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--- a/README.md
+++ b/README.md
@@ -23,6 +23,7 @@ Thanks goes to these wonderful people ([emoji key](https://allcontributors.org/d
Aravind S
đ |
milandeepak
đŹ đ |
H Athulkrishnan
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+ 
Namitha S
đ |
diff --git a/src/WikiSyllabus/KTU/2019_Scheme/S6/CSE/HUT300/1_module1.md b/src/WikiSyllabus/KTU/2019_Scheme/S6/CSE/HUT300/1_module1.md
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+# Module 1
+
+## 1. Introduction to Economics
+
+The term "Economics" is derived from the Greek word "IOKONOMIA," meaning household management. Adam Smith, known as the Father of Economics, introduced the seminal work "Wealth of Nations" in 1776. Economics examines how society and individuals allocate limited resources to meet unlimited wants. Business Economics, a specialized branch, applies economic concepts, methods, and theories to solve practical business problems and to make informed business decisions.
+
+## 2. Problem of Scarcity
+
+Scarcity refers to the condition where society's productive resources are insufficient to satisfy all human wants and needs. At any given time, only a limited amount of goods and services can be produced.
+
+## 3. Basic Economic Problems
+
+**Primary Concern: Scarcity of Resources (Limited Resources and Unlimited Wants)**
+
+The basic economic problems, or central problems in an economy, are as follows:
+1. The Problem of Allocation of Resources
+2. The Problem of Fuller Utilization of Resources
+3. The Problem of Growth of Resources
+4. The Problem of Efficiency
+
+### 3.1 The Problem of Allocation of Resources
+
+The main concerns are:
+1. **What to Produce?**
+ - Produce according to the current needs of the economy.
+2. **How to Produce?**
+ - Use labour-intensive or capital-intensive methods, depending on price and availability.
+3. **For Whom to Produce?**
+ - Produce for society and households.
+
+### 3.2 The Problem of Fuller Utilization of Resources
+
+- Optimal usage of limited resources.
+- Avoid wastage.
+- Use scarce resources efficiently to maximize productive capacity.
+
+### 3.3 The Problem of Growth of Resources
+
+- Aim to improve the standard of living.
+- Strive for economic growth.
+- Achieve growth through technological advancements, which increase the resource limit.
+- Technological advancements lead to greater economic growth.
+
+### 3.4 The Problem of Efficiency
+
+- Ensure efficient usage of resources.
+
+
+## 4. Production Possibility Curve
+
+- PPC is a curve which shows various combinations of 2 goods, which can be produced
+with a given amount of resources and technology
+- It is also known as production boundary or production frontier
+
+#### Assumptions :
+1. Only 2 commodities are produced
+2. Latest technology
+3. Fuller utilisation of resources
+
+#### Consider the example of two goods X and Y
+| Production Possibility | Good X | Good Y |
+|------------------------|--------|--------|
+| P | 0 | 21 |
+| A | 1 | 20 |
+| B | 2 | 18 |
+| C | 3 | 15 |
+| D | 4 | 11 |
+| E | 5 | 6 |
+| P' | 6 | 0 |
+
+
+
+
+- Any point on PPC shows fuller utilisation of
+resources (P,A, B, C, D, E, P')
+- Any point above or beyond PPC > point cannot be
+attained, beyond the scope (G)
+- Any point below the PPC shows the under
+utilisation of resources (F)
+
+#### Features of PPC
+
+PPC is downward slopping curve and concave in
+shape shows resources are transferred from one
+use to other use, thatâs why it is known as
+transformation curve.
+
+- **PPC slopes downward:** Production of one
+good can be increased only after sacrificing
+production of some quantity of the other
+good.
+
+- **PPC is concave to the origin:** A production
+possibility curve is concave to the point of
+origin because of increasing marginal rate of
+transformation (MRT) or increasing marginal
+opportunity cost (MOC).
+MRT or MOC is the opportunity cost of
+good X gained in terms of good Y given up.
+
+- Concave shape of PPC means that slope of PPC
+increase which implies that MRT increases. It means that for producing an additional unit of
+a good, sacrifice of units of other good (i.e.
+opportunity cost) goes on increasing.
+
+ **Slope of PPC = ÎY / ÎX
+ = Amount of Good Y lost / Amount of Good X gained
+ = MRT or MOC**
+
+#### Shifts in PPC
+
+
+
+
+With the discovery of new stock of resources or an advancement in technology, the productive
+capacity of an economy increases.
+
+- **PPC will shift to the right when:**
+ - New stock of resources is discovered.
+ - There is advancement in technology.
+
+- **PPC will shift to the left when:**
+ - Resources are destroyed because of national calamities like earthquakes, fires, wars, etc.
+ - There is use of outdated technology.
+
+
+## 5. Firms
+A firm is a for-profit business organizationâsuch
+as a corporation, limited liability company (LLC),
+or partnershipâthat provides professional
+services.
+
+### Objectives of Firms
+1. Profit maximisation
+2. Sales maximisation
+3. Increased market share/market dominance
+4. Social/environmental concerns
+5. Co-operatives â Welfare oriented
+
+### Types of Firms
+1. **Sole Proprietorship or Sole Trader** : It is owned by one person, who is liable for all costs and obligations, and owns all assets.
+
+2. **Partnership** : It is a business owned by two or more people; there is no limit to the number of
+partners that can have a stake in ownership. A partnership's owners each are liable for all business obligations, and together they own everything that belongs to the business.
+
+3. **Corporation** : Owners of a corporation are not liable for any costs, lawsuits, or other obligations of the business. A corporation may be owned by individuals or by a government. A firm that is owned by multiple people is often called a company.
+
+4. **Financial Cooperative** : It is similar to a corporation in that its owners have limited liability, with the difference that its investors have a say in the company's operations
+
+
+## Law of Diminishing Marginal Utility
+
+**The law states that as a consumer consumes more and more units of a commodity the
+marginal utility goes on diminishing.**
+
+For example, a boy eats 5 ice creams. 1st ice cream has more satisfaction. After 2nd and 3rd satisfaction will start decreasing. It will eventually reach negative.
+
+- **Utility** : The want satisfying capacity of a commodity is known as utility. It is
+expressed in Utils. Utility is a cardinal concept i.e., it can be measured. Benham formulated the unit of measurement of utility as utils.
+
+- **Total Utility ( TU)** : TU refers to the total satisfaction derived by the consumer from the
+consumption of a given quantity of a commodity.
+
+**TUn = MU1 + MU2 + .....+ Mun**
+
+- **Marginal Utility (MU)** : MU refers to the additional utility derived by the consumer from the
+consumption of an additional unit of a commodity
+
+**MU = TU n â TU n-1**
+
+**MU = d(TU) / d(Q)**
+
+#### Assumptions
+1. Commodify consumed as identical and standard size
+2. No time gap between consumption
+3. Consumers taste and preferences remain constant
+4. Consumer is rational
+5. Commodity should be normal, Not intoxicant like alcohol
+6. Consumers income is constant
+
+| No.of ice creams | TU | MU |
+|------------------|---------|--------|
+| 1 | 10 | 10 |
+| 2 | 18 | 8 |
+| 3 | 24 | 6 |
+| 4 | 28 | 4 |
+| 5 | 30 | 2 |
+| 6 | 30 | 0 |
+| 7 | 28 | -2 |
+
+
+
+
+- STAGE 1 > Increasing Returns
+ - TU , MU increases at an increasing rate
+- Stage 2 > Diminishing Returns
+ - MU starts falling
+ - TU increases at a diminishing rate
+ - At the end of second stage , MU reaches zero
+and TU reaches at its maximum (Point M )
+- Stage 3 > Negative Returns
+ - After point M, MU becomes negative
+ - TU starts falling
+
+- When Marginal utility is postive, Total Utility increases
+- When Marginal utility is 0, Total utility is Maximum
+- When Marginal utility is negave, Total Utility decreases
+
+#### Consumer Equilibrium
+
+According to DMU ,the consumer reaches
+equilibrium when MU of last unit is equal to
+price of the commodity
+
+When he consumes only one commodity :
+**MU = PRICE**
+
+When he consumes more than one commodity ( Consumes Goods X , Y , Z) - Law
+of Equi-Marginal Utility :
+**MUx/Px = MUy/Py = MUz/Pz .......... MUn/Pn**
+
+## 6. Demand
+
+**Demand is the desire backed by the ability
+and willingness to pay for a commodity.**
+
+**Demand for a commodity : it refers to the quantity of a commodity demanded in the market in a given period of time at a given price.**
+
+### Factors for Demand
+
+1. **Price of the commodity**
+ - Inverse relationship between demand and price.
+ - Price Increases, Demand Decreases.
+
+2. **Income of the consumer**
+ - Positive relation between income and demand.
+
+3. **Price of related goods**
+ - If two goods are related, the price of one commodity will affect the demand for another commodity.
+ - **Substitutable Commodities**: One can be substituted for the other. Example: Tea and coffee. If the price of tea increases, more people will drink coffee.
+ - **Complementary Commodity**: Increase in price of X decreases demand of Y. Example: Petrol and Cars. If petrol price increases, demand for cars decreases.
+
+4. **Taste and preferences of consumer**
+5. **Advertisement**
+6. **Climatic Conditions**
+7. **Consumer Expectations**
+8. **Population**
+
+
+### Law of Demand
+**The law states that other things remaining the same, price and quantity demanded of a commodity are inversely proportional**
+
+#### Exceptions of Law of Demand
+1. Veblen Goods - Luxury goods
+2. Giffen Goods - Affordable goods that are not essential for daily life
+3. Speculative goods - Assets that are purchased with the hope of selling them at a higher price in the near future
+4. Necessities of life
+
+#### Demand Schedule
+| Price(per kg) | Quantity Demanded | Reference Point |
+|------------------|---------|--------|
+| 20 | 6 | A |
+| 30 | 5 | B |
+| 40 | 4 | C |
+| 50 | 3 | F |
+
+
+
+
+### 2 types of changes in Demand curve
+1. **Movement: Change in Quantity Demanded**
+
+ A movement along the demand curve is caused by a change in the price of the good, other things remaining constant. It is also called change in quantity demanded of the commodity.
+
+ Movement along a demand curve can bring about:
+
+ a. Expansion or Extension of demand refers to rise in demand due to fall in the price of the good.
+
+ b. Contraction of demand refers to fall in demand due to rise in the price of the good.
+
+ 
+
+
+2. **Shift: Change in Demand**
+
+ A shift of the demand curve is caused by changes in factors other than price of the good. A change in factors causes shift of the demand curve. It is also called change in demand.
+
+ A shift of the demand curve can bring about :
+
+ a. Increase in Demand - It refers to more demand at a given price. The causes of increase in demand are: (i) Increase in the income of the consumers in case of normal goods. (ii) Decrease in the income of the consumers in case of inferior goods. (iii) Increase in the price of substitute goods. (iv) Fall in the price of complementary goods. (v) Consumer's taste becoming stronger in favour of the good
+
+ b. Decrease in Demand - It refers to less demand at the given price. It occurs due to unfavourable changes in factors other than the price of the good.
+
+ 
+
+### Elasticity of Demand
+
+It refers to the degree of responsiveness change in quantity demanded of a commodity due to change in price or any other factors.
+3 types of Elasticity : Price, Income and Cross
+
+**1. PRICE ELASTICITY**
+
+It refers to the degree of responsiveness change in qty demanded of a commodity due to change in price.
+
+
+Types of price elasticities of Demand :
+
+**1. Perfectly elastic demand**
+ - With a small change in price there would be an infinite change in qty demanded. It is an ideal and imaginary situation.
+ - Elasticity = infinity
+ -
+ 
+
+
+**2. Perfectly inelastic demand**
+ - With a small change in price there would be no change in qty demanded. It exists in case of essentials like life saving drugs.
+ - Elasticity = 0
+ -
+ 
+
+
+**3. Unit elastic demand / Unitary elastic demand**
+ - With a given change in price there would be an equal and proportionate change in qty demanded for the commodity. It exists in case of normal goods.
+ - Elasticity = 1
+ -
+ 
+
+
+**4. Elastic demand / More elastic demand**
+ - With a given change in price there would be a more than proportionate change in qty demanded of the commodity. It exists in case of luxuries.
+ - Elasticity > 1
+ -
+ 
+
+
+**5. Inelastic demand / Less elastic demand**
+ - With a given change in price there would a less than proportionate change in qty demanded of the commodity. It exists in case of necessities like food, fuel, etc.
+ - Elasticity < 1
+ -
+ 
+
+
+### Price elasticity of demand: Measurement using Percentage Method
+
+ Td = Percentage change in Quatity demanded / Percentage change in price
+
+ Td = (ÎQ/ÎP) * (P/Q)
+
+Percentage method is also called proportionate method. The absolute value of the coefficient of elasticity of demand ranges from zero to infinity.
+
+##
+
+**NUMERICALS ON PRICE ELASTICITY**
+
+**Q1.** What should be the percentage change in price of a product if the
+sale is to be increased by 50 percent and its price elasticity of demand is
+2 ?
+
+**Ans** :
+
+ Percentage change in quantity demanded = 50
+ Price elasticity = 2
+ Price Elasticity = Percentage change in Quatity demanded / Percentage change in price
+ 2 = x / 50
+ x = 100
+
+**Q2.** A company producing soft drink is selling its product for Rs. 22. It
+sells 1000 units, and then increases the price to Rs.24. Now sales fall to
+900 units. What is the price elasticity of soft drink? Is the demand elastic
+or inelastic? Why?
+
+**Ans** :
+
+ Initial price, P = 22
+ New price = 24
+ Initial quantity, Q = 1000 utils
+ New quantity = 900 utils
+ Change in price, ÎP = 24-22 = 2
+ Change in quantity, ÎQ = 900-1000 = 100 utils
+ Price Elasticity = (ÎQ/ÎP) * (P/Q)
+ = (100/2) * (22/1000)
+ = 1.1
+
+ Demand is elastic since value of price elasticity is greater than 1
+
+**Q3.** When the price of a commodity falls by 2 per unit, its
+quantity demanded increases by 10 units. Its price elasticity
+of demand is 1. Calculate its quantity demanded at the
+price before change which was 10 per unit.
+
+**Ans** :
+
+ ÎP = -2
+ ÎQ = 10
+ Price Elasticity = 1
+ P = 10
+
+ Price Elasticity = (ÎQ/ÎP) * (P/Q)
+ 1 = (10/-2) * (10/x)
+ x = -50
+ Q = 50
+
+
+**Q4.** A consumer spends 40 on a good at a price of 1 per unit
+and 60 at a price of 2 per unit. What is the price elasticity of
+demand? What kind of good it is? What shape its demand
+curve will take?
+
+**Ans.**
+
+ To determine the price elasticity of demand, we need to use the following formula:
+
+ Ed = % ÎQ / % ÎP
+
+ P1 = 1
+ Q1 = 40
+
+ P2 = 2
+ Q2 = 60/2 = 30
+
+ %ÎQ = Q2 - Q1 / Q1 * 100
+ = 30-40/40 * 100
+ = -25%
+
+ %ÎP = P2 - P1 / P1 * 100
+ = 2-1/1 * 100
+ = 100%
+
+ Ed = -25% / 100%
+ = -0.25
+
+##
+
+**NUMERICALS ON CROSS ELASTICITY**
+
+ Cross Elasticity = (ÎQx / ÎPy) * (Py / Qx)
+
+**Q1.** A tea manufacturing company was able to sell 8000 kg of tea when
+the price of coffee was Rs.70 per kg. Later they were able to sell 9000 kg
+when the price of coffee became Rs.80 per kg. Calculate the cross
+elasticity of demand for tea. Are the two commodities substitutes or
+complements? Give reason.
+
+**Ans.**
+
+ ÎQx = Q1x - Qx
+ = 9000 - 8000
+ = 1000
+
+ ÎPx = P1y - Py
+ = 80 - 70
+ = 10
+
+ Qx = 8000
+ Py = 70
+
+ Cross Elasticity = (ÎQx / ÎPy) * (Py / Qx)
+ = (1000/10) * (70/8000)
+ = 0.875
+ When the cross elasticity of demand is positive, it usually implies that the goods are substitutes. Substitutes are goods that can be used in place of each other, so when the price of one increases, consumers tend to buy more of the other.
+
+**Q2.** Suppose cross elasticity of demand between X and Y is 0.5. If there is
+a 50 percent change in the price of Y, what will be the percentage change
+in the quantity demanded of X?
+
+**Ans:**
+
+ Cross elasticity of demand = 0.5
+
+ Percentage change in the price of commodity Y = 50%
+
+ Percentage change in quantity demanded of commodity X = ?
+
+ 0.5 = Percentage change in quantity demanded of commodity X / 50
+
+ Percentage change in quantity demanded of commodity X = 50 x 0.5
+
+ Percentage change in quantity demanded of commodity X = 25 %
+
+**Q3.** Suppose the price of coffee rises from Rs. 4.50 per hundred grams to
+Rs. 5 per hundred grams and as a result the consumerâs demand for tea
+increases from 60 per hundred grams to 70 per hundred grams. Find the
+cross elasticity of demand of tea and coffee.
+
+**Ans:**
+
+ Initial demand 60
+ Final demand 70
+ Initial Price = 4.5
+ Final Price = 5
+
+ ÎDtea = 70-60 = 10
+ Dx = 6
+
+ ÎPtea = 5-4.5 = 0.5
+ Py = 4.5
+
+ Cross elasticity of demand of tea for coffee = % change in demand of tea / % change in price of coffee
+
+ Cross elasticity of demand of tea for coffee = (10/60) / (0.5/4.5) = 1.5
+
+## Supply
+
+- Supply refers to the quantities of a commodity
+which a seller offers for sale at a particular
+price in a given period of time.
+- It refers to the desired qty of commodity that
+the seller offer for sale in the market.
+
+### Factors affecting supply
+1. Price of the commodity ( P rises SS rises)
+2. Goals of the firm
+3. Price of other commodities
+4. Price of factors of production
+5. State of technology
+6. Government Taxation
+
+### Law of Supply
+**Other things remains constant, the quantity
+supplied increases with rise in price of the
+commodity and quantity supplied decreases
+with fall in the price of the commodity**
+
+### Supply Schedule
+| Price(per kg) | Quantity Supplied | Reference Point |
+|------------------|---------|--------|
+| 1 | 5 | A |
+| 2 | 8 | B |
+| 3 | 12 | C |
+
+
+
+
+### Changes in Supply
+
+1. Change in supply due to change in price â
+Expansion and Contraction of supply â
+Movement along supply curve
+
+
+
+2. Change in supply due to factors other than
+price â Increase and Decrease in supply â Shift
+in supply curve
+
+
+
+
+### Elasticity of Supply
+
+It refers to the degree of responsiveness change
+in qty supplied of a commodity due to change in
+price or any other factors.
+
+**1. Perfectly elastic supply**
+ - With a small change in price there would be
+an infinite change in qty supplied.
+- Supply curve would be a horizontal straight
+line parallel to x - axis
+- Elastic Supply = infinity
+
+ 
+
+**2. Perfectly inelastic supply**
+- With a small change in price there would be
+no change in qty supplied.
+- Supply curve would be a vertical straight line
+parallel to Y - axis
+- Elastic Supply = 0
+
+ 
+
+
+**3. Unit elastic supply / Unitary elastic supply**
+- With a given change in price there would be
+an equal and proportionate change in qty
+supplied for the commodity
+- Elastic Supply = 1
+
+ 
+
+**4. Elastic supply / More elastic supply**
+- With a given change in price there would be a
+more than proportionate change in qty
+supplied of the commodity.
+- Elastic Supply > 1
+
+ 
+
+
+**5. Inelastic supply / Less elastic supply**
+- With a given change in price there would a
+less than proportionate change in qty supplied
+of the commodity.
+- Elastic Supply < 1
+
+ 
+
+
+### Equilibrium Price
+
+ Qd = Qs
+
+ Price at which qty demanded of a commodity equals to the quantity supplied of the commodity
+
+
+
+
+#### Effects of changes in demand and supply on equilibrium price
+
+**1. Increase in Demand**
+
+When demand of a commodity increases, while supply remains constant, equilibrium price will
+increase. At the same time, quantity sold and purchased will also increase.
+
+
+
+
+**2. Decrease in Demand**
+
+If the demand of a commodity decreases, while supply remains constant, the equilibrium price
+and output will fall.
+
+
+
+
+**3. Increase in Supply**
+
+If the supply of a commodity increases, while demand remains constant, equilibrium price will fall.
+
+
+
+
+**4. Decrease in Supply**
+
+If the supply of a commodity decreases, while demand remains constant, equilibrium price will
+increase.
+
+
+
+
+##
+
+**NUMERICALS ON DEMAND AND SUPPLY PROBLEM**
+
+**Q1.** The demand function of a product is given as D = 60 - 2P and the
+supply function S = 30 + 4P. Estimate equilibrium price and equilibrium
+quantity. Also find the excess supply when Price equals Rs.6?
+
+**Ans:**
+
+ Given
+ D = 60 - 2P
+ S = 30 + 4P
+ We need to find equilibrium price and equilibrium quantity
+ When its equilibrium,
+ Demand = Supply
+ So that, 60 - 2P = 30 + 4P
+ 60-30 = 4P + 2P
+ 30 = 6P
+ Equilibrium price (P) = 5
+ Equilibrium quantity (Q) = 60 â 2 x 5 (substituting the value of P in demand function)
+ = 50 units
+ Equilibrium quantity (Q) = 30 + 4 x 5 (substituting the value of P in supply function)
+ = 50 units
+ Excess supply when Price equals Rs.6
+ = 30 + 4 x 6 (substituting the value of 6 in supply function)
+ = 54 units
+
+## Consumer Surplus and Producer Surplus
+
+**Consumer Surplus**
+- Consumer surplus is defined as the difference between the consumers' willingness to pay
+for a commodity and the actual price paid by them.
+- A surplus occurs when the consumerâs willingness to pay for a product is greater than its
+market price.
+- Consumer surplus always increases as the price of a good falls and decreases as the price
+of a good rises.
+
+
+**Producer Surplus**
+- Producer surplus is the difference between how much a person would be willing to accept
+for given quantity of a good versus how much they can receive by selling the good at the
+market price.
+- The difference or surplus amount is the benefit the producer receives for selling the good
+in the market
+
+
+
+
+## Taxation
+
+- Taxation is the means by which a government or
+the taxing authority imposes or levies a tax on its
+citizens and business entities.
+- Taxation refers to the practice of government
+collecting money from its citizens to pay for
+public services.
+- A tax is a mandatory fee or financial charge levied
+by any government on an individual or an
+organization to collect revenue for public works
+providing the best facilities and infrastructure.
+
+## Deadweight Loss
+- A deadweight loss is a cost to society created
+by market inefficiency, which occurs
+when supply and demand are out of
+equilibrium.
+- A deadweight loss is the irrecoverable
+reduction in economic efficiency that occurs
+when a free-market equilibrium is disturbed
+by a market intervention or other shock to
+supply and/or demand.
diff --git a/src/WikiSyllabus/KTU/2019_Scheme/S6/CSE/HUT300/2_module2.md b/src/WikiSyllabus/KTU/2019_Scheme/S6/CSE/HUT300/2_module2.md
new file mode 100644
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+# MODULE 2
+
+## 1. Production
+
+It is the process of transformation of inputs into output
+
+Input > Factors of Production
+
+**Production Function**
+
+ Q = f ( La, L , K , O )
+
+There are 4 major factors of production
+1. **Land(La)**
+ - In economies it includes not only the surface area but also the vegetation, air, water, minerals etc around it.
+ - The reward of land in production is rent
+2. **Labour(L)**
+ - It is the physical or mental effort that put in production. Labour is perishable because labour power cannot be storred
+ - If a worker is not working one day, that days labour is lost forever
+ - The reward of labour is wages
+3. **Capital(K)**
+ - It is the produced means of production
+ - It can be in the form of machinery, equipment, building
+ - Reward of capital is interest
+ - Human capital is the stock of knowledge, skill, experience. Can be increased by
+education and training
+4. **Organisation / Entrepreneurship(O)**
+ - Entrepreneur is the person who combines the services of other factors and organize production. Production involves risk and risk is taken by the entrepreneur.
+ - Reward of entrepreneurship is profit
+
+### Types of Production Function
+
+**1. Law of Fixed Proportion**
+
+*It is the arrangement where the quantities of
+all inputs are varied in the same and equal
+proportion. It happens in long run.*
+
+**2. Law of Variable Proportion**
+
+***The law of variable proportion states that as
+more and more units of a variable factor are
+applied to a given quantity of a fixed factor ,
+the total product increase at an increasing
+rate initially , but eventually it will increases at
+a diminishing rate.***
+
+*It is the arrangement where the quantity of a
+single input varies, keeping the quantities of
+other inputs constant . It happens in short run
+due to unavailability of all inputs.*
+
+**Total product of a factor(TP)**
+
+It is the total physical output produced by employing a certain quantity of that
+factor
+
+For example:
+Total product of labour means that when a certain amount of labour is
+combined with fixed quantities of other factors, the total output produced is
+the total product of labour
+
+**Marginal product of a factor**
+
+It is the addition to total product by employing one more unit of that factor.
+
+For example, marginal product of labour means addition to TP(Total product)
+when one more labour is employed
+
+
+**Average product of the factor**
+
+It is the output per unit of that factor employed
+
+Its obtained by dividing the Total product by the number of units of that factor employed
+
+
+### Assumptions of the Law
+1. All units of the variable factor employed are equally efficient
+2. Technology remains constant
+3. The proportion of inputs can be varied
+
+### Example
+
+|No. of units of Labour | Total Product | Marginal Product | Average| Stages
+|---------|---------|---------|--------|-----|
+|1|8|8|8|Stage 1 (IRF)
+|2|18|10|9|Stage 1 (IRF)
+3|30|12|10|Stage 1 (IRF)
+|INCREASING |RETURNS
+4|40|10|10|Stage 2 (DRF)
+5|45|5|9|Stage 2 (DRF)
+6|48|3|8|Stage 2 (DRF)
+7|49|1|7|Stage 2 (DRF)
+8|49|0|6.1|Stage 2 (DRF)
+DIMINISHING |RETURNS
+9|45|-4|5|Stage 3 (NRF)
+10|40|-5|4|Stage 3 (NRF)
+NEGATIVE|RETURNS
+
+- This example is of a farmer
+- Farmer has 2 things, land and labour
+- Here Land is a fixed factor
+- Labour is a variable factor as it can be changed
+- The farmer here decides to employ more and more labour
+- So as more and more of one variable factor (Labour) is employed, the Marginal product is
+decreasing
+- Initially it was 8
+- At the end it reached -5
+- Similarly Total product is increasing and decreasing
+- Initally its 8
+- It peaked at 49
+- Now its diminishing and reached 40
+
+
+
+
+The diagram shows 3 stages
+
+**Stage 1:**
+- This is stage of increasing returns
+- During this stage while MP (Marginal Product) increases, TP(Total Product) increases
+at an increasing rate
+- First stage continues till MP = AP(Average Product)
+
+**Stage 2**
+- This is the stage of diminishing returns
+- MP decreases, which causes TP to increase at a diminishing rate
+- Second stage ends when MP = 0
+- When MP touches the x axis(MP = 0), TP curve has its highest point
+- When MP = 0, TP is the maximum
+
+**Stage 3**
+- This is the stage of negative returns where MP becomes negative and TP starts
+declining
+- TP declines, TP curve comes down
+- MP curve goes below the x axis
+
+
+
+***Relation between MP and TP***
+
+1. When MP increases, TP increases
+2. When MP decreases but positive, TP increases at a decreasing rate
+3. When MP becomes negative, TP declines
+
+
+***Relation between MP and AP***
+1. When MP > AP, AP increases
+2. When MP = AP, AP is maximum
+3. When MP < AP, AP decreases
+
+## 2. Economies of Scale
+
+It means advantages of large scale production
+which help in reducing the average cost of
+production.
+
+|INTERNAL ECONOMIES | EXTERNAL ECONOMIES
+|----------------------------|------------------------------------
+|***As a firm increases its scale of production, the firm enjoys several economies named as internal economies. Basically, internal economies are those which are special to each firm.***| ***External economies refer to all those benefits which accrue to all the firms operating in a given industry. Generally, these economies accrue due to the expansion of industry and other facilities expanded by the Government.***|
+|1. *LABOUR ECONOMIES* : As the scale of production is expanded their accrue many labor economies, like new inventions, specialization, time saving production etc. A large firm employs large number of workers. Each worker is given the kind of job he is fit for. The HR manager evaluates the working efficiency of the labor if possible. Workers are skilled in their operations which save production, time and simultaneously encourage new ideas. |1. *ECONOMIES OF CONCENTRATION* : As the number of firms in an area increases each firm enjoys some benefits like transport and communication, availability of raw materials, research and invention etc. Further financial assistance from banks and non-bank institutions easily accrue to firm. Special economic zones (SEZ) and export processing zones (EPZ) are cases in point.
+|2. *TECHNICAL ECONOMIES* : Technical economies have their influence on the size of the firm. Generally, these economies accrue to large firms which enjoy higher efficiency from capital goods or machinery. Bigger firms having more resources at their disposal are able to install the most suitable machinery. Mechanization and adoption of more advanced technology are easier for a larger firm. |2. *ECONOMIES OF INFORMATION* : When the number of firms in an industry expands they become mutually dependent on each other. In other words, they do not feel the need of independent research on individual basis. Many scientific and trade journals are published. These journals provide information to all the firms which relates to new markets, sources of raw materials, latest techniques of production etc.
+|3. *MANAGERIAL ECONOMIES* : Managerial economies refer to production in managerial costs and proper management of large scale firm. Under this, work is divided and subdivided into different departments. Each department is headed by an expert who keeps a vigil on the minute details of his department. A small firm cannot afford this specialization. Experts are able to reduce the costs of production under their supervision. These also arise due to specialization of management and mechanization of managerial functions. |3. *ECONOMIES OF VERTICAL DISINTEGRATION* : As an industry develops, firms divide and specialize in different production processes. For example, in the moped industry, some firms focus on rims, hubs, chains, pedals, and tires. This specialization can be horizontal, where each firm focuses on one item, or vertical, where each firm specializes in different items. One firm's waste materials become raw materials for another, reducing production costs for both. Selling firms earn from their waste, while buying firms save on raw material costs, leading to a decrease in the average cost of production.
+|4. *MARKETING ECONOMIES* : When the scale of production of a firm is increased, it enjoys numerous selling or marketing economies. In the marketing economies, we include advertisement economies, opening up of show rooms, appointment of sole distributors etc. Moreover, a large firm can conduct its own research to effect improvement in the quality of the product and to reduce the cost of production. The other economies of scale are advertising economies, economies from special arrangements with exclusive dealers. |
+|5. *ECONOMIES FOR TRANSPORT AND STORAGE* : A firm producing on large scale enjoys the economies of transport and storage. A big firm can have its own means of transportation to carry finished as well as raw material from one place to another. Moreover, big firms also enjoy the economies of storage facilities. The big firm also has its own storage and go down facilities. Therefore, these firms can store their products when prices are unfavorable in the market. |
+
+
+## 3. ISO-QUANT
+
+- It is a curve which shows various combinations of two factor inputs which give the same level of output.
+- ISO means equal and QUANT means quantity.
+- It is also called Isoproduct curves and Equal product curves.
+
+Combination of Labor and Capital | Units of Labor (L) | Units of Capital (K) | Output of Cloth(meters)
+|-|-|-|-
+|A |5 |9 |100
+|B |10 |6 |100
+|C |15 |4 |100
+|D| 20| 3| 100
+
+
+
+
+### Properties of Iso-qoants
+1. Isoquants are negatively sloped
+2. Isoquants are convex to the origin
+3. Two isoquants cannot cut each other
+4. An isoquant lying above and to the right of
+another isoquant represents a higher level of
+output.
+5. Isoquants need not be parallel
+
+### Types of Iso-quants
+
+1. **Linear Iso-quant curve :**
+- perfect substitutability between the factors of
+production.
+
+
+
+
+2. **Right Angled Iso-quant Curve :**
+
+
+
+
+## 4. ISO-COST
+
+- An isocost line shows various combinations of labour and capital (two inputs) that can be
+purchased for a given expenditure of the firm
+- It shows various combinations of labour and capital that is available to the firm at the same
+cost and at given prices of the inputs
+
+
+
+
+ Slope of AB = Price of Labor(w) / Price of Capital(r)
+
+### Shift in Isocost line
+
+
+
+
+
+
+## 5. Producer's Equilibrium / Least cost combination
+
+The point of least-cost combination of factors
+for a given level of output is where the
+isoquant curve is tangent to an iso-cost line.
+
+
+
+
+- It is attained at that point where the isoquant is tangent to the isocost line
+- Here isoquant is tangent to isocost at E, Which makes E the equilibrium point
+- Q2 Isoquant will be produced with the least cost
+
+## 6. Expansion Path
+
+- Expansion path is a line connecting optimal input combinations as the scale of production
+expands
+- We can obtain the expansion path by joining the point of tangency between isoquants and
+isocost lines of a firm
+
+
+
+
+## 7. Cobb - Douglas Production Function
+
+Cobb douglas production function is widely used to represent the technological
+relationship between the amounts of 2 inputs, particularly capital and labour and the
+amount of output that can be produced
+
+ Q = A * L^ι * K^β
+
+ Q = Total output
+ L = Labour
+ K = Capital
+ A = Total factor productivity
+ ι and β are the output elasticities of labour and capital respectively
+
+ ι + β = 1 >> Constant Returns to Scale
+ ι + β > 1 >> Increasing Returns to Scale
+ ι + β > 1 >> Decreasing Returns to Scale
+
+##
+**NUMERICALS ON COBB DOUGLAS PRODUCTION FUNCTION**
+
+**Q1.** In the production function Q = 2 L^1/2 K^1/2
+ if L=36 how many units of
+capital are needed to produce 60 units of output?**
+
+**Ans:**
+
+ Q = A * L^ι * K^β
+
+ Q = 2 * L^1/2 * K^1/2
+ Given L = 36
+ Given Total Output Q = 60
+ Subbing the values
+ 60 = 2 â 36^1/2 * K^1/2
+ 60 = 2 â 6 â K^1/2
+ 60 = 12 â K^1/2
+ 5 = K^1/2
+ 25 = K
+ So the capital needed is 25
+
+**Q2.** Given below are the production function of firm A, Q = 2 K^0.25 L^0.75
+The firm uses 5 units of labour (L) and 5 units of capital (K). Calculate the output. If we reduce L by 10%, how much K would be increased to
+produce the same output.
+
+**Ans:**
+
+ Given Labour L = 5
+ Capital K = 5
+ Q = A * L^ι * K^β
+ Q = 2 â 5^0.25 â 5^0.75
+ Q = 2 x 5
+ Q = 10
+
+ Reducing L by 10%
+ 5 * 0.9 = 4.5
+ To produce the same output,
+ 10 = K^0.25 * 4.5^0.75
+ K = 6.86 units
+
+**Q3.** In a production function, Q = 2 * L^1/2 * K^1/2
+. If L= 36
+1. How many units of capital are needed to produce 60 units of output
+2. Determine the percentage increase in output if labour is increased by 10% assuming capital is held constant
+
+**Ans:**
+
+ 1.When Q = 60
+ L = 36
+ 60 = 2 â 36^1/2 * K^1/2
+ 60 = 2 â 6 â K^1/2
+ 5 = K^1/2
+ K = 25
+
+ 2. Labour increased by 10%
+ L = 36
+ L = L 1.1 = 36 1.1 = 39.6
+ Capital is constant, lets take it as 25
+ 2 * 36^1/2 * 25^1/2 = 60
+ 2 * 39.6^1/2 * 25^1/2 = 2 * 6.29 * 5 = 62.9
+
+ Percentage increase = (Q2 - Q1)/Q1 * 100
+
+ (62.9 - 60)/60 * 100
+ = (2.9) / 60 * 100
+ = 4.83
+ = 5%
+
+ 5% increase in output
+
+**Q4.** Derive the marginal product from the Cobb-Douglas production function.
+
+**Ans:**
+
+ Marginal product of Labor,
+ MPL = dQ/dL
+ = A * ι * L^ι-1 * K^β
+ = ι/L (A * L^ι * K^β)
+ = Îą (Q/L)
+ = Îą (Average Product of Labor) or Îą (APL)
+
+ Marginal product of Capital,
+ MPK = dQ/dK
+ = A * β * L^ι * K^β-1
+ = β/K (A * L^ι * K^β)
+ = β (Q/K)
+ = β (Average Product of Capital) or β (APK)
+
+**Q5.** Suppose that the production function is given as Q = A * L^3/4 * K^1/4
+
+(a) Find out the output when K = 20 and L = 30
+
+(b) Find the marginal product of labor when K = 20 and L = 30.
+
+(c) Find the average product of Capital when K = 20 and L = 30.
+
+(d) Find the number of units of capital required to produce 100 units of output if L = 40.
+
+**Ans:**
+(a)
+
+ Q = 4 X 30^3/4 X 20^1/4
+ = 4 X 12.8 X 2.11
+ = 108.03
+
+(b)
+
+ MPL = 4 X 3â4(30^-1/4) X 20^1/4
+ = 4 X 0.42 X 2.11
+ = 3.54
+
+(c)
+
+ APk = Q/K = 108.03 / 20 = 5.4
+
+(d)
+
+ 100 = 4 X 10^3/4 X K^1/4
+ = 4 X 5.62 X K^1/4
+ = 22.48 X K^1/4
+ K^1/4 = 100/22.48 = 4.44
+
+**Q6.** Suppose a production function is given as Q = A L^3/5 K^2/5 and A = 2. Prove that this
+production function follows constant returns to scale using a numerical example.
+
+**Ans:**
+
+ A production function is said to follow constant returns to scale when output increases proportionately to an increase in inputs. Here we will give arbitrary values to labor and capital and find the output and later double both labor and capital. It could be concluded that the production function follows constant returns to scale if output also doubles.
+
+ Lets assume that L =15 and K=15. Then,
+ Q = 2 * 15^3/5 * 20^2/5
+ = 2 * 5.07 * 3.31
+ = 33.6
+
+ Now we will double both capital and labor. The production function becomes,
+ Q = 2 * 30^3/5 * 40^2/5
+ = 2 * 7.69 * 4.37
+ = 67.2
+
+ 67.2/33.6 = 2
+
+ Thus, it has been seen that doubling of inputs has resulted in doubling of output. Hence, the production function follows constant returns to scale.
+##
+
+## 8. COST OF PRODUCTION
+
+Cost is the expenditure incurred y a firm in the
+production of a commodity.
+
+### Cost Concepts
+
+**Explicit Cost:** it is the expenses actually met y
+the producer while producing a commodity.
+( Raw materials)
+
+**Implicit Cost:** is the opportunity cost of the
+factor services supplied by the firm itself.
+(Rent)
+
+**Accounting Costs** this is the monetary outlay for
+producing a certain good. Accounting costs will include
+your variable and fixed costs you have to pay.
+
+**Sunk Cost** These are costs that have been incurred and
+cannot be recouped. (Adv cost)
+
+**Social Costs** This is the total cost to society. It includes private costs plus any external costs.
+
+**Private cost** It is the cost incurred by the producer in the production of a good.
+
+**External Cost** When a commodity is produced it may
+cause damages to the environment in the form o fair
+pollution, water pollution etc.
+
+**Replacement cost** is the amount of money required to
+replace an existing asset with an equally valued or
+similar asset at the current market price.
+
+## Types of Costs
+
+### Short - run Costs
+
+**1. TOTAL FIXED COST**
+- It is the cost which does not vary with the level of output
+- Ex : Rent of factory building, Salary of permanent employees, interest payment
+
+
+
+
+**2. TOTAL VARIABLE COST(TVC)**
+- Variable cost is the cost that vary with the level of output
+ - When output is zero, variable cost is also zero
+ - When output increases, cost also increases
+- Example : Cost of raw materials, wages of workers, transportation cost, fuel charges
+
+
+
+
+**3. TOTAL COST(TC)**
+
+ TC = TFC + TVC
+
+
+
+
+
+**4. Average Variable Cost (AVC)**
+
+ AVC = TVC / Q
+
+ TVC - total variable cost
+ Q - Quantity
+
+
+
+
+**5. Average Fixed Cost (AFC)**
+
+ AFC = TFC / Q
+
+ TFC - total fixed cost
+ Q - quantity
+
+
+
+
+**6. Average Cost(AC) or Average Total Cost(ATC)**
+
+ AC = TC / Q
+ = (TFC + TVC) /Q
+ = AFC + AVC
+
+
+
+
+**7. Marginal Cost(MC)**
+
+MC is the addition to total cost when one more unit of output Q is produced
+
+ MC = ÎTC / ÎQ
+ MCn = TCn - TCn-1
+
+
+
+
+### Long - run Costs
+
+**1. Long Run Average Cost (LAC)**
+- LAC is derived from short run AC
+- LAC is termed as the collection of SAC
+
+**2. Long - run Marginal Cost**
+- LMC is âUâ shaped curve
+- LMC passes through the lowest point of LAC
+
+[lac lmc]
+
+##
+**NUMERICALS ON COST**
+
+**Q1.** The total cost function of a firm is given as TC = 1000 + 10Q â 6Q^2 + Q^3
+
+(a) Derive TVC,MC, AVC and AC
+
+(b) What is TFC when output equals to 500 units?
+
+(c) What is MC when output is 100 units?
+
+**Ans:**
+
+(a)
+
+ TVC = TC - TFC
+ = 10Q - 6Q^2 + Q^3
+
+ MC = d(1000 + 10Q - 6Q^2 + Q^3)/ dQ
+ = 10 - 12Q + 3Q^2
+
+ AVC = TVC / Q
+ = 10Q - 6Q^2 + Q^3 / Q
+ = 10 - 6Q + Q^2
+
+ AC = TC / Q
+ = 1000 + 10Q - 6Q^2 + Q^3 / Q
+ = 1000 / Q + 10 - 6Q + Q
+
+(b)
+
+ Total Fixed Cost (TFC) is the part of the total cost that does not vary with the level of output.
+ TFC = 1000
+
+(c)
+
+ MC = 10 - 2Q + 3Q^2
+ = 10 - 12(100) + 3(100)^2
+ = 10 - 1200 + 30000
+ = 28810
+
+**Q2.** Suppose in the short run AVC 4. Suppose in the short run
+AVC 0 â 3 %
+
+4. ***Walking inflation*** > 3 â 10 %
+
+5. ***Galloping inflation*** > More than 10%
+
+6. ***Hyper inflation*** > More than 50%
+Causes of Inflation
+
+
+**Causes of inflation**
+
+Causes of Inflation has been classified into two: Demand side factors and Supply side
+factors
+
+|Demand Side Factors|Supply Side Factors|
+|-|-|
+|Increase in money supply|Shortage in factors of production
+|Increase in disposable income| Industrial dispute
+|Increase in consumer spending|Natural calamities
+|Black money|Artificial scarcity (Hoarding)
+|Increase in exports|International factors
+|Cheap monetary policy
+
+## 8. METHODS TO CONTROL INFLATION
+
+### 1. Monetary Policy Measures
+
+Monetary policy measures are strategies implemented by the central bank of a country (e.g., the Reserve Bank of India, RBI) to regulate credit and money supply in the economy. These measures can be categorized as follows:
+
+### a) Quantitative Credit Control Methods
+
+Quantitative control aims to regulate the overall volume of bank credit without considering the specific purposes for which the credit is used. Key measures include:
+
+#### i) Bank Rate
+
+The bank rate, also known as the discount rate, is the minimum rate at which the central bank provides loans to commercial banks by rediscounting bills of exchange. When the central bank raises the bank rate, commercial banks increase their lending rates, resulting in reduced borrowing and a decrease in the money supply. As of January 2022, the bank rate in India is 6.25%.
+
+#### ii) Reserve Ratio (CRR/SLR)
+
+Depending on economic conditions, the central bank adjusts the reserves that commercial banks must maintain. There are two types of reserve ratios:
+
+- **Cash Reserve Ratio (CRR):** Commercial banks are required to maintain an average cash balance with the RBI, which must be a certain percentage of their Net Demand and Time Liabilities (NDTL). An increase in the CRR leads to credit contraction, while a decrease leads to credit expansion, allowing banks to provide more loans. The CRR in India legally ranges from 3-15%, with the current rate at 4%.
+
+- **Statutory Liquidity Ratio (SLR):** This is the percentage of reserves that commercial banks in India must maintain in the form of gold and government-approved securities before extending credit. An increase in the SLR results in credit contraction, whereas a decrease allows for credit expansion. The legal SLR range is 20-40%, with the current rate at 18.00%.
+
+#### iii) Open Market Operations
+
+This involves the central bank's purchase and sale of securities. Selling securities contracts credit, while purchasing them expands credit. Two important rates in this context are:
+
+- **Repo Rate:** The rate at which the RBI lends money to banks for the short term. An increase in the repo rate contracts credit as banks borrow funds from the RBI at higher interest rates.
+
+- **Reverse Repo Rate:** The short-term borrowing rate at which the RBI borrows money from banks. An increase in the reverse repo rate also contracts credit as banks prefer to deposit their funds with the RBI to earn higher interest. The current repo rate is 4.00%, and the reverse repo rate is 3.35%.
+
+### 2. Fiscal Policy Measures
+
+Fiscal policy measures are actions taken by the government to control aggregate demand in the economy. The main instruments of fiscal policy include:
+
+### i) Public Revenue
+
+The primary source of public revenue is taxation. To reduce total spending during inflation, the government increases taxes. Higher direct taxes reduce people's disposable income, leading to lower spending.
+
+### ii) Public Expenditure
+
+During inflation, the government cuts down its expenditure on developmental activities and welfare programs, reducing both government demand for goods and services and private income. When the government spends less, individual incomes decrease, leading to a reduction in aggregate demand.
+
+### iii) Public Borrowing
+
+During inflation, the government delays the repayment of public debt and borrows more from the public to reduce the money supply in the economy.
+
+## 9. BUSINESS FINANCING
+
+
+Business finance refers to funds availed by
+business owners to meet their needs that
+may include commencing a business,
+obtaining top-up funds to finance business
+operations, obtaining finance to purchase
+capital assets for the business, or to deal with
+a sudden cash crunch faced by the business.
+
+**Sources of Capital**
+
+1. Internal self â finance
+2. Public Deposits
+3. Loans from Bank
+4. Indigenous Bankers
+5. Development finance institutions
+
+### Bonds and Shares
+
+A bond is a fixed-income instrument that
+represents a loan made by an investor to a
+borrower (typically corporate or
+governmental).
+
+A share represents a unit of equity ownership
+in a company. Shareholders are entitled to any
+profits that the company may earn in the form
+of dividends.
+
+| Basis | Bonds | Shares |
+|------------------------------|----------------------------------------------------|------------------------------------------------------|
+| Investment Type | The investor lends money to the company | The investor owns part of the company |
+| Risk Level | Low risk | High risk |
+| Issuer | Issued by government institutions, financial institutions, etc. | Issued by corporate enterprises |
+| Income | Bondholders get interest, as a fixed payment | Shareholders get dividends |
+| Return | Return is certain | Return is uncertain |
+| Maturity Period | Maturity period is fixed | No maturity period |
+
+
+
+## 10. MONEY MARKET AND CAPITAL MARKET
+
+A financial market is a place where buyers and
+seller come together to trade in financial
+assets such as bonds, stocks, derivatives,
+currencies and commodities.
+
+The two most important components of
+financial market are the money market and
+capital market.
+
+**MONEY MARKET**
+
+The money market is a good place for
+individuals, banks, other companies, and
+governments to park cash for a short period of
+time, usually one year or less.
+
+FEATURES :
+- It is fund-term market funds.
+- Itâs maturity period up to one year.
+- It trades with assets that can be transformed into cash easily.
+- All the transactions take place through phone, email, text, etc.
+- Broker not required for the transaction
+- The components of a money market are the Commercial Banks, Non-banking financial companies and Central Bank, etc.
+
+**Capital Market**
+
+The capital market is a type of financial
+market where financial products like stocks,
+bonds, debentures are traded for a long
+duration of time.
+
+FEATURES :
+- Unites entrepreneurial borrowers and savers
+- Deals with long-term investments.
+- Agents are required.
+- It is controlled by government rules and regulations.
+- Deals in both commercial and non-commercial securities.
+- Foreign Investors.
+
+| Basis | Money Market | Capital Market |
+|-----------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
+| **Definition** | A network of financial institutions, bill brokers, money dealers, banks, etc., dealing in short-term financial instruments. | A financial market where company or government securities are issued and traded to raise long-term finance. |
+| **Market Nature** | Informal | Formal |
+| **Instruments Involved** | Commercial Papers, Treasury Certificates, Certificates of Deposit, Bills, Trade Credit, etc. | Bonds, Debentures, Shares, Asset Securitization, Retained Earnings, Euro Issues, etc. |
+| **Investor Types** | Commercial banks, non-financial institutions, central bank, chit funds, etc. | Stockbrokers, insurance companies, commercial banks, underwriters, etc. |
+| **Market Liquidity** | Highly liquid | Comparatively less liquid |
+| **Risk Involved** | Low risk | Higher risk |
+| **Maturity of Instruments** | Instruments mature within a year | Instruments take longer time to mature |
+| **Purpose Served** | To meet short-term credit requirements of trade | To meet long-term credit requirements of trade |
+| **Functions Served** | Increasing liquidity of funds in the economy | Stabilizing the economy by increasing savings |
+| **Return on Investment** | ROI is usually low | ROI is comparatively high |
+
+
+
+## 11. STOCK MARKET
+
+Stock Market is the collection of markets and exchanges where people buy, sell and
+issue shares of publicly-held companies. People invest their money in buying shares in the
+hope of huge returns. To purchase, hold and sell shares, you need to have a Demat account, a
+digitally functioning account used to hold dematerialised securities, including stocks, mutual
+funds, bonds, etc.
+
+**Demat account**
+
+- Demat Account is used to hold the shares purchases in digital or electronic form
+
+- A Demat Account holds all invesstments an individual makes in shares, govt securities,
+bonds, mutual funds etc.
+
+- Its a storage space to hold the shares and securities purchases
+
+**Trading account**
+
+- Trading account is used to buy and sell shares and securities in the stock market.
+
+- Trading account acts like a link between demat account and bank account of an investor
+
+- When an investor wants to buy shares, he places an order through his trading account
+
+- The transaction goes for processing in the stock exchange. The required number of shares
+get credited into his DEMAT account and proportionate sum gets deducted from his bank
+account
+
+##
+
+### SENSEX
+- **Launch Date :** January 1, 1986
+- **Purpose :** Tracks the performance of India's 30 largest and financially sound companies.
+
+- **Listing :** These companies are listed on the BSE (Bombay Stock Exchange).
+
+- **Name Origin :** 'Sensex' is a blend of the words 'Sensitive' and 'Index', coined by stock market expert Deepak Mohini.
+
+- **Role :** It reflects the movements in the Indian stock market and serves as the benchmark index.
+
+- **History :** The oldest index in India, providing data since 1979.
+Nifty
+
+### NIFTY
+- **Name Origin :** 'Nifty' comes from combining 'National Stock Exchange' and 'fifty', representing the top 50 stocks.
+
+- **Stock Count :** Although called Nifty50, it currently includes 51 stocks.
+
+- **Introduction :** Launched by the National Stock Exchange of India (NSE), founded in 1992 and started trading in 1994.
+
+- **Management :** Owned and managed by India Index Services & Products Limited (IISL).
+
+- **Role :** A popular stock index that tracks the top-performing equity stocks on the NSE.
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+# MODULE 5
+
+## 1. INTERNATIONAL TRADE
+
+International trade is the exchange of goods
+and services between countries.
+
+International trade is an exchange involving a
+good or service conducted between at least
+two different countries.
+
+### Advantages of International Trade
+1. International trade enables countries to specialize in the production of those
+commodities in which they have a comparative advantage.
+2. It increases the size of a firmâs market, resulting in lower average costs and higher
+productivity.
+3. International competition promotes innovative production, new technology and
+marketing.
+4. Consumers benefit in the domestic economy as they can now obtain a greater variety
+of goods and services.
+5. The increased competition ensures commodities are supplied at the lowest prices.
+6. It results in foreign exchange gains. When India sells its products abroad, it receives
+foreign currency. This money is then used to pay for imports that are produced more
+cheaply overseas.
+7. Free trade creates new jobs in the domestic economy. Employment will increase in
+exporting industries.
+8. The countries involved in free trade experience rising living standards, increased real
+incomes and higher rates of economic growth. This is created by more competitive
+industries, increased productivity, efficiency and production levels
+9. Greater access to imports will benefit consumers and businesses by widening the
+choice of products available and boosting the living standards of the people.
+10. Having a bigger market to sell to means that a business can sell more, earn more
+profits and pay higher wages. Exporting businesses pay more to workers and sell
+more per worker than non-exporters.
+11. In the absence of trade, governments may distort market prices by subsidizing
+production. In such cases, production and trade, guided by distorted prices, will not be
+efficient.
+12. One clear cost of protection is that the country imposing it forces its consumers to
+forgo cheap imports.
+
+### Disadvantages of International Trade
+
+1. The main argument for protectionism is the infant industry argument. Industries in
+developing countries can effectively compete with those already developed if they
+receive some initial protection in the form of tariffs or subsidies.
+2. Increased economic stability as economies do not become dependent on global
+markets. This means that businesses are not vulnerable to downturns in the
+economies of their trading partners, e.g. Recession in the USA leads to decreased
+demand for Indiaâs exports, leading to falling export incomes, lower GDP, lower
+incomes, lower domestic demand, and rising unemployment.
+3. Countries with surplus products may dump them on world markets at prices below
+the cost of production.
+4. Countries whose economies are largely agricultural face unfavourable terms of
+trade. Their export income is much smaller than the import payments they make for
+high value imports resulting in large foreign debt levels.
+5. All round industrial development will occur in the country since it cannot depend on
+foreign industries.
+6. Free trade can lead to pollution and other environmental problems as companies fail
+to include these costs in the price of goods while trying to compete with companies
+operating under weaker environmental legislation in some countries.
+7. If old traditional industries are not protected, foreign competition may ruin them and
+create unemployment.
+8. It is unwise to export all the natural resources of a country. For example, India has
+exhausted its large supply of manganese and mica in the name of earning foreign
+exchange.
+9. Protective import duties are a way to generate tax revenue.
+10. During times of global financial crises and recession, falling employment has often
+resulted in an increase in protectionist policies in many countries. Governments in
+the United States, Britain and other European countries have faced domestic
+pressure to stop purchases from Chinese and Indian companies.
+
+##
+
+### THEORIES OF INTERNATIONAL TRADE
+
+**1. Adam Smithâs Theory of Absolute Advantage**
+
+- The concept of absolute advantage was
+developed by Adam Smith in The Wealth of Nations
+- Countries should specialize in producing the goods and services in which they have absolute advantage and engage in free trade with other countries to sell their goods.
+- A countryâs resources would therefore be utilized
+in the best possible wayâin the production of
+goods and services in which the country has a
+productivity advantage compared with other countriesâand national wealth would be maximized.
+
+
+**2. Comparative advantage theory of international trade**
+
+- Comparative cost advantage theory was developed by David Ricardo
+- Even in the case of a country for which there is no absolute advantage for both the
+commodities, it can gain from international trade.
+- In this situation, the country should specialize in the production and export of the
+commodity in which its absolute disadvantage is smaller and import the commodity in
+which its absolute disadvantage is greater
+
+ **Assumptions**
+ 1. There are only two countries and two commodities
+2. There are no barriers in international trade
+3. There is no transport cost
+4. Labour is the only component of cost of production
+5. There is perfect competition and full employment
+
+|COUNTRY|No.of units of labour per unit of cloth| No.of units of labour per unit of Wine|Exchange Ratio|
+|-|-|-|-|
+|England|100|120|1 wine = 1.2 cloth|
+|Portugal| 90|808|1 wine = 0.88 cloth|
+
+- The above example shows portugal has an absolute advantage in the production of both
+commodities
+- Ratio of wine and cloth production shows that
+ - Portugal has advantage in wine, so it will specialise in wine production and produce wine
+ - England will similarly produce cloth
+
+Letâs look at a simplified hypothetical example to illustrate the subtle difference between
+these principles. Miranda is a Wall Street lawyer who charges $500 per hour for her legal
+services. It turns out that Miranda can also type faster than the administrative assistants in her
+office, who are paid $40 per hour. Even though Miranda clearly has the absolute advantage in
+both skill sets, should she do both jobs? No. For every hour Miranda decides to type instead of
+do legal work, she would be giving up $460 in income. Her productivity and income will be
+highest if she specializes in the higher-paid legal services and hires the most qualified
+administrative assistant, who can type fast, although a little slower than Miranda. By having both
+Miranda and her assistant concentrate on their respective tasks, their overall productivity as a
+team is higher. This is a comparative advantage. A person or a country will specialize in doing
+what they do relatively better. In reality, the world economy is more complex and consists of
+more than two countries and products. Barriers to trade may exist, and goods must be
+transported, stored, and distributed. However, this simplistic example demonstrates the basis of
+the comparative advantage theory
+
+**3. Hekscher - Ohlin theory**
+
+- The theory was originally developed y Eli Heckscher in 1919. Later in 1935 it was refined by Bertil Ohlin.
+Hence it is known as Heckscher â Ohlin Theorem.
+- Heckscher â Ohlin Theorem states that a country will
+produce and export that commodity whose production
+requires the intensive use of nationâs relatively
+abundant and cheap factor and import the commodity
+whose production requires the intense use of relatively
+scare and expensive factor.
+- In other words, relatively labor abundant country will
+export the relatively labor-intensive commodity and
+import the relatively capital â intensive commodity.
+
+## 2. BALANCE OF PAYMENTS
+
+Balance of Payment is a systematic record of all economic transactions of a nation with the rest of the world for a specific period of tie. Usually, time period is taken as one year.
+
+It is obvious that during a period of time millions of transactions take place between one nation and with the rest of the world. Therefore, all these transactions cannot appear individually in the balance of payment statement. As a summary statement, BoP aggregates all these transactions under different heads.
+
+**1. Components of Current Account Transaction**
+
+|Sl. no| Items| Details|
+|-|-|-|
+|1. |Visible trade items| It includes all types of physical goods that can be seen,touched, felt & measured - Import of goods: debit side - Export of goods: credit side|
+|2.| Invisible trade items| It includes all types of services that can not be seen,touched, felt & measured. Eg. import and exports of services (insurance, banking, education) - Import of services: debit side - Export of services: credit side|
+|3.| Unilateral transfers| It includes gifts, personal remittance, and donations. or we can say one way transactions i.e. nothing in return - Transfer payment- Debit side - Transfer receipt- credit side|
+|4. |Income receipts and payments to and from abroad| It includes investment incomes and payments in the form of Rent, profit, interest It is generated through capital account transactions - Income payments: Debit - Income received: Credit|
+
+**2. Components of Capital Account Transaction**
+
+|Sl. no| Items| Details|
+|-|-|-|
+|1.|Borrowing and Lending from and to abroad| All transactions concerned with borrowing from abroad and lending to abroad are taken into consideration. Receipts of loan and Repayments of loan by foreigners- Credit side Lending to abroad and Repayment of loan to abroad- Debit side
+|2.| Investments to and from abroad| All transactions of investment in shares, real estate etc in between resident and foreigners are taken into consideration. Investments from abroad-Credit side. Investment to abroad-Debit side
+|3.|Change in foreign exchange reserves (FER)| FER are the financial assets (money, bonds, securities) of the government held by the central bank. Withdrawal from these assets-credit sides. Additions to these assets-debit sides
+
+**3. Finanacial Account**
+
+In the financial account, international monetary flows related to investment in
+business, real estate, bonds, and stocks are documented. Also included are
+government-owned assets such as foreign reserves, gold, special drawing rights held with
+the International Monetary Fund, private assets held abroad, and direct foreign investment.
+Assets owned by foreigners are also recorded in the financial account.
+
+**4. Official Reserve Account**
+
+It refers to the foreign currency held by the central bank of a country and is used to
+balance the payments from year to year.
+
+**5. Errors and Omissions**
+
+Sometimes the balance of payments does not balance. It is due to errors that have
+crept in during the compilation of the bop statement. Hence an entry called errors and
+omissions is made to reflect this imperfection.
+
+##
+### Balance of Payments Deficit
+
+A disequilibrium in the balance of payment
+means its condition of Surplus Or deficit
+
+A **Surplus** in the BOP occurs when Total
+Receipts exceeds Total Payments. Thus,
+**BOP= CREDIT>DEBIT**
+
+A **Deficit** in the BOP occurs when Total
+Payments exceeds Total Receipts. Thus,
+**BOP= CREDIT