B5 - Market Influence on Business Strategies

Question 1

How is price elasticity of demand calculated?

Answer 1

% change in quantity demanded / % change in price

Question 2

When is a demand considered inelastic?

Answer 2

When the price elasticity of demand is less than one

Question 3

How is price elasticity of supply calculated?

Answer 3

% change in quantity supplied / % change in price

Question 4

How is cross elasticity calculated?

Answer 4

% change in quantity demanded of X / % change in price of Y (substitute/complimentary)

Question 5

How is income elasticity calculated?

Answer 5

% change in quantity demanded of X / % change in income

Question 6

What are the four types of operating environments?

Answer 6

Pure/perfect competition
Monopolistic competition
Oligopoly
Monopoly

Question 7

What is derived demand?

Answer 7

Demand for the factors of production (land, labor, capital)

Question 8

What are the four steps of value chain analysis?

Answer 8

Identify value activities
Identify cost drivers associated with each activity
Develop competitive advantage by reducing cost or adding value
Exploit linkages among activities to gain competitive advantage