Price is the value of the good expressed in terms of money. Price of a good is fixed
by the forces of demand for and supply of the good. Price determines what goods are to be produced and in what quantities.It also decides how the goods are to be produced.
Generally, market means a place where
commodities are bought and sold.But, in Economics, it represents where buyers and sellers enter into an exchange of goods and services over a price.
Cost refers to the expenses incurred to
produce or acquire a given quantum of a
good. Together with revenue, it determines
the profit gained or the loss incurred by a
Revenue is income obtained from the sale of goods and services. Total Revenue (TR)
represents the money obtained from the sale of all the units of a good. Thus,TR = P × Q, where TR is Total Revenue;P is the price per unit of the good; and,Q is the Total Quantity of the goods sold.
a. Stable Equilibrium:
Prof. Stigler states that“equilibrium is a position from which there is no net tendency to move”. Its absence is referred to as disequilibrium.Consumer’s equilibrium occurs when he gets maximum satisfaction.
The equilibrium of the Producer occurs when he gets maximum profit. A resource is in Equilibrium when it gets fully employed and gets its maximum payment. Thus, static
equilibrium is based on given and constant prices,quantities,income,technology, population etc.
b. Particular Equilibrium and General
An equilibrium, when it pertains to a
single variable, may be called particular equilibrium. An equilibrium, on the other
hand, when it relates to numerous variables or even the economy as a whole,may be called general equilibrium.
Income represents the amount of monetary or other returns, either earned or unearned small or big, accruing over a period of time to an economic unit. Nominal income refers to income, expressed in terms of money. It is termed as the money income.
Real income is the amount of goods that can be purchased with money as income. It is the purchasing power of income which is based on the rate of inflation.