UTILITY THEORY

CHOICE AND UTILITY THEORY Whenever sets of alternatives are open to us at the same point of time, we often make choices. Provided we are all rational beings, it can be said that, behind all activities, our basic motive is to maximize the total level of satisfaction. Whatever we choose in our daily life depends […]

Demand Analysis

All of us in our daily life, consume various goods and services within our given income constraint. Whenever we visit the market to purchase a particular item to match our requirement, we often get puzzle by the multiplicity of the goods, which are all they near to our requirement. This is the point where we […]

Types of Price Elasticity of Demand

  Alfred Marshall was the first economist to give a clear formulation of price elasticity. It is the ratio of proportionate changes in the quantity demand of a commodity to a given proportionate change on its price. It is the ratio of a relative change in quantity to a relative change in price. A small […]

Elasticity of Demand

  By now we have already come to know from the law of demand that, when the price of a good increase, the quantity demanded falls, other things remaining the same. But, this information is not of much practical use since we know only the direction of change in the demand for a given change […]

Importance of Demand Analysis

  The analysis of demand theory is very much important in the business decision. Demand analysis helps firm forecast the market which is of importance in the modern business activities. It helps to design the appropriate pricing policy. In the present global market, it is not at all possible for a firm to exist without […]

The Demand Schedule and the Demand Curve

  The demand schedule is generally represented by a table, which shows how the quantity demanded of a good varies with price, other things remaining constant. Table shows a hypothetical demand schedule for jackets sold per month at Mahendranagar. Table Price (In rupees) Quantity demanded (In numbers) 500 450 400 350 300 250 200 150 […]

Factors Influencing the Demand Curve

              Apart from its own place, there are other several factors that determine the nature of the demand curve for a good. We briefly discuss those. 1)   Price of close substitutes and complements: Given other things, if the price of a substitute falls, then the consumer will shift his preference in favor of the […]

Determinants of Demand

The quantity demanded of a commodity depends upon the following factors, Price of the commodity, Prices of related goods, Income of the consumer, Taste and preferences of the consumer. Other factors includes population, distribution of income, expectation about the change in prices, stability etc. We can write this in a simple mathematical form: Dx= f […]

Meaning of Demand

The term demand is defined as the number of units of particular goods or service that consumer are willing to purchase during a specific period and under a given set of period. Demand is distinct from desire and generally it is confused with desire. We can desire for anything. A mere desire for a commodity […]