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I studied PPE at Lady Margaret Hall college, Oxford University, and currently work as an Economics A Level teacher. I have also examined several different economic units for Edexcel AS and A2.
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Law of demand simply states that there is opposite correlation between
Price and Demand of a quantity in case other things remain same and assumption is that
Consumer is rational. Like us everyone want more happiness. This happiness in utility. With less price he can get more utility and he can get more with same money. But is not ultimate law. Unlike law of gravity it does not apply on every situation. For example, in America before credit crunch more houses were being sold at high rate than after credit crunch when houses rate were comparably low. It is law based on psychological behaviors of human being. Law is based on three ideas-(1) Consumer is Rational. With low price he can get more utility. (2) With decreasing rate more money is available for that commodity. (3) Some things are alternative to each other. So user can switch from one to other. Another fact, some people may buy something at low rate just for profitability. So they can sell it at high rate. But these people are not consumers. But it is very important law and one of main fundamental of economics. Commodities may be alternative to each other. Coffee and Tea may be considered alternative to each other. If Coffee rate decreases 20% but tea rate decreases 50%, it may possible demand of Tea increases, but despite rate of Coffee decreases, its demand also decreases . There other things not remained same, so law of demand does not apply on Coffee.
Like law of general relativity it is law of general consumer not for special like special relativity
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Iits realy usefull for people who related with economics
Hi
There is problem of trade imbalance. Main problem lies in labor costs. Labor costs is a big component in production in western countries. But China or India has cheap labor.
So Production in these country is more profitable and cheap. So governments cannot sleep just trusting in the concept of liberal trade. Second trade balance problem may be grown due to crude oil. It would touch new heights in future. So it would also create huge trade deficit. Crude oil reserve are decreasing in America and Scotland.
ok
Hello
Do the income in real term and purchase power parity have the same meaning? If not, how do we distinguish them?
thanks
A country which decides to join a Monetary Union expects an increased ability to stabilize its output around the full employment level and keep inflation low compared with its initial ability under flexible exchange rates. is this true or false? why is that?
True or False? – It is impossible for a country to run both current account surplus and capital account surplus in the same year.
Hi.
I was just wondering what you think the government ought to do to rectify the trade imbalances we have seen in recent years (i.e. importing a lot from China and maxing out the country’s credit card). Do you think it would be beneficial to pursue a protectionist approach to international trade – at least taxing imports to encourage domestic production, but not taxing any exports. Would this help to fix the problem or would it have unforeseen effects elsewhere in the economy? What would the overall effect be in the long term?
Thanks