Explain the Expenditure Method of Measurement of Elasticity
Explain the Expenditure Method of Measurement of Elasticity.
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Expenditure or Outlay Method: Expenditure method was developed through Marshall. In this method, the elasticity is measured through estimating the changes in whole expenditure like a result of changes in price and quantity demanded. It has three components.
When the price changes but whole expenditure remains constant then unit elasticity exists.
When the price changes but whole expenditure moves in the opposite directions then demand elastic is (>1).
When the price changes and whole revenues moves in similar direction, demand is inelastic (<1).
It can be expressed by the given diagram.
What are the objectives and importance (Uses) of managerial Economics?
An increase in the competitively-set wage tends to cause: (w) firms to reduce the amounts of labor hired. (x) increases in the marginal revenue products of the workers a firm retains. (y) higher marginal factor costs of labor to competitive firms. (z)
Illustrates the definition and meaning of managerial economics?
What are the levels of Demand forecasting?
The concept of derived demand means that: (w) consumer demands for goods depend on the utilities received from their use. (x) firms’ demands for resources depend upon consumer demands for the goods produced. (y) governmental demands for social g
What are the important areas of decision-making?
Illustrates the term Demand Function?
Explain the reasons for demand curve slopes downward.
Explain the chief characteristics of managerial or business economics.
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