Methods for economic analysis

There are following methods which may be used for economic analysis: Deductive Methods: Deductive comes from deduce i.e. to interfere by logical reasoning or to conclude from know facts or general principles. This method is also called analytical method. According to this method we starts from general observation and ends up at particular generalization e.g. human behavior explains that when price increases demand decreases and at higher prices seller sells more. This principle is known as law of demand and law of supply. We make this decision on the basis of indisputable facts of human nature and draw a concrete interference which is called economics law. The steps which are used in this method are 5. 6. 7. 8. General facts of life (selective) Observations Testing and analysis To develop a relation for conclusions.

Inductive Method: It is opposite of deductive methods in this method we move from a particular nature and generalization and end up at a research and analyzed statement with the help of some research and arguments e.g. Price increases demand decreases but this may be possible that an increase in price may not result in decrease in price due to some other factors, reasons or things therefore, when we define this law we say Other things remaining the same, otherwise this law is not applicable all this is possible due to research and scientific applications. So we can conclude that when do any thing on the basis of observation it is included in deductive methods and in case, if conclusions is made on the basis of research or scientific application it is called inductive method. This method has following steps: 9. Collection of facts and figures specific nature 10.Analysis of facts 11.Research and Reasoning 12.Generalized Statement

Market: Market is a place where people are gathered to sell or purchase some goods and services. Kinds of Markets: Kinds of market can be explained as aBy Time 13.Short Period Market 14.Long Periods Market 15.Very Short Period Market By Space 16.Local Market (General Stores ) 17.Regional Markets (As per regions wise) 18.National Market (Domestic market) 19.International Market By Competition 20.Perfect Markets 21.Imperfect Markets By Commodities 22.General Market (General Stores) 23.Specialized Market (Specific Product Markets) 24.Capital Market (Monetary Markets i.e. Bonds and Share) 25.Factor Market (Includes all factors of Productions) 26.Money Market (Related to Bank Rates / Discount Rates)

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Merits and Demerits of Large Scale Production Merits i) ii) iii) iv) v) Use of Capital Research Facilities Increase Production Low Per Unit Cost Employment Demerits i) Surplus Production ii) Chance of Depression iii) Burden of Work Imperfect Market Results v) Difficult to Manage

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