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

Government may sometimes take regulatory actions in order to interfere with decisions made by individuals and groups of individuals concerning social and economic issues. This influence of government made to interrupt and affect the way financial markets and industries operate is known as government intervention. Many economists believe that intervention of government in the market … Read more

What is a demand curve? The graphical representation of the relationship between the demand of the commodity and price of the commodity, at any given time, is known as the demand curve. A demand curve can also be defined as the graphical representation of a demand schedule. A demand schedule is a tabular statement which … Read more

The cross-price elasticity of demand is the degree of responsiveness of quantity demanded of a commodity due to the change in price of another commodity. Mathematical Formula for Cross Elasticity of Demand Cross elasticity of demand is the percentage change in the quantity demanded of good X due to certain percent change in the price … Read more

Consumer’s Equilibrium The consumer is in equilibrium when he maximizes his utility, given his income and the market prices. – Anna Koutsoyiannis Every consumer aims at getting maximum satisfaction out of his given expenditure. A consumer is said to have attained equilibrium when he spends given income or budget in such a way as to … Read more

Utility is the ability of a good to satisfy a want. – Prof. Hobson In microeconomics, utility is a controversial topic. It is generally used to describe the degree of satisfaction an individual receives from consuming a commodity. It can be understood as the power of a commodity to satisfy the wants of consumers. The … Read more

Isocost Line The combination of factor-inputs with which a firm produces output depends upon the quantity of output that the firm wants to produce. Besides, the combination of factor-inputs also depends upon the amount of money that the firm wants to spend and prices of the factor-inputs. An isocost line is a graphical representation of … Read more

In economics, an externality is a term used to describe the cost or benefit incurred by the third party who did not choose to receive that cost or benefit. It is the consequence of economic activities endured by an unrelated third party due to lack of control over the factors that create the cost or … Read more

In economics, deadweight loss (excess burden) is a term used to describe the loss caused to the society due to market inefficiencies. It occurs when equilibrium for goods and services is not attained. In other words, it occurs when supply curve of a commodity does not intersect the demand curve at the free market equilibrium … Read more

Producing goods and services that can satisfy the changing needs and desires of the consumers is the primary objective of economic activities. But, queries like what to produce, how to produce, for whom to produce, and how to satisfy unlimited wants with limited resources have made it difficult for producers to meet their objectives. On … Read more