KOLEJ PROFESIONAL MARA

BUSINESS ECONOMICS (ECO1043)
SESSION 3_2021/22

PRESENTATION (15%)

CLO 3: Demonstrate self-directed learning on elasticity in real business practices

through group presentation. (A3, PLO5)

INSTRUCTIONS TO STUDENTS

1. This presentation contributes to 15% to your continuous assessment.

2. This is a group work. You are required to form a maximum of four (4) or minimum (3)
members in a group.
3. Prepare a slide presentation to show your answers for all questions.
4. Record a video of presentation. The video should not be more than 15 minutes.
5. Include graphs and relevant data for your presentation.
6. Acknowledge your sources and avoid plagiarism.
7. Submit a recorded presentation (upload in YouTube & share the YouTube link) on the
7th of January 2022 (Week 7) before 12.00 PM. Marks will be deducted for late
submission.

TOPIC: ELASTICITY

Elasticity is the sensitivity of quantity demanded or supplied of a commodity in

response to the change in factors related to that commodity. Elasticity of demand and
supply can be a useful tool for businesses to make crucial decisions like deciding the price of
goods and services to maximize their profit

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Answer the following to determine your knowledge of elasticity:

(1) Kai is a manager at a local store and has the following data for two products:

The owner of the firm wants to maximize revenue for each product, so she asks Kai to
calculate the value of elasticity and he (Kai) asks you (ace economics student) to
calculate price elasticity of demand for both products and advice Kai which price to
charge based upon your economics knowledge!

(2) Compute the value of elasticity based upon the data in the table below:

QUANTITY OF GOOD X
INCOME (RM)
(UNIT)

$1200 20

$1600 60

$2000 100

QUANTITY OF GOOD Y
INCOME (RM)
(UNIT)

$1200 50

$1600 60

$2000 70

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 a) Based on the value of income elasticity, what types of good for good X and
good Y?

b) If you work as an advisor for firm A (Good X) and firm B (Good Y), when income
of consumer increase during economic boom, what is the best advice you should
give to the firm owner for good X and good Y as to what to do with the volume
of production - should the firm raise their volume even more or just a little?
Why?

(3) Cross-price elasticity between UAV cameras and drones is negative 2.5 when the
price of drones drops. Explain what this means in terms of the relationship between
the two products. The forecast is that the price of drones will keep dropping - what
advice would you have for the UAV camera maker? Why?

(4) Discuss the importance of price elasticity of supply in manufacturing sector and
agriculture sector.

“END OF QUESTIONS”

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