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AGGREGATE DEMAND DETERMINANT: A ceteris paribus factor that affects aggregate demand, but which is assumed constant when the aggregate demand curve is constructed. Changes in any of the aggregate demand determinants cause the aggregate demand curve to shift. While a wide variety of specific ceteris paribus factors can cause the aggregate demand curve to shift, it's usually most convenient to group them into the four, broad expenditure categories -- consumption, investment, government purchases, and net exports. The reason is that changes in these expenditures are the direct cause of shifts in the aggregate demand curve. If any determinant affects aggregate demand it MUST affect one of these four expenditures.
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Lesson 12: Elasticity and Demand | Unit 5: Other Measures
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Page: 24 of 25
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Topic:
Cross Elasticity Of Demand
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- How responsive is my demand to this change in my other prices? To answer these questions, we need the cross elasticity of demand.
- Cross elasticity of demand is the relative response of the demand for one good to changes in the price of another good.
- Or stated in percentage terms: the cross elasticity of demand is the percentage change in demand for one good resulting from a percentage change in the price of another good.
- The cross elasticity of demand is a handy numerical measure commonly used by economists to identify complement and substitute goods:
- For a substitute good, cross elasticity is positive, meaning that an increase in the price of one good leads to an increase in demand for the other good.
- For an complement good, cross elasticity is negative, meaning that an increase in the price of one good leads to a decrease in demand for the other good.
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AVERAGE REVENUE PRODUCT AND MARGINAL REVENUE PRODUCT A mathematical connection between average revenue product and marginal revenue product stating that the change in the average revenue product depends on a comparison between the average revenue product and marginal revenue product. If marginal revenue product is less than average revenue product, then average revenue product declines. If marginal revenue product is greater than average revenue product, then average revenue product rises. If marginal revenue product is equal to average revenue product, then average revenue product does not change.
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RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time surfing the Internet seeking to buy either a how-to book on fixing your computer, with illustrations or several magazines on computer software. Be on the lookout for defective microphones.
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This isn't me! What am I?
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Lewis Carroll, the author of Alice in Wonderland, was the pseudonym of Charles Dodgson, an accomplished mathematician and economist.
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"If anything terrifies me, I must try to conquer it. " -- Francis Charles Chichester, yachtsman, aviator
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FIML
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