Search results
Results From The WOW.Com Content Network
The elasticity of demand refers to the sensitivity of a goods demand as compared to the fluctuation of other economic factors, such as price, income, etc. The law of demand explains that the relationship between Demand and Price is directly inverse. However, the demand for some goods are more receptive to a change in price than others.
Normally there is an inverse relationship between the price of the commodity and its quantity demanded. It implies that the lower the price of the commodity, the larger is the quantity demanded and the higher the price, the lesser is the quantity demanded. [4] This negative relationship is embodied in the downward slope of the consumer demand ...
The inverse linear demand function and the marginal revenue function derived from it have the following characteristics: Both functions are linear. [7] The marginal revenue function and inverse demand function have the same y intercept. [8] The x intercept of the marginal revenue function is one-half the x intercept of the inverse demand function.
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).
The inverse of the relationship, y = f (x), is the graphical representation of Marshall’s derived demand curve for the selected factor of production. [2] Its equilibrium price and quantity are determined by the intersection of this demand curve with the supply curve of the factor of production.
Veblen goods such as luxury cars are considered desirable consumer products for conspicuous consumption because of, rather than despite, their high prices.. A Veblen good is a type of luxury good, named after American economist Thorstein Veblen, for which the demand increases as the price increases, in apparent contradiction of the law of demand, resulting in an upward-sloping demand curve.
The IS curve is downward sloping because output and the interest rate have an inverse relationship in the goods market: as output increases, more income is saved, which means interest rates must be lower to spur enough investment to match saving. [51]
For example, consider a consumer that wants a means of transportation, which may be either a car or a bicycle. The consumer prefers a car to a bicycle. If the consumer has both a car and a bicycle, then the consumer uses only the car. The economic theory of unit elastic demand illustrates the inverse relationship between price and quantity. [15]