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Income Elasticity Of Demand
In economics, the income elasticity of demand (YED) is the responsivenesses of the quantity demanded for a good to a change in consumer income. It is measured as the ratio of the percentage change in quantity demanded to the percentage change in income. For example, if in response to a 10% increase in income, quantity demanded for a good or service were to increase by 20%, the income elasticity of demand would be 20%/10% = 2.0. Mathematical definition :\epsilon_d = \frac The point elasticity version, which defines it as an instantaneous rate of change of quantity demanded as income changes, is as follows. For a given Marshallian demand function Q(I,\vec) , with arguments income and a vector of prices of various goods, :\epsilon_d = \frac\frac This can be rewritten in the form :\epsilon_d = \frac For discrete changes the elasticity is (using the arc elasticity) :\epsilon_d= \times =\times , where subscripts 1 and 2 refer to values before and after the change. Interpr ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Necessity Good
In economics, a necessity good or a necessary good is a type of normal good. Necessity goods are product(s) and services that consumers will buy regardless of the changes in their income levels, therefore making these products less sensitive to income change. As for any other normal good, an income rise will lead to a rise in demand, but the increase for a necessity good is less than proportional to the rise in income, so the proportion of expenditure on these goods falls as income rises. If income elasticity of demand is lower than unity, it is a necessity good. This observation for food, known as Engel's law, states that as income rises, the proportion of income spent on food falls, even if absolute expenditure on food rises. This makes the income elasticity of demand for food between zero and one. Some necessity goods are produced by a public utility. According to Investopedia, stocks of private companies producing necessity goods are known as defensive stocks. Defensive sto ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Marshallian Demand Function
In microeconomics, a consumer's Marshallian demand function (named after Alfred Marshall) is the quantity they demand of a particular good as a function of its price, their income, and the prices of other goods, a more technical exposition of the standard demand function. It is a solution to the utility maximization problem of how the consumer can maximize their utility for given income and prices. A synonymous term is uncompensated demand function, because when the price rises the consumer is not compensated with higher nominal income for the fall in their real income, unlike in the Hicksian demand function. Thus the change in quantity demanded is a combination of a substitution effect and a wealth effect. Although Marshallian demand is in the context of partial equilibrium theory, it is sometimes called Walrasian demand as used in general equilibrium theory (named after Léon Walras). According to the utility maximization problem, there are L commodities with price vector p ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Income Distribution
In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes economic inequality which is a concern in almost all countries around the world. About Classical economists such as Adam Smith (1723–1790), Thomas Malthus (1766–1834), and David Ricardo (1772–1823) concentrated their attention on factor income-distribution, that is, the Distribution (economics), distribution of income between the primary factors of production (Land (economics), land, Labour economics, labour and Capital (economics), capital). Modern economists have also addressed issues of income distribution, but have focused more on the distribution of income across individuals and households. Important theoretical and policy concerns include the balance between income inequality and economic growth, and their often inverse relati ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Price Elasticity Of Supply
The price elasticity of supply (PES or Es) is commonly known as “a measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price.” Price elasticity of supply, in application, is the percentage change of the quantity supplied resulting from a 1% change in price. Alternatively, PES is the percentage change in the quantity supplied divided by the percentage change in price. When PES is less than one, the supply of the good can be described as ''inelastic.'' When price elasticity of supply is greater than one, the supply can be described as ''elastic''.Png, Ivan (1999). pp. 129–32. An elasticity of zero indicates that quantity supplied does not respond to a price change: the good is "fixed" in supply. Such goods often have no labor component or are not produced, limiting the short run prospects of expansion. If the elasticity is exactly one, the good is said to be ''unit-elastic''. Differing from pr ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Price Elasticity Of Demand
A good's price elasticity of demand (E_d, PED) is a measure of how sensitive the quantity demanded is to its price. When the price rises, quantity demanded falls for almost any good ( law of demand), but it falls more for some than for others. The price elasticity gives the percentage change in quantity demanded when there is a one percent increase in price, holding everything else constant. If the elasticity is −2, that means a one percent price rise leads to a two percent decline in quantity demanded. Other elasticities measure how the quantity demanded changes with other variables (e.g. the income elasticity of demand for consumer income changes). Price elasticities are negative except in special cases. If a good is said to have an elasticity of 2, it almost always means that the good has an elasticity of −2 according to the formal definition. The phrase "more elastic" means that a good's elasticity has greater magnitude, ignoring the sign. Veblen and Giffen goods are t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cross Elasticity Of Demand
In economics, the cross (or cross-price) elasticity of demand (XED) measures the effect of changes in the price of one good on the quantity demanded of another good. This reflects the fact that the quantity demanded of good is dependent on not only its own price (price elasticity of demand) but also the price of other "related" good. The cross elasticity of demand is calculated as the ratio between the percentage change of the quantity demanded for a good and the percentage change in the price of another good, ceteris paribus:\text = \fracThe sign of the cross elasticity indicates the relationship between two goods. A negative cross elasticity denotes two products that are complements, while a positive cross elasticity denotes two products are substitutes. If products A and B are complements, an increase in the price of B leads to a decrease in the quantity demanded for A, as A is used in conjunction with B. Equivalently, if the price of product B decreases, the demand curve fo ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Gamma Distribution
In probability theory and statistics, the gamma distribution is a versatile two-parameter family of continuous probability distributions. The exponential distribution, Erlang distribution, and chi-squared distribution are special cases of the gamma distribution. There are two equivalent parameterizations in common use: # With a shape parameter and a scale parameter # With a shape parameter \alpha and a rate parameter In each of these forms, both parameters are positive real numbers. The distribution has important applications in various fields, including econometrics, Bayesian statistics, and life testing. In econometrics, the (''α'', ''θ'') parameterization is common for modeling waiting times, such as the time until death, where it often takes the form of an Erlang distribution for integer ''α'' values. Bayesian statisticians prefer the (''α'',''λ'') parameterization, utilizing the gamma distribution as a conjugate prior for several inverse scale parameters, facilit ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Income Bracket
An income bracket is a category of people whose income falls within defined upper and lower levels. In governmental planning, entire populations are divided into income brackets. These brackets are used to categorize demographic data as well as determine levels of taxation and welfare benefits. See also * Tax bracket Tax brackets are the divisions at which tax rates change in a progressive tax system (or an explicitly regressive tax system, though that is rarer). Essentially, tax brackets are the cutoff values for taxable income—income past a certain poin ... * Salary packaging References Human resource management Income distribution Demographic economics {{labor-stub ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Selected Income Elasticities
Selection may refer to: Science * Selection (biology), also called natural selection, selection in evolution ** Sex selection, in genetics ** Mate selection, in mating ** Sexual selection in humans, in human sexuality ** Human mating strategies, in human sexuality * Social selection, within social groups * Selection (linguistics), the ability of predicates to determine the semantic content of their arguments * Selection in schools, the admission of students on the basis of selective criteria * Selection effect, a distortion of data arising from the way that the data are collected * A selection, or choice function, a function that selects an element from a set Religion * Divine selection, selection by God * Papal selection, selection by clergy Computing * Selection (user interface) ** X Window selection * Selection (evolutionary algorithm) * Selection (relational algebra) * Selection-based search, a search engine system in which the user invokes a search query using only ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Engel's Law
Engel's law is an economic relationship proposed by the statistician Ernst Engel in 1857. It suggests that as family income increases, the percentage spent on food decreases, even though the total amount of food expenditure increases. Expenditure on housing and clothing remains proportionally the same, and that spent on education, health and recreation rises. Even though Engel's law was proposed roughly 160 years ago, it holds relevance today in the context of poverty, especially the reduction of poverty. For instance, the lines and rates for national poverty are often determined by the food share of household expenditure. A quotation of Engel himself reveals the same relationship between income and percentage of income spent on food, but also indicates the application of Engel's Law in measuring standard of living: Understanding Engel's law Engel's law states that an increase in the income of a family decreases the proportion of the income which is spent on food, even ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Arc Elasticity
In mathematics and economics, the arc elasticity is the elasticity of one variable with respect to another between two given points. It is the ratio of the percentage change of one of the variables between the two points to the percentage change of the other variable. It contrasts with the ''point elasticity'', which is the limit of the arc elasticity as the distance between the two points approaches zero and which hence is defined at a single point rather than for a pair of points. Formula The ''y'' arc elasticity of ''x'' is defined as: :E_ = \frac where the percentage change in going from point 1 to point 2 is usually calculated relative to the midpoint: :\% \mbox x = \frac; :\% \mbox y = \frac. The use of the midpoint arc elasticity formula (with the midpoint used for the base of the change, rather than the initial point (''x''1, ''y''1) which is used in almost all other contexts for calculating percentages) was advocated by R. G. D. Allen for use when ''x'' refers to the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
