Bachelors @ Maharaja Ganga Singh University, Bikaner
Apart from a teacher, I am a writer who loves to pen down psychological realms. I am interested in psychology and philosophy.
Absolute Advantage, AD-AS Model, Aggregate Demand and Aggregate Supply, Aggregate Expenditure Model, Anti-Trust Laws, Balance of Payment, Comparative Advantage, Consumer Surplus, Cross Price Elasticity, Demand and Supply
I am currently an online tutor of economics and also following my master's in economics. I have helped nearly 10 students till now achieve the heights of their potential and I hope to work with many more students. I am fluent in English and my teaching technique is to use the simplest language possible to explain a complicated theory.
Demand is the quantity of a good that a consumer is willing to purchase at different prices during a period of time. Similarly, supply is the quantity that the firms are willing to sell at different prices during a period of time. The demand-side shows the relationship between price and quantity demanded. Based on the law of demand, there exists an inverse relationship between price and quantity demanded. So a demand curve is downward sloping showing that as the price increases, the quantity demanded decreases and vice versa. Similarly, a supply curve shows the relationship between price and quantity supplied. The law of supply states that there exists a direct relationship between price and quantity supplied. So a supply curve is upward sloping.
Price elasticity of demand is the responsiveness of the quantity demanded as the price of the good changes. So the greater the absolute value of price elasticity of demand, the greater the sensitivity of consumer to price. The price elasticity of demand not only shows whether a good is a necessity good, luxury good, or a normal good. But it is also used by firms to set their prices. If a good has a relatively inelastic demand, then the firm can charge a higher price and earn higher total revenue.
Consumer surplus is the gain experienced by consumers because of the difference between their maximum willingness to pay and the price they actually pay. Since a market meets at a price that is lower than the consumer's maximum willingness to pay. So consumers end up gaining surplus because they pay a lesser price than they would be willing to pay.
Producer surplus is the gain experienced by producers because of the difference between their minimum willingness to accept and the price they actually receive. When producers receive a price higher than their minimum willingness to accept. Then they end up gaining surplus.
The law of diminishing marginal utility states that the additional utility derived from each successive unit diminishes as a consumer consumes more and more units of goods.
Comparative advantage is the ability of a person or country to produce a good at a lower opportunity cost. That is, if a country can produce the good by forgoing a lesser amount of another, then it has a comparative advantage in the production of that good. Comparative advantage is used by countries to trade and also set the trading terms. The countries specialized in the production of the good that they have a comparative advantage in and then trade the excess with each other. This helps in both countries to consume a greater quantity of both goods compared to autarky.
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