A firm under perfect competition is a price taker by the following reasons:

1. Number of Firms: The number of firms under perfect competition is so large that no individual firm by changing sale, can cause any meaningful change in the total market supply. Hence, market price remains unaffected.
2. Homogeneous Product: All firms in a perfectly competitive industry produce homogeneous product. Hence, price remains same.
3. Perfect Knowledge: All the buyers and sellers have perfect knowledge about market price so no firm charge a different price than market price. Hence a uniform price prevails in the market.

Aggregate supply is the money value of total output available in the economy for purchase during a given period. When expressed in physical terms, aggregate supply refers to the total output of goods and services produced for sale by all the entrepreneurs in an economy. It is assumed that in short-run, prices of goods do not change and elasticity of supply is infinite. At the given price level, output can be increased till all the resources are fully employed.
If we go deep, we will find aggregate supply is represented by national income. How? We know that money value of final output is distributed as rent, wages interest and profit among factors of production who help produce the output. Since sum of factor incomes (rent, wages, interest and profit) at national level is called national income, therefore, aggregate supply, output and national income are same. Alternatively AS = Y where Y is national income. Thus income or total output measures the aggregate supply of goods and services.
Aggregate Supply = Output = Income
A major portion of income is spent on consumption of goods and services and the balance is saved. Thus national income or aggregate supply (AS) is sum of consumption expenditure (C) and savings (S). Put in the form of an equation:
AS = C + S
Clearly aggregate supply has two components, namely, consumption expenditure and savings. AS curve is depicted in the adjoining Fig.(a) Aggregate supply or national income is shown on X-axis and total spending (consumption + savings) on Y-axis.
AS curve is shown by a 45° line from the origin. Why? Its significance is that every point on this line is equidistant from X-axis and Y-axis taking same scale on both the axes, i.e., at each point on this line, Expenditure (AD) = Income (AS,). Thus 45° line (also called a Guideline) helps us to identify equilibrium when two variables are to be shown graphically equal,
(Classical and Keynesian concepts of Aggregate Supply. There is difference between these two concepts. According to Classicals "Aggregate supply is perfectly inelastic with respect to prices and it (aggregate supply) is always at full employment level of output." According to Keynes "Aggregate supply is perfectly elastic with respect to prices till the full employment level of output is reached.").

Fig.(a)

Product differentiation and price discrimination are two strategies used in marketing and economics. Product differentiation is the process used to distinguish one company's goods and services from another company's goods and services. Conversely, price discrimination is a strategy used to distinguish prices for the same goods and services.

Product differentiation seeks to distinguish a product from a competing product to make it more attractive to a specific target market. Three types of product differentiation are horizontal, vertical and simple. Horizontal product differentiation distinguishes a product based on one characteristic of the product; however, consumers are not able to distinguish which product has a higher quality. Vertical product differentiation is also based on one characteristic of a product, but consumers are able to distinguish which product has a higher quality. Simple product differentiation is based on distinguishing a product on a numerous amount of characteristics.

For example, a company can differentiate its product by packaging it better. Suppose a soda company packages its soda in a new ergonomic bottle, while another soda company packages its soda in a plain aluminum can. There is very little differentiation in the soda itself, but the products are differentiated by the containers.

Price discrimination occurs when the same goods and services are sold at different prices from the same company. Unlike product differentiation, price discrimination focuses on charging different customers different prices for the same goods. Contrary to product differentiation, price discrimination does not focus on distinguishing its product from others. For example, a company that offers a student discount is considered price discrimination. Generally, students may not have the money to buy products and are more sensitive to price changes, so businesses try to attract more of that target market by making items cheaper.

1. TU increases as long as marginal utility is positive (i.e., more than zero)
2. TU is maximum when MU is zero.
3. TU starts declining when MU becomes negative (.i.e, less than zero).

Implicit cost,on the other hand,refers to the opportunity cost of using the firm’s own resources. These costs are not recorded in the books of account as they deal with the expenditure incurred on the intangible items. These costs are also called ‘economic cost’. For example, imputed value of the services of the owner of the firm, imputed rent of the owner occupied building.

Operating surplus is a component of calculating national income by Income Method, it refers to income earned by owners of property and enterprise. It is classified into following categories:
1) Rent  it is income earned from property.
2) Royalty: it is income earned from property.
3) Interest:  it is income earned from property.
4) Profit:  it is income earned from entrepreneurship.
Profit includes:
i) Dividend: it is part of profit that is distributed to shareholders.
ii) Corporate tax: it is part of profit that is paid to government in form of tax.
iii) Undistributed profit:  it is part of profit that is retained for future use.
 

Circular flow of money is of two types — real flow and monetary flow. Simply flow of goods and services is called real flow and flow of money (income) is called money flow.
(i)    Real Flows. Real flows refer to flows of goods and services. These are called real flows because they consist of actual goods and services. In the context of national accounting, real flow implies flow of factor services from household sector to the firm (or producing) sector and the corresponding flow of goods and services from firm sector to the household sector. Thus flows of goods and services between firm sector and household sector are real flows. Such flows are continuous and there is no beginning or end point in these flows. In Fig.(a), the inner two arrows indicate real flows.
(ii)    Money Flows. These refer to flows of money in the form of factor payments and consumption expenditure. The monetary flows occur because it is through money that various transactions are conducted bringing flows of money from one sector to another. When factor incomes (rent, wages, interest and profit) flow from firm sector to the households as reward for their factor services, these are called money flows. Similarly when households spend their incomes on purchase of goods and services produced by the firm sector, money flows back to the firm sector as household expenditure. These also indicate money flows. In short, flows of money between firm sector and household sector are monetary flows.

Dimensions of poverty.....

1. Landlessness

2. Helplessness

3. Malnutrition

4. illiterate

5. Population of family

6. Unemployment

7. Child labouring

Buffer stock is the stock of food grains (e.g., wheat,rice etc.) procured by the government through Food Corporation of India (FCI). It is created in order to distribute food grains in deficit areas and among poorer section of society at an affordable price.

Major Features of Indian Economy at the time of Independence:
1. The agricultural sector suffered from various setbacks, immediately at the time of Independence.
2. The occupational structure in India, at the time of Independence, can be termed as unbalanced.
3. On the demographic front, the condition of India was very poor. India was experiencing very high birth rate as well as high death rate.
4. The colonial rule left the population of India in a poor and impoverished state. There were the Zamindars that prospered under the colonial rule and accumulated huge wealth. As a result, there existed high income inequality in the country.