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In most circumstances the demand curve has a negative slope, and therefore slopes downwards. This is due to the law of demand which conditions that there is an inverse relationship between price and the demand of commodity (good or a service). As price goes up quantity demanded reduces and as price reduces quantity demanded increases.
A linear demand curve's slope is constant, to be sure, but the elasticity can change even if / is constant. [ 13 ] [ 14 ] There does exist a nonlinear shape of demand curve along which the elasticity is constant: P = a Q 1 / E {\displaystyle P=aQ^{1/E}} , where a {\displaystyle a} is a shift constant and E {\displaystyle E} is the elasticity.
The elasticity of demand follows the law of demand and its definition. However, there are goods and specific situations that defy the law of demand. Generally, the amount demanded of a good increases with a decrease in price of the good and vice versa. In some cases this may not be true. There are certain goods which do not follow the law of ...
[2] [3] The law of diminishing returns does not cause a decrease in overall production capabilities, rather it defines a point on a production curve whereby producing an additional unit of output will result in a loss and is known as negative returns. Under diminishing returns, output remains positive, but productivity and efficiency decrease.
The negative slope of the indifference curve reflects the assumption of the monotonicity of consumer's preferences, which generates monotonically increasing utility functions, and the assumption of non-satiation (marginal utility for all goods is always positive); an upward sloping indifference curve would imply that a consumer is indifferent ...
Under the standard assumption of neoclassical economics that goods and services are continuously divisible, the marginal rates of substitution will be the same regardless of the direction of exchange, and will correspond to the slope of an indifference curve (more precisely, to the slope multiplied by −1) passing through the consumption bundle in question, at that point: mathematically, it ...
Cross elasticity of demand of product B with respect to product A (η BA): = / / = > implies two goods are substitutes.Consumers purchase more B when the price of A increases. Example: the cross elasticity of demand of butter with respect to margarine is 0.81, so 1% increase in the price of margarine will increase the demand for butter by 0.81
Negative correlation can be seen geometrically when two normalized random vectors are viewed as points on a sphere, and the correlation between them is the cosine of the circular arc of separation of the points on a great circle of the sphere. [1] When this arc is more than a quarter-circle (θ > π/2), then the cosine is negative.