Market failure is the situation the free-market fails in efficient distribution of goods and services. It is believed that in a free market economy, allocative efficiency is achieved through a price mechanism. In a situation of market failure, the consumer can have the desired quantity of goods and services at the price they wish. If …
The demand for a product is a variable that is influenced by different factors including the price of the product. The effect of influencing factors on demand including elasticity is numerically calculated in three different ways. Price elasticity of demand – The change in quantity demanded in response to the changes in the price of …
Economic systems are a complex network of individuals, organizations, and institutions and their social and legal interrelationships. The function economic system is to solve the basic economic problems. Based on the relative scarcity of economic resources all the economies face a common issue “Choice”. The choice is an issue of allocating available limited resources in …
The term “Inflation” refers to the continuous increase in the general price level in an economy over a considerable period of time. If the increase in price level is only for a short period of time it is not considered as inflation because it is not harmful to the economy. If the price level increases …
The price Theory is a microeconomic principle that explains that the price of any specific product is determined through the interaction of demand and supply forces in the market. The price so determined is considered as the equilibrium or the market price of the product. As per the law of demand, the price of the …
Scarcity is the basic economic issue that all societies face equally. In economics, the term “Scarcity” refers to the situation that “the available resources in an economy are not sufficient to fulfill all the human wants completely”. This is a theoretical concept that is based on the insatiable nature of the human mind. Once the …
Scarcity in Economics and Division of Labor – 7 advantages of division of labor Read More »
Opportunity Cost is an important concept in computing the true cost of resource allocation either in consumption in production. The concept of opportunity cost is used by the economists’ true cost of resource utilization. In economic analysis, two types of cost are considered. Financial cost – this is the cost incurred in the form of …
Similar to the demand of production, the market supply of a product is the horizontal summation of the individual firm’s supply schedules. The market supply is a dependent variable that will be influenced by some other factors mentioned below. Price of the product Prices of other products Prices of the factors of productions Government policies …
In economics, the term “Demand” refers to the desire for goods and services backed by the purchasing power and the willingness to purchase. Mere “Desire” for products does not reflect in the market. The demand supported by the purchasing power is termed as the “Effective demand”. Hence, the demand for a good can be defined …
Entrepreneurship is about creating new businesses by using unmet possibilities in the world. Entrepreneur builds new businesses by taking advantage of the available opportunities. When creating new businesses, the entrepreneur should have to face many risks throughout the entrepreneurial journey. Importance of entrepreneurship Entrepreneurs are known as people who see the things that other people …
Entrepreneurship and Creativity – An Innovative Perspective Read More »
