Microeconomics is the social science that studies the implications of human action, specifically about how those decisions affect the utilization and distribution of scarce resources. Microeconomics shows how and why […]
The law of price is the economic theory that states the price of an identical security, commodity or asset traded anywhere should have the same price regardless of location when […]
The law of supply is the microeconomic law that states that, all other factors being equal, as the price of a good or service increases, the quantity of goods or […]
Competitive equilibrium is a condition in which profit-maximizing producers and utility-maximizing consumers in competitive markets with freely determined prices arrive at an equilibrium price. At this equilibrium price, the quantity […]
A consumer is in equilibrium when he derives maximum satisfaction from the goods and is in no position to rearrange his purchases. Assumptions There is a defined indifference map showing […]
It is a measure of satisfaction an individual gets from the consumption of the commodities. In other words, it is a measurement of usefulness that a consumer obtains from any […]
Marshall’s demand analysis is based on the cardinal measurement of utility. The approach is criticised for two reasons. (i) Utility is a psychological phenomenon and (ii) It cannot be measured. […]
A short-run production function refers to that period of time, in which the installation of new plant and machinery to increase the production level is not possible. On the other […]
In Economics, distinction is often made between the short-run and long-run. By short-run is meant that period of time within which a firm can vary its output by varying only […]
An economy of scale is a microeconomic term that refers to factors driving production costs down while increasing the volume of output. There are two types of economies of scale: […]
It is important to explain the concept of optimum firm. The optimum firm refers to the best or ideal size of the firm. More specifically optimum or best firm is […]
The six main factors responsible for determining the size of the firm are as follows: Entrepreneurial Skill The most important factor of comes is the skill, initiative and resourcefulness of […]
Pure or perfect competition is a theoretical market structure in which the following criteria are met: All firms sell an identical product (the product is a “commodity” or “homogeneous”). All […]
Non-price competition refers to competition between companies that focuses on benefits, extra services, good workmanship, product quality – plus all other features and measures that do not involve altering prices. […]
The word Oligopoly is derived from two Greek words – ‘Oligi’ meaning ‘few’ and ‘Polein’ meaning ‘to sell’. An Oligopoly market situation is also called ‘competition among the few’. In […]
The four factors of production are inputs used in various combinations for the production of goods and services to make an economic profit. The factors of production are land, labor, […]
In the words of J.B. Clark, “Under static conditions, every factor including entrepreneur would get a remuneration equal to marginal product.” As per Mark Blaug, “The marginal productivity theory contends […]
