Monopoly and Profits

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Monopoly and Profits So far we assumed that the employer is working under conditions of competition. Under perfect competition, there are no profits in the long-run. Profits must. therefore, be either temporary or monopoly profits. The monopolist is able to control output so that the price is not allowed to fall to the level of cost, as is the case under […]

Normal Profit

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Normal Profit Some writers introduce the concept of normal profits. As Prof. Knight points out, normal profits, belong to the equilibrium state, or to the state in which changes are taking place which can be anticipated and calculated. Of course, it is difficult to imagine a world entirely devoid of change. But we can have societies, specially old established societies, in […]

Conclusion Regarding Theories of Profit

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Conclusion Regarding Theories of Profit We have discussed above the various theories of profits. The question arises: which theory shall we accept? How do profits arise? Here we are thinking of not gross profit but net profit. The fact is that in the real world there are several causes which give rise to profit, but the principle cause is uncertainty. […]

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Uncertainty-bearing Theory of Profits The Theory. According to Prof. knight, it is uncertainty bearing rather than risk-taking which is the special function of the entrepreneur and leads to profit. We’ have seen that there are certain risks which are foreseen and provided against. Risks of death and of accident like fire and ship sinkings are statistically determinable. Their incidence is measurable. […]

Innovations Theory of Profits

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Innovations Theory of Profits In the dynamic changes, which give rise to profits according to the dynamic theory of profits, Joseph Schumpeter has singled out for special treatment the part played by innovations. The daring and the dynamic entrepreneurs continue to hit at one innovation or another. keeping their business ahead of others and thus make a handsome profits. According […]

Dynamic Theory of Pro

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Dynamic Theory of Pro No I»rulil ill Slates Mary tate, This theory is associated with the name of the American economist, 1. B. Clark. He says that in a tatic world, where tile size of the population, the amount of capital, tile quantity and quality of human wants, the methods of production. technical knowledge, the organisation of business, etc., remain the […]

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THE MARXIAN THEORY A~ Prof. Kaldor observes, the Marxian theory is an adapt.ruon uf Ricardo’s surplus theory. According tv Marx, tltl’ value of a commodity is determined by thl’ labour-time necessary for its production. But labour produces more than the value of its labour power i.e. more than what is necessary for maintaining the minimum subsistence standard. Silence a surplus emerges […]

KAlECKi’S ‘DEGREE OF MONOPOLY’ THEORY

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KAlECKi’S ‘DEGREE OF MONOPOLY’ THEORY  According to Kalki, the distribution of national income into profits and wages depends upon the degree of monopoly in the economy. The degree of monopoly of a JIlin is measured h) ‘I’-a) which is the difference between the price of the HOUNd and the average cost on manual labour and Ia materials per unit of output, This […]

Modem Concept of Profit

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Modem Concept of Profit  I. Ects  An Economists takes into account the gross prolit as the surplus obtained over and above the average cost. In other words hc takes into account. TR = OP Price Per unit x OQ quantity Wid, TC = OR Cost per unit x OQ quantity sold; Where TR = Total revenue and TC […]

DO PROFITS TEND TO EQUALITY?

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DO PROFITS TEND TO EQUALITY? Here again, we cannot give a straight answer. It will depend upon the conditions that prevail. In a state of equilibrium, profit in the sense of wages of superintendence will be equalised. Pure profit will disappear. Absence of Uncertainty, In a state of society, in which change is present but the factor of uncertainty i~ absent, […]