Economics Powered

How Calculus is used in Economics. In the Last Volume of Applied Economics, we learnt about Maximizing Profit. But today, this blog aims to focus not only on qualitative aspects but also on quantitative ones. Theory can only take you so far. For example: A theoretical law (Law of demand, Law of Supply etc), may show you the direction in which demand moves, but it does not tell you by “How Much” the demand moves. Calculus fixes that. Why do some firms seem to "feel" the right price, the right output, or the right risk level? Most of the time, it's not intuition. It's applied economics , built on the Foundation of Economic Models that firms, banks, and funds use every day. This is the Application of Calculus in plain sight. The same ideas you see in class guide real decisions, from choosing how many units to produce to adjusting a hedge when volatility jumps. If you've ever wondered how analysts turn messy markets into clean rules, the answer is often math. In this...

Why would people buy something at double, triple or even ten times the price as their neighbour? The answer is not in taste, utility or even necessity, but rather one of the strongest forces that influence people: status. The notion seems quite ridiculous. This blog aims to decode consumer preference and how luxury goods are an important exception in Marshall's law of demand, and how an enterprise can position their goods and services as "elite." What are Luxury goods? Here, people prefer paying a higher price regardless of quality, quantity (sometimes a lesser quantity is appreciated due to lack of supply), utility, impact, and usage. These goods exploit the core human behaviour of relative status or the need for "display." Human success is not mainly measured by wealth or status, but in terms of relativity, of the success of others. This economic exception understands and thereby takes advantage of humans' competitive natures. Taking a classic example and ...