Hicksian Method of Decomposition of Price Effect
This method is used to decompose the price effect (PE) into substitution effect (SE) and income effect (IE), in which we keep the real income constant (i.e. IE = 0). Hicks defines real income as…
Price Effect, Substitution Effect and Income Effect in Consumer Demand
1. Price Effect (PE) Price Effect भन्नाले कुनै वस्तुको मूल्य परिवर्तन हुँदा त्यस वस्तुको माग हुने मात्रामा आउने कुल परिवर्तन हो। मूल्य घट्यो भने → सामान्यतया माग बढ्छमूल्य बढ्यो भने → सामान्यतया माग घट्छ Price…
Basic Issues & Challenges of Population Growth
There are some conflicting views on the role of population in economic development. Traditionally, it was argued that a small population size is better, and population growth should be controlled. For example, Aristotle and Plato…
Why cannot both of the commodities be inferior at the same time? What happens if both are inferior?
Q. Why cannot both of the commodities be inferior at the same time? What happens if both are inferior? Answer: Under the classical consumer’s equilibrium model, both commodities can not be inferior at the same…
Consumer’s Equilibrium Under IC Approach
Equilibrium = It is the state of rest, which means no tendency to change. A consumer is said to be in equilibrium if s/he has maximized utility under the given constraints. To explain the consumer’s…
Inequality Concept and Measurement
Inequality is the uneven or unequal distribution of income, opportunities, access, resources, etc. It means the different individuals or households or the community have unequal distribution or shares in the variable under consideration is known…
Poverty – Concept and Measurement of Poverty in Nepal
Concept of Poverty → There is no unique definition of poverty, but generally, poverty is defined as a situation in which an individual, household, or community is not able to maintain a minimum standard of living…
Determinants of Economic Growth
Old Question: Q) What is economic growth? Explain its determinants. [2081 NRB Officer] Economic growth is defined as the change in the aggregate real output/income of the economy. Generally, the changes in real GDP is…
Structure and Characteristics of Developing Economies
Reference Book – M.P. Todaro – Economic Development The term developing economies is more commonly used in economic literature to represent those countries that are trying to develop their economy and achieve the status of…