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The Demand Curve The quantity demanded of a good usually is a strong function of its price. Suppose an experiment is run to determine the quantity demanded of a particular product at different price levels, holding everything else constant. Presenting the data in tabular form would result in a demand  schedule , an example of which is shown below. Demand Schedule Price Quantity Demanded 5 10 4 17 3 26 2 38 1 53 The demand curve for this example is obtained by plotting the data: Demand Curve By convention, the demand curve displays quantity demanded as the  independent variable  (the x axis) and price as the dependent variable (the y axis). The  law of demand  states that quantity demanded moves in the opposite direction of price (all other things held constant), and this effect is observed in the downward slope of the demand curve. For basic analysis, the demand curve often is approximated as a straight line. ...

Demand-pull inflation Demand-pull inflation arises when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and  unemployment  falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation. This would not be expected to persist over time due to increases in supply, unless the economy is already at a full employment level. How it happens : According to Keynesian theory, the more firms will employ people, the more people are employed, and the higher aggregate demand will become. This greater demand will make firms employ more people in order to output more. Due to capacity constraints, this increase in output will eventually become so small that the price of the g...

Export and Import Export In economics, an export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade. Export is an important part of international trade. Its counterpart is import. Export goods or services are provided to foreign consumers by domestic producers. Export of commercial quantities of goods normally requires involvement of the Customs authorities in both the country of export and the country of import. The advent of small trades over the internet such as through Amazon, e-Bay and the like, have largely by-passed the involvement of Customs in many countries due to the low individual values of these trades. Nonetheless these small exports are still subject to legal restrictions applied by the country of export, particularly in respect of strategic export limitations. Import : In economics, an import is any good or commodity, brought into one country from another country in a legitimate fashion, typi...

Income Elasticity of Demand YED This measures the responsiveness of demand to a change in income. e.g. if your income increase by 5 % and your demand for mobile phones increased 20% then the YED = 20/ 5 = 4. YED = % change in Q.D % change in Income INFERIOR GOOD This occurs when an increase in income leads to a fall in demand. Therefore YED<0. E.g. clothes from charity shops, cheap bread When your income increase you buy better quality goods NORMAL GOOD This occurs when an increase in income leads To an increase in demand for the good, Therefore YED>0 LUXURY GOOD This occurs when an increase in demand causes a bigger % increase in demand, therefore YED>1. Luxury goods will also be normal goods and we can say They will be income Elastic Income inelastic This means an increase in income leads to a smaller % increase in demand. Therefore 0> YED <1 Firms will make use of YED by producing more luxury goods during periods of economic growth, similarly there will be les...

Market Research Market research is generally either primary or secondary.  [1]  In secondary research, the company uses information compiled from other sources that appears applicable to a new or existing product. The advantages of secondary research are that it is relatively cheap and easily accessible. Disadvantages of secondary research are that it is often not specific to your area of research and the data used can be biased and is difficult to validate. Primary market research involves testing such as focus groups, surveys, field tests, interviews or observation, conducted or tailored specifically to that product. A list of questions that can be answered through market research:  What is happening in the market? What are the trends? Who are the competitors? How do consumers talk about the products in the market? Which needs are important? Are the needs being met by current products? Market research for business/insurance planning Market research is for ...

Opportunity Cost Scarcity of resources is one of the more basic concepts of economics. Scarcity necessitates trade-offs, and trade-offs result in an opportunity cost. While the cost of a good or service often is thought of in monetary terms, the opportunity cost of a decision is based on what must be given up (the next best alternative) as a result of the decision. Any decision that involves a choice between two or more options has an opportunity cost. Opportunity cost contrasts to accounting cost in that accounting costs do not consider forgone opportunities. Consider the case of an MBA student who pays $30,000 per year in tuition and fees at a private university. For a two-year MBA program, the cost of tuition and fees would be $60,000. This is the monetary cost of the education. However, when making the decision to go back to school, one should consider the opportunity cost, which includes the income that the student would have earned if the alternative decision of remai...

Supply and Demand The  market  price of a good is determined by both the supply and demand for it. In 1890, English economist Alfred Marshall published his work,  Principles of Economics , which was one of the earlier writings on how both supply and demand interacted to determine price. Today, the supply-demand model is one of the fundamental concepts of economics. The price level of a good essentially is determined by the point at which quantity supplied equals quantity demanded. To illustrate, consider the following case in which the supply and demand curves are plotted on the same graph. Supply and Demand On this graph, there is only one price level at which quantity demanded is in balance with the quantity supplied, and that price is the point at which the supply and demand curves cross. The law of supply and demand predicts that the price level will move toward the point that equalizes quantities supplied and demanded. To understand why this must be the e...

The Production Possibility Frontier  Consider the case of an island economy that produces only two goods: wine and grain. In a given period of time, the islanders may choose to produce only wine, only grain, or a combination of the two according to the following table: Production Possibility Table Wine (thousands of bottles) Grain (thousands of bushels) 0 15 5 14 9 12 12 9 14 5 15 0 The  production possibility frontier  (PPF) is the curve resulting when the above data is graphed, as shown below: Production Possibility Frontier The PPF shows all efficient combinations of output for this island economy when the factors of production are used to their full potential. The economy could choose to operate at less than capacity somewhere inside the curve, for example at point  a , but such a combination of goods would be less than what the economy is capable of producing. A combination outside the curve such as point  b  is not ...

Demand-pull inflation Demand-pull inflation arises when  aggregate demand  in an  economy  outpaces  aggregate supply . It involves  inflation  rising as real  gross domestic product  rises and  unemployment falls, as the economy moves along the  Phillips curve . This is commonly described as "too much  money  chasing too few  goods ". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation. This would not be expected to persist over time due to increases in  supply , unless the economy is already at a  full employment  level. How it happens : According to  Keynesian theory , the more firms will employ people, the more people are employed, and the higher  aggregate demand  will become. This greater demand will make firms employ more people in or...

Optimization : In  mathematics , the simplest case of optimization, or mathematical programming, refers to the study of problems in which one seeks to  minimize  or  maximize  a  real function  by systematically choosing the values of  real  or  integer  variables from within an allowed set. This (a scalar real valued objective function) is actually a small subset of this field which comprises a large area of  applied mathematics  and generalizes to study of means to obtain "best available" values of some objective function given a defined domain where the elaboration is on the types of functions and the conditions and nature of the objects in the problem domain. History : The first optimization technique, which is known as  steepest descent , goes back to Gauss . Historically, the first term to be introduced was  linear programming , which was invented by  George Dantzig  in the 1940s...

What is meant by MBO? MBO or Management By Objectives is a thorough and meticulous management process that is accoutred with all those main activities that are completely and consciously directed towards the efficient and effective achievement of objectives, both on an individual basis as well as a collective basis. In addition to that, this very approach comprises of a number of steps. Firstly the highest level involves setting goals and objectives. Secondly it deals with clarification of roles to those individuals who are working on the very project and are responsible for accomplishing it. Next comes the step of setting smaller objectives for the people at the sub-ordinate level of the organization who intend to adopt the procedure of MBO. Projects can be both verifiable (quantitative) and also they could be non-verifiable (qualitative) for line managers as well as for other personnel of the organization who are also connected to the process of Management By Objectives. We can s...

The Supply Curve Price usually is a major determinant in the quantity supplied. For a particular good with all other factors held constant, a table can be constructed of price and quantity supplied based on observed data. Such a table is called a supply schedule, as shown in the following example: Supply Schedule Price Quantity Supplied 1 12 2 28 3 42 4 52 5 60 By graphing this data, one obtains the supply curve  as shown below: Supply Curve As with the demand curve, the convention of the supply curve is to display quantity supplied on the x-axis as the independent variable and price on the y-axis as the dependent variable. The law of supply states that the higher the price, the larger the quantity supplied, all other things constant. The law of supply is demonstrated by the upward slope of the supply curve. As with the demand curve, the supply curve often is approximated as a straight line to simplify analysis. A straight-line supp...

Price Elasticity of Demand  An important aspect of a product's demand curve is how much the quantity demanded changes when the price changes. The economic measure of this response is the price elasticity of demand. Price elasticity of demand is calculated by dividing the proportionate change in quantity demanded by the proportionate change in price. Proportionate (or percentage) changes are used so that the elasticity is a unit-less value and does not depend on the types of measures used (e.g. kilograms, pounds, etc). As an example, if a 2% increase in price resulted in a 1% decrease in quantity demanded, the price elasticity of demand would be equal to approximately 0.5. It is not exactly 0.5 because of the specific definition for elasticity uses the average of the initial and final values when calculating percentage change. When the elasticity is calculated over a certain arc or section of the demand curve, it is referred to as thearc elasticity and is defined as...

Theory of the firms : The theory of the firm consists of a number of economic theories which describe the nature of the firm, company, or corporation, including its existence, its behaviour, and its relationship with the market. Simplified Summary : In simplified terms, the theory of the firm aims to answer these questionsExistence - why do firms emerge, why are not all transactions in the economy mediated over the market? * Boundaries - why the boundary between firms and the market is located exactly there? Which transactions are performed internally and which are negotiated on the market? * Organization - why are firms structured in such specific way? What is the interplay of formal and informal relationships? Despite looking simple, these questions are not answered by the established economic theory, which usually views firms as given, and treats them as black boxes without any internal structure. Background : The First World War period saw a change of emphasis in economic theory a...

Pakistan Army From Wikipedia, the free encyclopedia Pakistan Army Flag of the Pakistani Army Founded August 14, 1947 Country Pakistan Size 550,000 active troops ( Center for Defense Information ) [1] Part of Pakistani Armed Forces Headquarters Rawalpindi ,  GHQ Motto Iman, Taqwa, Jihad fi Sabilillah.  Men at their best [ citation needed ] Colour Green and White           Commanders Chief of the Army Staff General   Ashfaq Pervez Kayani Notable commanders Field Marshal Ayub Khan General Zia-ul-haq General Pervez Musharraf Aircraft flown Attack Bell AH-1 Cobra Helicopter Bell 412 ,  Bell 407 Transport Mil Mi-8/17 ,  Aérospatiale Alouette III , Bell 412 , The  Pakistan Army  ( Urdu :  پاک فوج ) is the most sophisticated branch of the Pakistani Armed Forces  responsible for  land-based military  operations. It is the largest and oldest established branch of th...