Price Elasticity of Demand

Price Elasticity of Demand is a measurement of the responsiveness of quantity demanded to a change in price through how much the quantity will change.

Is measured by     % change in quantity demanded   

                                      % change in price                                                 

Supply and demand Graphs

Are when the demand and supply curves are bought together on the same diagram to help to determine the price's of the economy's goods and services.

On every supply and demand graph there is a point at which the curves cross each other, this is called the equilibrium point. At this point the quantity demanded is the same as the quantity supplied. At the equilibrium price there will be no unsold stocks and customers will be able to buy all they demand at that price.

Margin of safety

Is the difference between the actual level of output and the break-even level of output by showing how much sales can fall before the business makes a loss.
Is calculated by the actual sales - break even point

Effective demand

Is when demand of a product is high when the price of a product is low and if rates were high then demand for a product or a service will go down, this will usually be in comparison to the consumer's able and willingness to purchase at what they see as a reasonable and acceptable price.

McGregor's Theory X and Y

Theory X managers think that the workforce dislikes work and needs direction and control. Without this and the threat of punishment they will avoid work; believing that people would rather follow others than lead and that people are relatively unambitious and just want security without responsibility.

Theory X managers think the opposite; the workforce is capable of enjoying work and can be trusted to get on with things without close supervision.  The managers will assumes that people do not to be controlled and directed to ensure that the work is done, they respond well to praise and incentives, people are happy to lead and enjoy responsibility and that people are ambitious and will not only accept responsibility but also seek more.

Leadership types

Autocratic- Managers make all the decisions;they give orders without consulting anyone else. The communication of the business will be top down, one way only system (dictatorial). The advantages of it is that it can be useful for guiding new employees, and swift decisions are made which can be crucial in a crisis. The disadvantages of it are, useful decisions from employees are not heard and staff may resent it and become demotivated

Democratic- Managers listen to other people's ideas and opinions before reaching a decision. The communication is a two way system, tasks and responsibilities are delegated.  The advantages of it are that consultation increases motivation and all ideas are considered helping to motivate employees-es. The disadvantages are that lengthy decision making occurs and final decisions may be a compromise and not necessarily the best one.

Paternalistic- Managers act like a father towards their employee-es, thinking they know best and although there is some consultation, the manager ultimately takes responsibility and has the final word on what happens.  Communications are mostly top down but with some two way dialogue. The advantages are that there is some delegation and the needs of staff are looked after, leading to better decisions. The disadvantages are that leadership is still mostly autocratic and some staff will not like it but be more motivated then in an autocratic leadership.