MINI PROJECT ( MANEGERIAL

ECONOMICS)

Submitted to-: Submitted By-:

Prof. Neha Saxena Rajnish Kumar
Dubey

Question-: Choose a branded cosmetic product (shampoo,

hair dye, talcum powder, hair cream etc.). Collect , weekly
PRICE DEMAND (sales)/ Advertising Expenditure- sales revenue
data on an average over a period of Oct’ 2009 & Nov’ 2009 &
measure the POINT & ARC & PROMOTIONAL ELASTICITY of the
demand?

Solution-: I have taken Park Avenue Deodorant

for the data which I have collected from a
supermarket .

Below is the data of October & November for Park Avenue

Deodorant sales-:

october
Week Adv exp (in lacs) Sales PRICE
1 to 7 10 50 165
8 to 15 12 55 165
16 to 23 12 57 165
24 to 31 9 52 165
43 214 165
Average 10.75 53.5
November
Week Adv exp (in lacs) Sales
1 to 7 12 54 160
8 to 15 12 50 160
16 to 23 12 57 160
24 to 31 15 60 160
51 221
Average 12.75 55.25

ARC ELASTICITY

TOTAL AVERTISING EXPENSES IN OCTOBER = 43 LACS

AVERAGE WEEKLY EXP = 10.75 LACS

TOTAL SALES IN OCTOBER = 214 UNITS

AVERAGE WEEKLY SALES = 53.5 UNITS

TOTAL AVERTISING EXPENSES IN NOVEMBER = 51 LACS

AVERAGE WEEKLY EXP = 12.75 LACS

TOTAL SALES IN NOVEMBER = 221 UNITS

AVERAGE WEEKLY SALES = 55.25 UNITS

CHANGE IN AVERAGE ADV EXP = 12.75 – 10.75 = 2 LACS

CHANGE IN AVERAGE SALES = 55.25 – 53.5 = 1.75

THEREFORE PROMOTIONAL ELASTICITY OF DEMAND OF PARK AVENUE

DEODRANT:

(CHANGE IN SALES/CHANGE IN ADV. EXP)*(INTIAL ADV. EXP/ INITIAL SALES)

= (1.75/2)*(10.75/53.5)

= 0.875 * 0.20

= 0.17

POINT ELASTICITY

Price in the month of October = Rs.165

Total quantity demanded in October = 214 units

Price in the month of November = Rs.160

Total quantity demanded in November = 221 units

Therefore elasticity of demand = P/Q*(Change in Q/change in P)

= (165/214)*(7/5)

= 0.77 * 1.4

= 1.078

Graph representing point elasticity-: