Do you want BuboFlash to help you learning these things? Or do you want to add or correct something? Click here to log in or create user.



#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
other characteristics to generally predict a good’s elasticity of demand include the portion of the typical budget that is spent on the good, the amount of time that is allowed to respond to the change in price, the extent to which the good is seen as necessary or optional.

In general, if consumers tend to spend a very small portion of their budget on a good, their demand tends to be less elastic than if they spend a very large part of their income. Most people spend only a little on, say, toothpaste each month, so it really doesn’t matter whether the price rises 10 percent or not. They would probably still buy about the same amount. If the price of housing were to rise significantly, however, most households would try to find a way to reduce the quantity they buy, at least in the long run.
If you want to change selection, open document below and click on "Move attachment"

4.1. Own-Price Elasticity of Demand
found that there was a statistically significant 2.3 percent excess return associated with those shares, a finding consistent with a negatively sloped demand curve for common stock. In addition to the degree of substitutability, <span>other characteristics tend to be generally predictive of a good’s elasticity of demand. These include the portion of the typical budget that is spent on the good, the amount of time that is allowed to respond to the change in price, the extent to which the good is seen as necessary or optional, and so on. In general, if consumers tend to spend a very small portion of their budget on a good, their demand tends to be less elastic than if they spend a very large part of their income. Most people spend only a little on, say, toothpaste each month, so it really doesn’t matter whether the price rises 10 percent or not. They would probably still buy about the same amount. If the price of housing were to rise significantly, however, most households would try to find a way to reduce the quantity they buy, at least in the long run. This example leads to another characteristic regarding price elasticity. For most goods and services, the long-run demand is much more elastic than the short-run demand. Th


Summary

statusnot read reprioritisations
last reprioritisation on suggested re-reading day
started reading on finished reading on

Details



Discussion

Do you want to join discussion? Click here to log in or create user.