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Explain the Subsistence theory of wages.
Introduction: The subsistence theory of wages originated by the French economist in the 18th century and was developed by Adam Smith. It received the support of British classical economics like Ricardo and Malthus. The German economist Lassalle called it the Iron law of wages, the brazen law of wages. Karl marks made it the basis…
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Write a note on Risk bearing theory and Uncertainty theory of profit?
Risk bearing theory of profit: This Theory of risk bearing was put forwarded by American economist professor Bernard Hawley in 1907 according to him profit is the reward for risk bearing. The theory explains like this. Theory: In modern world, production is carried on in anticipation of demand the producer produces good for the future…
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Write a note on loanable funds theory.
Introduction: According to classical economist the rate of interest is the price paid for the use of capital. Loanable funds theory is an improved from classical theory. According to this theory rate of interest depends upon the supply of and demand for lonable funds. Thus the equilibrium rate of interest would be at the level…
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Explain the concept of Quasi rent.
The concept of quasi rent was first introduced by Marshall. He explained that besides land, other factors also get rent the only difference is that rent may accrue to land in the long run also whereas it accrues to others factor only in the short run. Concept of Quasi-Rent: Marshall explained that the supply of…
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Explain the Marginal productivity theory of wages.
Introduction: The Marginal Productivity Theory of Wages is an economic theory that explains how wages are determined in a competitive labor market. The theory is based on the idea that employers will hire workers up to the point where the cost of hiring an additional worker (the wage) is equal to the value of the…
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Explain the modern theory of rent?
Introduction: Ricardo was of the opinion that rent arises due to differences in the fertility of land but the modern economist do not agree with him, they said that there is no need to have separate theory for determining rent because there is no special feature in land which distinguish it from other factors. They…
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Explain the cost concepts under short-run and a long-run.
Meaning: In general terms cost refers to an amount to be paid or given up for acquiring any resources or services. in economics, cost can be defined as monitory valuation of efforts, material resources, time and utility consumed, risk incurred in the production of goods and services. The cost concepts are of two types based…
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Explain the Types/concepts of Revenue.
Meaning: In economics, revenue refers to the total income generated by a firm from selling goods or services over a specific period. The sale proceed that a firm gets from the sale of its product in a given period is called revenue. In other words revenue is the market value obtained by a firm from…
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Explain briefly the law of Returns to Scale.
Introduction: Long run behavior of a firm is explained in terms of returns to scale that is the change in output as a result of change in all the inputs, proportion of input remains constant when all the inputs are changed in the same proportion we call this as change in scale of production. The…
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Explain the types of utility.
Meaning: Utility is a concept used in economics, philosophy, and other disciplines to describe the satisfaction or benefit derived from consuming goods and services or making choices. It is a measure of satisfaction of an individual get from the consumption of the commodity. In other word it is a measurement of usefulness that a consumer…