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Law of Supply
What is Law of Supply? Economists have studied the behaviour of both buyers and sellers. They have discovered the law of supply as a result of their findings. The law of supply describes the relationship between price and amount supplied when all other variables remain constant (ceteris paribus). Price is a dominant factor in the determination of the supply of…
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Difference between Stock and Supply
The words stock and supply of the commodity are frequently used interchangeably. However, the two concepts are different in economics. What is Stock? Stock describes the total amount of a specific commodity that is in hand with the company at any given time. It consists of the number of goods supplied by a firm for…
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Theory of Supply
What is Supply? The amount of a commodity a company is willing and able to provide for sale at a specific time is called the supply. The four factors highlighted by the definition of supply are quantity of commodity, price of the commodity, period, and willingness to sell. Characteristics of Supply The characteristics of Supply…
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Producer’s Equilibrium: Meaning, Assumptions, and Determination
Producer’s Equilibrium is determined in terms of profit. Like consumers, producers also aim to maximise their satisfaction. A producer is someone who provides goods and services to consumers/customers in exchange for revenues and producers need to incur expenditure to produce those goods and services. The excess of revenues over expenditures is known as Profit. The producers aim to…
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Relationship between Revenues
What is Revenue? Revenue is the amount received by an organisation from the sale of a given quantity of a commodity in the market. There are three important terms in Revenue; viz., Total Revenue, Average Revenue, and Marginal Revenue. The total receipts from the sale of a given quantity of a commodity are known as Total…
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Concepts of Revenue| Total Revenue, Average Revenue and Marginal Revenue
What is Revenue? Revenue is the amount received by an organisation from the sale of a given quantity of a commodity in the market. Simply put, is the amount of money received by a producer for the sale proceeds. For example, if a firm gets ₹20,000 by selling 100 tables, then ₹20,000 will be the revenue of…
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Interrelation between Costs
What is Cost? Cost refers to the total expenditure made on inputs or resources that are used for the production of final goods or services. The resources used by a firm are limited in nature and thus require efficient allocation to maximise the firm’s profit. The cost or economic cost of a firm consists of…
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Variable Cost: Meaning, Formula, Types and Importance
What is Variable Cost? Variable costs are expenses that fluctuate in direct proportion to the level of production or sales activity within a business. In other words, variable costs increase as production increases and decrease as production decreases. These costs vary with the volume of goods or services produced and sold. Variable costs are important…
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What is Marginal Cost ? | Formula, Example and Graph
What is Marginal Cost? The additional cost incurred to the total cost when one more unit of output is produced is known as Marginal Cost. Marginal Cost is also known as Incremental Cost. Marginal Cost can be used to determine the optimal production volume and pricing. It includes both variable costs (such as labour, material, etc.) and…
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What is Average Cost ? | Formula, Example and Graph
What is Average Cost? Average Costs are the per unit costs which explain the relationship between the cost and output in a realistic manner. These per-unit costs are obtained from Total Fixed Cost, Total Variable Cost, and Total Cost. The three different types of per-unit costs are as follows: 1. Average Fixed Cost (AFC): The per unit fixed…