Microeconomics

Monopsony Definition

Monopsony Definition

A monopsony is where there is a sole buyer of a product, but many sellers. This contrasts with the similarly named monopoly, whereby there is only one seller and many buyers.

Market Equilibrium Definition

Market Equilibrium Definition

Market equilibrium occurs when demand and supply meet. At this point, producers of a good are selling exactly how much they produce and consumers are buying exactly how much they want. Most importantly, this comes at a price that both parties are agreeable to.

Price Gouging Definition

Price Gouging Definition

Price gouging is where the seller increases the prices of their goods or services to a level considered unreasonable and unfair. It arises due to a sharp surge in demand, normally as a result of natural disaster such as a hurricane or earthquake.

Excise Tax Definition

Excise Tax Definition

An excise tax is a tax that is levied on specific products, usually in order to create a socially optimal outcome. For instance, cigarettes, alcohol, and fuel are all examples that have an excise tax.

Economic System Definition

Economic System Definition

An economic system is a network that forms the economic relationships between individuals in society. In other words, how the people of a nation come together to create a complex whole and conduct economic transactions with each other.

Introduction to Microeconomics

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Human Capital Definition

Human Capital Definition

Human capital refers to the skills, habits, and other attributes each person possesses. In other words, the attributes that contribute to the production fo the final economic output.

Conspicuous Consumption Definition

Conspicuous Consumption Definition

Conspicuous consumption is where the consumer spends excessive amounts in order to highlight their wealth to society. In other words, they buy expensive items that are not needed, but are bought solely to display their wealth and power to the world.

Private property to show the importance of property rights

The Importance of Property Rights

An efficient free market is reliant on strong property rights as a fish is to water. Its purpose is to ensure that competitive control over economic resources is resolved in a peaceful way. Rather than disputes leading to violence, they can be resolved through the legal system.

Producer Surplus Definition

Producer Surplus Definition

The producer surplus is the difference between what the producer sells its goods for and the minimum price it would be willing to sell for. In other words, because the producer is selling at a higher price than they would accept, a ‘producer surplus’ is created.