Author: admin
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Law of Returns to Scale: Meaning and Stages
What is the Law of Returns to Scale? Returns to scale refer to the change in output that results from a change in the factor inputs simultaneously in the same proportion in the long run. Simply put, when a firm changes the quantity of all inputs in the long run, it changes the scale of…
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Relationship between TP, MP, and AP
Consumers and producers both play a crucial role in the efficient operation of an economy. A producer uses a variety of inputs to create commodities and services. Production is an essential economic activity since it transforms the product into the form consumers require, increasing its utility. It helps transform the raw materials into some desirable…
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Law of Variable Proportion
What is the Law of Variable Proportions? Imagine that a farmer is cultivating wheat only by using more and more labour in a circumstance where land is a fixed factor and labour is a variable factor. Here’s a crucial query: Will the amount of wheat produced by each additional unit of labour used in the…
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What is TP, AP and MP? Explain with examples.
Consumers and producers both play a crucial role in the efficient operation of an economy. A producer uses a variety of inputs to create commodities and services. Production is an essential economic activity since it transforms the product into the form consumers require, increasing its utility. It helps transform the raw materials into some desirable…
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Production Function
What is Production Function? Production Function is the relationship between physical inputs (land, labour, capital, etc.) and physical outputs (quantity produced). It is a technical relationship (not an economic relationship) that studies material inputs on one hand and material outputs on the other hand. Material inputs include variable and fixed factors of production. In a standard…
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Difference between Elastic and Inelastic Demand
Elastic Demand and Inelastic Demand refer to how sensitive the quantity demanded of a good or service is to changes in its price. When demand for a product is elastic, it means that changes in price result in relatively larger or equal changes in quantity demanded. However, when demand for a product is inelastic, it means that…
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Methods of Measuring Price Elasticity of Demand
The quantity of a good or service that a consumer is willing and able to purchase at different price levels available during a given time period is known as Demand. Generally, demand is interchangeably used with want and desire; however, in economics these terms are different. Desire is just a wish of a consumer to purchase a…
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Price Elasticity of Demand
What is Price Elasticity of Demand? The proportionate change in the quantity demanded of a commodity due to a proportionate change in the price of the commodity is called Price Elasticity of Demand. Consumers usually buy more when the price of the commodity falls and tends to buy less when the price of the commodity rises.…
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Difference between Normal Goods and Inferior Goods
What are Normal Goods? The goods whose demand increases when there is an increase in the income of the consumer are known as Normal Goods. These include the commodities which we usually purchase. Besides, in general, consumers purchase more of normal goods when their income increases and purchase less of these goods when their income falls. For…
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Normal Goods and Inferior Goods
What are Normal Goods? The goods whose demand increases when there is an increase in the income of the consumer are known as Normal Goods. These include the commodities which we usually purchase. Besides, in general, consumers purchase more of normal goods when their income increases and purchase less of these goods when their income falls. For…