Scarcity and Choice: The Emergence of Economic Problems Scarcity The wants of human beings are limitless and resources to fulfill them are limited. It is a fact that the total quantity of products that can be produced by applying the productive resources of an economy is insufficient to satisfy all the needs and wants of
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In this article, we have explained the static and dynamic analysis of macroeconomics. Introduction to Static and Dynamic Analysis of Macroeconomics To construct the economic model, there are two methods static and dynamic. An economic analysis that limits its attention to the final equilibrium position is called ‘statics’ or ‘static’. A static model may be
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Introduction The laws of returns to scale explain the input-output relationship under the condition that both the inputs (labor and capital) are variable and their quantity increases proportionately (by same size or proportion) and simultaneously. When both the inputs labor and capital are increased proportionately, the scale or volume of production also increases. So, the
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Introduction The law of variable proportion is a widely observed law of production that takes place in the short run. The law was propounded by economists like Joan Robinson, Alfred Marshall, P.A. Samuelson, etc. This law is also known as the law of diminishing returns. The law is concerned with a short-run production function.
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In this article, we have explained different factors affecting the price elasticity of demand The value of price elasticity of demand is based on so many factors and such factors are collectively called determinants of price elasticity of demand. If the magnitude of price elasticity of demand is greater than one then the demand is
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Introduction German economist H.H. Gossen developed his second law as the law of substitution or the law of equi-marginal utility/the law of maximum satisfaction in 1854 AD. This law is further developed and popularized by Prof. Alfred Marshall. According to this law, the consumer allocates her/her limited money income among various goods for getting maximum
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In this article, we tried to explain the law of diminishing marginal utility Introduction The Law of Diminishing Marginal Utility was originally formed by German economist Hermann Heinrich Gossen in 1854. So, the law is also known as the first law of Gossen. It was systematically formulated and made popularized by Alfred Marshall in his
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Concept of Cardinal Utility: Total Utility and Marginal Utility In this article ‘total Utility, marginal Utility, and their relationship’, we try to explain the meaning of total utility, marginal utility, and the relationship between marginal utility and total utility In economics, the term utility refers to ‘the pleasure or satisfaction that individuals get from their
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Meaning of the Production Function The technical process that links inputs to the output of a good is known as the production function of that good. It is defined as the technological relationship between inputs and output giving the maximum output that can be produced from various input combinations. The production function analyses the relationship
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Meaning of Production In economics, production means the creation of utility for sale. The act of creating utility is done by transferring a set of inputs into some output of good or service. The output has a greater utility than the inputs together. Thus, output or new product created is sold in the market. If
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