Economics Is The Study Of The Ownership, Use, And Exchange...

Economics is the study of the ownership, use, and exchange of competing wants - Economics is observed as a societal knowledge because it uses scientific methods to form theories that can help clarify the performance of individuals, groups and organisations. Economics challenges to describe economic behaviour, which rises when scarce resources are exchanged. http://www.economicsonline.co.uk/Competitive_markets/What_is_economics.html I will be aiming to answer three questions on economics- I have chosen question 2 (Elasticity) question 4 (Perfect and monopoly competition) and question 5 (Price discrimination). Question 2) Elasticity is a bill of responsiveness. The responsiveness of measured by variable quantity Z to a modification in†¦show more content†¦http://www.economist.com/economics-a-to-z/p#node-21529502 An example would be: A magazine costing  £1.00 and then increasing by an extra 20p, the daily sales would then fall from 500,000 to 250,000 the PED would be: - 50% / + 20% = (-) 2.5 The negative sign indicates that the Price and the Quantity are related, which you would expect for most price/demand relationships as a rise in price will fall in the quantity demanded. This is important due to the magazine supplier being able to estimate the revenue that will be affected by the change in price. From above, the revenue at  £1.00 is  £500,000, but falls to  £30,000 after the price has risen. http://www.economicsonline.co.uk/Competitive_markets/Price_elasticity_of_demand.html The government has many products which are imposed to indirect taxation, an example of this is inelastic, meaning fuel or alcohol. The price elasticity of demand is important for these products as it is able to determine how much tax producers can change on consumers as the prices rise. Companies/Firms are able to use PED in many ways, which enables them to decide the change of price effected by the total revenue of sales which then the price change that is likely caused by the supply changes. Income elasticity of demand Income elasticity of demand (YED) shows the effect of a change in income on quantity demanded based on the consumers income, and YED shows precisely the extent to which changes in income lead to