BASICS OF MANAGERIAL ECONOMICS

The concept of elasticity of demand is very important in economic theory and policy. It is used to measure the effect of changes in price on quantity demanded. It is known that according to the law of demand, if price decreases the demand increases and if price increases the demand falls. The quality of demand to change with changes in price is called the elasticity of demand.

By definition, then, the elasticity of demand is the rate at which the quantity demanded changes in response to a change in price.
Its formula is:
Ed = percentage change in quantity demanded/percentage change in price.
 
A monopoly is a market structure in which there is only one producer/seller for a product. In other words, the single business is the industry. Entry into such a market is restricted due to high costs or other impediments, which may be economic, social or political. For instance, a government can create a monopoly over an industry that it wants to control, such as railways.
 
When the percentage change in quantity demanded is greater than the percentage change in price, the demand is said to be elastic.
 
vikram chawla said:
WE WILL BE DISCUSSING BASICS OF MANAGERIAL ECONOMICS UNDER THIS THREAD:

LETS START WITH:

ELASTICITY OF DEMAND
Click to expand...

When quantity demanded changes by a very large percentage in response to an almost zero change in price, the demand is said to be perfectly elastic.
 
:SugarwareZ-237:thanx for ur posting can u able to give a pdf file on managerial economics hmm do u hav any notes on demand principle or engels law
 
You must log in or register to reply here.
Back
Top