Managerial Economics.Docx
ASSAIGHNMENT NAME | DIVYA J.JATHANNA | ROLL.NO. | | COURSE | MBA-SEMISTER-1 | SUBJECT | MANAGERIAL ECONOMICS | SUBJECT CODE | MB0042 | LEARNING CENTER | TRACKS INDIA INFOTECH - 01508 | ASSIGHNMENT NO | | DATE | |
SET 1 1) Mention the demand function. What is elasticity of demand? Describe the determinants of elasticity of demand.
Answer:
Demand function: The demand for a product or service is affected by its price, the income of the individual, the price of the other substitutes, population, habit etc. thus we can say that demand is a function of the price of the product, and others as mentioned above.
Demand function is a comprehensive formulation which specifies the factors that influence the demand for a product. Mathematically, a demand function can be represented in the following manner.
Dx =f (Px, Ps, Pc, Ep, Y, Ey, T, W, A, U…………………..etc). Where,
Dx = Demand for commodity X
Px = Price of the commodity X
Pc = Price of the compliments
Y = Income of the consumer
T = Taste & preferences
A = Advertisement and its impact
Ps = Price of the substitutes
Ep = Expected future price
Ey = Expected income in future
W = wealth of consumer
U = All other determinants
Elasticity of Demand: We know that there is direct relationship between the price and demand. The change in one variable leads to change in other variable to a certain degree. Elasticity of demand is generally defined as the responsiveness or sensitiveness of demand to a given change in the price of a commodity. It refers to the capacity of demand either to stretch or shrink to a given change in price. It indicates the ratio of relative changes in two quantities i.e. price and demand.
According to prof.Boulding. ” Elasticity of demand measures the responsiveness of demand to changes in price”. In the words of Marshall,” The elasticity(or responsiveness) of demand in a market is great or small according to the amount demanded much or little for a given fall in price,
SET 1 1) Mention the demand function. What is elasticity of demand? Describe the determinants of elasticity of demand.
Answer:
Demand function: The demand for a product or service is affected by its price, the income of the individual, the price of the other substitutes, population, habit etc. thus we can say that demand is a function of the price of the product, and others as mentioned above.
Demand function is a comprehensive formulation which specifies the factors that influence the demand for a product. Mathematically, a demand function can be represented in the following manner.
Dx =f (Px, Ps, Pc, Ep, Y, Ey, T, W, A, U…………………..etc). Where,
Dx = Demand for commodity X
Px = Price of the commodity X
Pc = Price of the compliments
Y = Income of the consumer
T = Taste & preferences
A = Advertisement and its impact
Ps = Price of the substitutes
Ep = Expected future price
Ey = Expected income in future
W = wealth of consumer
U = All other determinants
Elasticity of Demand: We know that there is direct relationship between the price and demand. The change in one variable leads to change in other variable to a certain degree. Elasticity of demand is generally defined as the responsiveness or sensitiveness of demand to a given change in the price of a commodity. It refers to the capacity of demand either to stretch or shrink to a given change in price. It indicates the ratio of relative changes in two quantities i.e. price and demand.
According to prof.Boulding. ” Elasticity of demand measures the responsiveness of demand to changes in price”. In the words of Marshall,” The elasticity(or responsiveness) of demand in a market is great or small according to the amount demanded much or little for a given fall in price,