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buffer stocks and stabilization fundsin this case the government buys up part of the supply when output is excessive stores this surplus and resells
perfectly elastic supplysupply is said to be perfectly or infinitely elastic if the price is fixed at all levels of demand the demand curve has
elastic supplysupply is said to be price elastic if changes in price bring about changes in quantity supplied in greater proportion thus when
unit elasticity of supplysupply is said to be of unit elasticity if changes in price bring about changes in quantity supplied in the same
inelastic supplysupply is said to be price inelastic if changes in price bring about changes in quantity supplied in less proportion thus when
perfectly inelastic zero elastic supplysupply is said to be perfectly inelastic if the quantity supplied is constant at all prices the supply
importance of cross elasticityknowledge of cross elasticity is necessary when the government wants to impose a tariff on an imported commodity to
cross elasticitycross elasticity of demand measures the degree of responsiveness of the quantity demanded of one good b to changes in the price of
importance of income elasticityif a country is experiencing economic growth the income of the people will increase however for those engaged in
types of income elasticity of demanddepending upon the product demand might increase or decrease in response to a rise in income there are thus
income elasticity of demandthe income elasticity of demand measures the degree of responsiveness of the quantity demanded of a product to changes in
practical importance of the knowledge of price elasticity of demandthe practical importance of the measures of elasticity of demand is to be
factors determining elasticity of demand ease of substitution nature of the commodity ie whether it is a necessity of life luxury or addictive
types of price elasticity of demand a perfectly inelastic demanddemand is said to be perfectly inelastic if changes in price have no
price elasticity of demandis the responsiveness of the quantity demanded to changes in price its co-efficient isped proportionate change
definition of elasticityis defined as the ratio of the relative change of one dependent variable to changes in another independent variable or its a
stable and unstable equilibriuman equilibrium is said to be stable equilibrium when economic forces tend to push the market towards it in other
factors influencing supply curvestate of technology there is a direct relationship between supply and technology improved technology
goals of the firmhow much is produced by a firm depends on its objectives a firm which aims to maximise its sales revenue for example will
prices of the factors of productionas the prices of those factors of production used intensively by x producers rise so do the firms costs this cause
prices of other related goodsi substitutes if x and y are substitutes then if the price x increases the
exceptional supply curvesin have some situations the slope of the supply curve may be reversed i regressive supply in this case the
firm and industry supply schedulesthe plan or table of possible quantities that will be offered for sale at different prices by individual firms for
uses of indifference curve analysisindifference curve analysis is useful when studying welfare economics as followsthey are used to indicate the
income and substitution effects of price changewhen the price of a commodity falls the consumers equilibrium changes the consumer can purchase