Economics through its different theories and principles help to economic agents and participants in their decision-making processes and help them to get their objective fulfilled. For instance, a manager may have to think of what level of output he has to produce. Managers will produce the level of output that maximizes the form’s profit if […]
Basic Mathematical Concepts Used in Economics Read More »
The Cardinal utility approach provides a sound basis for analyzing consumer behavior based on the arithmetic measurement and expression of utility. However, economists have pointed out some criticisms or drawbacks of cardinal utility analysis. The following are the basic drawbacks or limitations of cardinal utility analysis. An incorrect assumption of cardinal measurement of utility According
Criticisms of Cardinal Utility Analysis Read More »
The key purpose of the analysis of consumer behavior is to derive a consumer demand curve. Here we will discuss the derivation of the demand curve under cardinal utility analysis in the case of one commodity and case of two commodities. Learning Objective To deal with the derivation of the demand curve under cardinal utility
Derivation of Demand Curve under Cardinal Utility Analysis Read More »
Meaning of Consumer’s Equilibrium Consumer’s equilibrium is the position in which the consumer reaches the highest level of satisfaction given his or her money income and the prices of goods. It means a consumer is said to be in equilibrium when he/she can maximize his/her utility with the given limited resources. At the consumer’s equilibrium
Consumer’s Equilibrium under Cardinal Utility Analysis Read More »
Concept of Cardinal Utility Analysis In this article, we will know the concept of cardinal utility analysis and its fundamental assumptions. The cardinal utility analysis or the marginal approach to utility states that utility or the satisfaction derived from the consumption of a commodity or service is measurable and can be expressed in quantitative terms.
Cardinal Utility Analysis and its Assumptions Read More »
Meaning of Utility The term utility refers to the want satisfying capacity of a commodity or service. In another word, utility deals with the pleasure or satisfaction that individuals get from their economic activity. When a person has a desire for a commodity or for a service and if he contracts it and consumes it,
Basics of Utility Analysis Read More »
Learning Objective To discuss the concept of the scientific paradigm of economics According to Wikipedia, the paradigm is a distinct set of concepts; thought patterns, including theories, research methods, postulates, and standards for what constitutes legitimate contributions to a field. Paradigm is a means of looking at something. In such a sense new paradigm means
Scientific Paradigm of Economics Read More »
The article will discuss the meaning and some key importance of assumptions, hypothesis, and empiricism in the study of economics. Meaning of Assumptions in Economics Economists apply assumptions to split down composite and complex economic phenomena and processes and advocate different theories to recognize and understand different economic variables. Assumption can be defined as some
Importance of Assumptions, Hypothesis, and Empiricism in Economics Read More »
Learning Objective To explain hypothetico-deductive method of scientific study Meaning of Hypothetico-deductive Method Hypothetico-deductive method also called H-D method is an approach to research or a method of construction of a scientific theory that will account for results procured through direct observation and experimentation and that will, through inference, forecast additional effects that can then be verified or disproved by empirical verification derived
Hypothetico-deductive Method Read More »
The concept and theory of elasticity of demand play a vital role in the solution of economic problems and the determination of various economic policies. Mainly there are four types of elasticity of demand (price, income, cross, and advertisement). Here we will talk about the importance or uses of price elasticity of demand. The concept
Uses of Elasticity of Demand Read More »