Supply:
Supply of any commodity refers to various amounts of the commodity which the sellers are willing to sell at different possible prices at any given time.
Please refer to later chapters for complete understanding of the concepts of Supply and Demand.
Production:
Production, as commonly understood, refers to creation of something tangible, which can be used to satisfy human want. The process of addition of utilities to the existing matter by changing its form, place and keeping it over time is referred to as Production in Economics. Technologically conversion of inputs into outputs is production. We need Land, Labour, Capital and organization to undertake production. These four are called Factors of Production.
Distribution:
The term distribution in Economic Theory refers to the sharing of the wealth produced in the community among the various factors of production. These rewards to the factors are known by Rent for Land, Wages for Labor, Interest for Capital and Profits for the organization.
However, in general, the term distribution is loosely used to denote the process by which the goods and services produced are made to reach, through different stages to the final consumers.
Consumption:
Consumption, in Economics implies destruction or use of utilities for satisfying human wants. As consumer starts consuming unit after unit of a commodity his total utility or satisfaction goes on increasing but at the diminishing rate. This continues until total utility is the maximum and marginal utility is minimum ultimately reaching zero.
If the price of the commodity is to be considered, then he will consume it until its marginal utility equals the price of the commodity.
Thus,
MU X = Price of X
The consumer in reality consumes a variety of commodities and at that stage will consider price of each commodity as well as total income at his disposal. The Law of equi-
MU indicates that,
MUx /Px = MUy/Py = MUz/pz
Supply of any commodity refers to various amounts of the commodity which the sellers are willing to sell at different possible prices at any given time.
Please refer to later chapters for complete understanding of the concepts of Supply and Demand.
Production:
Production, as commonly understood, refers to creation of something tangible, which can be used to satisfy human want. The process of addition of utilities to the existing matter by changing its form, place and keeping it over time is referred to as Production in Economics. Technologically conversion of inputs into outputs is production. We need Land, Labour, Capital and organization to undertake production. These four are called Factors of Production.
Distribution:
The term distribution in Economic Theory refers to the sharing of the wealth produced in the community among the various factors of production. These rewards to the factors are known by Rent for Land, Wages for Labor, Interest for Capital and Profits for the organization.
However, in general, the term distribution is loosely used to denote the process by which the goods and services produced are made to reach, through different stages to the final consumers.
Consumption:
Consumption, in Economics implies destruction or use of utilities for satisfying human wants. As consumer starts consuming unit after unit of a commodity his total utility or satisfaction goes on increasing but at the diminishing rate. This continues until total utility is the maximum and marginal utility is minimum ultimately reaching zero.
If the price of the commodity is to be considered, then he will consume it until its marginal utility equals the price of the commodity.
Thus,
MU X = Price of X
The consumer in reality consumes a variety of commodities and at that stage will consider price of each commodity as well as total income at his disposal. The Law of equi-
MU indicates that,
MUx /Px = MUy/Py = MUz/pz
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