Archive for the Economics Category
The Meaning of Supply
January 30, 2010 | Economics | Comments Off
Supply is of the scarce goods. It is the amount of a commodity that sellers are able and willing to offer for sale at different prices per unit of time. In the words of Meyer “Supply is a schedule of the amount of a good that would be offered for s...
Meaning of Demand in Economics
January 29, 2010 | Economics | Comments Off
The word demand is so common and familiar with every one of us that it seems superfluous to define it. The need for precise definition arises simply because it is sometimes confused with other words such as desire, wish, want, etc. Demand in economi...
Marginal Rate of Substitution (MRS)
January 29, 2010 | Economics | Comments Off
Marginal Rate of Substitution (MRS): The concept of marginal rate of substitution (MRS) was introduced by Dr. J.R. Hicks and Prof. R. G. D. Allen to take the place of the concept of Diminishing Marginal Utility. Allen and Hicks are of the opinion...
An Indifference Map
December 6, 2009 | Economics | Comments Off
An Indifference Map: A graph showing a whole set of indifference curves is called an indifference map. In the given figure three indifference curves IC1, IC2 and IC3 have been shown. The various combination of goods of wheat and rice lying on IC1 yi...
The Construction of Indifference Curves
December 6, 2009 | Economics | Comments Off
The Construction of Indifference Curves: The consumer’s preferences can be shown in a diagram with an indifferences curve. The indifferences curve shows nothing about the absolute amounts of satisfaction obtained. It merely indicates a set of con...
Concept of Ordinal Utility
September 5, 2009 | Economics | Comments Off
Concept of Ordinal Utility: The indifference curve indicates the various combinations of two goods which yield equal satisfaction to the consumer. By definition, an indifference curve shows all the various combinations of two goods that give an equa...
Derivation of Demand Curve in terms of Utility Analysis
September 3, 2009 | Economics | Comments Off
Dr. Alfred Marshall-was of the view that the law of demand and so the demand curve can be derived with the help of utility analysis. He explained the derivation of law of demand (i) in the case of a single commodity and (ii) in the case of two or mor...
Law of Equi Marginal Utility
September 1, 2009 | Economics | Comments Off
Consumer’s Equilibrium Cardinal Utility Approach The principle of equal marginal utility occupies an important place in the cardinal utility analysis. According to this, a consumer is in equilibrium when he distributes his given money income amo...
Law of Diminishing Marginal Utility
August 30, 2009 | Economics | Comments Off
Law of diminishing marginaL utility when a good is free: The law of diminishing marginal utility describes a familiar and fundamental tendency of human behaviour. The law of diminishing marginal utility states that, “as a consumer consumes more an...
Total Utility and Marginal Utility
August 29, 2009 | Economics | Comments Off
Total Utility and Marginal Utility: People buy goods because they get satisfaction from them. This satisfaction which the consumer experiences when he consumes a good, when measured as number of utils, is called utility. It is here necessary to make...