The difference between micro and macro economicsis simple. Microeconomics is the study ofeconomics at an individual, group or company level.Macroeconomics, on the other hand, is the study of a national economy as a whole. Microeconomicsfocuses on...
Demand is also effective demand. Desire becomes demand only when it is backed bypurchasing power and willingness to spend. Demand is always at a certain price. Demand becomes meaningless unless stated in terms ofprice. Therefore, demand is...
Theory of Consumer Behaviour (Indifference-Curves) Rationality: The consumer is assumed to be rational he aims at the maximization of his utility, given his income and market prices. It is assumed he has full knowledge (certainty) of all relevant...
Demand elasticity refers to how sensitive the demand for a good is to changes in other economic variables, such as the prices and consumer income. Demand elasticity is calculated by taking the percent change in quantity of a good demanded and...
Price Elasticity of Supply is the responsiveness of quantity supplied when the price of the good changes. ... Price Elasticity of Supply is always positive because the Law of Supply says that quantity supplied increases with an increase in price.
A situation in which the supply of an item is exactly equal to its demand. Since there is neither surplus nor shortage in the market, price tends to remain stable in this situation. this is where the quantity demanded and quantity supplied are...
The three alternative methods used for measuring national income are as follows: 1. Value Added Method 2. Income Method 3. Expenditure Method. Since factor incomes arise from the production of goods and services, and since incomes are spent on...
Returns to a factor and returns to scale are two important laws of production. Both laws explain the relation between inputs and output. ... On the other hand, returns to scale relate to the long period production function when a firm changes its...
In an economy, various goods and services are produced by different productive units during a period of one year. Such goods and services cannot be added together in terms of quantity (as we cannot add 5,000 tonnes of wheat + 10,000 mobile phones...
The break-even point for a product or service occurs when revenue generated by the product equals thecosts incurred in producing, selling and delivering the product. Break-even analysis blends cost and revenue analysis to help companies determine...
The circular flow of income or circular flow is a model of the economy in which the major exchanges are represented as flows of money, goods and services, etc. between economic agents. The flows of money and goods exchanged in a closed circuit...
In economics, market structure (also known as market form) describes the state of a market with respect to competition. Most market forms given below talk about a homogeneous product. This simply means that they all make the same . They simply...
The budget is an avenue to ensure the country's economic growth. The government makes provisions to increase budgetary spending and promote savings. It aims toaccelerate the country's economic growth. ... If there is deflation, the government...
Equilibrium refers to a state of rest when no change is required. A firm (producer) is said to be in equilibrium when it has no inclination to expand or to contract its output. This state either reflects maximum profits or minimum losses. There...
Fiscal Policy: meaning and instruments of fiscal policy.Meaning and instruments of fiscal policy – Public Revenue: Meaning, taxes (Meaning and types), difference between direct and indirect taxes; Public Expenditure: Meaning and importance;...
In perfect competition, the price of a product is determined at a point at which the demand and supply curve intersect each other. This point is known as equilibrium point as well as the price is known as equilibrium price. In addition, at this...
Balance of Payment – meaning, components; foreign exchange – meaning, determination ofexchange rate (Flexible). Balance of Payment - Meaning and components; Causes of disequilibrium and how the disequilibrium can be corrected; Foreign Exchange...
In perfect competition, the price of a product is determined at a point at which the demand and supply curve intersect each other. This point is known as equilibrium point as well as the price is known as equilibrium price. In addition, at this...
A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial stability of a...
Money is a concept which we all understand but which is difficult to define in exact terms.
Money is anything serving as a medium of exchange. Most definitions of money take ‘functions of money’ as their starting point. ‘Money is that which...
