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Economics (Determinants of Demand (Income (In case of Normal Good (↑…

- - - - ↑ Income, → Demand
    - - ↑ Income, ← Demand
  - - - XED
- - - - Calculated through GDP, indicators such as health, education, social, etc.
      - Human Development Index (HDI)
  - - - Does not mention the welfare of people
  - - - Growth and development that do not give rise to environmental degradation, and which if possible include improvements in environmental quality
- - - - Assigned resources < Socially desirable
        
        Underallocation
      - Assigned resources > Socially desirable
        
        Overallocation
  - - - Distribution of Income or Output changes
        
        Certain social groups will receive more or less income and output
        
        Redistribution
  - - - Under ownership of government or state
    - - Under the ownership of private individuals
  - - - Made by Public Sector
      - Made by Private Sector
  - - - All economic questions are decided on the basis of prices of goods, services and resources
    - - All economic questions are made by use of methods that have nothing to do with prices
- - - - Shortage of Goods
        
        Not all who are willing to buy are able to obtain
      - Smaller quantity supplied and sold
      - Underallocation of resources
      - Non-price Rationing
      - Underground Markets
    - - Constraining
        
        Below Equilibrium
      - Non-Constraining
        
        Above Equilibrium
  - - - Surplus of Goods
      - Smaller quantity supplied and purchased
      - Firm Inefficiency
        
        No incentives to cut costs
      - Overallocation of resources
      - Underground Markets
    - - Constraining
        
        Above Equilibrium
      - Non-Constraining
        
        Below Equilibrium
- - - - Shifts Rightwards
    - - Shifts Leftwards
- - - - Less demand for a given price
    - - More demand for a given price
- - - - Tenancy for no change
  - - - Tenancy to increase price to meet demand
        
        Adjust towards Equilibrium
  - - - Tenancy for decrease price to meet demand
  - - - Market will adjust to new Equilibrium
- - - - Large response -> Elastic
      - Small response -> Inelastic
    - - Availability of Substitutes
        
        ↑Substitutes, ↑Elasticity
      - Definition of Good or Service
        
        ↑ Broad definition, ↓ Elasticity
      - Necessity / Luxury
        
        ↑ Luxurious, ↑ Elasticity
      - Length of Time
        
        ↑ Time, ↑ Elastic
      - Proportion of income spent
        
        ↑ Proportion, ↑ Elasticity
      - Addiction
        
        ↑ Addictive, ↓ Elasticity
    - - PED = 0
        
        Perfectly Inelastic Demand
      - 0 < PED < 1
        
        Inelastic Demand
        
        ↑Price, ↑Total Revenue
      - PED = 1
        
        Unit Elastic Demand
        
        ↑Price, No change in Total Revenue
      - 1 < PED < ∞
        
        Elastic Demand
        
        ↑Price, ↓Total Revenue
      - PED = ∞
        
        Perfectly Elastic Demand
  - - - Relationship
        
        -ve XED
        
        Complements
        
        +ve XED
        
        Substitutes
        
        0 XED
        
        Unrelated
      - Adjacency
        
        Closer to 0
        
        Less related
        
        Further from 0
        
        More related
  - - - Type
        
        +ve YED
        
        Normal Good
        
        -ve YED
        
        Inferior Good
      - Elasticity
        
        0 < YED < 1
        
        Income Inelastic
        
        1 < YED < ∞
        
        Income Elastic
        
        YED < 0
        
        N/A
    - - Necessity / Luxury
      - Income Level of Consumers
  - - - PES = 0
        
        Perfectly Inelastic Supply
      - 0 < PES < 1
        
        Inelastic Supply
      - PES = 1
        
        Unit Elastic Supply
      - 1 < PES < ∞
        
        Elastic Supply
      - PES = ∞
        
        Perfectly Elastic Supply
    - - Length of Time
        
        Immediate Time Period (S1)
        
        Firms unable to change Inputs
        
        Highly Inelastic
        
        Short Run (S2)
        
        Firms can vary some, NOT ALL Inputs
        
        Inelastic
        
        Long Run (S3)
        
        Firms can vary all Inputs
        
        Elastic
      - Spare Capacity of Firms
        
        Some extra Unallocated Resources
        
        More Elastic
        
        High Allocative Efficiency
        
        Less Elastic
- - - - Profit Incentive
        
        High Dynamic Efficiency
        
        Productive Efficiency
        
        No waste of resources
        
        Allocative Efficiency
        
        Greatest benefit for consumers
      - High Quality Goods at Low Price
        
        More consumer choice
      - Low Tax Rates
    - - High Level of Inequality
        
        Unemployment
      - Services unavailable to poor
        
        Low education, healthcare, etc.
      - Monopolies exploit public
        
        Demanded goods may not be produced
        
        Socially undesirable Activities
        
        Strong legal framework enforced by government required
    - - Private and state ownership exist
  - - - Low Unemployment
    - - Low incentive to work hard
        
        Low quality of work
      - Less choice and progress
        
        Less Dynamic Efficiency
      - In Soviet Russia, the product buys you
        
        Produced goods may not be demanded goods
      - Low Productive Efficiency
      - Excessive bureaucracy
      - Low Allocative Efficiency