MICRO-ECONOMICS IS RELATED TO STOCK AND FLOW CONCEPT
The Aggregate of microeconomics are of two kind sum are stocks, typically the stock of capital k which is a timeless concept. Even in period analysis a stock must be specified at a particular movement. Other aggregate are flow or such as income and output, consumption and investment.A flow variable has the time dimension t, as per unit of time or per period.
Stock is the quantity of any economic variable relating to a point of time. For example, Store of cloth in a shop at a point of time is Stock. Flow is the quantity of an economic variable relative of a period of time.
The monthly income and expenditure of an individual, receipt of early interest rate on various deposit in a bank, sale of commodity in a month or some example of flow.
In price theory of microeconomics, the concept of stock and flow are related to the demand for and supply of goods the market demand and supply of goods at a point of time or expressed as stock. the stock demand curve of a good slope downward from left to right like an ordinary demand curve, Which depend upon price.
But the stock supply curve of a good is parallel to the y axis because the total quantity of stock of a good is constant at a point of time. On the other hand, the flow demand and supply curve are like the ordinary demand and supply curve which are influenced by current prices. But the price is neither a stock a flow variable because it doesn't not need a time dimension. In fact it is a ratio between the flow of cash and the flow of goods.
No comments:
Post a Comment