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Case study:1

Mr. Rastogis annual income is Rs.6 lakh. He lives in Thane. His

family consists of 4 members including him. The price of salt is

Rs.10 per Kg. and the Rastiogis family consumes 4 Kg. of salt

per annum. The retailers decide to increase the price of salt to

Rs. 14 per kg.

1.Would Rastogis family purchase of salt be affected by therise in price of salt? Explain.

2.If Rastogis income rises to Rs.10lakh, will this affect hisfamilys salt consumption.

Case study: 2.

A study of 100 companies with aggregate sales of Rs. 15,367

crores showed that they spent 1.61 per cent of the total net

sales on advertising. The industry wise break-up of theadvertising intensity shows soaps, toiletries, etc. at the top with

3.78%. It has followed by the miscellaneous group with 2.30

per cent and drugs with f1.64%. Among the companies

selected for the study, Hindustan Lever had the largest absolute

expenditure on advertising Rs. 40.28 crores, followed by Brooke

Bond, Colgate-Palmolive, Pieco Electronics, Glaxo and BajajAuto. There werejust 8 companies whose expenditure on

advertising accounted for more than 5% of the net sales.

Balsara group spends up to 2o-25% of their sales turnover on

advertising, yet they are not able to advertise as intensively as

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the established multinationals that spend only 3-4 per cent of

their much larger sales turnover to advertise much more

effectively.

Faced with a demand recession, many durable consumer goods

manufacturers kept on spending money on advertisement

rather than reduce advertising.

1.Advertising is essential maintain and capture marketshare Comment.

2.Is it right to spend on advertising during recession?3.Explain the impact of advertising on goods having elastic

and inelastic demand.

Case study:3.

The market for stocks traded on the BSE and other stock

exchanges is as close we come to a perfectly competitivemarket. The price of a particular stock at a particular time is

determined by the market forces of demand and supply of the

stock. Retail or individual buyers and sellers have insignificant

effect on the price of the stock, they are price takers. All stocks

within each category are homogenous. The resources are fairly

mobile, as can be seen from the fact the stocks are bought andsold daily. Besides, today all information on prices and

quantities traded is readily available. With the introduction of

web trading, there is even better diffusion of information. Web

trading has also encouraged a large number of people to buy

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and sell stocks from convenient location. Thus the number of

buyers and sellers participating in the market is very large.

1.Market for stocks is very close to being a perfectivelycompetitive market, but is not the perfect example of

perfectly competitive market. Why?