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Scale of production: Large-scale production is a crucial aspect of modern industrial society. The size of business undertakings has significantly expanded as a result. There are some benefits to large-scale production that contribute to lower production costs. Large-scale production-related economies can be divided into two categories: internal economies and external economies. Internal economies are those […]
Supply is defined in economics as the total amount of a particular product or service a supplier provides to a consumer at a particular time and price level. It is usually determined by market movements. Sellers of goods and services constitute the supply side in a market economy. We know that the term “demand” refers to the quantity of a good or service that consumers are […]
Indifference curve Analysis: The ordinal utility approach is a very popular alternative and a more realistic way to describe customer demand. This approach uses a different tool, namely the indifference curve, to analyze consumer behavior and is based on consumer preferences. The approach is based on the belief that since human satisfaction is a psychological […]
What do we understand by “want” in economics? In economics, the term “want” refers to a wish, desire, or motive to own or/and use goods and services that give satisfaction. Want may arise due to physical, psychological, or social factors. We must choose between our urgent wants and our less urgent wants because resources are […]
Total Outlay Method of calculating price elasticity: The total expenditure or outlay made on it and the price elasticity of demand for that commodity are significantly related to each other. We can say that the price elasticity and total revenue received are closely related to one another because the total expenditure (price of the commodity […]
Based on values of price elasticity, economists have found it useful to categorize distinct types of demand behavior. Since we draw demand curves with quantity on the horizontal axis and price on the vertical axis,∆Q/∆P = (1/slope of curve). As a result, demand is less elastic for any given price and quantity combination, the steeper […]
Concept: The law of demand has an inverse relationship with its price, i.e., as the price rises, the quantity demanded decreases and vice versa. However, it is very important to understand the extent of the relationship or the degree of responsiveness of demand to change in its determinants. I.e., how sensitive is demand to its […]
Business economics is an area of applied economics that examines business enterprises, the variables influencing the variety of organizational structures, and the interactions between businesses and the labor, capital, and product markets using economic theory and quantitative tools. Similar to how people go through different stages of life, practically every firm goes through several stages […]
Production Optimization: Generally, a profit-maximizing firm wants to determine which combination of factors of production (or inputs) would minimize its cost of production for a given output. This can be known by combining the firm’s production and cost functions, namely isoquants and iso-cost lines, respectively. Let us understand what we mean by isoquants. Isoquants: An […]
Meaning The mathematical relationship between the cost of a product and various determinants of costs is referred to as a cost function. The dependent variable in a cost function is unit cost or total cost, while the independent variables are the price of a factor, the size of the output or capacity utilization, or any […]
