal costs(MC).That is MR=MC There are various other marginal concepts like marginal utilities and marginal productivities.

Difference between Incrementalism and Marginalism

The concept of margin is very useful , but in real world the concept of margin is replaced by Incrementalism . 1). Marginal concepts are always defined in terms of unit changes, but incremental concepts are defined in terms of chunk changes. 2) Marginal concepts are less flexible as compared to incremental concepts.
3) In case of Incrementalism more then one independent variable can be considered

at a time but in case of Marginalism only one independent variable can be considered at a time . 4) Marginal revenue is the increase in revenue due to one-unit increase in level of output. But revenue may increase due to a change in not only output, but also price and production process

Answer 2 ) The Price Elasticity of Demand (commonly known as just price elasticity) measures the rate of response of quantity demanded to a change in price. .The formula for the Price Elasticity of Demand : Price elasticity of demand = (% Change in Quantity Demanded) /(% Change in Price) Calculating the Price Elasticity of Demand:Price elasticity of demand can be understood through the following example P1= 5 P2=10 Q1=1000 Q2=2000

PRICE ELASTICITY OF DEMAND= (%CHANGE IN QUANTITY)/ (%CHANGE IN PRICE ) = (2000-1000/10-5)*(5/1000) = (1000/5)* (5/1000) = 200*0.005 =1 Price elasticity helps to determine the nature of the goods as follows:Ep>1- goods are elastic Ep< 1- goods are inelastic Ep=1 goods are unitary

DETERMINANTS OF PRICE ELASTICITY OF DEMAND:-

Price elasticity of demand is determined by various factors. These are as follows:

Number of substitutes: The larger the number of close substitutes for the good th easier it is for the household to shift to alternative goods if the price increases. Generally, the larger the number of close substitutes, the more elastic the price elasticity of demand. Degree of necessity: If the good is a necessity item then the demand is unlikely to change for a given change in price. This implies that necessity goods have inelastic price elasticities of demand. Price of the good as a proportion of income: It can be argued that goods that account for a large proportion of disposable income tend to be elastic. This is due to consumers being more aware of small changes in price of expensive goods compared to small changes in the price of inexpensive goods. People do not pay much attention to changes in price of inexpensive goods.

Answer 3) To an economist the fixed costs are overhead costs and to an accountant these are indirect costs. The difference lies in the context. Economics is the study of the production, consumption and distribution of goods and services. Accounting is the communication of financial information about a business entity. Since the purpose of the disciplines is different, the way things are discussed and organized in accountancy and economics is also different. It's similar to the notion of a saw to a tile layer vs a carpenter. The tile saw is made with industrial diamonds and the blade runs through a bath of water to keep it cool. There are dozens of types of saws a carpenter would find useful, but the tile saw would not be one of them.

Answer 4 ) The effect of change in demand on price and quantity can be shown in two ways :a) Increase in demand b) Decrease in demand Price 5 4 3 2 1 Demand 100 120 150 200 300 Supply 200 180 150 110 50

If price is 5 supply exceeds demand. The producer in this case may phase difficulty in order to find enough customers to sell its products. On the other hand if price is 1 demand is in excess of supply. This will give rise to competition among the buyers as to buy from whom. Therefore the best price is 3 where demand and supply are equal. This means what ever is produced is consumed. This is known as the equilibrium. Equilibrium price can be determined by the intersection of the demand and the supply curve

INCREASE IN DEMAND

In case of increase in demand, both price and quantity will rise. The figure below will show the effect of increase in demand on both price and quantity. As the demand increases rightward that is from D1 TO D2, there is an increase in price from P1 TO P2 as well as increase in quantity from Q1 TO Q2. The figure below clearly indicates the increase in demand. An increase in demand will lead to a rightward shift of the demand curve.

DECREASE IN DEMAND

In case of decrease in demand, both price and quantity will decrease. The figure below will show the effect of decrease in demand on both price and quantity. As the demand decreases towards the left that is from D1 TO D2, there is an decrease in price from P1 TO P2 as well as decrease in quantity from Q1 TO Q2. The figure below clearly indicates the decrease in demand. A decrease in demand will lead to a leftward shift of the demand curve.

Answers 5a) MARKET EXPERIMENTS Marketing Experiments is a research laboratory with a simple (but not easy) seven-word mission statement: To discover what really works in optimization. The main aim is to focus on all our experimentations so as to on optimize the marketing communications. Towards the that we test every approach and it is then published in the marketing experiments Journal

There are three ways to use this site: 1. Self-Guided Learning: Access, for free, more than $10 million in primary marketing research and experiments. 2. Formal Training: this helps to learn how to increase our marketing ROI through live events & workshops, live company training, online certification courses 3. Research Partnership: Apply for a research partnership and let the Marketing Experiments team help drive conversions and ROI for our subscription, leadgeneration, ecommerce, other online marketing efforts and emails.

Answer 5 b) BUNDLING OF SERVICESBundling is one of the most commonly used marketing tactic that involves offering two or more goods or services as a package deal at a discounted price. Examples :Bundling of services of goods and services are followed at McDonald's which offer value meals. Another example can be of automobiles with features such as air conditioning, geographical systems and sunroofs . The most well-known example is of bundled computer package complete with a monitor, keyboard, mouse, , and preloaded software for a single price. Alternatively, one could select and buy each component of the system separately. Advantage of bundling of goods and services is that all related goods and services need not be purchased separately instead they can be purchased altogether. This makes it cost effective for the buyers. Answer 5c ) PRODUCT DIFFERENTIATION :Product differentiating involves differentiating the products with the products of ur competitors because of certain unique features your product has. Differentiating product (or service) gives the producer more pricing power and even a degree of monopoly.

There are a number of ways in which a company can differentiate its products . This includes:-

1) Improving the product itself by adding features, improving reliability, etc. 2)Branding- marketing to make the product appear different to consumers. 3) Distribution: making the product more conveniently available than its competition