Durable & Non-Durable Goods

Durable goods are those goods that don't wear out quickly and last over a long period. Examples of durable goods include land, cars, and appliances. While non-durable goods or soft goods are those goods that have a short life cycle. They are used up all at once or have a lifespan of fewer than three years. For example light bulbs, paper products,…
Read More...

Harrod Domar Model

The Harrod Domar model shows the importance of saving and investment in a developing economy. The model was developed independently by Roy F. Harrod in 1939. The growth of an economy is positively related to its savings ratio and negatively related to the capital-output ratio. It suggests that there is no natural reason for an economy to have…
Read More...

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 goods, etc., that it employs (its “inputs” or “factors of production”) it will use. Economics, models, and…
Read More...

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…
Read More...

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 MobilityThe…
Read More...