Dynamics is the part of economic analysis that deals with whether an economic system in disequilibrium reaches an equilibrium position, how long it takes, and the path it follows to do such. Dynamic refers to the evolutionary process in a dynamic manner. This method of economic analysis takes into account all the changes, lags, sequences, […]
Comparative statics tries to establish a relationship between two different interconnected economic variables in two different static situations. Comparative statics is a method of economic analysis that was first used by German economist F. Oppenheimer in 1916. According to Schumpeter, “Whenever we deal with disturbances of a given state by trying to indicate the static
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Nowadays it becomes a regular phenomenon to see the dynamics of almost all the economic analyses and economic relationships. Before the 1920s dynamic analysis was confined only to certain analyses like an explanation of the business cycle. Since 1925, dynamic analysis has been used extensively in almost all branches of economics including the explanation of
The uniqueness of equilibrium is referred to the query of the number of times that equilibrium exists and corresponded values are determined in the particular model or system. If there is a single equilibrium that is the demand curve and supply curve meets only one time at a single positive price with the corresponding positive
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Meaning of Stable Equilibrium If any small disturbances take place forces come into play to re-establishes in the initial position is called stable equilibrium. It means after any fluctuations either in the price or quantity supplied or demanded if these market forces again come back or move back to the original equilibrium position then such
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For an individual person, equilibrium is said to be attained by him or her when he or she assumed or recognized his or her concrete performance or behavior as the possible most excellent under the given conditions and he or she does not feel beneficial to change his or her actions and in such case, this excellent situation is called equilibrium.
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The basic economic problems and their nature can be explained with the help of a diagram named the production possibility curve(PPC). Since the resources are limited, demand and things to be produced are unlimited. So society has to decide about the goods to produce: wheat, cloth, roads, electrical goods, etc. After deciding the nature of
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Meaning of Equilibrium The term equilibrium is defined as states in which at least two different opposite forces or powers are equal. Thus, equilibrium means a state of balance. Concerning the market, equilibrium is the position in which market demand for a commodity is exactly equal to the market supply of that commodity. This equality
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Profit maximization is one of the most important assumptions of economic theory. In economics, it is always assumed that a firm’s rationality is the maximization of profit. It means, rational producer or entrepreneur always attempts for profit maximization. Thus profit maximization constitutes a central and crucial concept in the theory of the firm.
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Resources are scarce and they have alternative usages so that there arises the problem of choice regarding the use of these resources. This scarcity has always been with us and will be with us till eternity. Scarcity occurs among poor people as well as among rich people. It applies to everyone and every nation because there will never be enough of everyone that people want to have.
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