Five Brief Scenarios Are Presented Below

question 12

Essay

Five brief scenarios are presented below. Apply the correct elasticity term to each scenario and explain your answer.
(a) John must have an appendectomy. Upon arriving at the hospital he is told that for this week only they are doing abdominal operations at half price. Even in the face of a 50 percent price cut, John insists that he wants only one operation.
(b) Apple announces that it is willing to sell as many model 3000 computers as are ordered at a fixed price of $500 per unit.
(c) Northwest Airlines increased all its fares by 25 percent. As a result the number of passengers declined by 25 percent and the total revenue of Northwest Airlines remained the same.
(d) Newsweek magazine raised its price to annual subscribers by 50 percent. As a result annual subscriptions fell by 30 percent. Although it lost some readership, Newsweek significantly increased its revenues.
(e) The price of soybeans went up by 60 percent. In response farmers planted more soybeans and output increase by 70 percent.

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Definitions:

Uncertainty Avoidance

A cultural dimension that describes societies or individuals who attempt to mitigate the unpredictability of future events through established norms and procedures.

Power Distant Leader

A leader who maintains a significant gap between themselves and their followers in terms of authority and control.

Crowdsourcing

The use of collective intelligence gathered from the public for accomplishing tasks, often by the use of social media.

In-house

Pertaining to activities or operations performed within an organization rather than outsourced.