The proportion of your excess money or excess income that you spend
Marginal Revenue Product
The revenue that an additional unit of labour would bring into the firm
Real wage rate
Quantity of good and services that an hours work can buy
It’s a combination of recession and inflation i.e a contradictory phase where both unemployment and inflation are high
The amount by which potential GDP exceeds real GDP is called the Okun gap. Its also called the recessionary gap
Factors that are beyond the control of a firm that lowers the firms cost as the industry output increases
Factors that are beyond the control of a firm that raises the firms cost as the industry output increases
Amount by which price exceeds marginal cost. In perfect competition, the price is always equal to marginal cost but in monopolistic competition, the buyers will always pay a price more than the marginal cost
Action taken by an informed person to pass on the information / message to an uninformed person
When the demand of a product or service is derived from demand for other goods and services then its said to be derived demand
Higher the wage a person is offered, the more a person is willing to work.
Higher a person’s income, the more, will the person be inclined for leisure and the more he is inclined to forgo work for leisure.
Backward bending supply of labour curve
When the wage rates raises, the substitution effect brings in an increase in the quantity of labour supplied while the income effect decreases the quantity of work supplied. At low wage rates, the substitution effect is larger than the income effect so pple tend to supply more labour. But as the wage rates keeps raising, the income effect eventually becomes larger than substitution effect and thus decreases the labour supplied. This brings in a backward bending curve in the labour supplied.
Types of Demand
When an increase in price of a product brings about a greater decrease in the demand of the product, then its termed as an elastic demand.
E.g: Fancy pens, fancy items. Electronic goods.
When an increase in price brings in a slight or no change in demand of a product, then its termed as inelastic demand.
E.g: Cigarettes, Oil, essential commodities.
Perfectly elastic demand
An increase / decrease in the price of a product brings about an equal increase / decrease in demand of that product
Perfectly inelastic demand
When an increase in the price of a product does not bring about a decrease in the demand of the product then its said to be perfectly inelastic demand