Because it's More than a Subject
The scarcity of resources relative to human wants gives rise to various basic problems, issues, or questions that must be solved by an economy if it is to fulfil its purpose. These basic economic problems are also called central economic problems. All these problems involve choices to be made by … read more
Law of demand states the relationship between price and quantity demanded by assuming “other things remaining the same”. When there is a change in these other things, the whole demand schedule or demand curve undergoes a change. In other words, these other things determine the position and level of the … read more
In day-to-day language, we often consider meaning of demand as desire. Desire means an urge to have something. In Economics, demand means a desire which is backed by willingness and ability to pay. For example, if a person has the desire to purchase a television set but does not have … read more
The law of variable proportion occupies an important place in economic theory. This law examines the production function with one factor variable, keeping the quantities of other factors fixed. In other words, it refers to the input-output relation when output is increased by varying the quantity of one input. When … read more
In the cardinal utility approach, the utility function was direct in the sense that the total utility was related to the quantities of different commodities and services consumed by a consumer at a given time. The direct utility function can be expressed as: The ordinary demand equations for the goods … read more
The consumer is assumed to be rational. Given his income and the market prices of the various commodities, he plans the spending of his income so as to attain the highest possible satisfaction or utility. This is the axiom of utility maximisation. In the traditional theory it is assumed that … read more
Basic competitive models gives an answer of the control problems of an economy i.e., who makes the decision of what to produce, how to produce and for whom to produce. We know that, economics has been evolved and developed in the framework of a free market economy in which the … read more
A change in the price and income alters the consumer’s expenditure pattern. So to know the consumer’s expenditure pattern due to changes in price and income, all the variables should be varied simultaneously. Let, Utility function be Subject to Or Here we can form a new function with the help … read more
This Cobb-Douglas production function is based on the empirical study of the American manufacturing industry made by Paul H. Douglas and C.W. Cobb. It is a linear homogeneous production function that considers only two inputs, labor and capital, for the total output of the manufacturing industry. The Cobb-Douglas production function … read more
Two other closely related forms of price discrimination are important and widely practiced. The first of these is inter-temporal price discrimination: separating consumers with different demand functions into different groups by charging different prices at different points in time. The second is peak-load pricing: charging higher prices during peak periods … read more