Business

Concept of Price Elasticity of Demand

Concept of Price Elasticity of Demand

Concept of Price Elasticity of Demand The price elasticity of demand measures the degree of responsiveness of quantity demanded for a certain commodity to the change in its price. It measures the change in demand for a good in response to a change in price. Price elasticity of demand is a measure.....

Read More »

Important Uses of Income Elasticity of Demand

Important Uses of Income Elasticity of Demand

Some important uses of income elasticity of demand are as follows: 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 chang.....

Read More »

Determinants of Elasticity of Demand

Determinants of Elasticity of Demand

Elasticity of demand for any commodity is determined by a number of factors which are explained below: Nature of the commodity: The elasticity demand for any commodity depends upon the nature of the commodity, i.e., whether it is a necessity, comfort or luxury. Whereas the demand for the luxury g.....

Read More »

Significance of Income Elasticity of Demand

Significance of Income Elasticity of Demand

Significance of Income Elasticity of Demand Income elasticity shows fluctuations in demand for goods or services as precipitated by changes in the purchasing power of consumers. While price elasticity plays a significant role in pricing of a product to maximize the total revenue of an organizatio.....

Read More »

Types of Income Elasticity of Demand

Types of Income Elasticity of Demand

Types 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 comm.....

Read More »

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.....

Read More »

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.....

Read More »

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.....

Read More »

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.....

Read More »

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.....

Read More »

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.....

Read More »

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.....

Read More »