Econometrics And Econometricians December 01, 2021

Revenue curves under Different markets

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Broadly markets are of three types as follows: 1. Perfectly competitive market 2.Monopoly market 3.Monopolistic competitive market 1.Revenue curve under perfectly competitive market or Perfect competition: Under perfect competition, a firm is a price taker. It cannot influence /change the market price. AR and MR curve 2. Revenue Curve Under Monopoly: A monopolist is a price maker. He is the single seller of the product in the market. Under monopoly, however, if a firm desires to sell more , he has to reduce price of the product. Thus, there is  negative relationship  between price of the product na ddemand for the product in a monopoly market. Accordingly, a Firm’s AR curve (or the demand curve or the priice line) slopes downaward.  3. Revenue Curve Under Monopolistic Competition: In a Monopolistic Competitive market, producers sell “differentiated product” which means products whose close substitutes are easily available in the market. Under Monopolistic Compet...
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Why is Econometrics regarded as a separate discipline?

Econometrics is the combination of three subjects: mathematics, statistics, and economics. Using the notations, and models from mathematics; tools from statistics ; and theoretical background of economics - it quantifies the relationship between economic variables. This is why it is considered as a separate discipline.

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Revenue curves under Different markets

Image
Broadly markets are of three types as follows: 1. Perfectly competitive market 2.Monopoly market 3.Monopolistic competitive market 1.Revenue curve under perfectly competitive market or Perfect competition: Under perfect competition, a firm is a price taker. It cannot influence /change the market price. AR and MR curve 2. Revenue Curve Under Monopoly: A monopolist is a price maker. He is the single seller of the product in the market. Under monopoly, however, if a firm desires to sell more , he has to reduce price of the product. Thus, there is  negative relationship  between price of the product na ddemand for the product in a monopoly market. Accordingly, a Firm’s AR curve (or the demand curve or the priice line) slopes downaward.  3. Revenue Curve Under Monopolistic Competition: In a Monopolistic Competitive market, producers sell “differentiated product” which means products whose close substitutes are easily available in the market. Under Monopolistic Compet...
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Problem of Deficient Demand: Measures to correct it

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Deficient Demand (Deflationary Gap) It refers to a situation when at full employment income level, AD<AS. In other words, when the planned AD is less than AD which is required to achieve full employment equilibrium, it is called deficient demand and it gives rise to deflationary gap. When deficient demand exists, economy’s income, output and employment decline thus pushing the economy into under-employment equilibrium. Impact of Deficient Demand Deficient demand decreases the level of output , National Income and price level in the economy because when AD<AS, there is less demand for inputs than actually available. As a result, prices of inputs start falling. This creates deflationary situation in the economy.   Measures to Correct Deficient Demand Fiscal Policy Measures Following are the measures to correct Deficient Demand/Deflationary Gap: (a) Decrease in Taxation: When the tax rate is decreased, more money will be available in the hands of people to spend. Purchasin...
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