Economics

Concept of Income Elasticity of Demand

Concept of Income Elasticity of Demand

Concept of Income Elasticity of Demand The income elasticity of demand shows the responsiveness of quantity demanded of a certain commodity to the change in income of the consumer. The income elasticity of demand is also defined as ‘ the ratio of the percentage change in the demand for a co.....

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Concept of Cross Elasticity of Demand

Concept of Cross Elasticity of Demand

Concept of Cross Elasticity of Demand Cross elasticity of demand is the relation between the percentage change in demand for a commodity to the percentage change in the price of related commodity. It is an economic concept that measures the responsiveness in the quantity demand of one good when a.....

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Concept of Cardinal Utility Analysis

Concept of Cardinal Utility Analysis

Concept of Cardinal Utility Analysis Cardinal Utility is the idea that economic welfare can be directly observable and given a value. Cardinal utility analysis is based on the cardinal measurement of utility which assumes that utility is measurable and additive. Cardinal utility is an important c.....

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Determinants of Elasticity of Demand

Determinants of Elasticity of Demand

Determinants of Elasticity of Demand A good with more close substitutes will likely have a higher elasticity. The higher the percentage of a consumer’s income used to pay for the product, the higher the elasticity tends to be. For non-durable goods, the longer a price change holds, the high.....

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Concept of Total Utility

Concept of Total Utility

Concept of Total Utility Total utility refers to the utility derived out of the consumption of a commodity. The total satisfaction received from the consumption of given quantities of a commodity by a consumer within a given time period is called total utility. In other words, total utility is th.....

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Concept of Marginal Utility

Concept of Marginal Utility

Concept of Marginal Utility Utility is an idea that people get a certain level of satisfaction / happiness / utility from consuming goods and service. Marginal utility is the change in total utility by the consumption of an additional unit of a commodity. Marginal utility is the benefit from cons.....

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Assumptions and Importance of Law of Diminishing Marginal Utility

Assumptions and Importance of Law of Diminishing Marginal Utility

Assumptions, Exceptions and Importance of the Law of Diminishing Marginal Utility This law was first developed by a German economist Hermann Heinrich Gossen. This law is also known as the first law of Gosse. The law of diminishing marginal utility states that the marginal utility derived from the.....

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Concept of the Law of Diminishing Marginal Utility

Concept of the Law of Diminishing Marginal Utility

Concept of the Law of Diminishing Marginal Utility The marginal utility of a commodity diminishes at the consumer gets larger quantities of it. Marginal utility is the change in the total utility resulting from one unit change in the consumption of a commodity per unit of time. This law was first.....

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Importance of Consumer’s Surplus

Importance of Consumer’s Surplus

Importance of Consumer’s Surplus Consumer surplus is an extra amount which we feel as surplus of satisfaction. We as consumers give importance to this concept because we want to use any commodity to fulfill particular desire. The concept of consumer’s surplus has great practical impor.....

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Condemnation of Consumer’s Surplus

Condemnation of Consumer’s Surplus

Condemnation of Consumer’s Surplus The concept of consumer’s surplus is one of the most important idea in economic theory especially in demand and welfare economics. It is a measure of the welfare that people gain from consuming goods and services. The concept of consumer’s surplus .....

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Theory of Consumer’s Surplus

Theory of Consumer’s Surplus

Theory of Consumer’s Surplus The concept of consumer’s surplus is one of the most important idea in economic theory especially in demand and welfare economics. It is a measure of the welfare that people gain from consuming goods and services. It is important for small businesses to co.....

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Theory of Law of Substitution

Theory of Law of Substitution

Law of Substitution The law of substitution is also known as the law of equi-marginal utility or the law of maximum satisfaction. This law was first developed by H.H Gossen. Therefore, this law is also known as second law of Gossen. Prof. Marshall has developed and given the present shape of this.....

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