Use of Price Elasticity & Income Elasticity of Demand for Businesses Essay Example for Free

Use of Price Elasticity Income Elasticity of Demand for Businesses Essay Price elasticity of demand and income elasticity are two important ideas in practical business activities. Price elasticity, which is represented by PED, measures the changes of one product’s demand in response to a changing in its price. We can write an equation in this way: Price elasticity of demand = percentage change in quantity demanded of the product / percentage changes in price of the product. This is abbreviated to: XED=%ΔQD / %ΔP. Income elasticity of demand (represented by YED) shows the relationship between a change in quantity demand and the changing in income. The equation can be written as: Income elasticity of demand = percentage change in quantity demanded / percentage changes in income. Abbreviated to: YED=%ΔQD / %ΔY. These are just two terms, but how they work is the most important part. For companies, price elasticity of demand is actually effects of prices’ changing on its own sales of products; and income elasticity of demand is effects of consumers’ changes on its sales. Generally speaking, learning the two relationships can help the business find out the situation of the market and make right decisions. Price Elasticity of Demand (PED) The value of price elasticity of demand is usually negative. The product with high value of PED is described to be elastic, while for one with low PED is said to be inelastic. Just an example to show this idea: when Mc Donald rises its price of burger from $2 to $2.3, and its demand falls from 20 million to 14 million, so its PED= (14 million-20 million)/20 million / (($2.3-$2)/$2 = 30% / 15% = 2. It’s a quite big value of PED, so this is elastic. In order to show the degree of elasticity, we use graphs. There are generally 5 types of graphs, and through them we can see the product’s PED, and company can make decisions in different situations. Type 1: Elastic demand (Please ignore the numbers on it.) This occurs when a given % change in price causes a greater % change in demand. In this kind of graph’s condition, the value of PED is greater than 1 and less than infinity. It usually happens when the company has close substitutes, so a little change in price can cause a big changing in demand. When in a company the PED graph gets like this, it should consider decreasing the price a little to achieve more consumers. From the graph, we can see when the price drops a little, the area of revenue increases much. Type 2: Inelastic demand This is when a given % change in price causes a smaller % change in demand. Its PED value will be greater than 0 and less than 1. Goods with this graph are usually necessaries, and even a relatively high change in price would not cause a big decrease in demand. Or, there are no big substitutes closely, so most consumers will still choose to buy it even if the price rises. Type 3: Unit price elasticity of demand This is when a given % change in price results an equal % change in demand. Its PED value will be exactly 1. In this condition, the PED is easy to handle, because the price and the quantity demanded is proportional, so the revenue will remain constant. Thus, the company can change the price flexibly depending on the market’s situation. However this may not happen so frequently, because the real market is much more complicated. Type 4: Perfectly elastic demand This occurs when a constant price will cause the infinite change in the quantity demanded. In this case, the value of PED is infinite. For example, 2 people are selling the exactly the same goods in a small area, and if one of them gets his price below the other one, then he will get all of the consumers. This doesn’t happen frequently, because there may not be such goods that are exactly the same but different in price in a certain area. Type 5: Perfectly inelastic demand Perfectly inelastic demand curve describe the situation for the company that the price’s change will have absolutely no affect on the demand. PED here is 0. No matter how much the price increases or decreases (mostly increases), the demand will not change any. This often happens to the necessaries or monopolies that people have to choose to buy the good even the prices changes rapidly. For example, the gasoline’s price changes from $2.3 to $3.5, the demand will still remain about the same, because for such goods consumers have to pay for it. Conclusion: Different goods will have different PED charts. Companies should change its price depending on different kind of charts. Generally, if a goods is in a competitive market, it can be high elastic, so it should consider to lower the price to increase revenue; contract to it while in a relatively not so competitive market, it can rise price to increase revenue when its PED is low. The goods that are new in the market should decrease the price to survive and achieve higher revenue (new products usually has high PED). Luxuries are mostly elastic, since they are not essential goods. However, PED is not exactly what it would happen in the market; it is limited in many situations, that the practical market condition and the competitors’ changing may have effect on the demand. So it’s better to just make it as a supplement, but not relying on it.

Medlife Insurance LTD Case Study :: Business and Management Studies

We have chosen a company called Medlife Insurance LTD. This company deals with financial services, within that with life insurance. Marketing Financial Services Presentation Introduction: We have chosen a company called Medlife Insurance LTD. This company deals with financial services, within that with life insurance. It is part of a â€Å"network† of companies that sell life insurance and to be able to give a whole picture of the company’s activities we will introduce some of it’s partner companies as well. We will also give a brief description of the different kinds of services they provide to customers, such as life insurance for a whole family, life insurance for a single person or life insurance for the company employees. Situation Analysis: Grazer Wechselseitige and other international investors founded Medlife in the year 1994. Medlife started its business activities in 1995. It is set up as a Cypriot offshore company and offers life insurance products on US dollar basis. Medlife is an insurance company full of traditions and experience. Because of its traditions, seriousness and experience, it provides reliability of all activities in life insurance and capital investments of Medlife. All sales are performed through the network of SI-Save Invest Ltd, (one of the biggest independent and international insurance broker companies in the world that offers and sells financial services, specializes in capital forming life insurance and disability insurance offered by its insurance partners), covering the former CIS and Baltic countries. Insurance and investment programmes have been developed that help encompassing the risks of everyday life and at the same time allow the customer to achieve a profitable return of the money invested. Contracts concluded between Medlife and its clients are subject to Austrian law which extensively protects the rights of Medlife’s clients. Due to the very strict rules and regulations of the Insurance Contract Act and the Consumer Protection Act. Grazer Wechselseitige Group in Austria, a well-known insurance company, provides fundamental insurance services like technical administration, funds investment, and reinsurance since 1828. These services are delivered following the same principles of security and profitability that do apply for Grazer Wechselseitige itself. Grazer Wechselseitige Versicherung AG is 100% financed on own capital and therefore does not require any investor’s ratings. Some examples of the financial services that Medlife is selling: Economic Insurance Plan Economic Insurance Plan is the ideal package for those who seek comprehensive insurance coverage combined with an opportunity to invest capital in a profitable way. G5S -Endowment Insurance with graduated death benefits and surplus participation. The benefit to be paid in the case of death becomes payable if the insured person dies before the end of the insurance term. The sum to

Does Kenya Get the Full Benefit From its Tourist Industry?

My coursework task is to write a report about Kenya to show that I have studied Kenya and its tourist industry and can make a judgement about how much Kenya benefits from the tourists that visit the country. Kenya is an equatorial country located on the east side of the continent of Africa bordering Somalia, Ethiopia, Sudan, Uganda, Tanzania and the Indian Ocean. Kenya is also bordered by Lake Victoria in the west. Kenya lies between 5à ¯Ã‚ ¿Ã‚ ½N and 5à ¯Ã‚ ¿Ã‚ ½S and covers an area of 582,646Kmà ¯Ã‚ ¿Ã‚ ½. Kenya has an extremely diverse relief with a low coastal plain spanning 536km, inland plateaux regions and multiple mountain ranges and isolated peaks. Tourism has become the most important part of Kenya's economy accounting for 38% of industry in the developing country. Kenya's main tourist attractions are the many game parks across the country, including the popular Massai Mara reserve and the more exclusive Tsavo National Park. Kenya also offers Golden beaches and 5-star hotels along its 536km of coastline. The map below shows the location of Kenya within Africa, Important tourist destinations, Major Game reserves and relief. Map of Kenya and the Surrounding Countries Kenya lies on the equator but the annual rainfall is unusually low and varies from year to year. This is due to the seasonal winds blowing the intertropical cloud and rain relatively quickly across Kenya in April and October and the Monsoons taking a track parallel to the coast and passing over large areas of land before reaching Kenya. You would expect the temperature in Kenya to be constantly high as it is an equatorial and so the sunlight hits the earth vertically and with more concentration than at latitudes away from the equator all year round, but the average temperatures in Kenya are relatively low compared to other equatorial African countries due to the variation in altitude. Only the low lying coastal areas of Kenya experience constant high temperature associated with equatorial locations. There are two rainy seasons; March – May and November – December and two dry seasons in between. The country's climate can be divided into four regions: Coastal region The temperature and humidity stay relatively high all year round but the offshore wind and the long days make the area bearable. It receives some rain all year round mostly in the small hours of the morning. The Northern Frontier and Lower Inland Plateau This section of the country experiences a low annual rainfall considering its equatorial location (usually below 500mm). The temperatures are high throughout the year and the humidity low. The Kenya Highlands This region to the west of the country is the most agriculturally productive land in the country. As Kenya is a developing country with a huge slice of its industry being primary the region is also the most densely populated. Kenya's Double rainy season does feature in the region but rainfall is moderate and exceeds 1250mm only on the highest parts of the area. The region experiences its lowest temperatures from June to September, the nights being described as â€Å"chilly†. The Higher Mountain Regions These areas are above 2500m and are small. Temperatures fall low enough for frost to form and some snow to fall. Mt Kenya has a permanent snow cap. Kenya receives two rainy seasons because of the tilt of the earth when orbiting the sun. The following diagram illustrates this: The tropic of Capricorn is closest to the sun. It becomes warmed by the sun. During the day more water evaporates causing clouds to form bringing rain. 231/2à ¯Ã‚ ¿Ã‚ ½South Tropic of Capricorn The earth spins on its axis, the angle at which it faces the sun changes gradually tilting towards the equator this then warms the equator 0à ¯Ã‚ ¿Ã‚ ½ Equator – Kenya This tilt increases until it reaches 231/2 N where the tropic of cancer is warmed. 231/2à ¯Ã‚ ¿Ã‚ ½North Tropic of Cancer The whole process is reversed tilting back to the tropic of Capricorn via the equator. The full tilt and reverse tilt of the earth's axis takes a year. This is why Kenya has two rainy seasons due to the position of the overhead sun. * Sunlight The two Climate graphs above show the climate of Mombassa, Kenya and London, England for comparison. The Graph of Mombassa shows the two rainy seasons. The graphs also indicate a main reason why tourists visit Kenya. The lowest temperature Mombassa endures is 24à ¯Ã‚ ¿Ã‚ ½C, higher than the highest temperature London endures. The Hottest times of the year in Mombassa coincide with the coldest time of the year in London. This is one of the major reasons tourists visit Kenya. Because the country has two rainy seasons it also has two grazing seasons. The Savannah ecosystem means that more species can live in harmony together. Darwin's â€Å"survival of the fittest† theory states that when two species are in direct competition the best evolved will survive, the reason the Savannah can support so many animals is that all the animals have a â€Å"niche† and so are not all in direct competition. Some species are Grazers, some are browsers etc. This is called Grazing succession; the grazing succession ensures that every opportunity to use the supply of food is taken. It is a similar pattern for Carnivores; Lions make a kill but leave plenty of food for spotted Hyenas and again for the vultures. Each specie waits in turn to be fed. The following diagram is an example of Grazing succession: The Savannah is famed for the diversity of species of large animals that live there. There are near forty different types of herbivores, plus the carnivores, this is a simple food web of part of the savannah ecosystem: The Savannah and the balance of the ecosystem is important to Kenya's Tourist Industry as it provides the main incentive for tourists to holiday there. It is important that the Industry does all it can to preserve the delicate balance. The following table is a selection of the people who are involved with Kenya's tourist industry. It helps sum up their views and why they hold that view. It also helps me conclude which direction the people involved in Kenya's tourist industry wish it to go. Person Group(s) of people they represent What view they hold about tourism In Kenya Why they hold their view A European Tourist Tourists Tourism is good for Kenya but only when it is controlled It is their lifelong dream to go on safari and think that it's excellent to see all the animals in their natural habitat. But they have reservations about how much the tourists are damaging the animal's natural habitat. A Kenyan Maasai Maasai tribe Against mass tourism The Maasai people have been ejected from their homeland to make way for the tourists. They are no longer allowed to live in the game park. The tribe is no longer allowed to migrate around the country. Muslim from Mombassa The Muslim community of Mombassa Against tourism Induces changes to there culture and insults their religious followings. I.e. western women show their bodies. Tourists bring with them alcohol, drugs and sex tourism. Mombassa has therefore found a rise in crime and social unbalance as young black men marry older white women and immigrate to Europe. Muslim from Lamu The Muslim community of Lamu For sustainable tourism Lamu has restrictions on the way tourists dress and behave. There are no bars in Lamu and there are restrictions on the size and design of hotels. E.g. they have to be white and made of local materials. The Muslim community also work closely with travel agents and a certain amount of the price tourists pay towards there holiday goes back into the community and maintenance of the town. A Marine Biologist Conservationists Against tourism as it is now Tour guides don't do enough to prevent the destruction of the coral. They let tourists stand on the coral and even drop their anchors (which is illegal but the law is not enforced) because of the bigger tips on offer. This means the coral reef becomes unbalanced and slowly dies and therefore no more tourists will want to go and see the reef. Laws should be enforced to save the reef and any future tourism. Owner of Glass Bottom Boat Tour guides For and against Gets a major income from taking tourists out in their boat. The marine park is swamped by boats at low tide which means there are lots of pollutants are going into the reef. The boats also collide into the reef and their customers also stand on the reef. Game Warden Conservationists Against tourism as it is Tour bus drivers in the Maasai Mara reserve go far too close to the animals. There is a rule that they can't go closer than 25m to animal but they disobey this rule for better tips. There are too many tourist busses for him to police. The animals suffer and reproduction rates have dropped rapidly. Most of the above groups are for tourism in one way or another. It seems that they all would like to have a sustainable tourist industry where the needs of the tourists aren't put above that of the local population and the natural habitat. Sustainable tourism would also prolong the life of the tourist destinations thus providing an income for many generations of Kenyans. So, Does Kenya get the full benefit from its tourist industry? Kenya is a developing country. I can see that it is a developing country by using development indicators. These include; GNP (Gross National Product), jobs, Trade, population, health and education. Most Kenyans are employed in the primary sector; relatively few are involved in secondary or tertiary industry apart from tourism. This is shown in the pie chat below: This is one indicator that Kenya is developing. Another indicator is that most of Kenya's exports are raw materials (Shown in the chart below), this shows that the country is developing compared to a developed country like the United Kingdom whose exports are mainly manufactured goods and services. Kenya also has a high birth rate, infant mortality rate and a low literacy rate, all of which are indicators of a developing country. Possibly the Best way to judge whether a country is developing is by looking at its GNP (Gross National Product). The table below shows that Kenya is still developing as a county because it shows 83% of the countries in the world to have a higher GNP than that of Kenya. Compared with a Developed country such as the United Kingdom (GNP- à ¯Ã‚ ¿Ã‚ ½18700) and even with man African counties Kenya has a long way to go before it can call itself a developed country. Table 8. Kenya: GNP (Gross National Product) Countries in the world with higher GNP than Kenya 83% Countries in the world with same GNP as Kenya 2.5% Countries in the world with lower GNP than Kenya 14.5% Countries in Africa with higher GNP than Kenya 52% Countries in Africa with same GNP as Kenya 10.5% Countries in Africa with lower GNP than Kenya 37.5% Kenya's GNP per person (1995) = US $280 Kenya needs to continue to develop tourism as it will bring more money into the country so it can start providing better health services and education services for its population. Tourism is seen as a good way to continue developing a country. The table printed below shows employment in the hotel industry. General Managers in hotels are mainly Non-African. This means that a lot of money is not going to Kenyan employees and therefore doesn't go back into the community. This also true with some Hotel profits going to multinational companies based in developed countries. This means the profits of the tourist trade done by these multinational giants aren't going back into Kenya. However I feel that if Kenya continues to develop it will start to produce graduates capable of filling higher positions in the tourist industry, therefore bringing more money back into Kenya's economy. At the present time Kenya has developed tourism in the inland game and safari parks and along the shores of the Indian Ocean. The development along the coast is mainly luxury hotels, new developments that have sprung up especially for the tourists. Most of the Game parks have gone this way too with 5-star lodges etc. there are only a few exceptions, Tsavo Safari park is one of them with the emphasis on preserving the land and protecting it from the potential devastation tourism can bring. Most Kenyans benefit from tourism in Kenya, mainly the people who work directly with the tourists or derive their incomes from the industry, for example hotel owners, tour guides and safari park operators, But also the whole of Kenya can potentially benefit from tourism if the money spent by tourists in Kenya is put back into the community in the form of hospitals and schools. The groups of people who are affected in a negative way by tourism are mainly those whose ways of life are changed or oppressed by the tourists. For example the Muslim community of Mombassa. They feel that the tourists don't respect their way of life and their religious followings. Personally I feel that Kenya is feeling the full benefit from tourism as they see a huge amount of people now holidaying in Kenya. However I do feel that the Kenyan tourist board needs to do more to work towards maintaining a sustainable tourist industry if it wishes to continue to feel the full benefit. The Kenyan authorities should take note of example like Tsavo National Park and Lamu where sustainable tourism is already operating. In these areas special care is taken not to damage the environment. For example in Tsavo the accommodation is Temporary and so can be moved about so the land receives equal wear. The tour guides also operate under strict rules when approaching animals and taking paths along the park. In Lamu a levee is placed on all tourist payments to go back into the town to maintain the local way of life and therefore the tourist attraction itself. The tourists also are encouraged to abide by the Muslim dress rules when going out and there is no alcohol available in accordance with their religion. If the Whole of the Kenyan Industry adopted policies similar to this it would preserve the tourist attractions for generations of Kenyans and would most probably attract more tourists, as the people who go to Kenya like to experience local culture and animals in their natural habitat, rather than it feel manufactured to their needs. Kenya will also further its economical development by operating this scheme as it will ensure a higher percentage of income from the tourist trade staying in the country.

The Benefits of Genetic Engineering Essay - 1108 Words

The engineering of deoxyribonucleic acid (DNA) is entirely new, yet genetics, as a field of science, has fascinated mankind for over 2,000 years. Man has always tried to bend nature around his will through selective breeding and other forms of practical genetics. Today, scientists have a greater understanding of genetics and its role in living organisms. Unfortunately, some people are trying to stop further studies in genetics, but the research being conducted today will serve to better mankind tomorrow. Among many benefits of genetic engineering are the several cures being developed for presently incurable diseases. Genetics has also opened the door way to biological solutions for world problems, as well as aid for body†¦show more content†¦With dysfunctional DNA, a cell is a pile of lipids and proteins; cancerous tumors will turn to harmless dumps of organic material, that can be filtered out by the body. DNA scissors will affect things that antibiotics cannot, like AIDS. (Not even AIDS can function without DNA). One day the only thing that will stand between medical diseases and their cure will be the analysis of their DNA. Genetics now offers a new way to solve the general problems of the world. First, genetic research makes it possible for food to be grown safer, better, and faster, without doing any damage to the environment. With todays knowledge of genetic engineering, several food companies are investigating possibilities of making more food in less time. Through a process know as gene therapy, geneticists have the ability to modify parts of genetic material in organisms. Geneticists can add attributes to crops, like tomatoes, that would make them resistant to insects. With such features, dangerous chemicals like DDT that harm the environment, plants, animals, and humans would not be needed. Other enhancements would include prolonged life spans for food products after harvesting. For example, tomatoes have been engineered to last longer so they do not have to be harvested early. Thus, it is unnecessary to spray chemicals on them to prematurely change their color. While the US has not yet approved the new crops, several countries have and are making greatShow MoreRelatedBenefits Of Genetic Engineering711 Words   |  3 PagesShould genetic engineering be allowed? â€Å"With genetic engineering, we will be able to increase the complexity of DNA, and improve the human race.† - Stephen Hawking. Genetic engineering is the genetic modification of an organism’s phenotype, also known as an organism’s genetic makeup. Genetic engineering can have its advantages and disadvantages, but I believe there are more advantages than disadvantages. There are a number of benefits that we can only discover if scientists consider to study andRead MoreBenefits Of Genetic Engineering1115 Words   |  5 Pageswill be talking about genetic engineering. What is genetic engineering? 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