What is price elasticity of demand? Price elasticity of demand is a measure of the degree of change in demand of a commodity to the change in price of that commodity. In other words, price elasticity of demand is the rate of change in quantity demanded in response to the change in the price. It … Read more
Income elasticity of demand is the measure of degree of change in quantity demanded for a commodity in response to the change in income of the consumers demanding the commodity. In simple words, it can be defined as the change in demand as a result of change in income of the consumers. Often referred to … Read more
The law of supply states that, other things remaining the same, the quantity supplied of a commodity is directly or positively related to its price. In other words, when there is a rise in the price of a commodity the quantity supplied of it in the market increases and when there is a fall in … Read more
The law of diminishing marginal utility was first propounded by 19th century German economist H.H. Gossen which explains the behavior of the consumers and the basic tendency of human nature. Hence, this law is also known as Gossen’s First Law. This was further modified by Marshall. According to Marshall, The additional benefit a person derives … Read more
The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. It is one of the important laws of economics which was firstly propounded by neo-classical economist, Alfred Marshall. Other things remaining the same, the amount demanded increases with a fall in price … Read more
Meaning The term ‘isoquant’ is composed of two terms ‘iso’ and ‘quant’. Iso is a Greek word which means equal and quant is a Latin word which means quantity. Therefore, these words together refer to equal quantity or equal product. An isoquant curve is the representation of a set of locus of different combinations of … Read more
Microeconomics is composed of two words – micro and economics. Micro is derived from the Greek word ‘mikros’ which means ‘small’ and economics is the branch of knowledge which studies about the production, consumption, and transfer of wealth incurred during the trade. The term microeconomics was first coined by Ragner Frich in the year 1993. … Read more
In microeconomics, indifference curve is an important tool of analysis in the study of consumer behavior. The concept of indifference curve analysis was first propounded by British economist Francis Ysidro Edgeworth and was put into use by Italian economist Vilfredo Pareto during the early 20th century. However, it was brought into extensive use by economists … Read more
Income elasticity of demand is the degree of responsiveness of quantity demanded of a commodity due to change in consumer’s income, other things remaining constant. In other words, it measures by how much the quantity demanded changes with respect ot the change in income. The income elasticity of demand is defined as the percentage change … Read more
What is price ceiling? Price ceiling is a measure of price control imposed by the government on particular commodities in order to prevent consumers from being charged high prices. Price ceiling can also be understood as a legal maximum price set by the government on particular goods and services to make those commodities attainable to … Read more