Shortage

-is a disparity between the amount demanded for a product or service and the amo
unt supplied in a market.
-are related to pricewhen the price of an item is set below the equilibrium rate
determined by supply and demand, there will be a shortage. In most cases, a shor
tage will compel firms to increase the price of a product until it reaches marke
t equilibrium. Sometimes, however, external forces cause more permanent shortage
sin other words, there is something preventing prices from rising or otherwise ke
eping supply and demand balanced.
Surplus
-A surplus is used to describe many excess assets including income, profits, cap
ital and goods. A surplus often occurs in a budget, when expenses are less than
the income taken in, or in inventory when fewer supplies are used than were reta
ined.
Equilibrium
-A condition or state in which economic forces are balanced
-may also be defined as the point where supply equals demand for a product the e
quilibrium price is where the hypothetical supply and demand curves intersect.
Law of demand
- law states that, all else being equal, as the price of a product increases, qu
antity demanded falls; likewise, as the price of a product decreases, quantity d
emanded increases.
-the quantity demanded for a good rises as the price falls. In other words, the
quantity demanded and price are inversely related."
Law of Supply
-the law states, all other factors being equal, as the price of a good or servic
e increases, the quantity of goods or services that suppliers offer will increas
e, and vice versa.
A)Land
natural resources such as iron ore, gold, diamonds, oil, etc.
B)Labor human resources such as wage-earning workers
C)Capital plants and equipment used in the production of final goods, such as as
sembly lines, trucks, heavy duty machinery, factories, etc.
D)Entrepreneurship the marshaller of resources, the person or group that marshal
s resources in the production of final goods.
Friedrich von Hayek
-Friedrich August von Hayek had a great contribution in the field of economics a
nd is mainly popular for his work The Road to Serfdom (1944) and for his outstandi
ng work on knowledge in the 1930s and 1940s. He was also an expert of business-c
ycle theory. He had also worked on psychology (1952), political philosophy (1960
) and legal theory (1973-79). Apart from this, his emphasis on impulsive order a
nd his work on intricate systems have been very significant and persuasive among
st the Austrians.
-Simon Kuznets was considered to be one of the earliest economists to work on th
e concept of development economics. His findings were significantly based on the
economic growth on the distribution of income. He found that in poor countries,
the economic growth leads to increased disparity between the rich and the poor
while this disparity decreases in developed countries. Kuznets also enumerated t
he cyclic nature of production and prices over a span of 15-20 years known as Ku
znets Cycle.

His discovery of the inverted U-shaped relation between income inequality and ec
onomic growth was the most important of all his discoveries that sparked many re
search programs. The patterns in savings-income characteristics discovered by Ku
znets was instrumental in introducing the Life-Cycle-Permanent-Income hypothesis
of Modigliani and Friedman and also many other alternatives such as the Relative
Income Hypothesis.
Trygve Haavelmo
-His main contributions were the two articles, one which showed the statistical
implications of simultaneous equations and the other which bases econometrics fi
rmly on probability theory.
-His major contribution was the introduction of a new approach to approximate ec
onomic relations by applying mathematical statistics. After this he continued de
veloping his interest towards economic theory.
-Another major contribution was the Theory of Investment. His book entitled A Study
in the Theory of Investment coined the demand for the actual capital, the indisp
osition in the modification of the real capital.
-Wassily Leontief took avid interest in research. His works had great influence
not only on the policies, but also on the studies of his contemporaries and succ
essors. Through his inputoutput method, he contributed extensively to enrich the G
eneral Equilibrium theory.
-Leontiefs standing influences on economic studies was his insistence on the usag
e of solid raw data for developing theories. He opposed the practice of many eco
nomists resorting to assumptions, which were not backed by any sort of empirical
data.
Bertil Gotthard Ohlin
-Ohlins biggest contribution was in the subject of Economics. In 1933, he altered
and elaborated the economic theory written by Heckscher on international trade.
He called this book Interregional and International Trade. This expanded theory o
f Ohlin on foreign trade and got its recognition through the Heckscher-Ohlin mod
el.