Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The demand curve
Suppose that starting from a condition of equilibrium, the price of X falls relative to Y. We now have a condition where the utility from the last shilling spent on X will be greater than the utility from the last shillings spent on Y. Mathematically this can be written as:
In order to restore the equilibrium the consumer will buy more of X (and less of Y), thus reducing the marginal utility of X. The consumer will continue substituting X for Y until equilibrium is achieved. Thus we have attained the normal demand relationship that, ceteris paribus, as the price of X falls, more of it is bought. We have therefore a normal downward-sloping demand curve. The demand curve we have derived is the individuals' demand curve for a product. The market demand curve can be then obtained by aggregating all the individual demand curves.
The explanation we have obtained here is of the price (or substitution) effect.
examples
Part A : Select one of the following economic issues and discuss how it impacts on your organisation. Analysis of consumer demand Cost analysis Market structure and
The quantity theory of money In the 17 th Century it was noticed that there was a connection between the quantity of money and the general level of prices, and this led to th
Disadvantages The effect on incentives High progressive tax makes work and extra effort become less valuable. The effect on the willingness to accept risk
assignment
a) The production-possibilities curve is? b) If there is a shortage in the provider of a product, we can conclude that its price: c) An enhance in supply and a
DIFFERENTIALS AND DISEQUILIBRIUM In a free enterprise system, workers aim at maximizing their wages. Hence, it would be expected that workers would move form low-paying indus
Measuring Point Elasticity on a Non-linear Demand Curve Let's now explain the method of measuring point elasticity on a non-linear demand curve. Assume we want to measure the
#question.meaning of isoquants and its types
Jane, the manager of a company manufacturing air-conditioning units can choose between two production technologies for a new product line. If she chooses and installs technology 1,
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd