Income effect on demand & Mathematically Calculation of Demand

Posted: November 15, 2012 in Education

Income effect on demand & Mathematically Calculation of Demand

Demand:
“Any desire that is able to pay”

* Desires
* Ability to pay

Income effect on demand:
Main effect on demand is income or ability to pay, consumer purchase goods or services for his satisfaction under his income level but doesn’t complete his satisfaction.

Mathematically
Qdx = f(px) M, Po, T

f = Function of
px = Price of x

M = Income of the consumer
Po = Price other thing
T = Taste, Habits

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