Supply: Meaning and Definition of Supply

The amount of goods and services produced are called production and the portions of the produce offered for sale at prevailing prices in a given period of time is known as supply. OR "Supply is a schedule of the amount of a product that would be offered for sale at all possible prices, at any instant of time e.g., a day, a week and so on". Similar to demand supply is always related to a price of that product but there is a direct relation between supply and price i.e., at higher prices larger quantities will be offered because larger [...]

By |2021-10-22T10:23:56+05:00August 4th, 2021|Economics, Microeconomics|0 Comments

Demand: Meaning and Definition of Demand

Meaning of Demand: Demand means the desire to purchase a commodity for which the consumer has the power to purchase. So, demand has two conditions: (1) Desire/ Willingness to purchase (2) Power to purchase or Purchasing power If either of the two conditions of demand are not fulfilled, demand will not come into existence. The desire for a commodity is not demand, for example, the desire of a poor man to purchase a car does not demand because he has no power to purchase it. On the other hand, a rich man has the power to purchase a car, but [...]

By |2021-10-22T10:23:48+05:00July 17th, 2021|Economics|0 Comments

How do we measure utility or pleasure?

This question cannot be answered but back in the 1800s economists such as Jeremy Bentham thought that eventually they would be able to measure pleasure by measuring brain waves. In the expectation of this discovery they even developed a measure of pleasure which they called a util. They predicted that someday a machine that could measure utils would be developed. Not surprisingly they called this machine a Utilometer. The Utilometer was to be connected to people's heads and an economist would read it as people went through their daily activities. Util: Although utility cannot be measured, this term is sometimes [...]

By |2021-10-22T10:23:42+05:00January 1st, 2021|Economics|0 Comments

Relationship Between Total Utility and Marginal Utility

Total utility refers to the total satisfaction one gets from one's consumption of a product while marginal utility refers to the satisfaction one gets from the consumption of an incremental or additional unit of a product above and beyond what one has consumed up to that point. Here, it is necessary to define the principle of diminishing marginal utility, which states that the marginal utility of an item tends to decline as more of the item is consumed over any given period. The relationship between total utility and marginal utility exist as at first unit of consumption of a commodity [...]

By |2021-10-22T10:23:25+05:00December 13th, 2020|Economics|0 Comments

Utility: Meaning and Different Aspects of Utility

Utility: When we consume a product, we in fact use its utility. Therefore, we are now analyzing the concept of utility. Utility is the power of a product by which a human want is satisfied. For example, bread satisfies hunger, cloth satisfies the want for clothes and T.V. satisfies the want for entertainment. The more we want a product the more utility we get from it and if we don't use a product, we don't get utility from it. Hindus don't eat beef so there is no utility for them in it. Muslims don't eat pork. So, they don't find [...]

By |2021-10-22T10:23:09+05:00December 9th, 2020|Economics|0 Comments

Utility: Meaning and Characteristics of Utility

Utility: An early introduction of the utility notion into social sciences was accomplished by the English Philosopher Jeremy Bentham (1748-1831) After studying legal theory to draw some social legislation. He proposed that society should be organized on the “Principle of Utility” which he defined as “Property in any object to produce pleasure, good, or happiness or to prevent pain, evil or unhappiness”. All legislations according to Bentham should be designed on utilitarian principles to promote “The greatest happiness of the greatest number”. The next step in the development of utility theory came when the Neo-classical economists such as William Stanley, [...]

By |2021-10-22T10:22:44+05:00November 24th, 2020|Economics|0 Comments

Goods and Types of Goods in Economics

Goods: A good is a material thing used to satisfy a human want or in other words, a good is a material thing which has utility to satisfy any human want. For example, chair, table, book, table lamp, paper, pen etc. are all goods which are used to satisfy different wants. Economic goods can be divided into these categories: Consumer Goods: Consumer goods are the things which have utility to satisfy human wants. These goods are directly used by the people themselves to satisfy wants. For example, food, shelter, clothing, T.V., radio, refrigerator etc. are goods while the services are [...]

By |2021-10-22T10:22:31+05:00November 9th, 2020|Economics|0 Comments

Difference between Goods and Services

In order to satisfy unlimited wants people take up economic activities in the form of land, labour, capital and organization. As a result of the combination of these four factors of production goods and services are produced. These are the (limited) resources to satisfy human wants. What are the real resources or what are goods and services? Goods: A good is a material thing used to satisfy a human want or in other words, a good is a material thing which has utility to satisfy any human want. For example, chair, table, book, table lamp, paper, pen etc. are all [...]

By |2021-10-22T10:22:18+05:00November 9th, 2020|Economics|0 Comments

Human Wants: Meaning, Types and Their Characteristics

Human Wants: Human wants are the ends which human beings pursue for their satisfaction. Human wants are the instinctive desires which are however to be fulfilled. For example, everybody wants food, clothing, shelter etc. not only this, people also want bungalow, cars, air conditioners etc. Human wants keep on rising with the passage of time and there is no end to them. Human wants can be classified as (i) Economic wants (ii) Non-Economic wants. (i) Non-Economic Wants: Non-economic wants are the kind of wants which can be satisfied without undertaking any economic activities in the form of land, labour, capital [...]

By |2021-10-22T10:22:11+05:00November 7th, 2020|Economics|0 Comments

Difference Between Value and Price

Value: In Economics, the value of a product is taken in two senses. (i) Value-in-use. (ii) Value-in-exchange. The utility of a product which one gets to satisfy a want is known as the value of a product in use. For example, you buy a jacket. When you use it you actually consume its utility. This is the value in use of the product. The number of goods and services which one unit of a product can command in exchange for it is the value in exchange of a product. For example, a pen costs Rs. 20/while a pencil only Rs. [...]

By |2021-10-22T10:21:53+05:00September 28th, 2020|Economics|0 Comments

What is meant by wealth in economics?

Wealth: In economic sense, any good or service that has value in exchange is called wealth. This means that any good and service that has the three characteristics of value i.e. utility, scarcity and transferability is wealth. For example, TV, radio, pencil, pen etc, are all wealth in the sense that they have values is exchange. A product is said to be wealth if it has the following three characteristics. i) Utility: The product must have the power to satisfy a want as bread, clothes, pen, pencil etc, can satisfy human wants. ii) Scarcity: The supply of a product must [...]

By |2021-10-22T10:35:24+05:00September 4th, 2020|Economics|0 Comments

Does Economics Relates with Goodness or Badness of Wants?

The classical economists were of the view that economics has no relation with the nature of wants. In other words, economics has no concern with the goodness or badness of Wants. Opposing this theory, the Neo-classical economists gave the opinion that only those activities which increase material welfare will be discussed in economics. They stressed that the human welfare should be the objective of economics. Although this point of view of Neo-classical economists got much popularity. According to them economics is not impartial with the nature of wants. Robbins affirmed this view while Neo-classical economists have different view. Robbins criticized [...]

By |2021-10-22T10:20:50+05:00August 31st, 2020|Economics|0 Comments

Difference Between Microeconomics and Macroeconomics

Subject-Matter: Price determination, Consumers equilibrium, distribution and welfare are the subject-matter of microeconomics. Full employment, national income, general price level, trade cycles and growth are subject-matter of macroeconomics. Objectives: The purpose is to study principles. problems and policies relating to allocation of resources. Macroeconomics studies problems, policies and principles about full employment of resources and growth of resources. Aggregates: Microeconomics deals with individual units of the economy like firm. Macroeconomics deals with aggregates like national income and aggregate savings. Method of Study: Method of study is called partial equilibrium analysis in microeconomics. Method of study is called general equilibrium analysis [...]

By |2021-10-22T10:34:49+05:00August 26th, 2020|Economics|0 Comments

Importance and Significance of Studying Economics

The importance and utility of the subject of Economics can be judged from this fact that it is now considered to be one of the most important and useful subjects as compared to any other branch of knowledge. The reasons for gaining its importance are That it makes human welfare its direct and primary concern it helps in raising the quality of economic life. As it greatly helps in the solution of economic and social problems so it exercises an over-whelming influence on the minds of the people. In the words of Durbin “Economics is the Intellectual religion of the [...]

By |2021-10-22T10:34:13+05:00August 26th, 2020|Economics|0 Comments

What is the Interdependence of Microeconomics and Macroeconomics?

Microeconomics and macroeconomics are interdependent. Microeconomics takes a close-up view of the economy and concentrates on the choices made by individual, consumers. producers, farmers and investors. Macroeconomics looks at the economy from a broader perspective and considers it overall performance. The classical approach to macroeconomics is that individuals and firms act in their own best interest. The wages and prices adjust quickly to achieve equilibrium in the free market economy. The Keynesian approach to macroeconomics is that wages and prices do not adjust rapidly and unemployment may remain high for a long time. The Keynesians are of the view that [...]

By |2021-10-22T10:28:03+05:00August 26th, 2020|Economics|0 Comments
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