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Tejvan Pettinger Readers Question: What factors determine the wage that someone receives? Basic economic theory suggests that wages depend on a worker’s marginal revenue productMRP. (this is basically the value that they add to the firm which employs them.) MRP is determined by two factors: MPP – Marginal physical product...

The Harrod-Domar Growth Model: The aggregate production function—which is the main pillar of every growth theory—can take different forms, depending on the actual relationship between the factors of production (K and L) and aggregate output. The Harrod- Domar model is based on the simple fixed-coefficient pro­duction...

The natural or (equilibrium) level of unemployment is determined by calculating the level of unemployment when the labour market is in equilibrium. Diagram Showing Natural Rate of Unemployment The labour force includes everyone of working age who is either working or looking for work. The Aggregate Supply (AS)...

Tejvan Pettinger A list of different types of economic goods. Income elasticity of demand and types of goods Income elasticity of demand (YED) measures the responsiveness of demand to a change in income. Normal good A normal good means an increase in income causes an increase in demand. It has a positive...

Since 1991, the Indian economy has pursued free market liberalisation, greater openness in trade and increase investment in infrastructure. This helped the Indian economy to achieve a rapid rate of economic growth and economic development. However, the economy still faces various problems and challenges, such...