DEMAND
The ABILITY
To PAY THE PRICE
AND
The WILLINGNESS
To PAY THE CURRENT MARKET PRICE
It is the DESIRE backed by:
1
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Demand and Elasticity: A Basic Introduction to Economic Concepts, Slides of Economics
Economics Slides micro and macro
Typology: Slides
2019/2020
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DEMAND
The ABILITY
To PAY THE PRICE
AND
The WILLINGNESS
To PAY THE CURRENT MARKET PRICE
It is the DESIRE backed by:
Demand (contd.) Hence, D = f (A, W)
Venn Diagrams used to depict Ability and Willingness:
Ability (^) Willingness
Disjoint sets
Must they be
Congruent
sets?
UNEQUAL sets ??
Strategies to make ‘A’
or ‘W’ favourable for
a firm?
Ability Willingness
Intersecting sets
Intersection Means ??
- E dp =
- E dp <
Price
Demand
A B
RIE
RE
Demand
Price
A B
RIE
RE
Demand and Elasticity (= Responsiveness) (^) Marshallian Mode
Income Demand
10000 400
Income Elasticity of Demand
Dx = 7000 + 0.3Y
At Y = 20k, E (^) dY =?
Promotional Elasticity of Demand
Promo Exp. Demand
50 400
Dx = 10 + 0.7A
At A = 50, E (^) dA =?
Cross Elasticity of Demand
Substitute Goods Complementary Goods
Py Dy Dx Py^ Dy^ Dx
Dx
Py
Dx
Py