--%>
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 : Functions and responsibilities of

    States the functions and responsibilities of managerial economist?

    		•
  • Q : Increases in orders for new capital A

    A change in a derived demand is best demonstrated while there are increases in: (1) sales of roasted peanuts during baseball season. (2) new car sales during economic downturns. (3) orders for new capital throughout economic booms. (4) beef prices when cowboys unioniz

    		•
  • 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

    		•
  • Q : Explain about the term survey techniques

    Explain about the term survey techniques.

    		•
  • Q : Explain the steps for demand estimation

    Explain the steps for demand estimation.

    		•
  • Q : Explain the target pricing briefly

    Explain the target pricing briefly.

    		•
  • Q : Attempt Screening and Signaling

    Screening and signaling are attempts to: (w) decreases job interview time. (x) decrease the problem of adverse selection. (y) uphold equal opportunity laws. (z) All of the above. I need a good answer on the topic o

    		•
  • Q : Occurrence of backward bending supply

    A backward bending supply curve is more likely to arise for the supply of: (1) labor. (2) land. (3) capital.  (4) tomatoes. (5) leisure. Please choose the right answer from above...I want your suggestion for t

    		•
  • Q : Least wage elastic demand for labor For

    For labor Plastibristle’s demand for labor is least wage elastic at: (i) point a. (ii) point b. (iii) point c. (iv) point d.

    Q : Illustrates the term Law of Demand

    Illustrates the term Law of Demand? Answer: The law of Demand is termed as the “first law in market”. It shows the relation in between quantity and price

    		•