Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. The macroeconomic perspective looks at the economy as a whole, focusing on goals like growth in the standard of living, unemployment, and inflation. Macroeconomics has two types of policies for pursuing […]
Microeconomics is a branch of economics that studies the behavior of individual economic agents, or systems with a limited number of agents, in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. The microeconomic perspective focuses on parts of the economy: individuals, firms, and industries. Together with macroeconomics, which studies systems […]
Employment is a relationship between two parties, usually based on a contract where work is paid for, where one party, which may be a corporation, for-profit, not-for-profit organization, co-operative or other entity is the employer and the other is the employee. Human labor is one of the most important resources which need effective utilization – “almost” […]
Scarcity means that human wants for goods, services, and resources exceed the available supply (the opposite of scarcity is abundance). Scarcity also includes an individual’s lack of resources to buy commodities. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods and services we want but they exist in limited supply. […]
In economics, a commodity is a basic good or service that is interchangeable with other goods of the same type. A commodity must be easily storable over time, that is, not lose its original characteristics. The high standardization that characterizes a commodity allows it to be easily negotiated on international markets.
In economics, a budget constraint represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income. There are two major differences between a budget constraint and a production possibilities frontier. The first is the fact that the budget constraint is a straight line. This is because […]
In economics, demand is an economic principle referring to a consumer’s desire to purchase goods and services and willingness to pay a price for a specific good or service during a given period of time. In economics, the law of demand states that the quantity demanded and the price of a good or service is inversely related, […]
Inflation is a general and ongoing rise in the level of prices in an entire economy. Inflation does not refer to a change in relative prices. A relative price change occurs when you see that the price of tuition has risen, but the price of laptops has fallen. Inflation, on the other hand, means that there […]
A production possibilities frontier (or production possibility curve, PPC) defines the set of choices society faces for the combinations of goods and services it can produce given the resources available. The shape of the PPF is typically curved outward, rather than straight. Choices outside the PPF are unattainable and choices inside the PPF are wasteful. Over time, a growing […]
When we talk of efficiency in terms of the productiveness with which we obtain an output with a certain set of inputs, we are talking about technical efficiency. An alternative way of looking at it is through X-efficiency – the level of efficiency in the case of imperfect competition. For instance, a monopolist might not upgrade […]
The paradigm of allocative efficiency assumes that producers are only supplying goods that the market wants, i.e. products that are in high demand. In mathematical terms, it is the point at which price is equal to the marginal cost (the cost of producing one more unit of particular produce). Some allocations are inherently better than others in […]
Production theory is one of the basic concepts of microeconomics; it is the study of production or the economic process of converting inputs into outputs. Producers seek to choose the combination of inputs and methods of combining them that will minimize cost in order to maximize their profits. The production uses resources to create a good […]
The theory of consumer choice (or consumer demand theory) is the branch of microeconomics that relates preferences for the consumption of both goods and services to the consumption expenditures; ultimately, this relationship between preferences and consumption expenditures is used to relate preferences to consumer demand curves. Analogous to production theory, consumers will choose to purchase and consume a […]
Banks facilitate using the money for transactions in the economy because people and firms can use bank accounts when selling or buying goods and services, when paying a worker or receiving payment, and when saving money or receiving a loan. In the financial capital market, banks are financial intermediaries; that is, they operate between savers who […]
Insurance is a way of sharing risk. People in a group pay premiums for insurance against some unpleasant event, and those in the group who actually experience the unpleasant event then receive some compensation. The fundamental law of insurance is that what the average person pays in overtime cannot be less than what the average person […]
The cost, in the economy, business management, and accounting, indicates the expression in money or other numerical value of the goods and services used for the production or purchase of a good or service. It can be determined on the basis of internal assessments of the economic entity that holds it or in economic transactions with […]
A service, in Economics and in marketing, is the intangible equivalent of a good, therefore a good with quantifiable economic value. The provision of service has been defined as an economic activity that cannot be separated from its owner, because it is produced at the same time as it is consumed, and all this is what […]
In Economics, goods are items that are usually (but not always) tangible, that satisfy human wants and provide utility. Goods consist of material objects, even complex ones, which are considered differently from non-material goods, that is, from services. The goods can be an economic, natural or technically produced good, capable of being exchanged for other goods (bartering […]
The word market, in economics, indicates the place (also in a figurative sense) and at the same time also the moment in which the economic-commercial exchanges of raw materials, goods, services, money, financial instruments, etc., of the particular economic subsystem of reference. In other words, market is one of the many varieties of systems, institutions, procedures, […]
A monopoly (from Greek μόνος, mónos, ’single, alone’ and πωλεῖν, pōleîn, ’to sell’) exists when a specific person or enterprise is the only supplier of a particular commodity. Bilateral monopoly A bilateral monopoly is a labor market with a union on the supply side and a monopsony on the demand side. Since both sides have monopoly power, the equilibrium level of employment will be lower than […]
Business-to-business (B2B or BtoB) refers to the electronic exchange of products, services, or information between businesses rather than between businesses and consumers. Examples include online e-commerce (products and supply exchange websites) that allow businesses to search for products, services, and information and to initiate transactions through e-procurement interfaces.
A business is defined as the activity of an organization or enterprising entity engaged in commercial, industrial, or professional activities to produce or exchange goods or services. Businesses can be for-profit entities or non-profit organizations that operate to fulfill a charitable mission or further a social cause. Businesses must establish a clear set of values that promote […]
The division of labor is an economic concept which combines specialization and the partition of a complex production task into several, or many, sub-tasks which enables workers to focus on specific tasks. This concept was popularised by Adam Smith in An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The division of labor is an […]
Business-to-consumer (B2C) is the retail part of commerce; retail is the process of selling consumer goods, services, or information directly to consumers. The term was popular during the dot-com boom of the late 1990s when online retailers and sellers of goods were a novelty.
E-commerce (electronic commerce) is the activity of buying and selling goods and services, or the transmitting of funds or data, over an online network, primarily the internet. Contemporary electronic commerce can be classified into two categories. The first category is business based on types of goods sold (involves everything from ordering “digital” content for immediate online […]
Consumer-to-consumer (C2C) is a type of commerce in which consumers trade products, services and information with each other. These transactions are generally conducted through a third party that provides an online platform on which the transactions are carried out.