Determinants of the income elasticity , Microeconomics

Determinants of the Income Elasticity of the Demand:

The determinants of income elasticity of demand are given below:

  • The Degree of necessity of the commodity.

 

  • The rate at which the desire for commodity is satisfied as consumption increases.

 

  • The level of income of the consumer.

Short Run and Long Run criteria:

Short run is the period in which not all factors can adjust fully and thus adjustment to shocks can only be partial.

Long run is the period over which all factors can be changed and full adjustment to shocks can happen.

 

 

Posted Date: 7/19/2012 4:07:37 AM | Location : United States







Related Discussions:- Determinants of the income elasticity , Assignment Help, Ask Question on Determinants of the income elasticity , Get Answer, Expert's Help, Determinants of the income elasticity Discussions

Write discussion on Determinants of the income elasticity
Your posts are moderated
Related Questions
What determines aggregate demand?

What does the basic neoclassical, or traditional, model of economics assume about markets? It supposes that markets are perfectly competitive and smoothly functioning, and thos

Problem: (a) Consider the Classical Linear Regression Model (CLRM) Y i = α + βX i + ε i (i) Using the method of ordinary least squares (OLS), derive an expression for

Q. Define Contribution Pensions? Defined Contribution Pensions: A pension plan which makes no specified promise about level of pension paid out after retirement. In its place,

The question states that a hotel charges $60 a night for a room per night during off peak. This hotel has a fixed cost of $75 per night and variable costs of $40 per night (only ap

what is histogram?

What is "high-powered money"?  The "high-powered money" is the similar as monetary base, which is defined, at the minimum, as the sum of the currency in circulation (banknotes

A government official announces a new policy. The country wishes to eliminate its trade deficit, but will strongly encourage financial investment from foreign firms. Explain why su

CURRENCY UNIONS AND OPTIMUM: This Section explains the working of monetary unions and common currency areas. The Section also examines the case for and against optimum currenc

assume you are selling a product and when your price is decreased by 29% your quantity demanded increases by 55%. What is your price elasticity of demand?