Managerial Economics
PGPM Batch 2019-21
Guide : Dr Paroma Mitra
Submitted by - Section A Group 6
1. Abhinanda Ghosh 19PGPM001
2. Lokesh V 19PGPM029
3. Nabarun Mukherjee 19PGPM034
4. Niraj Agarwal 19PGPM037
5. Priyanshi Khandewal 19PGPM047
6. Rohit Gupta 19PGPM053
7. Utkarash Swaroop 19PGPM064
Product selected by the group 6 section A is Tea. Climatic conditions, labor availability
and growing technology in India make tea as one of the growing industry. India is one of
the largest producer of Tea in the World, so Tea industry plays vital role in the Economic
growth , employment rates and foreign earnings.
To analyze the demand for the Tea for the last 5 years following details has been taken
from the Industry outlook (CMIE). Substitute of tea is taken to be coffee and the
complimentary good is taken as sugar.
PRICE CHANGE OF TEA
Price of
Sales in quality of Price of Substitute ( complementry (
Year Price Of Tea Tea - 000 tons coffee Rs Per KG) Sugar Rs Per KG) GDP Per Capta in USD
2013- 14 123.1 749.26 180.5 31.365 1486.154
2014- 15 120 3259.41 174.7 27.096 1609.702
2015- 16 129.8 13507.1 143.7 34.15 1640.68
2016- 17 130.6 4308.73 171.7 32.125 1764.334
2017- 18 134.7 3930.82 152.2 33.532 2015.228
ELASTICITY OF DEMAND
% Change in the
% Change % Change in rise of substitue % Change Price Income
Year in price quantity (Coffee) in income Elasticity Elasticity Cross Elasticity
2013- 14
2014- 15 -2.518 335.01 -3.21 8.3132 -133.064 40.2985 -104.364
2015- 16 8.1666 314.4 -17.744 1.924 38.449 163.409 -17.71
2016- 17 0.1663 -68.1 19.48 7.5367 110.4981 -9.035 -3.49
2017- 18 3.139 -8.77 -11.357 14.22 -2.7938 -0.6167 0.7722
Sales in quantity of Tea
13507.1
4308.73 3930.82
3259.41
749.26
SALES IN QUALITY OF TEA - 000 TONS
2013- 14 2014- 15 2015- 16 2016- 17 2017- 18
Price of Tea
134.7
129.8 130.6
123.1
120
PRICE OF TEA
2013- 14 2014- 15 2015- 16 2016- 17 2017- 18
PRICE ELASTICITY
150
110.4981
100
38.449
50
0
Price Elasticity -2.7938
-50
-100
-150 -133.064
2013- 14 2014- 15 2015- 16 2016- 17 2017- 18
INCOME ELASTICITY
2013- 14 2014- 15 2015- 16 2016- 17 2017- 18
163.409
40.2985
-9.035 -0.6167
Income Elasticity
CROSS ELASTICITY
20
0.7722
0
Cross-17.71
Elasticity -3.49
-20
-40
-60
-80
-104.364
-100
-120
2013- 14 2014- 15 2015- 16 2016- 17 2017- 18
Inference :
For the year 2014-15
1. Price Elasticity is less than 1, which means it is Inelastic demand.
2. Income Elasticity is greater than 1, which is termed as luxury goods.
3. Cross Elasticity is less than 1 , which is termed as complimentary goods.
For the year 2015-16
1. Price Elasticity is greater than 1, which means it is elastic demand.
2. Income Elasticity is greater than 1, which is termed as luxury goods.
3. Cross Elasticity is less than 1 , which is termed as complimentary goods.
For the year 2016-17
1. Price Elasticity is greater than 1, which means it is elastic demand.
2. Income Elasticity is less than 1, which is termed as Inferior goods.
3. Cross Elasticity is less than 1 , which is termed as complimentary goods.
For the year 2017-18
1. Price Elasticity is less than 1, which means it is Inelastic demand.
2. Income Elasticity is less than 1, which is termed as Inferior goods.
3. Cross Elasticity is greater than 0 but less than 1 , which is termed as Marginally substitue
goods.
• By building on a proud legacy of enterprise that spanned nearly two and a half centuries,
India has acquired an exalted status on the global tea map. The country is the second
largest tea producer in the world. Interestingly, India is also the world's largest consumer of
black tea. In all, the domestic market consuming 973 million kg of tea during 2016-17. India
is ranked fourth in terms of tea exports, which reached 256.57 million kg during 2017-18
and were valued at US$ 785.92 million.
• The top export markets in volume terms for 2017-18 were Russian Federation (48.1 million
kg), Iran (31.19 million kg) and UAE (21.63 million kg). In terms of value, the top export
markets were Iran (US$ 120.82 million), Russian Federation (US$ 120.59 million) and UAE
(US$ 66.33 million). All varieties of tea are produced by India. While CTC accounts for
around 89 per cent of the production, orthodox/green and instant tea account for the
remaining 11 per cent.
• Production of tea reached 1,325.05 million kg in 2017-18. Around 1,087.11 million kg was
produced in North India and 233.65 million kg was produced in South India.
• India has around 566.66 thousand hectares of area under tea production, as per figures for
December 2015. Tea production is led by Assam (307.08 thousand hectares), West Bengal
(140.44 thousand hectares), Tamil Nadu (69.62 thousand hectares) and Kerala (35.01
thousand hectares). According to estimates, the tea industry is India's second largest
employer. It employs over 3.5 million people across some 1,686 estates and 157,504 small
holdings; most of them women.
