DEMAND THEORY

# DEMAND THEORY - if I is = normal goods I is = inferior goods c Cross-price elasticity xy ε = x y y x Q P P Q • ∆ ∆ if xy is = substitute

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DEMAND THEORY 1.    IMPORTANCE: essential for the creation, survival and profitability of a firm 2.    FORCES /DETERMINANTS OF DEMAND Q d x   f (P x , I, P y , T) *demand functions can be estimated using regression analysis 3.     ELASTICITY OF DEMAND   a. Price elasticity p ε  =  Q P P Q b. Income elasticity   I  =  Q I I Q

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Unformatted text preview: if I is + = normal goods I is - = inferior goods c. Cross-price elasticity xy ε = x y y x Q P P Q • ∆ ∆ if xy is + = substitute goods xy is - = complementary...
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## This note was uploaded on 01/08/2011 for the course ACC. C-090786 taught by Professor Prof.bantua during the Spring '10 term at Xavier - Ateneo de Cagayan.

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DEMAND THEORY - if I is = normal goods I is = inferior goods c Cross-price elasticity xy ε = x y y x Q P P Q • ∆ ∆ if xy is = substitute

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