Microeconomics Archives - Management Notes

The amount of a good that buyers are willing and able to purchase at a given price

May 8, 2022 by Smirti

The amount of a good that buyers are willing and able to purchase at a given price

a) Law of Demand
b) Demand Schedule
c) Quantity Demanded
d) Demand Curve

Oligopoly Definition – Characteristics and Examples | Microeconomics

March 6, 2022September 16, 2021 by Smirti

Oligopoly Definition

Table of Contents

A market structure in which few sellers control a large portion of it is referred to as an oligopoly. This is a market structure in which there are only a few sellers whose products are either homogeneous or closely related. It is competition among the few. If products are homogenous, it is called perfect monopoly. On the other hand, if products are differentiated, it is called imperfect oligopoly.

An oligopoly occurs when a small number of firms collude, explicitly or implicitly, to restrict production or set prices in order to achieve profits above market levels. An oligopoly can be contrasted with monopolies, in which only one company exists as a producer. Firms in mixed economies often seek the government’s approval for ways to limit competition, and government policy can discourage or encourage oligopolistic behavior. The oil and gas industry, airlines, mass media, automobiles, and telecommunications are all examples of oligopolies. A oligopoly does not imply that there is collusion or coordination.

Difference between Micro Static and Micro Dynamics | Microeconomics

March 15, 2023May 4, 2020 by Smirti

Difference between Micro Static and Micro Dynamics

Microstatic is the study of the static relationship between different microeconomic variables and deals with the final position equilibrium of these variables at a particular point in time. Microdynamics explains the process by which the system moves from one equilibrium point to another and describes the happenings in the market during the period of transition from one equilibrium point to another.

The concepts of micro statics and micro dynamics are used to explain the behavior of individual economic units, such as consumers, firms, and markets, in microeconomics. Using micro statics, economic variables can be analyzed at a given point in time, providing insight into the decisions made by economic agents and how these decisions affect the economy as a whole. Microstatistics has several subtopics.

Consumer theory: Using consumer demand, indifference curves, and utility functions, it examines how consumers make decisions based on preferences and budget constraints.
Producer theory: An analysis of the production function, cost curves, and profit maximization is performed in order to understand how firms make decisions about production.
Market equilibrium: An equilibrium market is determined by the interaction of supply and demand. It involves analyzing the market demand curve and supply curve, as well as price elasticity and market equilibrium determinants.

Income Elasticity of Demand | What are the types of income elasticity of demand?

September 19, 2020May 4, 2020 by Smirti

Income Elasticity of Demand | Microeconomics | Quiz Questions | MCQs |Management Notes The degree of responsiveness of quantity demanded for a good to the change in the income of the consumer is shown by the income elasticity of demand. Simply, we can say that it is the change in demand for the quantity as … Read more

Positive and Normative Economics – Major Differences | Microeconomics

March 14, 2022May 4, 2020 by Smirti

Positive and Normative Economics

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We all know that the term economics is defined as a social science. There has been a discussion about this term whether it is called a normative science or a positive science. But the debate ended with the conclusion that it is both positive and normative science. Economics not only tells us about the happening of certain things but also says whether it is the right thing to happen or not.

Marginal Rate Of Substitution – Why does MRS Diminish? | Microeconomics

August 27, 2021January 31, 2020 by Smirti

Marginal Rate of Substitution Marginal Rate of Substitution (MRS) is considered one of the very important concepts for the analysis of the indifference curve. Taking about the marginal rate of substitution, it is the rate that reflects the rate at which the consumer will be willing to replace /substitute the one commodity that he/she is … Read more

Law of Returns to Scale – Introduction to Microeconomics | Management Notes

November 7, 2022June 5, 2018 by Smirti

Law of Returns to Scale

Table of Contents

Definition of Law of Returns to Scale

According to the law of returns to scale, output changes in proportion to input changes. The law of returns to scale states that when there is a proportionate change in input, the output also changes. Every factor of production is variable over the long term. There is no fixed factor. Thus, changing the quantity of all factors of production can change the scale of production. The distinction between fixed factors and variable factors vanishes in the long run. This means that in the long-run everything is variable.

As inputs are increased in the same proportion, the law of returns to scale describes the relationship between output and input scale in the long run. As a result of the law of returns to scale, when the amount of inputs changes proportionately, the output also changes. Changes in inputs influence output in different ways. As an example, output changes by a large, same, or small proportion based on changes in input.