Law of Supply : Assumptions, Exceptions and Limitations

The law of supply states that, other things remaining the same, the quantity supplied of a commodity is directly or positively related to its price. In other words, when there is a rise in the price of a commodity the quantity supplied of it in the market increases and when there is a fall in … Read more

Law of Diminishing Marginal Utility: Assumptions and Exceptions

The law of diminishing marginal utility was first propounded by 19th century German economist H.H. Gossen which explains the behavior of the consumers and the basic tendency of human nature. Hence, this law is also known as Gossen’s First Law. This was further modified by Marshall. According to Marshall, The additional benefit a person derives … Read more

Law of Demand: Assumptions, Exceptions and Limitations

The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. It is one of the important laws of economics which was firstly propounded by neo-classical economist, Alfred Marshall. Other things remaining the same, the amount demanded increases with a fall in price … Read more

Isoquants: Meaning, Assumptions and Properties

Meaning The term ‘isoquant’ is composed of two terms ‘iso’ and ‘quant’. Iso is a Greek word which means equal and quant is a Latin word which means quantity. Therefore, these words together refer to equal quantity or equal product. An isoquant curve is the representation of a set of locus of different combinations of … Read more

Introduction to Microeconomics

Microeconomics is composed of two words – micro and economics. Micro is derived from the Greek word ‘mikros’ which means ‘small’ and economics is the branch of knowledge which studies about the production, consumption, and transfer of wealth incurred during the trade. The term microeconomics was first coined by Ragner Frich in the year 1993. … Read more

Indifference Curve Analysis: Concept, Assumption and Properties

In microeconomics, indifference curve is an important tool of analysis in the study of consumer behavior. The concept of indifference curve analysis was first propounded by British economist Francis Ysidro Edgeworth and was put into use by Italian economist Vilfredo Pareto during the early 20th century. However, it was brought into extensive use by economists … Read more

Income Elasticity of Demand: Definition and Types with Examples

Income elasticity of demand is the degree of responsiveness of quantity demanded of a commodity due to change in consumer’s income, other things remaining constant. In other words, it measures by how much the quantity demanded changes with respect ot the change in income. The income elasticity of demand is defined as the percentage change … Read more

Effects of Price Ceiling and Price Floor

What is price ceiling? Price ceiling is a measure of price control imposed by the government on particular commodities in order to prevent consumers from being charged high prices. Price ceiling can also be understood as a legal maximum price set by the government on particular goods and services to make those commodities attainable to … Read more