Market equilibrium implies a certain type of stability in both the price and quantity of goods. But changing market forces may disturb the equilibrium, either by shifting demand, shifting supply, or shifting both demand and supply. Over time the equilibrium point changes its position. Any factors that cause a change in demand shifts the demand […]
Effect of Changes in Demand and Supply on Market Equilibrium Read More »
Introduction The demand and supply curve let know us about different quantities of goods that are demanded by the consumers at various prices, and quantities that producers are willing to produce and sell at various prices respectively. But studying and knowing demand and supply will not tell us the actual price of goods in the
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Introduction to Incremental Analysis Incremental analysis in economics is also one of the tools used in rational decision-making like marginal analysis and is used in different economic concepts like profit, cost, revenue, utility, etc. Increment simply refers to a change in total. Marginal analysis sometimes may not be applied in real-life especially when it is
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Introduction of Marginal Analysis The term marginal can be defined as a change in total quantity due to one unit change in its determinant. Thus, marginal analysis is a microeconomic concept that deals with a small change in given economic variables or changes in the economic variables due to unit changes in their determinants. Marginal
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Microeconomics does study about economic behavior of individual units and individual economic variables. It provides a theoretical framework for a systematic analysis of the economic behavior of the individual economic units like individual households, firms, industries, and factor owners. For instance, the determination of the price of the product, determining the payment for the factors
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A function shows the relationship between two or more variables known as dependent and independent variables. In a given market and in a given time period, the demand function for a commodity is the relation between the amount of the commodity demanded and its determinants like the price of the commodity, price of related goods,
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One of the fundamental concepts of economics, the law of demand states that there is an inverse relationship between the price and demand for a product underneath the assumption of ceteris paribus. However it is not the only price that affects the demand but also there are many other factors such as the income of
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Introduction to Induction and Deduction There are two methods of reasoning the deductive method and the inductive method. Both the methods are forms of logic that help to establish the truth. It means generalization can be drawn by using these two methods. During scientific reasoning, true logic can be stressed through deduction as well as
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The inductive method refers to the process of reasoning from part to the whole, from specific to general, from narrow to wider, and from individual to the universe. Bacon described it as an ascending process in which facts are collected; arranged and then general conclusions are drawn. It is also called the empirical, historical, and
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Methods of Analysis Economic laws or generalization states the relationship between economic variables. Economic theory provides an explanation of the stated relation between the variables. It means economic theory brings out the logical reasoning and logical basis of generalization. An economic theory deduces generalization through the procedure of logical reasoning and explains the condition under
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