 Showing posts with label Class Notes: Economics. Show all posts
Showing posts with label Class Notes: Economics. Show all posts

## Measurement of Price Elasticity of Demand:

There are 5 different measurements of Price Elasticity of Demand. They are as follows:
1. Perfectly Inelastic Demand (Elasticity = 0)
2. Perfectly Elastic Demand (Elasticity = Infinity)
3. Unit Elasticity of Demand (Elasticity = 1)
4. Relatively Inelastic Demand (Elasticity < 1)
5. Relatively Elastic Demand (Elasticity > 1)

These measurements has been discussed here. In the following discussion 5 symbols has been used which are

### Explain Cross Elasticity of Demand.

Cross Elasticity of Demand : Cross elasticity of demand occurs when a change in price of a commodity brings the change in demand of another commodity. The cross elasticity of demand for two goods X and Y, is the ratio of the percentage change of quantity purchased of X to the percentage change in price of Y.

Cross elasticity of demand occurs for two goods which are interrelated, such as complementary goods, substitutable goods, etc. ...

### Explain Income elasticity of demand.

Income elasticity of demand : A persons demand for a good may change with his\her change in income. The income elasticity of demand is the ratio of percentage change quantity purchased per time to the percentage change in income. Thus,

### Explain Price elasticity of demand

Price Elasticity of Demand : Price elasticity of demand measures the quantitative response of demand to a change in price. This is the ratio of percentage change in demand to the percentage change in price. So the price elasticity of demand is,

### What is elasticity, elasticity of demand, elastic demand, and inelastic demand?

Elasticity : In economics, elasticity is the ratio of the percentage change in one variable to the percentage change in another variable. Elasticity is a popular tool among empiricists because it is independent of units and thus simplifies the analysis. ...

### Show the market demand for a commodity with example and explanation.

Market Demand For a Commodity : The market demand for a commodity means the total demand for a commodity made by all the individuals in the market. The market demand for a commodity gives the alternative amounts of a commodity demanded per time period, at various alternative prices, by all the individuals in the market. It depends on all the factors as the individuals demand depends on. It is obtained by the horizontal summation of all the individuals demand curves for the commodity. ...

### What is shift in demand curve? Explain with example.

Shift in Demand Curve : Shift in demand curve means the change in demand curve. This change will have to be for the change in ceteris paribus. That is when the price of a commodity remains constant and the other things which can affect the demand of the commodity changes, a shift can be found in the demand curve. This shift may be either leftward or rightward, meaning the decrease in demand and increase in demand respectively. ...

### Explain the law of negatively sloped demand curve.

Law of Negatively Sloped Demand Curve:

First, obtain the demand schedule; the formula is,

Qdx = f(Px)

Considering, an individual demand function for a commodity X is given by,

Qdx =8 - Px    cet.par.

Here, Qdx  is the quantity demanded and Px is the price of X commodity.
.....

### Obtaining Demand Schedule:

To obtain the demand schedule the formula is,

Qdx = f(Px)

Considering, an individual demand function for a commodity X is given by,

Qdx =8 - Px    cet.par.

Here, Qdx  is the quantity demanded and Px is the price of X commodity.

### Demand:

The desire for a commodity of an individual or a group will be called their demand when they are able to pay for that commodity. That is demand is desire with account to pay.

### Opportunity Cost:

Life is full of choices. Because resources are scarce, we must always consider how to spend our limited income or time. In a world of scarcity choosing one thing means giving up something else. If there is no increase in productive resources, increasing production of a first good has to entail decreasing production of a second, because resources must be transferred to the first and away from the second.

### What is production possibility frontier (PPF)? Explain.

Production Possibility Frontier (PPF) : In economics, a production possibility frontier (PPF) is a graph that shows the different rates of production of two goods that an individual or group can efficiently produce with limited productive resources. The PPF shows the maximum obtainable amount of one commodity for any given amount of another commodity or composite of all other commodities, given the society's technology and the amount of factors of production available. ...

## Differences Between Microeconomics and Macroeconomics:

The study of economics is divided into microeconomics and macroeconomics by the modern economists. Both of them discuss the economical activities but are used in different sectors under different circumstances. In spit of having some similarities, they also have some differences which have been given below.

### What are microeconomics and macroeconomics?

The study of economics is divided into microeconomics and macroeconomics by the modern economists. Both of them discuss the economical activities but are used in different sectors under different circumstances.

## Three Problems of Economic Organizations:

In every economy; economic organizations, irrespective of their type, have to face and solve three problems of economics. These three problems are as follows,

1. What commodities are produced & in what quantities.
2. How goods are produced.
3. For whom goods are produced.

Description and solution to these problems in fee and mixed economies is given below.

### Define Economics / Definition of Economics / What is Economics ?

Economics : The word ‘Economics’ has been originated from the Greek word ‘Oikonomia’ which means ‘Management of household wealth’. As being social, humans face various wants and needs. Economics is all about those activities which occur to fulfill these wants and needs. In fact, Economics describes the economical activities of humans in daily life. Founder of Economics is Adam Smith. ...