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Mankiw Model of Nominal Rigidities There are two related reasons for which firms do not frequently change prices. First, as we saw in the discussion on menu costs, the cost
Factors determining Elasticity of demand Ease of substitution. Nature of the commodity i.e. whether it is a necessity of life, luxury or addictive. Consumers
Consider a manufactured good whose production process generates pollution. The annual demand for the good is given by Qd=100-3P. The annual market supply is given by Qs=P. In both
Desire for a commodity This validates that a want or a desire doesn't develop into a demand except it is supported by the ability and willingness to acquire it. For example, a
Statistical technique used to estimate economic variable Some statistical techniques are used to estimate economic variables of interest to a manager. In a number of cases, sta
Explain about the equilibrium in the labor market. Equilibrium into the Labor Market: All of firm will hire labor up to the point at that the value of the marginal product o
State the Specific Time of demand Demand should be assigned specific time. For instance, it is an incomplete proclamation to state that demand of air conditioners is 4,000 at t
Real Rigidities in the Goods Market The most important factor associated with real rigidity in the goods market is the existence of imperfect competition. Imperfect comp
Q. Explain the Short run production function? Discussion of production up to now has ignored the time required to build production facilities. There is a requirement to take in
Problem 1: All economies of the world can be said to be ‘mixed', to a greater or lesser degree, in that there is no economy where there is no state activity and no economy wher
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