Essays on Law Of Demand

The Impact of the Theory of the Consumer Choice on Demand Curves, Higher Wages and Higher Interest Rates

The theory of consumer behavior shows how the choice is affected by the price of goods, income and preferences, and the way buyers maximize their net gains from the purchase of goods and services. The price change of a good affects the consumer demand structure in two ways. Any change in the price results in the appearance of the income and substitution effects, as it changes the amount of available goods and their relative prices. The above effects are consumer reaction to changes in relative prices and real income (Mankiw, 2014). The substitution effect is the change in the ...

The term "demand" in economics means payment need, i.e. need that the subject is able to pay. From this definition it follows that the demand for a particular commodity (service) depends on the price. This means that the increase in commodity prices will lead to a decrease in demand, and, conversely, a decrease in prices will lead to higher demand. The relationship between price and quantity demanded is stable. (Agarwal, 2013) The cause of the change in demand is change. This reverse causal relationship between price and quantity demanded is the law of demand. The law of demand manifests ...

Suppose that, in an attempt to raise more revenue, Nobody State University increases its tuition. Will this necessarily result in more revenue? Not necessarily. As we know, revenue depends on price and quantity of a given good or service; in the case of Nobody State, Revenue = Tuition Price x Number of Enrolled Students If tuition price increases, the number of students will likely fall as fewer students will be able to afford Nobody State and will favor its nearby competitor, Anybody Community College. As we can see, the qualitative aspect of demand is easy to grasp (increase prices, lower ...

Identify two microeconomics and two macroeconomics principles or concepts from the simulation/ video. Explain why you have categorized these selected principles or concepts as microeconomics or macroeconomics. The main concepts displayed in the video are the law of supply and law of demand. These concepts are common to microeconomics and macroeconomics. Law of supply is a positive relationship between quantity of goods and services and its price. When price of a good rises, the quantity supplied of the good increases accordingly. With much higher price producers are willing to supply more goods and services. Law of demand depicts negative ...

Question 1

Beta is a measure of a project’s risk relative to the entire market . There are several factors that determine the value of beta of a project when it is calculated from domestic stock index against the world stock index. They include; financial leverage, operating leverage and the nature of the project . Financial leverage is the amount of debt in a firm’s capital structure. Payment of interest on debt is a contractual obligation and is fixed. Fixed financing costs cause profits after tax of a project to vary with changes in sales and earnings before interest and tax. Financial leverage increases a project financial ...