Managerial Economics AssignmentOn Product Elasticity Of Tonsillectomies And Cosmetic Surgery
Task: How can elasticity of tonsillectomies and cosmetic surgery be categorized using Managerial economics assignment research techniques.
This Managerial economics assignmentwill assess the elasticity of tonsillectomies and cosmetic surgery by categorizing of the products and services by their type of elasticity.Besides the financial part of any product development and sales, there is a significant demand and supply mechanism, which should be considered a vital part. In terms of economics, many factors engage the increase or decrease in demand. Ineffectual, under the economics concept, the products are bifurcated into different segments: the necessary goods, everyday goods, luxury goods, and others.
Types of goods and services identified on this Managerial economics assignment
The categorization of the products includes the necessary goods, everyday goods, luxury goods and others, and each one of them will have different elasticity positions. The term elasticity indicates the change in product prices and its effect on the demand curve (Vu et al., 2018). If the changes in product prices make an exact change in the demand curve, it is considered perfectly elastic. If there is a price increase for some products and no change in demand, it will be regarded as inelastic. There will be some products there that will not have perfect elastic or perfectly inelastic. It will depend upon the product characteristics and the other valuable factors that will affect the demand for the products.
Current product categorization
The product related to the treatment of tonsillectomies is when the tonsils are surgically removed for medical or cosmetic purposes.On this Managerial economics assignmentare two different product categorizations have been identified. If the treatment is made for medical purposes and there are no other options available to the consumer, it will be considered a necessary product (James et al., 2019).
Effect of subsidy
If the government is planning to affect the producers of tonsillectomies, then in such a case, it will increase the demand by a small percentage because of the decrease in product prices. However, this Managerial economics assignmentidentifies that demand and supply for the product are minimal. Because of the subsidy, the people who could not purchase that product will now become eligible for the purchase (Murjani, 2020). Therefore, there is a subsidy given to the product. Therefore, all the producers of the product's prices will go down, increasing the demand. Here, the product should be considered inelastic because the change in product price has a significant difference in product demand.Since per unit cost of 100000 unit is $4000 therefore, if the subsidy decreases the cost to $3000 the demand will not increase or decrease since its inelastic.
In the case of cosmetic surgery, it is not a necessary good; it should be considered a common good. If any subsidy is given to the producers of the cosmetic products, then the product price will decrease, which will eventually increase the product demand. Therefore, it should be considered elastic. Therefore, with the subsidy decreasing the price of cosmetic surgery, demand of cosmetic surgery will increase thereby, deeming it to be elastic.As per this Managerial economics assignment finding, if subsidy is offered on this product, then the cost will reduce to $3000 then the demand might increase to 200000 since the demand is elastic.
Based on the overall discussion for the product, it can be said that the nature of the product has significance in the product elasticity or in-elasticity. Explicitly speaking, tonsillectomies will be inelastic and cosmetic surgery will be elastic if the subsidy is given. Therefore, this Managerial economics assignmentconcludes by with the following remark; subsidization rules will differ for different medical treatments.
James, M.H., Bowrey, H.E., Stopper, C.M. and Aston Jones, G., 2019. Demand elasticity predicts addiction endophenotypes and the therapeutic efficacy of an orexin/hypocretin 1 receptor antagonist in rats. European Journal of Neuroscience, Managerial economics assignment50(3), pp.2602-2612.https://onlinelibrary.wiley.com/doi/abs/10.1111/ejn.14166
Murjani, A., 2020. Assessing the energy subsidy reform in Indonesia through different scenarios. International Journal of Energy Economics and Policy, 10(4), p.122.https://www.researchgate.net/profile/Ahmadi-Murjani/publication/341437199_Assessing_the_Energy_Subsidy_Reform_in_Indonesia_through_Different_Scenarios/links/5fc43e8592851c933f768789/Assessing-the-Energy-Subsidy-Reform-in-Indonesia-through-Different-Scenarios.pdf
Vu, D.H., Muttaqi, K.M., Agalgaonkar, A.P. and Bouzerdoum, A., 2018. Customer reward-based demand response program to improve demand elasticity and minimize financial risk during price spikes. IET Generation, Transmission & Distribution, 12(15),Managerial economics assignment, pp.3764-3771.https://ieeexplore.ieee.org/iel7/4082359/8435098/08435105.pdf