Found 104 Articles for General Economics

Introduction: What is Market Equilibrium? Market equilibrium is a condition of the market where the demand and supply balance each other. Usually, during times of over-supply, the prices go down which increases the demand. In the case of over-demand, the prices increase which diminishes the demand. The equilibrium price is the price at which supply meets the demand in a market. The periodic consolidation of an index or its sideways momentum shows market equilibrium over a certain period of time. The prices of a product in a market often hover over the equilibrium price level. When the prices go ... Read More

Introduction: What is a Market Economy? A market economy is a type of economy where demand and supply control the marketplace. In a market economy, there is minimal government intervention whereas the price and quantity of goods are determined by the demand and supply of products in the market. A market economy encourages entrepreneurship and drives competition and innovation in the economic system which leads to consumer satisfaction and production efficiency. Market economies are also known as free markets where government intervention is minimal to moderate. Businesses in a free market are free to take decisions regarding the price ... Read More

Introduction: What is a Market? A market is a place where buyers and sellers can meet to exchange items. There are physical markets such as those containing retail stores and virtual markets such as online stores. In the case of virtual markets, there is no physical interaction between the buyers and sellers. However, in physical markets, the buyers and sellers have interactions. Transactions in a marketplace. may include goods, services, currency, or information apart from any other combination of any of these items. Things should pass from one person to another in a market. There is a need for a ... Read More

What is a Demand Curve? The demand curve is a graph that shows the relationship between the price of and the demand for a commodity in the market. The price of the good is usually shown on Y-axis while the demand for the product is placed on the X-axis. This price-quantity relationship can be shown for both individual customers and the markets. When the graph is plotted for the individuals it is called an individual demand curve while when the graph depicts the market condition it is called a market demand curve. Demand curves usually slope downwards because, with ... Read More

What is Marginal Revenue? The increased revenue obtained from an additional unit’s sale of a product is called marginal revenue. The word marginal always expresses something extra; so in the case of revenue, it shows the extra revenue generated. Marginal revenue follows the law of diminishing returns. According to the law, the output slows down with a gradual increase in inputs. In the case of a perfectly competitive business, marginal revenue means to continue to produce output up to the point when marginal revenue equals the marginal cost. Example Suppose company ABC produces pens at the rate of Rs ... Read More

What is Price Elasticity of Demand? Price elasticity of demand shows what happens to price when the demand for a product changes. It is obvious that demand and prices are related to each other. When the price increases, usually, the demand for the product goes down. Alternatively, when the price of demand for a product goes up, the price shall come down. This means that price and demand have an inverse relationship. When there is a rise in one of the factors, the other factor goes down. When this inverse relationship holds good, the product is said to have price ... Read More

Introduction Marginal product formula helps businesses predict the demand and thereby produce just enough products according to market demand. Businesses are concerned with the market demand and want to keep production in sync with the market demand. The marginal product formula helps them to take production decisions wisely. Knowing the marginal product helps businesses keep production at a high while costs at a low level. What is the Marginal Product Formula? The marginal product formula determines what happens to overall production when one factor of production is changed. These factors may be anything that is directly related to production, such ... Read More

What is Marginal Cost? Mostly used in the manufacturing industry, marginal cost refers to the extra cost required to produce additional items. The marginal cost is calculated by dividing additional costs by the change in quantity. The calculation also includes the items that have already been produced and variable costs that must be accounted for the additional items. Marginal cost is the change of cost with a change in the level of production. When marginal costs are below the price per unit of a good, the manufacturer may earn a profit from the item. Plotting marginal cost on a ... Read More

Introduction In order to understand what a floating exchange rate is, one must first understand what an exchange rate means. The exchange rate of a currency is the rate of exchange of the currency against foreign currencies (usually, it is compared with US Dollars). The exchange rate regime is adopted by the Central Bank of India or the Reserve Bank. The idea of an exchange rate is to ideate, establish, and operate a functional rate of exchange against foreign currencies. This is also known as the forex rate. Let us see first what is depreciation and appreciation of currencies in ... Read More

Introduction Liabilities are obligations of a company that is payable within a certain time period. Depending on the nature and time period, liabilities are divided into three types. They are – Current liabilities or short-term liabilities Long-term liabilities Contingent liabilities. Current liabilities or short-term liabilities are payable within the same business cycle or the operating cycle of a business. Long-term liabilities are payable within a period of more than a year. Then, there are contingent liabilities that have not occurred yet and depend on certain events for getting started. What are Long-Term Liabilities? Long-term liabilities are important ... Read More