--%>
Assignment Help - homework help

Explain the Expenditure Method of Measurement of Elasticity

Explain the Expenditure Method of Measurement of Elasticity.

E

Expert

Verified

Expenditure or Outlay Method: Expenditure method was developed through Marshall. In this method, the elasticity is measured through estimating the changes in whole expenditure like a result of changes in price and quantity demanded. It has three components.

When the price changes but whole expenditure remains constant then unit elasticity exists.

When the price changes but whole expenditure moves in the opposite directions then demand elastic is (>1).

When the price changes and whole revenues moves in similar direction, demand is inelastic (<1).

It can be expressed by the given diagram.

1197_Expenditure Method.png

   Related Questions in Managerial Economics

  • Q : Illustrates definition and meaning of

    Illustrates the definition and meaning of managerial economics?

    		•
  • Q : Supply of labor in a perfectly

    The supply of labor within a perfectly competitive market is: (w) an upward sloping curve. (x) a horizontal line. (y) above the MRC. (z) below the MRC. Hello guys I want your advice. Please recommend some views for

    		•
  • Q : How is the Demand forecasting important

    How is the Demand forecasting important?

    		•
  • Q : Wealth definition of economics Who is

    Who is the father of economics and what is wealth definition of economics?

    		•
  • Q : Lower Wages in Wage Differentials

    Compared to men along with similar amounts of education or experience, women onto average earn: (1) higher wages. (2) similar wages. (3) lower wages. (4) There is no general pattern. Can someone explain/help me with best solution a

    		•
  • Q : Screening job hiring decisions The

    The concept that employers artificially utilize formal training and education while screening job applicants to make hiring decisions is termed as: (w) nepotism. (x) formalism. (y) human capital discrimination. (z) credentialism.

    Q : Functions and responsibilities of

    States the functions and responsibilities of managerial economist?

    		•
  • Q : Problem regarding the Diminishing

    Assume that you require studying six hours per week to earn a ‘C’, nine hrs a week to earn a ‘B’, and 15 hrs per week to earn an ‘A’. This would mean: (i) Raising returns to hrs studied. (ii) Diminishing returns to hrs studied. (iii

    		•
  • Q : Tutorial 7. The San Diego Zoo is

    7. The San Diego Zoo is contemplating a stuffed panda bear advertising promotion. Annualized sales data from local shops marketing the "Can't Bear it When You're Away" bear indicate that: Q = 50,000 - 1,000P where Q is Panda bear sales and P is price. A. How many pandas could the zoo sell at $30

    		•
  • Q : Labor Supply Curves to Competitive Firms

    A price taker within the labor market: (w) can set the wage that this will pay for the labor this hires. (x) can set the wage at which this will supply the use of its labor. (y) doesn’t care what wage this pays or receives. (z) can’t influ

    		•