Theory of Production: Short-Run Analysis

The Theory of production explains the principles by which a business firm decides how much of each commodity that it sells (its “outputs” or “products”) it will produce. And how much of each kind of labor, raw material, fixed capital good, etc., that it employs (its “inputs” or “factors of production”) it will use. Economics, models, and theories…
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The Relationship between Education and Health

If you had to guess, would you say better education lead to better health or does better health lead to a better education? The answer isn't that simple. While people commonly understand that the more educated you are, the higher your income is likely to be, which is also likely to lead to better health. However, better health could help people…
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Perfect Competition in the Long Run

In the long run, we assume that all Factors of Production are variable, which means that the entrepreneur can adjust plant size or increase their output to achieve maximum profit. Perfect Competition Long Run equilibrium results in all firms receiving normal profits or zero economic profits. Perfect Competition Long Run Factor Mobility…
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Monopolistic Competition Market Structure

In Monopolistic Competition, there are many small firms who all have minimal shares of the market. Firms have many competitors, but each one sells a slightly different product. Firms are neither price takers (perfect competition) nor price makers (monopolies). Example of Monopolistic Competition The athletic shoe market: When you…
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Objectives of Central Banks

Central banks oversee the banking system in their country. They play an important role in managing a state's currency, money supply, and interest rates. There are five major objectives of central banks. Objectives of Central Banks 1. Inflation A central bank pursues a low and stable rate of inflation. 2. Employment It aims for a…
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