Microeconomics, Production
Originally posted in Mba-tutorials A production function indicates the highest output Y that a firm can produce for specific combination of input. We have many factors of production used as inputs but for simplicity we will focus only on labor and capital as a factor...
Income and Substitution Effect, Microeconomics
Income and Substitution Effects Let us assume there is a decrease in the price of a product. This will have two effects: Consumer will prefer buying more of that good because it has become cheaper and he/she will decrease the demand for those goods which are now...
Income and Substitution Effect, Microeconomics, Price Consumption Curve
We have been discussing about Demand curve of product with changes in its price and Quantity Demanded depending on different Situation. Let us now be more concerned about Individual Consumer Demand Curve whose decision are affected by the limited budget it has....
Demand and Supply, Market Equilibrium, Microeconomics
From our last Lectures we now do know that Equilibrium prices are determined by the relative level of supply and demand. And that changes in supply and/or demand will cause change in the equilibrium price and/or quantity in a free market. Let us provide some example...
Demand and Supply, Elasticity, Microeconomics
We described one of the most important concerning topics of Principles of Microeconomics that is ELASTICITY . But what happened as we move along a demand curve ? Since its downward Sloping, what consequences does it has for the elasticity that we just studied? ...
Demand and Supply, Elasticity, Microeconomics
Not only are we concerned with what direction price and quantity will move when the market changes, but we are concerned about how much they change. Elasticity is a tool to measure by how much a variable will change with there is change in another variable. We do have...
Demand and Supply, Market Equilibrium, Microeconomics
Market Mechanism The Market Mechanism is the tendency in a free market for price to change until the Market Clears. Markets clear when Quantity Demanded equals Quantity Supplied at the prevailing price. Market clearing price. Price at which markets clears (Qs and Qd...
Demand and Supply, Microeconomics, Supply
There are few things we need to consider before discussing the supply curve. Supply and demand analysis can: Help us understand and predict how real world economic conditions affect market price and production Analyze the impact of government price controls, minimum...
Consumer Choice, Microeconomics, Optimum Consumption
So after studying all of the previous topics which had given preferences and budget constraints, how do consumers choose what to buy? Consumers choose a combination of goods that will maximize their satisfaction, given the budget available to them. The maximizing...
Consumer Choice, Indifference Curve, Microeconomics
The shapes of indifference curves describe how a consumer is willing to substitute one good for another In the Graph above: A to B, gives 6 clothing to get 1 food D to E, gives 2 clothing to get 1 food The more clothing and less food a person has, so the more clothing...
