Business Management Postgraduate Diploma 2014 Insights
Explore Dr. M. Ganeshamoorthy's teachings on consumer equilibrium, elasticity of demand, and more in the context of a postgraduate diploma in business management from 2014. Discover principles like price elasticity of demand and how it affects consumer behavior and equilibrium. Dive into the world of economics with this insightful look at essential business concepts.
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Presentation Transcript
Postgraduate Diploma in Business Management 2014/15 Dr. M. Ganeshamoorthy, B.A (Hons) PDN, PgDED CMB, M.A CMB, Ph.D The Netherlands
MUx = TU/ Qx Consumer Equilibrium is achieved when MUx = Px
Consumer Equilibrium is achieved when MUx = Px
Elasticity of Demand Elasticity of demand is a measure of sensitivity of quantity demand to a change in any one of the determinants of demand. There are THREE types of elasticity of demand: 1. Price elasticity of demand 2. Income elasticity of demand 3. Cross elasticity of demand
Elasticity of Demand 1. Price elasticity of demand:
Elasticity of Demand 1. Price elasticity of demand: Measuring price elasticity of demand: Point formula: PED: ( QD/ P)x(P/QD) Arc Elasticity formula: PED: ( QD/ P)x(P1+P2/QD1+QD2)
Elasticity of Demand Point Price Quantity demanded A 0 120 B 2 100 C 4 80 D 6 60 E 8 40 F 10 20 G 12 0
Elasticity of Demand Price elasticity coefficient is always a negative number as price and quantity demanded move in opposite directions. The negative sign is ignored and the absolute values are taken in to consideration 1. PED = 0 Perfectly inelastic demand 2. PED < 1 Inelastic demand 3. PED = 1 Unitary elastic demand 4. PED > 1 Elastic demand 5. PED = Perfectly elastic demand
Elasticity of Demand Price elasticity coefficient is always a negative number as price and quantity demanded move in opposite directions. The negative sign is ignored and the absolute values are taken in to consideration 1. PED = 0 Perfectly inelastic demand 2. PED < 1 Inelastic demand 3. PED = 1 Unitary elastic demand 4. PED > 1 Elastic demand 5. PED = Perfectly elastic demand
Elasticity of Demand Determinants of Elasticity of Demand 1. Necessities versus Luxuries 2. Availability of Substitutes 3. Relative Price (Income) 4. Time
Elasticity of Demand Income Elasticity of Demand YED: ( QD/ Y)x(Y/QD)
Elasticity of Demand Income Elasticity of Demand YED: ( QD/ Y)x(Y/QD)
Elasticity of Demand Cross Elasticity of Demand Cross elasticity measures the responsiveness of quantity demanded of one commodity to a change in price of another commodity YED: ( QD/ Y)x(Y/QD)
Elasticity of Demand Cross Elasticity of Demand
Elasticity of Demand Cross Elasticity of Demand YED: ( QD/ Y)x(Y/QD)
Elasticity of Demand Cross Elasticity of Demand YED: ( QD/ Y)x(Y/QD)
Elasticity of Demand Cross Elasticity of Demand YED: ( QD/ Y)x(Y/QD)
