Last time I have discussed about the concept and nature of utility. Today I will discuss about the Types OF UTILITY APPROACH.
Utility approach is basically of 2 following types: Continue reading “TYPES OF UTILITY APPROACH”
Concept and nature of utility
CONCEPT OF UTILITY
Dear friends let us first discuss the concept or meaning of utility.
Utility may be defined as the want satisfying power of a good. A commodity is demanded because of the want satisfying power of a commodity as long as good satisfy human want they set to possess. Continue reading “Concept and nature of utility”
Concept of Opportunity cost
Today we will discuss the concept of opportunity cost with the help of examples.
The concept of opportunity cost was developed by Austrian school of economics. Later on it was popularized by American economist Devenport. Continue reading “Concept of Opportunity cost”
Difference between positive economics and normative economics
Last time we have discussed the types of economics. Today we will discuss the difference between positive economics and normative economics. Let us discuss it:
POSITIVE ECONOMICS:
It deals with the economic issues of past, present and future and tells about what was, what is, what would be. Positive economics is basically based on the facts and figures which can be verifiable.
For example India is the second largest populated country; it is a positive statement nobody can deny it as it is based on the facts and figures.
NORMATIVE ECONOMICS:
It deals with the opinions of economists related to the economic issues and tells about what ought to be. Normative economics is basically based on the opinions which can’t be verifiable. For example there should be the development industries in underdeveloped countries to make them developing countries. So this statement is just an opinion and it is just a judgment.
I hope you have understood the difference between positive economics and normative economics.
Types of Economics
The term economics is very common and Economics can be broadly classified into two parts:
MICRO ECONOMICS: in microeconomics we study “I” which means individual. It means in micro economics we study everything from the point of view of individual. The word micro itself means small. In micro economics we study individual firm, individual producer, individual consumer etc. Continue reading “Types of Economics”
Concept of Economics and Economic Problem
Economics is the study of human activities which they perform with their limited resources to satisfy their unlimited wants. Continue reading “Concept of Economics and Economic Problem”
Five year plans, the year of implementation and objectives of these plans
Dear friends, let us discuss today about the various five year plans, the year of implementation and objectives of these plans. The thirteenth plan is going on.
| Year | Five year plans | Objectives of plans |
| 1951-56 | First Five Year Plan |
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| 1956-61 | Second Five Year Plan |
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| 1961-66 | Third Five Year Plan |
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| 1966-69 | Plan Holiday |
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| 1969-74 | Fourth Five Year Plan |
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| 1974-78 | Fifth Five Year Plan |
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| 1978-79 | Rolling Plan | |
| 1980-85 | Sixth Five Year Plan |
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| 1985-90 | Seventh Five Year Plan |
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| 1992-97 | Eighth Five Year Plan |
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| 1997-2002 | Ninth Five Year Plan |
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| 2002-2007 | Tenth Five Year Plan |
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| 2007-2012 | Eleventh Five Year Plan |
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| 2012-2017 | Twelfth Five Year Plan |
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| 2017-2022 | Thirteenth Five Year Plan |
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This was all about the various five year plans, the year of implementation and objectives of these plans. The thirteenth plan is going on.
Law of diminishing marginal utility
Today we will discuss the law of diminishing marginal utility commonly known as law of DMU. It is known as Gossen’s first law also. It explains consumer behaviour.
According to it as we go on consuming more and more units of a commodity, the utility obtained from every additional unit goes on decreasing. Law can be explained with the help of following example: Continue reading “Law of diminishing marginal utility”
Difference between topline and bottom line growth
Dear readers, if you are management student or follower of business news, you must have heard the terms top line growth and bottom line growth of a company. You must have heard that top line of a company is good but bottom line is not. Many of you may be aware about the terms and many may not be. Let us understand the difference between these terms: Continue reading “Difference between topline and bottom line growth”
Quatitatitive measures of credit control
Quatitatitive measures of credit control are also called general measures of credit control. These measures refer to the methods which are used to direct the total volume of credit in the banks. These measures consists of the following methods
- Bank rate: it means the rate of interest at which central bank discounts the bills of the commercial banks. If central bank wants to expand the credit then central bank will reduce the bank rate. Reduce bank rate will reduce the cost of borrowing of the commercial banks who in turn charge low rate of interest from their borrowers. This means the price of credit will decrease. Business community will borrow more money which leads to more investment, production, generate more employment and income in hands of people. Thus the purchasing power of people will increase and aggregate demand will also increase. While on the other hand if there is the situation of inflation means there is increase in the general price level central bank will contract the credit by increasing the bank rate. Increased bank rate will increase the cost of borrowing of the commercial banks who in turn charge high rate of interest from their borrowers. This means the price of credit will increase. Business community will discouraged to borrow money which leads to fall in investment, production, employment and income in hands of people. Thus the purchasing power of people will decrease and aggregate demand also decrease which will solve the situation of inflation. The present bank rate is 9 %.
- Open market operations: it means buying and selling of securities of central bank in the open market. If the central bank wants to expand the credit then it would purchase the securities from the commercial banks. Which will in turn generate the money supply in the market and if the central bank contract the credit then this means it will sell the securities to the commercial banks which in turn reduce the money supply with the commercial banks.