Introduction In economics, the concept of perfect competition represents an ideal market structure where numerous firms operate freely, selling identical products, and where none possesses the power to influence the market price. Every firm under perfect competition is a price taker, not a price maker. This means that the firm has no control over the…
Introduction In the study of production economics, the Law of Increasing Returns plays a vital role in explaining how the productivity of a firm changes when the scale of production is increased. This law is a fundamental part of the broader Laws of Returns to Scale, which describe the relationship between input and output in…
Introduction In economics, the concept of elasticity of demand is one of the most fundamental tools for understanding consumer behavior and market dynamics. It measures how sensitive the quantity demanded of a good is to changes in various factors such as price, income, and the prices of related goods. This concept plays a crucial role…
Introduction The concept of consumer surplus occupies a central place in the field of welfare economics and microeconomic analysis. It provides an important measure of the benefit or satisfaction that consumers derive from purchasing goods and services in the market. The theory of consumer surplus was first developed by the English economist Alfred Marshall, who…
Introduction In economics, the concept of choice is fundamental because human wants are unlimited, but resources are scarce. Every individual, firm, or nation faces the problem of how to allocate limited resources among competing uses. The Law of Substitution plays a vital role in understanding this process of decision-making and resource allocation. It is based…
Introduction In economics, price elasticity of demand (PED) is a crucial concept used to analyze the responsiveness of the quantity demanded of a good or service to changes in its price. Businesses, policymakers, and researchers rely on elasticity measurements to make informed decisions regarding pricing, taxation, subsidies, and market regulations. The concept of elasticity goes…