Demand Forecasting Forecasting is important for business planning. Demand forecasting means predicting the future demand for a product. The success of a business manager depends on how accurately he can predict the future demand for a product. This is more important where production is on a large scale and production processes require long gestation periods. … Read more
Determinants of Demand We know that the demand for any commodity depends on the desire, consent and ability to pay the price. The desire to purchase depends on the preferences and interests of the individuals. Purchasing capacity depends on the purchasing power. Since there is always a need to distribute the scarce resources in the … Read more
Exceptions to the Law of Demand Exceptions to the Law of Demand refer to those circumstances and reasons in which this law does not apply. In other words, there are certain circumstances in which the demand for a commodity increases when its price increases and decreases when its price falls. In these circumstances, the demand … Read more
Assumptions of the Law of Demand The Law of Demand If other things remain constant’ is an important clause of the law of demand. This clause means that the law will apply if certain conditions are met. This law is based on the following assumptions – 1. There will be no change in the occupation … Read more
Law of Demand The law of demand is one of the fundamental laws of economics. The law of demand explains the relationship between the price and demand of a commodity. It is a matter of practical experience that when the price of a commodity increases, its demand decreases and when it decreases, its demand increases. … Read more
Types of demand (i) Demand for consumer goods and producer goods- Consumer goods are those final goods which directly satisfy the needs of the consumer. Such goods are: bread, milk, clothes, furniture etc. Capital or producer goods are those goods which help in the production of other goods and which indirectly satisfy the needs of … Read more
Theory and Nature of Demand The theory of demand plays an important role in business decision making. In every business firm, there are many issues on which the executives have to take decisions such as what to produce, when to produce, how to produce, what will be the quality of the output etc. The theory … Read more
Determination of profits under perfect competition – Modern profit theory Selling Powers of Perfect Competition – Modern Profit Theory Profit is demanded like the reward of any other factor-service and the power of the product is determined by it. This theory explains the profit itself as the business corporation and profit as its net income. … Read more
Marginal Productivity Theory of Profit- Like any other factor, an attempt has been made to explain the determination of remuneration of an entrepreneur in terms of his marginal revenue productivity. Angsworth, Chapman, Stigler and recently Stonier and Hague have explained profit determination with the help of this theory. According to this theory, profit as a … Read more
Shackle’s Profit Theory Professor Shackle has extended Prof. Knight’s theory by introducing expectations under conditions of uncertainty. According to Shackle, expectations are of two types: general and specific. General expectations relate to general variables of the entire economy. They relate to future macro variables such as general price level, gross national product (GNP), balance of … Read more