StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Distinguish between price elasticity of demand, cross elasticity of demand, income elasticity of demand and price elasticity of - Essay Example

Comments (0) Cite this document
Summary
introduction Price fluctuations can influence not only the producers but the consumers as well. Changes in prices cause changes in the demand and supply and therefore everyone is influenced because of changes in the price level (Hoover, 2011). Although prices can be controlled by the government but it is a complex process and there are number of factors that need to be considered to understand the changes in the price level…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER98.5% of users find it useful
Distinguish between price elasticity of demand, cross elasticity of demand, income elasticity of demand and price elasticity of
Read TextPreview

Extract of sample "Distinguish between price elasticity of demand, cross elasticity of demand, income elasticity of demand and price elasticity of"

Download file to see previous pages Section 1: Explanation of important terms 300 Price elasticity of demand Price elasticity of demand shows the relationship between the changes in the quantity demanded of any specific product with the changes in the price of that specific product. The terminology of price elasticity of demand is generally referred to analyze the sensitivity of the prices of the product (Hanushek, & Quigley, 1980). Price elasticity of demand can be calculated using the following formula: If there is a little change in the prices of the good and this small change can cause a large change in the demand of the product, then such a product is said to be elastic. However if there is a significant change in price level of the product but even this significant change in price level cannot cause a small change in the quantity demand of the product then such a product will be said as price inelastic. Cross elasticity of demand In order to analyze the responsiveness of demand of one product when the price is changed for another product then it is called as the cross elasticity of demand. ...
The following formula is used to calculate the price elasticity of supply Section II: actions that are to be taken to reduce price fluctuations Price is one of the most important factors that influence the purchasing decision of the consumers. It is also the most important factor that influences the production decision of the producers. Therefore changes in price of commodity can influence both the demand and supply of products. Therefore the role of the government is to offer stability in the prices of commodities so that the overall economy can be stable and more stable decisions are taken. There are number of reasons why price level should be stable and one of the most important reasons is that if the prices are more constant and stable then the producers would be able to plan their production accordingly. As producers plan production at a specific level at a constant price, but if the price changes then it can influence supply. For instance, if the price is increased then it will increase the supply of the commodity as shown in the graph below: As the prices have increased, producers want to increase their production so that they can earn more and sell more products at the higher price. However with increase in price, the demand of the products have reduced and thus it is showing that the consumers are not willing to buy the same amount of commodity at the higher prices. Therefore it is showing that the increase in price has increased the supply but it has decreased the demand. Thus a new equilibrium has been formed at Price level P1 and Quantity Q1. Changes in the price level influence the demand and supply of the goods and therefore it is shown that ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Distinguish between price elasticity of demand, cross elasticity of Essay”, n.d.)
Distinguish between price elasticity of demand, cross elasticity of Essay. Retrieved from https://studentshare.org/macro-microeconomics/1468995-distinguish-between-price-elasticity-of-demand
(Distinguish Between Price Elasticity of Demand, Cross Elasticity of Essay)
Distinguish Between Price Elasticity of Demand, Cross Elasticity of Essay. https://studentshare.org/macro-microeconomics/1468995-distinguish-between-price-elasticity-of-demand.
“Distinguish Between Price Elasticity of Demand, Cross Elasticity of Essay”, n.d. https://studentshare.org/macro-microeconomics/1468995-distinguish-between-price-elasticity-of-demand.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Distinguish between price elasticity of demand, cross elasticity of demand, income elasticity of demand and price elasticity of

The Distinction Between the Tort of Negligence and the Tort of Nuisance

There are many instances in which establishing a claim in private nuisance does not require proof of negligence and it, therefore, remains necessary to maintain the tort of private nuisance distinct from the tort of negligence. The discussion that follows will demonstrate the necessity by comparing and contrasting both torts.
The tort of negligence is founded on the principles enunciated in the House of Lords decision in Donoghue v Stevenson which essentially defines the duty of care and situations in which a breach of that duty will give rise to a claim in negligence. Lord Atkin explained that we are required to take all necessary precautions to prevent injury to our neighbours. He goes on to fully explain the duty of care i...
17 Pages(4250 words)Case Study

Calculation of Income Tax

The calculations for the capital gains tax are shown in the appendix. From the calculations, it may be observed that it is advisable to sell off the business building before 05th April 2008 as you can avail of the indexation allowance and taper relief which are no more available. It may be noted that the indexation and taper relief are the allowanced granted by the government to provide for the increase in the asset value due to inflation (Chris Horne). In case you decide to sell the property after 05th April 2008 you may have to pay a higher CGT of 18,000. However in the case of the personal paintings since they have been acquired only in the year 2005 they do not stand eligible for any allowances and the capital gains will simpl...
6 Pages(1500 words)Case Study

The Difference between Prudential and Protective Regulations

Governments attempt to regulate and organize different fields of life in their respective countries. This need for regulation has been created for a number of reasons. One prominent reason may be attributed to the fact that the government may assess a certain industry having a significant impact on the economy thereby embarking on a regulation endeavor. By these regulations, the government will be able to protect its markets from failure, leading to unwanted deficiencies such as monopoly, windfall profits, anti-competitive behavior, and predatory pricing.

One of the most important types of regulations that endeavor to protect consumers and restore confidence in the financial markets as being genuine is the regulation...

9 Pages(2250 words)Research Paper

Correlation between Motivation and Efficiency

It also has many warehouses to deliver chilled and frozen food to customers. It is highly unpleasant for the workers to work in the chilled warehouses. Just five years ago, one of the warehouses in Stroke-on-Trent introduced a new technical system that transformed the attitude of the workers and their efficiency.
Though the company spent almost £ 300,000 on installing a new system, it reckoned that by cutting down the mistakes and providing a better workplace for workers it could save that much amount in the first year itself. Prior to the installation of a new communication system, workers felt much boring with the old techniques of writing the movements of goods by a bit of paper and pencils. Apart from mistakes and e...
6 Pages(1500 words)Research Paper

Conflict Between Science and Religion

When the Copernican theory of planetary motion became well known in 1543 through the publication of his book, De revolutionibus, the geocentric model of the universe as implied in the Bible received a great setback. There were also questions raised about the notion that God created the earth and universe in seven days. The scriptures also speak in a plain manner that the earth is stationary, but science proved that the earth was rotating around the sun. To reconcile science and religion became a Herculean task for the faithful and several approaches were adopted to find out a coherent explanation.
“Grant us space from our meditations on the secret recesses of your law, and do not lock the gate to us as we knock. It is n...
22 Pages(5500 words)Assignment

Clinical Governance Approach between UK and Australia

The UK Department of Health defines it as “the framework through which NHS organizations are accountable for continuously improving the quality of their services and safeguarding high standards of care by creating an environment in which excellence in clinical care will flourish.” (Department of Health, 2004).

The term clinical governance gained importance following the high mortality rate for pediatric cardiac surgery at the Bristol Royal Infirmary. The incident led to the formation by the government in 1998 of the Kennedy Commission, which proved a turning point in overhauling the NHS (Kennedy, 2001). The commission’s final report recommended that change “can only be brought about with the willing...
11 Pages(2750 words)Term Paper

The Relationship Between Security, Risk and Health in a Large Organisation

...The relationship between Security & Risk and Health & Safety in a large organisation "Assess the relationship between Security & Risk and Health & Safety in the context of a large organisation. Are they complimentary or the demands of one conflict with or inhibit the realisation of the other? Identify and discuss the implications of your assessment for the roles of the security manager". 1. Introduction The development of commercial activities worldwide has been extremely rapid; firms operating in various industrial sectors need to confront a series of challenges in order to ensure the limitation of risk related with their strategic initiatives. Within this context, the issues of security, risk, health and safety are very likely to appear...
9 Pages(2250 words)Coursework

Relationship between Money Supply and Inflation in Saudi Arabia

Over the recent past, the effects of money supply, debt and inflation have become contentious issues for debate. Furthermore, frequent cautions concerning the risk of very large budgetary deficits aver that this would send up the upcoming state debt and capital rate as indicated by the rates (interests). As a nation, Saudi Arabia has a bi and enduring budgetary deficit over the past two decades and the government has been forced to go into the market so as to have loan access and to make up for the deficits. Given the impact of this on inflation and other economic variables, it's imperative and of great alarm for strategy architects (strategists) to understand how microeconomics has an effect on money supply, financial plan defici...
10 Pages(2500 words)Speech or Presentation

Evaluation of Children with Visual Impairment between Ages 4-12

A visually impaired child may suffer from incomplete sight, reduced vision, total blindness as well as legal sightlessness (Kelley and Gale p 45). It is a condition that may become severe in a child, thereby affecting its growth and development. The impact is usually dependent on the kind of loss, age at which it occurs, as well as the general body functioning of the child. The normal interest that is usually evident amongst children on seeing attractive items in their surroundings lacks in a visually impaired child. This may interfere with the child’s learning capabilities unless he/she is assisted to learn. The development of social behavior in children usually depends on the ability to see parents or those in charge of ca...
6 Pages(1500 words)Coursework

Conflict Between Researh and Ethics on the Tuskegee Syphilis Study

...Opinion paper The Declaration of Helsinki by the WHO clearly s that in clinical trials involving humans the wellbeing of the should be of prime importance than the interest of science or society. This has been stated because at times in order to achieve the objectives of a study the investigators might overlook the welfare of the trial subjects thus jeopardizing their health in the process. According to ethical rules while comparing two treatment options the control group of the study must receive the best known treatment available while the study subjects are given a potential newer treatment. Only when there is no effective treatment available a placebo-controlled group can be used for the study. There have been several trials... paper The...
7 Pages(1750 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Distinguish between price elasticity of demand, cross elasticity of demand, income elasticity of demand and price elasticity of for FREE!

Contact Us