Compilation of Notes on the Central Problems of an Economy with its solution for class 10, 11 and 12 students. Rich or poor, developed or undeveloped, every economy must face three central problems. These are: (A) What to produce? (B) How to produce? and (C) For whom to produce? Following is a brief description of these problems: (A) What to [...]
Prof. Marshall works out a relationship between price elasticity of demand and total expenditure. He estimates the degree of price elasticity of demand depending on the change in total expenditure caused by a change in own price of the commodity. He states three different situations, as under: Situation 1 - Ed = Unitary or Ed = 1: Elasticity of demand [...]
Basically, we are focusing on two relationships: 1. Relation between Average Cost and Marginal Cost, and 2. Relation between Total Cost and Marginal Cost. Details are as under: 1. Relation between Average Cost and Marginal Cost: Relation between average cost and marginal cost is explained through Table 8 and Fig. 9. Table 8 and Fig. 9 offer the following observations [...]