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MONOPOLY MEANING In this post you will get notes on Monopoly Meaning, Features of Monopoly and price determination under monopoly. The word Monopoly Meaning is the derivation from the combination of two words i.e., ‘Mono’ and ‘Poly’. Mono refers to a single and poly to control. In this way, monopoly refers to a market situation…
PERFECT COMPETITION A Perfect Competition market is that type of market in which the number of buyers and sellers is very large, all are engaged in buying and selling a homogeneous product without any artificial restrictions and possessing perfect knowledge of the market at a time. ACCORDING TO MRS. JOAN ROBINSON “Perfect Competition prevails when…
In this post, you will study Theory of Revenue. Understand the topic and make notes properly. THEORY OF REVENUE Revenue is the amount that a firm receives from the sale of the output. ACCORDING TO PROF. DOOLEY “The Revenue of a firm is its sales receipts or income.” There are three concepts of revenue which…
EXPLICIT VS IMPLICIT COSTS The difference between Explicit vs Implicit costs are as follows: EXPLICIT COSTS Explicit costs refer to all those expenses made by a firm to buy goods directly. They include, payments for raw material, taxes and depreciation charges, transportation, power, high fuel, advertising and so on. According to Leftwitch, “Explicit costs are…
RELATIONSHIP BETWEEN AC AND MC AVERAGE COST Average total cost is the sum of the average fixed cost and average variable cost. Alternatively, ATC is computed by dividing total cost by the number of units of output. Therefore, ATC or AC = AFC + AVC =TC/Q Average cost is also known as unit cost, as…
MODERN THEORY OF COST Modern economists including Stigler, Andrews and Friedman have questioned the validity of U-shaped cost curves both theoretical as well as on empirical grounds. Also the long run costs in modern theory are not U- shaped but L- shaped. The Modern theory suggests the existence of ‘built- in- reserve capacity ‘which imparts…
TRADITIONAL THEORY OF COST Traditional theory distinguishes between the short run and the long run. The short run is the period during which some factors is fixed; usually capital equipment and entrepreneurship are considered as fixed in the short run. The long run is the period over which all factors become variable. SHORT-RUN TRADITIONAL THEORY…
WHAT IS COST? Cost refers to an amount to be paid or given up for acquiring any resource or service. In economics, cost can be defined as a monetary valuation of efforts, material, resources, time and utilities consumed, risks incurred, and opportunity forgone in the production of a good or service. CONCEPT OF COSTS There…
ECONOMIES AND DISECONOMIES OF SCALE Economies and Diseconomies of scale arises due to law of returns to scale. Economies of scale are defined as the cost advantages that an organization can achieve by expanding its production in the long run. In other words, these are the advantages of large scale production of the organization. The…
LAW OF RETURNS TO SCALE Returns to scale tells how production changes in response to an increase in all inputs in the long run. An industry can exhibit constant returns to scale, increasing returns to scale or decreasing returns to scale. In the long- run, there is no fixed factor; all factors are variable. The…
