Importance of income elasticity, Managerial Economics

Importance of Income Elasticity

If a country is experiencing economic growth, the income of the people will increase.  However, for those engaged in the production of goods with negative income elasticities, this will mean a declining demand for their product.  Even products with positive income elasticities, there is a great variability of response.

Income elasticity therefore has a most important effect upon resource allocation.  As such, prosperous areas of any economy are often those associated with products which have a high income elasticity.  In recession the opposite will be true.

Posted Date: 11/27/2012 6:38:35 AM | Location : United States







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

Write discussion on Importance of income elasticity
Your posts are moderated
Related Questions
Q. Explain about Long run production function? Long run is a phase adequately long so that all factors together with capital can be changed. The factors that can be increase

explain the law of demand. briefly discuss the exception to the law of demand

factorsw determining demand

Ask questiHow does economic theory contribute to managerial decisions? on #Minimum 100 words accepted#

Q. Explain Supernormal Equilibrium? Supernormal Equilibrium: E is the point of stable equilibrium as MC = MR and MC cuts the MR from below.   Figure: Supernormal Equ

Disposable Income This is the income which households actually have available to spend or to save.  To calculate disposal income, which is indicated by Ya, the statistician mu

Advantages a.           It is more equitable.  The broader shoulders are asked to carry the heavier burden. b.          It satisfies the canon of productivity as it yields

Long-Term Policies One long term option of tackling balance of payments deficit is export promotion .  In the long run this is the best method of improving a balance of payme

WHAT ARE THE PRINCIPLES OF MANGERIAL ECONOMICS

A profit-maximizing firm faces the following options for hiring workers: a) Assume the firm has limited space so that it can only hire one worker. Which type of employee sh