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Posts Tagged ‘Economics’

What is the difference between Accounting and Economics degrees?
- I’m an economics major..but i hear that accounting majors take many of the same classes as I do. I also hear that economics majors can get the same jobs as accounting majors….
is this true? if this is true, that would be great because you always see ads that say “accountants needed”, but not really “economist needed”.

If the price of one commodity (x) changes a new set of combinations (x, y) is created between the changing tangents of the budget line and indifference curves forming the ‘price-consumption curve’ for the commodity (x) – assuming constant income and prices of the other commodity (y). The price-consumption curve shows how much of a commodity (x) is purchased if its price changes – assuming constant income and constant prices for the other good (y).

Economics, social science concerned with the production, distribution, exchange, and consumption of goods and services. Economists focus on the way in which individuals, groups, business enterprises, and governments seek to achieve efficiently any economic objective they select. Other fields of study also contribute to this knowledge: Psychology and ethics try to explain how objectives are formed; history records changes in human objectives; sociology interprets human behavior in social contexts.

Standard economics can be divided into two major fields.

• The first, price theory or microeconomics, explains how the interplay of supply and demand in competitive markets creates a multitude of individual prices, wage rates, profit margins, and rental changes. Microeconomics assumes that people behave rationally. Consumers try to spend their income in ways that give them as much pleasure as possible. As economists say, they maximize utility. For their part, entrepreneurs seek as much profit as they can extract from their operations.
• The second field, macroeconomics, deals with modern explanations of national income and employment. Macroeconomics dates from the book, The General Theory of Employment, Interest, and Money (1935), by the British economist John Maynard Keynes. His explanation of prosperity and depression centers on the total or aggregate demand for goods and services by consumers, business investors, and governments. Because, according to Keynes, inadequate aggregate demand increases unemployment, the indicated cure is either more investment by businesses or more spending and consequently larger budget deficits by government.

The concept of elasticity of demand is very important in economic theory and policy. It is used to measure the effect of changes in price on quantity demanded. It is known that according to the law of demand, if price decreases the demand increases and if price increases the demand falls.
The quality of demand to change with changes in price is called the elasticity of demand.

By definition, then, the elasticity of demand is the rate at which the quantity demanded changes in response to a change in price.
Its formula is: Ed = percentage change in quantity demanded/percentage change in price.

This rate of change in demand varies according to commodities, market and consumers. At times a small change in prices has a big effect of demand. This phenomenon is called elastic demand. This effect is usually seen when consumers have more buying options. There are also situations when a large change in price has a small effect of demand. This is called inelastic demand. Commodities like basic food items like salt tend to show inelastic demand.

A perfect elastic demand exists when demand increase with no change in price. This is called infinite elasticity. A situation of zero elasticity result when lowering the price does not increase the demand.