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Independent Goods
Independent goods are goods that have a zero cross elasticity of demand. Changes in the price of one good will have no effect on the demand for an independent good. Thus independent goods are neither complements nor substitutes. For example, a person's demand for nails is usually independent of his or her demand for bread, since they are two unrelated types of goods. Note that this concept is subjective and depends on the consumer's personal utility function. A Cobb-Douglas utility function implies that goods are independent. For goods in quantities ''X''1 and ''X''2, prices ''p''1 and ''p''2, income ''m'', and utility function parameter ''a'', the utility function : u(X_1, X_2) = X_1^a X_2^, when optimized subject to the budget constraint that expenditure on the two goods cannot exceed income, gives rise to this demand function for good 1: X_1= am/p_1, which does not depend on ''p''2. See also * Consumer theory * Good (economics and accounting) In economics, goods are i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cross Elasticity Of Demand Independent
A cross is a geometrical figure consisting of two intersecting lines or bars, usually perpendicular to each other. The lines usually run vertically and horizontally. A cross of oblique lines, in the shape of the Latin letter X, is termed a saltire in heraldic terminology. The cross has been widely recognized as a symbol of Christianity from an early period.''Christianity: an introduction'' by Alister E. McGrath 2006 pages 321-323 However, the use of the cross as a religious symbol predates Christianity; in the ancient times it was a pagan religious symbol throughout Europe and western Asia. The effigy of a man hanging on a cross was set up in the fields to protect the crops. It often appeared in conjunction with the female-genital circle or oval, to signify the sacred marriage, as in Egyptian amule ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Good (economics)
In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying Product (business), product. A common distinction is made between goods which are transferable, and Service (economics), services, which are not transferable. A good is an "economic good" if it is useful to people but scarcity, scarce in relation to its demand so that human effort is required to obtain it.Samuelson, P. Anthony., Samuelson, W. (1980). Economics. 11th ed. / New York: McGraw-Hill. In contrast, free goods, such as air, are naturally in abundant supply and need no conscious effort to obtain them. Private goods are things owned by people, such as Television, televisions, living room furniture, wallets, cellular telephones, almost anything owned or used on a daily basis that is not food-related. A consumer good or "final good" is any item that is ultimately consumed, rather than used in the production of another good. For example, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cross Elasticity Of Demand
In economics, the cross elasticity of demand or cross-price elasticity of demand measures the percentage change of the quantity demanded for a good to the percentage change in the price of another good, ceteris paribus. In real life, the quantity demanded of good is dependent on not only its own price (Price elasticity of demand) but also the price of other "related" products. \text = \frac The concept is used to identify the relationship between two goods, they can be: * Complements * Substitutes * Unrelated 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 for product A shifts to the right reflecting an increase in A's demand, resulting in a ''negative'' value for the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Demand (economics)
In economics, demand is the quantity of a good that consumers are willing and able to purchase at various prices during a given time. The relationship between price and quantity demand is also called the demand curve. Demand for a specific item is a function of an item's perceived necessity, price, perceived quality, convenience, available alternatives, purchasers' disposable income and tastes, and many other options. Factors influencing demand Innumerable factors and circumstances affect a consumer's willingness or to buy a good. Some of the common factors are: The price of the commodity: The basic demand relationship is between potential prices of a good and the quantities that would be purchased at those prices. Generally, the relationship is negative, meaning that an increase in price will induce a decrease in the quantity demanded. This negative relationship is embodied in the downward slope of the consumer demand curve. The assumption of a negative relationship is reason ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Complementary Goods
In economics, a complementary good is a good whose appeal increases with the popularity of its complement. Technically, it displays a negative cross elasticity of demand and that demand for it increases when the price of another good decreases. If A is a complement to B, an increase in the price of A will result in a negative movement along the demand curve of A and cause the demand curve for B to shift inward; less of each good will be demanded. Conversely, a decrease in the price of A will result in a positive movement along the demand curve of A and cause the demand curve of B to shift outward; more of each good will be demanded. This is in contrast to a substitute good, whose demand decreases when its substitute's price decreases. When two goods are complements, they experience ''joint demand'' - the demand of one good is linked to the demand for another good. Therefore, if a higher quantity is demanded of one good, a higher quantity will also be demanded of the other, and '' ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Substitute Good
In microeconomics, two goods are substitutes if the products could be used for the same purpose by the consumers. That is, a consumer perceives both goods as similar or comparable, so that having more of one good causes the consumer to desire less of the other good. Contrary to complementary goods and independent goods, substitute goods may replace each other in use due to changing economic conditions. An example of substitute goods is Coca-Cola and Pepsi; the interchangeable aspect of these goods is due to the similarity of the purpose they serve, i.e fulfilling customers' desire for a soft drink. These types of substitutes can be referred to as close substitutes. Definition Economic theory describes two goods as being close substitutes if three conditions hold: # products have the same or similar performance characteristics # products have the same or similar occasion for use and # products are sold in the same geographic area Performance characteristics describe what the pro ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Utility Function
As a topic of economics, utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or happiness as part of the theory of utilitarianism by moral philosophers such as Jeremy Bentham and John Stuart Mill. The term has been adapted and reapplied within neoclassical economics, which dominates modern economic theory, as a utility function that represents a single consumer's preference ordering over a choice set but is not comparable across consumers. This concept of utility is personal and based on choice rather than on pleasure received, and so is specified more rigorously than the original concept but makes it less useful (and controversial) for ethical decisions. Utility function Consider a set of alternatives among which a person can make a preference ordering. The utility obtained from these alternatives is an unknown function of the utilities obtained from each alternative, not the sum of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Consumer Theory
The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves. It analyzes how consumers maximize the desirability of their consumption as measured by their preferences subject to limitations on their expenditures, by maximizing utility subject to a consumer budget constraint. Factors influencing consumers' evaluation of the utility of goods: income level, cultural factors, product information and physio-psychological factors. Consumption is separated from production, logically, because two different economic agents are involved. In the first case consumption is by the primary individual, individual tastes or preferences determine the amount of pleasure people derive from the goods and services they consume.; in the second case, a producer might make something that he would not consume himself. Therefore, different motivations and abilities are involved. The models that make up consumer theory ar ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Good (economics And Accounting)
In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying Product (business), product. A common distinction is made between goods which are transferable, and Service (economics), services, which are not transferable. A good is an "economic good" if it is useful to people but scarcity, scarce in relation to its demand so that human effort is required to obtain it.Samuelson, P. Anthony., Samuelson, W. (1980). Economics. 11th ed. / New York: McGraw-Hill. In contrast, free goods, such as air, are naturally in abundant supply and need no conscious effort to obtain them. Private goods are things owned by people, such as Television, televisions, living room furniture, wallets, cellular telephones, almost anything owned or used on a daily basis that is not food-related. A consumer good or "final good" is any item that is ultimately consumed, rather than used in the production of another good. For example, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Goods (economics)
In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not transferable. A good is an "economic good" if it is useful to people but scarce in relation to its demand so that human effort is required to obtain it.Samuelson, P. Anthony., Samuelson, W. (1980). Economics. 11th ed. / New York: McGraw-Hill. In contrast, free goods, such as air, are naturally in abundant supply and need no conscious effort to obtain them. Private goods are things owned by people, such as televisions, living room furniture, wallets, cellular telephones, almost anything owned or used on a daily basis that is not food-related. A consumer good or "final good" is any item that is ultimately consumed, rather than used in the production of another good. For example, a microwave oven or a bicycle that is sold to a consumer is a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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