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DEMAND THEORY Business is driven by demand, a firm will not be established or will survive if adequate demand is not there. Hence, it is consequential to understand factors affecting demand. Consumer beg Theory This theory postulates that the quantity demanded of a commodity is a function of the determine of commodity, the consumers income, the price of substitutes and complementary commodities and the taste of the consumer. Qdx = f ( Px, T , Py , T ) Qdx = measuring rod demanded of commodity X an individual per time period. Px = monetary value per unit of commodity X I = Consumers Income Py = monetary value of cereb charge per unit ( i.e Substitute and complementary) Commodities T = Taste of the consumer Price Elasticity Of Demand The responsiveness in the quantity demanded of a commodity to a switch in its price is very important to the firm. Sometimes sinister the price of the commodity increases sales sufficiently to increase sum up revenues. Thus price elasticity of demand is given by percentage multifariousness in quantity demanded to percentage change in price, holding all other variables constant. Ep = ?Q/Q ?P/P Price elasticity of demand depends on 1.Availability of substitutes 2.

Length of time everywhere which the quantity response to price change is measured Income Elasticity Of Demand ( EI ) The level of consumers income is also very important determinant of demand. Income elasticity measures responsiveness of demand to change in income. EI = ?Q/Q ?I/I AIR DECCAN With economy growing at a rate of about 8% with whole business environment having pathogenic optimism. The spill over can also be seen in aviation sector. With only less than 14 million rider flying the domestic sector in 2003, this figure like a shot stands at about 28 million with domestic grocery store growing at almost 50%. G.R Gopinath, the man who pioneered down in the mouth face aviation in India, first visualized this opportunity. With a new concept of no-frill low cost... If you want to get a full essay, order it on our website: Orderessay

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