Case study Economics Essay Example | Topics and Well Written Essays - 1000 words

Case cultivation Economics - Essay ExampleThe first term on the even off hand side depicts the nub that is demanded if the product is freely available, i.e if p = 0, Qd = 100. Since, this term is oblivious to wrong movements, and it is the coefficient of the act term on the right hand side that actually determines the extent of influence price changes can exert on demanded quantities, the second term is relatively much more important from the aspect of decision making perspective of the suppliers in particularly deciding the price to charge.More than the direction of the relative (inverse in general), it is the exact nature of the relation reflected in the extent to which demand is influenced by price movements which is considered important in most casings and in our case specially as we are dealing with the issue of tax incidences. This extent of influence that price changes feature on the quantity demanded, or in other words, the degree of responsiveness of quantity demande d to price changes is know as the price duck soup of demand. In more specific terms, the lot change in quantity demanded due to a percentage change in price is known as the price elasticity of demand. There are two alternative ways in which we can calculate such percentage changesObserve in this measure, the elasticity of demand is measured for a particular point only. For a variant value of p in the function, we are measuring the elasticity for a different point on the demand curve1 and get different values of price elasticity. For this very reason this particular measure of price elasticity is known as point price elasticity of demand.The alternative that shows the way give away of this difficulty is the arc elasticity measure. It measures the elasticity over an arc of the demand curve using the pith of the arc as a reference. The p and Q values are essentially averages of their