Cross Price Elasticity of Demand: Types & Examples
Cross Price Elasticity of Demand (XED) measures the relationship between two goods when the price of one changes.
Microeconomics
The brand of economics that looks at the behaviour of individuals and businesses. In other words, it examines how consumers and businesses react to changes in variables. For example, how do consumers react to price changes and how does quality affect this decision making.
Price Ceiling: Definition, Examples & Graph
A price ceiling is a legal restriction which prevents businesses from selling beyond that price.
Price Floor: Definition, Examples & Effects
A price floor is a minimum price set on goods and services usually determined by the government. This makes it illegal for any company or individual to sell its goods or services below the set minimum price.
Law of Supply: Definition & Example
The law of supply is the relationship supply has with price. As prices rise, businesses supply more. As prices fall, businesses supply less.
Law of Demand: What it is, Examples & Diagram
The law of demand refers to how demand changes in reaction to price. So when prices rise, the law of demand dictates that demand will fall.
Third Degree Price Discrimination: Definition, Examples & Graph
When business charge customers different prices based on their demographic or other characteristic.
Second Degree Price Discrimination: Examples & Graph
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.
Substitution Effect: Definition & Example
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.
Economic Incentives: What it is, Types & Examples
In economics, incentives are what drives consumer and business behaviour.
Explicit and Implicit Costs: Definition & Examples
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.
