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Unit1 150428082524 Conversion Gate01
Unit1 150428082524 Conversion Gate01
Unit1 150428082524 Conversion Gate01
Oikos - a house
Nemein - to manage
Emphasis on Contribution by
Wealth Adam Smith (1723 – 1790)
Welfare Alfred Marshall (1842 – 1924)
Scarcity Lionel Robbins
Growth Paul Samuelson
Wealth Definition
Adam smith (1723 – 1790)
His book “An Inquiry into Nature and Causes of
Wealth of Nations” (1776) defined economics as the
science of wealth.
Micro means very small or millionth part. Macro means large or whole.
At the given price, suppliers are selling all the goods that they
have produced and consumers are getting all the goods that they
are demanding.
Equilibrium
Equilibrium
Equilibrium occurs at the intersection of the demand and
supply curve, which indicates no allocative inefficiency.
Excess Supply
Income Elasticity
= (Proportionate change in quantity
demanded)/ (Proportionate change in
income)
Types of Income Elasticity
1. Unitary income elasticity (℮y = 1)
2. Income elasticity greater than 1 (℮y >
1)
3. Income elasticity less than 1 (℮y < 1)
4. Zero income elasticity (℮y = 0)
5. Negative income elasticity (℮y < 0)
Unitary Income Elasticity (℮y = 1)
When percentage change in quantity demanded is
equal to percentage change in income, it is termed as
unitary income elasticity.
Income Elasticity Greater than
1 (℮y > 1)
Demand is income elastic or income elasticity is
greater than 1 if the percentage change in quantity is
greater than percentage change in income.
Income Elasticity Less than 1 (℮y <
1)
Demand is termed as income inelastic or less than 1 if
the percentage change in quantity demanded is less
than percentage change in income of the consumer.
Zero Income Elasticity (℮y = 0)…
Sometimes any change in the income does not affect
the quantity demanded of a particular product at all.