Economics with Insight

CONCEPT OF POVERTY & VICIOUS CIRCLE OF POVERTY Meaning of poverty:- In simple terms, poverty is not having enough money or access to resources to enjoy a decent standard of living; be that the lack of access to healthcare, education or sanitation facilities, etc. The simplest definition of being poor is ‘being unable to subsistence’ that is, being unable to eat, drink, have shelter and clothing. Types of poverty:- Primary poverty means not having enough money to meet basic needs, it can also be considered as ‘living below the poverty line.’ Secondary poverty is when people earn just enough money to afford the necessities but spend part of it on “coping mechanisms” to deal with financial and work-related stress (high risk and/or difficult working conditions due to abuse and long hours) and therefore end up struggling to make ends meet. Absolute poverty is when we consider every poor person as equal. The general definition of poverty which is valid at...

Marxist Theory Marx is regarded as the father of history (scientific socialism) who prophesied the decline of capitalism and the advent of socialism.   He is considered a great thinker of history. His famous book ‘ Das Kapital’  is known as the Bible of socialism (1867). He presented the process of growth and collapse of the capitalist economy.   He expected capitalistic change to break down because of sociological reasons and not due to economic stagnation and only after a very high degree of development is attained. “Marxism is a religion. To an orthodox Marxist, an opponent is not merely in error but in sin”. -Prof. Schumpeter wrote, According to Marx, human civilization has manifested itself in a series of organizational structures, each determined by its primary mode of production, particularly the division of labor that dominates in each stage. In Marxian theory, production means the generation of value. Thus economic development is the process of mor...

1. Which of the following will be true for both monopoly and monopolistic competition in the short run? (1) Price is greater than marginal revenue. (2) Price is equal to marginal revenue. (3) Price is equal to marginal cost. (4) Price is equal to average cost. 2. Consider the following matrix which describes the respective strategies and the corresponding pay-offs of firms A and B operating in a duopoly: Which of the following statement(s) is/are true for the above game? Select the correct answer from the codes given below: (a) Firm A has no dominant strategy. (b) Firm B has a dominant strategy. (c) The game has a Nash equilibrium. (d) Neither Firm A nor Firm B has a dominant strategy. Code: (1) (a), (c) (2) (b), (c) (3) (d) Only (4) (a), (b) and (c) 3. In the context of oligopoly, consider the following statements: (a) Cournot’s equilibrium is a Nash equilibrium. (b) Stackelberg equilibrium is a Nash equilibrium. Select the correct ...

Meaning:   Economic integration is a process whereby countries in a geographical region (location) cooperate with one another to reduce or eliminate barriers to the international flow of products, people, or capital. It can be of served forms with different degrees of integration. ACCORDING TO SALVATORE’S “Commercial policy of discriminatively reducing or eliminating trade barriers only among the nations joining together” Note: Therefore it refers to a decision or process whereby two or more countries combine into  a larger economic region by removing discontinuities and discriminations existing along national frontiers, and by establishing certain elements of cooperation between them. ON THE BASICS OF COOPERATION WE HAVE THE FOLLOWING TYPES OF ECONOMIC INTEGRATIONS. 1. P referential trading system/Preferential trade arrangements (PTA). 2. Free trade area (FTA). 3. Customs union (CU). 4. Common market. 5. Economic Union (EU). 1. PREFEREN...

On February 27, 2017 Government of India notified the  Specified Bank Notes (Cessation of Liabilities) Act 2017.The Act repealed the Specified Banknotes (Cessation of liabilities) Ordinance 2016 providing for cessation of liabilities for the Specified Banknotes (SBNs) and for matters connected therewith and incidental thereto, with effect from December 31, 2016. The SBNs cease to be the liabilities of the Reserve Bank under Section 34 of the RBI Act and cease to have the guarantee of the Central Government. A grace period has been provided during which the Specified Bank Notes can be deposited at five RBI Offices (Mumbai, New Delhi, Chennai, Kolkata, and Nagpur by Indian citizens who make a declaration that they were outside India between November 9 and December 30, 2016, subject to conditions or any class of persons for reasons that may be specified by notification by the Central Government. The Reserve Bank, if satisfied after making the necessary verifications, that the re...

Personality at a Glance Antoine Augustin Cournot Born:  28 August 1801 Died:  31 March 1877 Known for:  Cournot competition, Oligopoly                                Antoine Augustin  Cournot  was a French  philosopher, mathematician, and economist  who contributed to the development of economic theory.   The oldest determinate solution to the duopoly problem is by the French economist Antoine Augustin Cournot  in  1838  who took the case of two mineral water springs situated side by side and owned by two firms A and B.   Assumptions: This model is based on certain assumptions which are as follows - Interdependence-There are two independent sellers. In other words, the interdependence of the Duopolists is ignored. Homogeneous product-They produce and sell a homogeneous product, mineral water. Perishable good-The total outpu...