Mangerial Economics Assignment Example | Topics and Well Written Essays - 250 words

Mangerial Economics - Assignment ExampleSince sports is an inelastic product, the increase of expenditure for the sports package from $10 to $25 did not have an effect on the quantity demanded. As famed by Gelles and Mitchell (260), although it increases the MC, the fixed termss remain the same.When we have zero fixed costs, the marginal cost is constant. When StarHub embossed the monetary value of the sports package from $7 to $15, the MC remained the same since all cable TV providers pay the kernel providers a royalty based on the number of subscribers of the content. The increase in content resulted in more than subscribers subscribing to the service thus an increase to 504, 000 as at December 2007.Considering that sports is an inelastic product, an increase in price is unlikely to cause a substantial change in the quantity of demand. Therefore, the change that was relevant to StarHubs pricing of cable television services was the increase of sports package from $10 to $15 si nce the marginal cost was low.The thematic basic packages indispensability to be reduced from $32.95 to $ 22.95 monthly. The price of the sports package need not to be doubled but increase from $7 to $12 so to reduce the marginal costs. Furthermore, the basic packages need to be increased annually by $3. Lastly, being an inelastic product, the sports package need to be increased from $10 to $30 to cater for the initial costs and operational costs. According to Gilles and Mitchell (261), a firm does missionary post a price that is beyond the marginal