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Before explaining returns to scale it will be instructive to make clear the distinction between change in the scale and changes in factor proportions. The difference between the ch
Two people are engaged in a joint project. If each person i puts in the effort xi, the outcome of the project is worth f(x1, x2). Each person’s effort level xi is a number between
Q. Distribution of income? Distribution:Distribution of income reflects the process by which real output of services and goods produced by the economy is allocated to different
Production without capital is hard for us even to imagine. Nature cannot furnish goods and materials to man unless he has the tools and machinery for mining farming forestry fishin
Development: Economic development is the process through that a country's economy expands and improves in both qualitative and quantitative terms. Economic development requires co
Elastic and Inelastic Demand can be understood as follows: Slope and elasticity of demand have an inverse relationship between them. When slope is high elasticity of demand bec
Mercantilism:It is an economic theory from pre-capitalist times which held that a country's prosperity depended on its ability to produce large and persistent surpluses in its fore
For the purposes of economic analysis, a normal profit contains the cost of the lost opportunity of the next best option allocation of the firms resources. In a purely competitive
Separate Administrative Set-up for Exports: It may be worth examining the setting up of Foreign Trade Board, similar to what obtains in Japan (JETRO) and South Korea (KETRO)
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