Law of Price
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 […]
Law of Supply
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
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 […]
Consumer’s Equilibrium
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 […]
Utility Approach
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 […]
Indifference Curve Approach
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. […]
Short Run and Long Run Production Function
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 […]
Short Run and Long Run Cost Curve
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 […]
Internal and External Economies of Scale
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: […]
Optimum Size of the Firm
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 […]
Factors Affecting Optimum Size of the Firm
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 […]
Perfect Competition
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 […]
Aspects of Non-Price Competition
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. […]
Oligopolistic Behavior
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 […]
Characteristics of Various Factors of Production
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, […]
Marginal productivity theory
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 […]
