MGM626-0902A-03 Economics for Decision-Making - Phase 3 Discussion Essay

MGM626-0902A-03 Economics for Decision-Making - Phase 3 Discussion Board - Essay Example Price elasticity will be elastic if a change in price causes a proportionately higher change in demand, i.e., the price elasticity of demand will be greater than 1. Hence a unit change in price will cause a change in demand which is larger than one unit. Inelastic price elasticity is where a change in price causes a proportionately smaller change in demand. In this case the value of price elasticity will be lesser than 1, i.e., a unit change in price will cause a change in demand which will be lesser than one unit. Unitary price elasticity is a case where the quantity demanded changes in proportion to the change in price, i.e., the change in price is equal to the change in demand. Hence the value of unitary price elasticity, as the name indicates, is 1. The reasons for the price elasticity being higher in the Brazil market can be analyzed and researched to find any possible alteration or substitute to the product that will reduce the price elasticity. Also, the trend of the currency exchange rate of Real to Euro over can be analyzed to predict the future values. This will indicate the potential revenue in Euro that can be earned from Brazil market and give a clear indication whether the venture will be profitable. Also, the prices in Real can be set in such a way that would attract more customer base and when the currency is exchanged, the company earns a significant profit