August 2020

Measurement of Cross Elasticity of Demand

Cross elasticity of demand measures the degree of responsiveness of the quantity demand for one good to the change in the price of any other related good, keeping other things the same. For the business firms, cross elasticity of demand is useful to see the competitors and determine their strategy accordingly. Goods and services can […]

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Measurement of Income Elasticity of Demand

The degree of income elasticity of demand for different types of goods is different. So, it is imperative to quantity the income elasticity of demand for the business decision as well as other policy-related decisions. Economists have suggested different methods to compute the income elasticity of demand. The following are the major methods used in

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Concept and Degree of Income Elasticity of Demand

Concept of Income Elasticity of Demand Consumer income is one of the significant determents of demand for a commodity as it determines the buyer’s ability to pay. Therefore, consumer’s demand for goods and services directly responds to the change in their income. Income elasticity of demand thus measures the degree of change in quantity demand

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Methods of Measurement of Price Elasticity of Demand

The degree of price elasticity of demand for different goods is different. So, it is important to measure the elasticity of demand to compare the elasticity of demand for different goods. Economists have developed different, methods of measurement of price elasticity of demand. Here we will discuss all the major methods of measurement of price

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Market Efficiency, Consumer’s Surplus, and Producer’s Surplus

In economics, we believe that the equilibrium of supply and demand in the market maximizes the total benefits received by sellers and buyers. Similarly, the price that balances the supply and demand for the product is the best one as it maximizes the total welfare of consumers and sellers or producers. So, economists consider a

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Price Control Policies and their Effect in Market Equilibrium

If the market is free then there are no government interventions and prices and quantities adjust with the market forces of demand and supply. At the equilibrium price, the quantity that consumers are willing to buy exactly equals the quantity that sellers are ready to sell in the market. In economics, this is an efficient

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