The Price Theory

price theory

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 …

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Scarcity in Economics and Division of Labor – 7 advantages of division of labor


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 …

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Opportunity Cost

Opportunity Cost

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 …

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Market Supply

Market Supply

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 …

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Demand in Economics


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 …

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Monetary Policy

Monetary policy

Every government has to implement policies to create and maintain economic growth. Two main policies are the monetary policy and fiscal policy. Monetary policy is the actions that are taken by the central bank to control the money supply of the economy to achieve defined macroeconomic goals. Monetary policy is implemented to promote sustainable economic …

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Fiscal Policy

Fiscal Policy

Fiscal policy is a common term that has been used in economics as well as in political science. Fiscal policy is the use of government revenues collection such as taxes and government spending to influence the economic conditions in the country. The government revenues and the expenditure are used to influence the macroeconomic variables under …

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06 Phases of the Business Cycle : What shapes the economy

Business Cycle

After entering the market, any business has to go through several phases which will increase and decrease the business’s revenue and sales. Business Cycle explains six major phases any usual business would go through. The rise and fall of the product output levels can be identified through the business cycle. This can be identified as …

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