Paul Boyce

Paul is a Business Economics graduate from the UK and currently an editor at Boycewire

Second Degree Price Discrimination Definition

Second Degree Price Discrimination

Second degree price discrimination is where a firm sells at different prices based on quantity. This may include offers such as buy two, get one free, or 20 percent off when you buy six.

Nash Equilibrium Definition

Nash Equilibrium Definition

Nash equilibrium refers to the situation whereby a group of individuals choose the most optimal strategy and do not deviate from that initial decision. Individuals stick to the initial decision in the knowledge that all other options are inferior.

Substitution Effect Definition

Substitution Effect Definition

The substitution effect occurs when consumers switch to substitute goods as prices rise. For example, if the price of chicken increases, then consumers may start to switch to substitute goods such as beef or pork.

Incentives Definition

Incentives Definition

In economics, incentives are what encourages an individual to act in a certain way. In other words, how consumers and businesses respond to market signals such as prices and financial benefits.

Nominal GDP Definition

Nominal GDP Definition

Nominal GDP is the total economic output of a nation using current prices. In other words, it is the measurement of all the goods and services a country produces, in prices, at the time they are made.

Explicit and Implicit Costs Definition

Explicit and Implicit Costs Definition

An explicit cost is the clearly stated costs that a business incurs. For example, employee wages, inputs, utility bills, and rent, among others. These are the costs which are stated on the businesses balance sheet.

By contrast, implicit costs are those which occur, but are not seen. In other words, these are the costs that are not directly linked to an expenditure. For example, a factory may close down for the day in order for its machines to be serviced.

fixed cost and variable cost graph

Fixed Cost Definition

A fixed cost is a cost that a business must pay whether it produces one good or a million. Regardless of output, it must pay the same amount.

Burning money, as a representation of what inflation is

What is Inflation

Inflation is created through excessive money creation. That is to say, money supply is in excess of economic output. Let’s say GDP grows at 2 percent. If the money supply increases by 3 percent, we could expect inflation.

what is gdp

What is GDP?

GDP stands for Gross Domestic Product. On its own, it may not make much sense. However, when
we split it down, the naming becomes clearer. Let us first start with ‘Gross’. It has various
meanings, but in the case of GDP, it is used as a noun. This has a meaning of ‘Complete Amount’.

Natural Monopoly Definition

Natural Monopoly Definition

A natural monopoly is a type of monopoly that occurs due to high fixed costs and a need to achieve extreme economies of scale. In other words, it is only economically viable for one business to serve the market.