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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 […]
The Theory of Consumer Behaviour Read More »
Economics
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
Total Outlay | Advertising | Cross price Elasticity Read More »
Economics
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
Interpretation of elasticity of demand: Brief Overview in all Aspects Read More »
Economics
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
Concept of Elasticity of demand & price elasticity of demand Read More »
Economics
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
Production Optimization Using Isoquants and Isocosts Curves Read More »
Economics
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
COST FUNCTION AT VARIOUS LEVELS (Broader View) Read More »
Economics
“Cost is a fundamental notion in economics.” It refers to the sum of money paid to get products and services. To put it another way, cost is a financial assessment of the resources, materials, hazards, time, and utilities consumed to acquire goods and services. Cost principles and interrelationships: Optimal input utilization and production. A farmer’s
Need of Cost Concepts from Economics View point with the broader perspective Read More »
Economics
Law of Variable Proportions or Law of Diminishing Returns: Before understanding The Law of Variable proportions or Law Of Diminishing Returns we need to understand a few concepts: Concept 1 : Total product: when we talk about total product, what exactly do we mean by total product? It is the total output resulting from the
Law of Diminishing Returns Read More »
Economics
MEANING : It refers to inputs. Let us understand what we mean by inputs. An input is a good or service which a firm buys for its use in its production process. Production process consists of various processes such as Changing in the form of natural resources ( eg. changing the form of log of
FACTORS OF PRODUCTION Read More »
Economics, Education