Theoretical and satellite-based assessments of the sensitivity of broadband shortwave radiative fluxes in cloudy atmospheres to small perturbations in the cloud droplet number concentration (N) of liquid water clouds under constant water conditions are performed. Two approaches to study this sensitivity are adopted: absolute increases in N, for which the radiative response is referred to as ëëabsolute cloud susceptibility,íí and relative increases in N or ëërelative cloud susceptibility.íí Estimating the former is more challenging as it requires an assumed value for either cloud liquid water content or geometrical thickness; both susceptibilities require an assumed relationship between the droplet volume and effective radius. Expanding upon previous susceptibility studies, present radiative calculations include the effect of DN perturbations on droplet asymmetry parameter and single-scattering albedo, in addition to extinction. Absolute cloud susceptibility has a strong nonlinear dependence on the droplet effective radius as expected, while relative cloud susceptibility is primarily dependent on optical thickness. Molecular absorption and reflecting surfaces both reduce the relative contribution of the cloud to the top-of-atmosphere (TOA) flux and therefore also reduce the TOA albedo susceptibility. Transmittance susceptibilities are negative with absolute values similar to albedo susceptibility, while atmospheric absorptance susceptibilities are about an order of magnitude smaller than albedo susceptibilities and can be either positive or negative. Observation-based susceptibility calculations are derived from MODIS pixel-level retrievals of liquid water cloud optical thickness, effective radius, and cloud top temperature; two data granule examples are shown. Susceptibility quantifies the aerosol indirect effect sensitivity in a way that can be easily computed from model fields. As such, susceptibilities derived from MODIS observations provide a higher-order test of model cloud properties used for indirect effect studies. MODIS-derived global distributions of cloud susceptibility and radiative forcing calculations are presented in a companion paper.