SavingsSaving is the most important factor that determines the level of economic growth of a country.As the success of an individual depends on his or her level of saving, the living standard of anation depends on the level of national savings since it is a contributory factor of a number ofmicroeconomic indicators such as the […]
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Microeconomics and macroeconomics are considered as the most important division of the broad range of economic concepts. Economists use different methods to analyses economic issues. The standard of modern economies is discussed as positive economics and normative economics. In positive economics, different economic issues are described based on the existing situation based on the facts,
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Market failure is the situation the free-market fails in efficient distribution of goods and services. It is believed that in a free market economy, allocative efficiency is achieved through a price mechanism. In a situation of market failure, the consumer can have the desired quantity of goods and services at the price they wish. If
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The demand for a product is a variable that is influenced by different factors including the price of the product. The effect of influencing factors on demand including elasticity is numerically calculated in three different ways. Price elasticity of demand – The change in quantity demanded in response to the changes in the price of
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Economic systems are a complex network of individuals, organizations, and institutions and their social and legal interrelationships. The function economic system is to solve the basic economic problems. Based on the relative scarcity of economic resources all the economies face a common issue “Choice”. The choice is an issue of allocating available limited resources in
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The term “Inflation” refers to the continuous increase in the general price level in an economy over a considerable period of time. If the increase in price level is only for a short period of time it is not considered as inflation because it is not harmful to the economy. If the price level increases
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The price Theory is a microeconomic principle that explains that the price of any specific product is determined through the interaction of demand and supply forces in the market. The price so determined is considered as the equilibrium or the market price of the product. As per the law of demand, the price of the
Scarcity is the basic economic issue that all societies face equally. In economics, the term “Scarcity” refers to the situation that “the available resources in an economy are not sufficient to fulfill all the human wants completely”. This is a theoretical concept that is based on the insatiable nature of the human mind. Once the
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Opportunity Cost is an important concept in computing the true cost of resource allocation either in consumption in production. The concept of opportunity cost is used by the economists’ true cost of resource utilization. In economic analysis, two types of cost are considered. Financial cost – this is the cost incurred in the form of
Similar to the demand of production, the market supply of a product is the horizontal summation of the individual firm’s supply schedules. The market supply is a dependent variable that will be influenced by some other factors mentioned below. Price of the product Prices of other products Prices of the factors of productions Government policies
