When to use the most powerful weapon called "divorce" in a marital relationship? How does divorce of parents affect kids? What should you do if you have kids while applying for divorce? How to take care of your kids post divorce? What things should you consider if you plan to get married again?
Meaning of an inadequate communication - meaning of information loss in communication - three elements of an effective communication - how to prevent information loss in communication
A sports journalist, though can be little informal and sports enthusiastic, must possess full details of games including rules, playing techniques, required skills and knowledge to play, and so on...
A good tax system should satisfy certain conditions. Adam Smith laid down some rules for a good tax system. Even today, they are valid. They are known as the canons of taxation...
Marginal productivity theory of wages tells how wages are determined under conditions of perfect competition. According to this theory, wages will be equal to the value of the marginal productivity...
The Keynesian theory of interest is known as the liquidity preference theory of interest. It is the modern theory of interest. Interest is the price that has to be paid for borrowing money...
The term ‘real wages’ refers to the commodities and services that the money wages command. Real wages depend on many things like the purchasing power of money, additional benefits the workers get...
The concept of quasi-rent was introduced in economics by Marshall. Quasi-rent is the income derived from machines and other appliances for production made by man...
The Ricardian theory of rent has been the basis for all discussion on the problem of rent. The theory is named after David Ricardo, an eminent economist of the nineteenth century. It is one of the...
The Marginal Productivity Theory is the general theory of distribution. The theory explains how the prices of the various factors of production would be determined under conditions of perfect...
There are three main methods of measuring national income: output method, incomes received method, and consumption and investment method. The output method measures the value of all commodities and...
A continuous deficit in balance of payments has to be corrected eventually. There are many methods for correcting the disequilibrium. Some important methods are discussed below...
The central bank is the most important institution in the banking system of a country. Its main object is to secure the stability of the economy...
The Quantity Theory of Money was formulated by an American economist named Irving Fisher. The Quantity Theory of Money in its original form states that prices always change in exact proportion...
Gold standard is a system under which gold is the standard of value. Under the system, the monetary unit of a country is defined in terms of certain weight of gold. Gold standard operated in its...
Gresham's Law means that bad money tends to drive good money out of circulation. The law is named after Sir Thomas Gresham, a merchant of great experience and founder of the Royal Exchange...
The term “monetary standard” refers to the monetary system of a country. There are three main types of monetary standards...
The modern economy cannot work without money. Money is a medium of exchange, a measure of value, a store of value, and a standard of deferred payments.
Monopoly means absence of competition. Monopolist is the sole seller of a commodity. Under monopoly, the price of a good is determined by the interaction of supply and demand, but in a different way..
Scale of production relates to the size of a business organization. Before Industrial Revolution, production was carried on a small-scale. But large-scale production has become the rule in modern...
Economic Organization is the act of coordinating the other factors of production – land, labor and capital. Organization performs a very important function in modern production...
There are four main functions of Economics. They are consumption, production, exchange and distribution. But in modern times, we add one more function to it and that is public finance...
The term “standard of living” refers in general to the necessaries, comforts and luxuries that go into the consumption of a particular class of people. For example, every man wants better food...
Consumption is a branch of economics, which deals with the satisfaction of human wants. The existence of human wants is the starting point of all economic activity in the world...
In economics, the term wealth refers to all those scarce goods which have money value and which satisfy human wants. Anything to be considered wealth should posses the following characteristics...
The Industrial Revolution took place first in England during the second half of the 18th century and the first half of the 19th century (1750 – 1850). During the period, British industry underwent...
The economic development of mankind has been broadly divided into five stages. They are the hunting stage, the pastoral stage, the agricultural stage, the commercial stage and the industrial stage...
Adam Smith is known as the Father of Political Economy for he was the first man to put all economic ideas in a systematic manner. According to him, "Economics is the science of wealth."
“Long-run” period is a period of many years. Long period is the time during which the supply conditions are fully able to meet the new demand conditions. In the long-run, all factors are variable...
Pricing under perfect competition - Distinction between normal price and market price - Importance of time element in price theory
The market period is a very short period in which the supply of a commodity is fixed. The variations in demand determine the price in such a market period.
Adam Smith in his ‘Wealth of Nations’ mentioned the concept of perfect competition in a casual way. Edgeworth was the first to attempt a systematic and rigorous definition of perfect competition...
Markets may be classified into various ways. According to the degree of competition, markets may also be classified into perfect markets and imperfect markets...
In ordinary language, “market” refers to a place where commodities are bought and sold. However, in economics, “market” has no place but for a particular commodity which is being bought and sold...
Supply curves are derived from cost curves because supply depends on cost of production. The concept of supply curve is relevant only under perfect competition.
Supply is responsive to price changes. The extent to which supply extends for a given price rise is known as elasticity of supply...
The law of supply states the functional relationship between price and the quantity offered for sale. Read on for my full explanation of this confusing law and its occasional exceptions!
Supply is different from stock. The term “stock” implies a fixed quantity while the term “supply” implies that the amount offered can be increased or decreased. Stock is the actual quantity...
The costs and revenues of a firm determine its nature and the levels of profit. The revenue concepts commonly used in economic are total revenue, average revenue and marginal revenue...
Long-run is a period long enough to enable all costs to vary. The firm can expand its plant to meet the long-term increase in demand or reduce its plant capacity to adjust itself to a drop in demand..
Short-run is defined as that period in which the firm can expand or contract its output only by varying the amounts of variable factors such as labor and raw materials...
The concept of opportunity cost occupies an important place in economic theory. Wieser first developed the concept.
The law of diminishing returns is one of the most eminent concepts in the theory of production function. The modern version of the law of diminishing returns is known as law of variable proportions...
The law of returns to scale examines the relationship between output and the scale of inputs in the long run when all the inputs are increased in the same proportion.
A rational firm seeks maximization of its profit. Maximization of profit implies minimization of cost. The cost is minimum, when the input combination is optimal. Therefore, choosing the right...
The marginal rate of technical substitution of Labor (L) for Capital (K) is the slope of an isoquant multiplied by -1. Since the slope of an isoquant is moving down, the isoquant is given by –ΔK/ΔL ...
What is an isoquant, and what are they used for? Learn all about the economic concept through tables, graphs and plenty of examples.
Diseconomies of scale: meaning and definition - Diseconomies in a large-scale production - Diseconomies in a small-scale production - Diseconomies in management - External diseconomies
In business expansion, producers may benefit from the emergence of economies of scale. These economies are broadly classified as either internal economies or external economies.
Introduction to the optimum population theory - What is optimum population - Assumption of optimum population theory - Superiority of optimum population theory - Criticism of optimum population theory
Summary of Malthusian Theory of Population - Relationship between Food Supply and population - What are Positive Checks? - What are Preventive Checks? - Criticisms of Malthusian Theory of population
Methods of measuring price elasticity of demand - The percentage elasticity method - Total outlay elasticity method - Point or geometrical elasticity method - Arc elasticity method
Meaning of elasticity of demand - Relationship between law of demand and elasticity of demand - Determinants of elasticity of demand - Importance of elasticity of demand
Types of elasticity of demand - Price elasticity of demand - Income elasticity of demand - Cross elasticity of demand - Formulas to measure price elasticity, income elasticity and cross elasticity
Application of consumer’s surplus - Theoretical importance of consumer's surplus - Practical importance of consumer's surplus
Meaning and assumptions of consumer's surplus and measurement of consumer's surplus: The law of diminishing marginal utility approach and the indifference curve approach.
Hicks and Allen, in an attempt to find an alternative approach to Marshall’s utility analysis, have described the indifference curve analysis. What are the differences between the two?
Indifference curve analysis possesses certain distinguishable and unquestionable merits over Marshall’s cardinal utility analysis. This article discusses the undeniable merits of indifference curve analysis.
A look at the income and substitution effects on Giffen goods. What will be the income effect in case of an inferior good? This article explores various answers.
This article will discuss the meaning of price effect, income effect and substitution effect (aka, the Hicksian substitution effect), as well as Slutsky's and Hicks' methods.
Income Effect on Consumer's Equilibrium - Substitution Effect on Consumer's Equilibrium - Price Effect on Consumer's Equilibrium - Derivation of Demand Curve from Price Consumption Curve
This article will help readers gain a better understanding of consumer's equilibrium and explain how to derive it graphically.
An indifference curve represents level of satisfaction, and each person holds a unique set. All indifference curves contain common characteristics and properties.
Indifference curve analysis is basically an attempt to improve cardinal utility analysis (principle of marginal utility). An indifference curve is also known as iso utility curve (“iso” means same).
Prof. Marshall writes that the application of marginal utility concept extends over almost every field of economics, including production, distribution, consumption, public finance, and so on.
The law of equi-marginal utility or Gossen's second law explains how a consumer allocates his income among various commodities for getting maximum satisfaction.
Some important economic concepts such as law of demand, consumer's surplus, elasticity of demand and law of substitution are based on the law of diminishing marginal utility.
Gossen, a German economist, explains the law of diminishing marginal utility based on general observations of human behavior. The law is also called ‘Gossen’s first law.'
Renowned classical economists such as William Stanley Jevons, Karl Menger, Leon Walras and Gossen developed the cardinal utility theory. However, significant contributions made by neo-classical...
The law of demand states that while other things do not change, there is an inverse relationship between the price of a commodity and the quantity demanded at a specified time.
You can never deny that the entire economic activities revolve around a single factor called demand. An organization cannot sustain if it does not find sufficient demand for its products...
Meaning of demand schedule - Meaning of demand curve - Market demand curve - Movement along the demand curve - Shift in the Demand Curve
The terms ‘statics’ and ‘dynamics’ are widely used in physical sciences. In fact, a theoretical physicist called August Comte introduced these concepts to social sciences...
Alfred Marshall emphasized the significance of time element in the value theory. According to Marshall, price determination without including time element in the process is meaningless. In order to...
There are three main concepts of balance in physics: stable equilibrium, unstable equilibrium, and neutral equilibrium. Prof. Schumpeter explains the three positions with a simple illustration.
Prof. Samuelson has introduced an incredible instrument called ‘production possibilities frontier’ or ‘production possibility curve’ in his book ‘Economics’. The central economic problems facing...
Macroeconomics is concerned with the study of a nation's economy as a whole or substantial sections of it. Macroeconomics has become an eminent discipline in economics during the great depression...
Positive Economics: English Classical View - Arguments in favor of positive economics - Normative Economics: German Historical View - Arguments in favor of normative economics.
In academics, a collection of generalizations engineered by analysts is referred to as the laws. Similar to all sciences, economics possesses its own laws. A law is an assertion of casual...
Answering whether economics is a Science or an Art is a challenging task because of numerous convincing arguments. Economists are significantly and divergently grouped on the subject whether...
Marshall’s materialist definition of economics was unable to convince Lionel Robbins. Therefore, Robbins attempted to define economics in a better sense in his book...
Adding social media buttons such as facebook, twitter, hubpages and blogspot to your email signature is helpful to advertise yourself. Here is the guide to add these buttons to your Gmail signature.
Green tea has been a natural remedy for many diseases and played a vital role in traditional Indian and Chinese medical practices. Here are some important notes on this wonderful beverage.
Market order and limit order are two important terms used in stock trading. Novice stock traders often get confused with these terms and tend to lose money by executing the orders wrong. Therefore, it is highly important to understand these concepts before entering into stock trading. Before...
Introduction to the Theory of Demographic Transition - First Stage of Demographic Transition - Second Stage of Demographic Transition - Third Stage of Demographic Transition
Introduction to division of labor - Kinds of division of labor - Advantages of division of labor - Disadvantages of division of labor - Limitations or determinants of division of labor
Functions of an entrepreneur - Role of an entrepreneur in business planning - Role of an entrepreneur in organizing factors of production - Role of an entrepreneur in supervising the business
Characteristics of capital - Functions of capital - Capital as a factor of production - Capital and wealth - Capital and income - Capital and money - Differences between capital and land
The term ‘capital’ is rather broad as it includes both financial and physical assets. Depending upon its uses, capital can be classified in various ways...
Meaning of capital formation - Definition of capital formation - Three stages of capital formation - Factors governing the ability to save and willingness to save - Capital formation and interest rate
Factors affecting mobilization of savings - Types of investment: public investment and private investment - Factors affecting public investment - Factors affecting private investment
Labor as a factor of production - Meaning of labor in economics - Why is labor as a factor of production very important? - Relationship between labor and laborer - Characteristics of labor
Land as a factor of production - Meaning of land in economics - Important characteristics of land - Land and natural resources - land and water resources - What is land in economics
A demand curve represents functional relationship between price and quantity. In general, demand curves slope downward from left to right while horizontal axis measures quantity demanded and...
Alfred Marshall made his distinguished contribution to microeconomics and constructed an impressive platform for microeconomic research in his book ‘Principles of Economics’. ‘Micro’ denotes a tiny...
Inductive method is also known as the historical, empirical or ‘a posteriori’ method of economic analysis. Inductive reasoning is the widely accepted method in economics for deriving conclusions...
Deductive method is typically known as analytical, abstract or a priori technique. Deduction starts and continues from the generic to the specific whereas induction progresses from the specific...
Objectives of a good Curriculum Vitae range from marketing yourself to self-analysis. Writing a CV that exhibits exactly what you are is a challenging task. This article is designed to provide you with tips on how to write the four important sections of your CV, namely career objective, personal...
There is no exact definition for discount factor. Generally, discount factor is the main element used for factoring, which is a procedure followed in accounting and economic analyses such as cost-benefit analysis and discounted cash flow analysis.