During the Industrial Revolution, it became obvious that the ways companies operated their businesses had to drastically change. While many people were in agreement that change was inevitable, pioneers in management theory differed in how they believed things should change and operate. Principles or theories of management are generally organizational principles used as a guideline for … Read more
What is Average Cost (AC) Average cost is the total cost of production divided by the quantity of output produced. It gives an indication of the cost per unit of output. The average cost curve typically exhibits a U-shaped pattern. In the early stages of production, average costs are relatively high due to spreading fixed … Read more
The concepts of Average Revenue (AR) and Marginal Revenue (MR) stand as important metrics and play a role in shaping pricing strategies and influencing the output decisions of firms across various market structures. Average Revenue represents the revenue generated per unit of output sold, whereas Marginal Revenue represents the additional revenue generated from selling one … Read more
Absorption costing and marginal costing are two different methods of costing that are used to calculate the cost of a product or service. While both methods are used to calculate the cost of a product, they differ in the types of costs that are included and the purposes for which they are used. The differences … Read more
What Are Explicit Costs? Explicit costs refer to the direct, tangible, and measurable expenses incurred by a firm or individual in the course of conducting business or carrying out an activity. These costs involve actual monetary transactions where money is paid or assets are exchanged. Explicit costs are easily accounted for and are recorded in … Read more
What Is Monopoly? A monopoly is a market structure characterized by a single seller, producing and selling a unique product in the market. It is fair to say that such a firm constitutes the entire industry and there is no distinction between the firm and the industry. In a monopoly market structure, the seller faces … Read more
From the word gross domestic product (GDP), the word ‘’gross’’ means that the GDP measures production regardless of the various uses to which the product can be put whereas ‘’Domestic’’ means that the measurement of GDP contains only products from within its borders. Therefore, gross domestic product (GDP) can be described as the aggregate of … Read more
What Is Total Utility? Total utility refers to the overall or total level of happiness or satisfaction that a consumer experiences by consuming a certain amount of a good or service. Total utility is usually measured in relative units referred to as utils. When measuring total utility, analysis can span from one unitofconsumption to multiple … Read more
Both bill of exchange and promissory note are known as negotiable instruments. A negotiable instrument is a document guaranteeing the payment of a specific amount of money to a specified person (the payee). It requires payment either upon demand or at a set time and is structured like a contract. A negotiable instrument can be … Read more
What Is Cardinal Utility Approach? Cardinal utility approach is propounded by neo-classical economists and is based on the assumption that the satisfaction or utility derived from consumption of a particular good and service is measurable and can be expressed cardinally or in absolute numbers. The concept Cardinal utility approach to consumer behavior was first pioneered … Read more