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Introduction to Economics

6 Types of Inflation In Economics;You Must Know

6 Types of Inflation In Economics;You Must Know

The  types of inflation are associated with different causes (roots) that determine the growth of prices. The term ‘inflation’ generally means price growth in an economy. Prices can essentially increase for two reasons, due to the excess demand for goods compared to supply or for the growth of production costs of goods. Generally, the origin of inflation is ascribed to two different categories of events: events ... Read More »

What Is Inflation In Economics With Great Examples

What Is Inflation In Economics With Great Examples

Inflation in economics is the general rise in prices of goods and services in an economy. The rise in the general price level can be caused by an imbalance between market demand and supply, increase in production and transport costs. The general increase in prices (P + ΔP) of goods and services causes a reduction in the purchasing power (M / P) ... Read More »

What Is Equilibrium Price In Economics;What Does It Do

What Is Equilibrium Price In Economics;What Does It Do

The equilibrium price is the price that equals the quantity offered and the quantity demanded of an economic good on the market. The equilibrium price is a meeting point between supply and demand. On the other hand, a market characterized by a scarcity of demand and a high supply, has a very low equilibrium price. Market forces push the price towards its equilibrium condition. For example, ... Read More »

What Is Ability to Pay Principal In Economics

What Is Ability to Pay Principal In Economics

This section explores the nature Ability to Pay Principal In Economics. Ability to pay is the principle that any tax should fall on those who can afford to pay. Paying for  public goods or ‘income redistribution requires taxes: taking account of ability to pay means that these should increase with the income or assets of taxpayers, and as some minimum ... Read More »

What Is Law of Diminishing Returns In Economics

The law of diminishing returns (or, technically, diminishing marginal returns) is defined this way: If units of a resource are added to a fixed proportion of other resources, eventually marginal output will decline.A British economist, David Ricardo, found  the law of diminishing return in economy. Example of law of diminishing returns. Someone cultivates carrots on the land. The use of fertilizer ... Read More »