Elasticity of demand is the sensitivity of quantity demanded of a commodity in response to the change in factors related to that commodity. Elasticity of demand may be of different types, depending upon the factor that is responsible for causing the change in demand. Among them, price elasticity of demand is one of the most … Read more
What is income elasticity? Income elasticity of demand is the measure of change in demand of the commodity as a result of a change in income of the consumers. It is denoted by Ey, and is mathematically expressed as Uses of Income Elasticity of Demand 1. To classify normal and inferior goods Any products that … Read more
Cross elasticity of demand is a measure of degree of change in demand of a commodity due to change in price of another commodity. Cross elasticity of demand can also be understood as the proportionate change in quantity demanded of commodity ‘X’ due to proportionate change in price of commodity ‘Y’. Cross elasticity of demand … Read more
What do you mean by supply? The economy is composed of two forces – the producers (who produce goods and services) and the consumers (who buy the products available in the market). Supply is a fundamental concept of economics which can be defined as the total amount of a particular good or service which is … Read more
What is a supply curve? A supply curve is a graphical representation of the relationship between the amount of a commodity that a producer or supplier is willing to offer and the price of the commodity, at any given time. In other words, a supply curve can also be defined as the graphical representation of … Read more
Microeconomics refers to the study of individualistic economic behavior at the time of making economic decisions. It studies an individual consumer, producer, manager or a firm, price of a particular commodity or a household. Scopes of Microeconomics The scope or the subject matter of microeconomics is concerned with: Commodity pricing The price of an individual … Read more
Producer’s Equilibrium The primary objective of any business firm is to maximize profit. And, a producer is said to be in equilibrium when he attains maximum profit from limited outlay or limited output. A producer may find out his equilibrium condition by the help of isoquant map and a family of isocost line. An isoquant … Read more
Marginal Rate of Technical Substitution Marginal rate of technical substitution (MRTS) may be defined as the rate at which the producer is willing to substitute one factor input for the other without changing the level of production. In other words, MRTS can be understood as the indicator of rate at which one factor input (labor) … Read more
What is price elasticity of supply? In Economics, elasticity is defined as the degree of change in demand and supply of consumers and producers with respect to the change in income or price of the commodity. Particularly, price elasticity of supply is a measure of the degree of change in the supplied amount of commodity … Read more
Elasticity of demand refers to price elasticity of demand. It is the degree of responsiveness of quantity demanded of a commodity due to change in price, other things remaining the same. Mathematical Expression of Price Elasticity of Demand The price elasticity of demand is defined as the percentage change in quantity demanded due to certain … Read more