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Tag Archives | Microeconomics

Relationship between Price Elasticity of Demand and Total Expenditure | Microeconomics

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 […]

Relation between Average, Marginal and Total Cost | Production | Microeconomics

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. […]

Producer’s Equilibrium: MR-MC Approach, Perfect Competition and Diagrams

Producer’s Equilibrium: MR-MC Approach, Perfect Competition and Diagrams! Conditions of Producer’s Equilibrium – MR-MC Approach: Producer’s equilibrium is often explained in terms of marginal revenue (MR) and marginal cost (MC) of production. Profit is maximized (or a producer strikes his equilibrium) when two conditions are satisfied – (i) MR = MC, and (ii) MC is […]

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