In the beginning of this Unit we mentioned that, ceteris paribus, firms are willing to produce more as prices augment. We also stated that the objective of any business activity in a free market is profit maximization. In maximizing profits the business will, in practice, be covering: Cost of raw materials, new stocks, consumables etc.… Continue reading 4.3 Production Costs & Economies of Scale in Insurance
Category: Insurance Introduction Course
4.2 Demand & Supply Elasticity in Insurance
Demand Elasticity Demand for a product tends to fall into three broad categories, i.e. Highly price sensitive (Relatively elastic): This means that the change in demand is at a higher rate than the change in price. Price Neutral: That the change in demand is equal to the change in price Insensitive to Price Changes (Relatively… Continue reading 4.2 Demand & Supply Elasticity in Insurance
4.1 The Concept of Scarcity, Demand, Supply & the Market
The whole study of economics is based on one fundamental problem: i.e. people have a large, and growing, demand for commodities whereas the resources to meet this demand are scarce. There aren’t enough resources to satisfy demand. This fundamental problem gives rise to other questions, such as, What should be produced – that which is… Continue reading 4.1 The Concept of Scarcity, Demand, Supply & the Market