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Explain the precautions in the estimation of national income.
INTRODUCTION: The estimation of national income refers to the process of calculating the total economic output of a country over a specific period, usually a year. National income is a key indicator of a country’s economic performance and is typically measured using three main approaches: the Production (or Output) Approach, the Income Approach, and the…
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What is Macro economics? explain the merits and demerits.
Meaning: Macro economics is that branch of economics which deals with the study of aggregate or average behavior of the entire economy. In it we study the collective functioning of the entire economy. It deals with the aggregate of the economic system rather than with the individual parts of it. Hence it is called as…
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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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ECNOMICS-1 PRINCIPLES OF ECONOMICS.
MODEL ANSWER PAPER UNIT- 1 Q. 1. Critically explain the wealth definition of economics? The wealth definition is the fundamental definition of economics. The economics is derived from the Greek word oikos and Nomos which means household and management .So in its original sense, economics means house hold management that is satisfying as many wants…
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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…