The principle of Ability-to-Pay asserts that taxes should be levied based on the taxpayer's capacity to bear the tax burden. This principle often leads to progressive taxation where higher income or wealth results in higher tax rates.
An in-depth exploration of abnormal profit, its significance, and implications in economic theory and business practice.
An in-depth explanation of adaptive expectations in economics, where future values are calculated based on previous predictions and outcomes. Learn about its significance, models, and practical applications.
An in-depth look at adjustment, including cyclical, partial, and seasonal adjustments, their importance, applications, and related concepts.
A comprehensive exploration of Aggregate Demand (AD), its components, factors influencing it, and its significance in macroeconomics.
An in-depth exploration of Arrow–Debreu State Prices, encompassing historical context, key models, and applications in economics and finance.
An in-depth exploration of the Auctioneer Mechanism, explaining how prices adjust in a theoretical market to reach equilibrium without actual transactions.
Autonomous consumption is the portion of consumption expenditure that occurs even when current income is zero, influenced by assets, expectations, and social standards.
An exploration of the Big Push theory, its historical context, key events, models, and implications in development economics.
A budget line represents the combinations of two goods that a consumer can purchase with a given income, demonstrating the trade-offs and opportunities in consumer choice theory.
A buffer stock is a stock of a commodity held to stabilize its price by buying when prices fall and selling when prices rise, thus smoothing out short-run fluctuations while adapting to long-run market conditions.
Past events which play no part in rational present decision-making. For a firm, bygones include sunk costs and past operating profits and losses, except to the extent that these play a part in forming present expectations.
A comprehensive guide to understanding the Capital–Labour Ratio, its significance in economic analysis, and its practical applications.
The Classical Model is an economic theory which assumes that prices, wages, and interest rates are flexible and that markets will always reach equilibrium, resulting in full employment and output growth dependent on factor supply.
The Cobweb Model is used to illustrate situations where a time lag in the response of one variable to changes in another introduces economic fluctuations. It is also known as the hog cycle, and describes patterns observed in markets such as hog prices.
Commodity fetishism describes the perception of social relationships involved in production not as relationships among people, but as economic relationships among money and commodities.
An exploration of Comparative Advantage, its historical context, types, significance, and implications in the realm of international trade.
An in-depth exploration of comparative costs, a concept pivotal in international trade economics, expressing comparative advantage through costs.
The amount of additional income needed to restore an individual's original level of utility following a change in the economic environment. This article provides an in-depth explanation, historical context, formulas, and examples.
Consumer behaviour explores how individuals choose to use their incomes, balancing utility maximization with satisficing and trial-and-error methods, significantly influenced by advertising and social factors.
Consumer demand broadly encompasses primary and selective demand, representing the total demand by consumers for goods and services.
An in-depth exploration of consumer sovereignty, highlighting the concept that consumers are the best judges of their own interests within the market system.
A comprehensive guide to understanding coordination failure, its economic implications, historical context, types, key events, and examples.
Explore the concept of CORE, focusing on its dual definition in economics as central regions and in game theory as a set of feasible allocations. Understand historical context, key events, detailed explanations, models, and its significance.
A comprehensive examination of cost curves, illustrating the relationship between costs and production quantity. Includes short-run and long-run perspectives, different types of cost curves, and their practical implications in economics.
A comprehensive overview of the cost schedule in economic and financial analysis, including historical context, types, key events, detailed explanations, and more.
Cut-throat competition refers to the intense rivalry between suppliers of goods or services, characterized by aggressive tactics such as price cutting that threaten the survival of some or all competitors.
Debt deflation is a situation where excessive debt reduces spending and borrowing, leading to a decline in aggregate demand. This phenomenon typically occurs when individuals and firms cut back on spending due to high debt levels, contributing to economic slowdowns.
An examination of the economic theory that suggests government borrowing does not affect the level of demand in an economy, as suggested by David Ricardo.
Demand inflation occurs when inflation is driven by excess demand in the economy. This article provides a detailed overview of demand inflation, including historical context, key events, explanations, mathematical models, examples, and much more.
Derived demand refers to the demand for an input to a productive process, determined by the output of the good or service being produced. It also depends on the price of the input and the prices of other inputs which can either be substitutes or complements.
An in-depth exploration of the Diamond-Mirrlees Production Efficiency Lemma, its historical context, applications in tax policies, and implications for competitive economies.
Diminishing Marginal Utility is a fundamental concept in economics that describes the decrease in additional satisfaction or benefit obtained from consuming one more unit of a good or service as its consumption increases.
Distribution refers to the allocation of income among different sections of society, the process of moving goods from producers to consumers, and probability distributions in statistics.
Dutch Disease refers to the economic concept where an increase in one type of export, typically natural resources, leads to an appreciating exchange rate, negatively impacting other export sectors and domestic products' competitiveness.
Dynamic Adjustment refers to the process through which market prices and quantities adapt over time due to changes in demand and supply. This entry covers definitions, theoretical frameworks, examples, historical context, and common questions.
A comprehensive analysis of economic costs, detailing their significance, components, historical context, models, and applications in various sectors.
Exploring the concept of economic efficiency, its historical context, types, key events, and detailed explanations, along with practical examples and related terms.
Economic Man refers to an idealized individual who makes rational decisions to maximize personal benefit under constraints. This concept is pivotal in economic theories and models.
Economic Theory is the cornerstone of economic research, focusing on the construction of economic models and development of mathematical methods for their analysis.
An in-depth exploration of effective demand, contrasting it with notional demand, and examining its significance in economics, its historical context, applications, and associated concepts.
Elastic Supply refers to a condition in which the quantity supplied of a good or service significantly changes in response to variations in its market price.
A comprehensive look into the measure of a consumer's willingness to shift consumption between different time periods, known as the Elasticity of Intertemporal Substitution (ε_s).
A comprehensive examination of endogenous growth theory, its principles, historical context, categories, key events, mathematical models, and practical implications in economic growth driven by internal factors.
An in-depth exploration of endogenous variables, including their definitions, applications in econometrics, and related concepts such as endogeneity problems.
A comprehensive explanation of the Envelope Theorem, including historical context, key concepts, mathematical formulations, practical applications, examples, related terms, and more.
An equivalence scale is a method used to adjust household incomes to account for differences in demographic composition, enabling welfare comparisons.
An in-depth examination of the excess burden (deadweight loss), its historical context, key concepts, examples, and significance in economics.
A detailed exploration of the concept of excess demand, its implications in economics, and its impact on market equilibrium.
The margin that is affected by a discrete change in the level to which an activity is undertaken.
An in-depth exploration of how the entry of new firms into an industry can drive up input prices and increase the minimum average total cost for all firms, leading to an upward-sloping long-run supply curve.
A comprehensive look at the Factor Price Equalization theorem within the Heckscher–Ohlin model, detailing how international trade impacts factor prices across countries and aiming for an equalization in an ideal scenario.
A comprehensive exploration of the firm as the fundamental unit in economic theory, its behavior, structure, and various types, alongside theoretical models and practical applications.
An in-depth look at First-Best Allocations, their historical context, key characteristics, and their place in economic theory.
Exploring the concept of fiscal drag, how inflation affects tax systems under progressive tax regimes, and its economic implications.
Fiscal Illusion refers to a systematic misperception of the tax burden by taxpayers when government revenues are unobserved or not fully observed, which may distort democratic decisions on fiscal issues.
An in-depth look into the Fisher Effect, its historical context, mathematical formulas, importance in economics, and real-world applications.
An in-depth analysis of flexible wages, how they adjust in response to economic changes to balance supply and demand for labor, and their implications in economic theories.
A comprehensive exploration of the concept of Free Entry, its implications, historical context, importance in economics, key considerations, related terms, and more.
An in-depth look at the concept of free trade, its historical context, types, key events, implications, and more.
An in-depth exploration of full cost pricing, a practice of setting prices to cover average costs at a normal production rate plus a conventional mark-up, its historical context, key events, models, importance, and applicability.
An in-depth exploration of the two fundamental theorems of welfare economics, which outline the efficiency properties of competitive equilibria, the conditions for decentralization, and their implications in economics.
An in-depth exploration of the concept of gains from trade, its historical context, types, key events, mathematical models, and more.
An integrated state where supply and demand are balanced across multiple markets simultaneously, ensuring comprehensive market stability.
General equilibrium is an approach in economics for analyzing simultaneous equilibrium in all markets within an economy. This article delves into the historical context, key models, importance, applicability, and related concepts.
A situation where overall supply exceeds demand, leading to economic stagnation.
In economic theory, the Golden Rule refers to the optimal relationship between the capital-labour ratio and population growth rate to maximize consumption per capita. In British politics, it refers to a fiscal policy implemented in 1997 under Gordon Brown.
Gradualism is the belief that it is preferable to make a series of small changes in economic policy rather than a single large change. This approach is utilized to manage economic transitions smoothly and avoid potential disruptions.
An overview of Gradualist Monetarism, including its historical context, types, key events, explanations, mathematical models, importance, and applicability.
Explore the dynamics of growth cycles, the process of repeated shifts between periods of high and low growth rates. This article covers historical context, key events, types, detailed explanations, mathematical models, charts, and practical examples.
An exploration of habit persistence in economics, examining how past consumption affects present utility and implications for consumer behavior.
An in-depth analysis of the concept of Homo Economicus, a theoretical figure representing the rational and self-interested decision-maker in classical economics.
An in-depth exploration of homogeneous goods, their economic implications, and real-world examples.
Human capital refers to the skills, knowledge, and experience possessed by an individual, viewed in terms of their value or cost to an organization. The concept was popularized by Gary Becker in the 1960s to explain wage variations and labor market dynamics.
An in-depth exploration of inelastic demand, its implications, and significance in economics.
An in-depth exploration of the inflationary spiral, examining the causes, effects, and mechanisms that perpetuate this economic phenomenon.
Detailed exploration of the flows of goods and services between different sectors of the economy through input-output analysis, examining the assumptions, applications, and implications of the model.
Interest-Elasticity of the Demand for Money measures the responsiveness of the quantity of money demanded to changes in interest rates. It plays a critical role in economics and finance, aiding in policy formulation and economic analysis.
A comprehensive exploration of the concept of internalizing externalities, focusing on how external costs are incorporated into market activities through various mechanisms such as taxes or regulations.
The concept of the 'Invisible Hand' introduced by Adam Smith highlights how self-interest in a free-market economy leads to economic prosperity and efficient resource allocation, without the need for central coordination.
An exploration of involuntary unemployment, examining its causes, historical context, key theories, implications, and related economic concepts.
Comprehensive insight into the Job Acceptance Schedule, its components, key factors influencing it, and its implications in the job market.
Explore the significant contributions of John Maynard Keynes to modern macroeconomics, including his revolutionary ideas on government intervention and economic stabilization.
An in-depth exploration of the Juglar Cycle, a key concept in economic theory that describes medium-term business cycle fluctuations.
A comprehensive overview of Keynesian Consumption Theory, which posits that current income is the primary determinant of consumer spending. This theory, rooted in the economic ideas of John Maynard Keynes, explores consumption patterns, economic implications, and critical perspectives.
Keynesian economists emphasize the use of fiscal policy and government spending to manage economic cycles, in contrast to monetarists who focus on monetary policy.
Understanding the Knock-On Effect in Economics: An in-depth exploration of how one action or event can have secondary or indirect consequences, impacting the entire economic system until a new equilibrium is reached.
An exploration of the Kondratieff Cycle, a supposed long cycle in economic activity spanning approximately 60 years, its historical context, theories, evidence, and significance.
Explore the concept of labour intensity, the proportion of labour in total inputs to a productive process, and its significance in economic and industrial contexts.
An in-depth examination of the labour market, its components, historical context, and significance in economic systems.
Explore the Laffer Curve, its historical context, key events, mathematical models, and its importance in economic theory. Learn about its applicability, examples, and related terms.
Limit Pricing is a strategy used by incumbent firms to set prices low enough to discourage new competitors from entering the market.
Linear Flow Models depict a one-way movement of resources, often oversimplifying the intricate dynamics of real-world economies.
The Locomotive Principle is an economic theory positing that growth in an economy, or the global economy, is driven by the expansion of leading sectors or countries.
The long run refers to a period sufficiently long that all variables can be changed, allowing firms and economies to make significant adjustments that are impossible in the short run.
A comprehensive guide to understanding Long-Run Marginal Cost (LRMC), including its historical context, importance in economics, applicability, formulas, examples, and related terms.
A comprehensive exploration of lumpiness in economics, finance, and other fields, emphasizing its implications and applications.
Mainstream Economics, also known as orthodox economics, refers to the dominant approaches including neoclassical and Keynesian economics that shape contemporary economic thought and policy.
A comprehensive examination of the Malthusian Problem, developed by economist Thomas Malthus, which addresses the inherent tension between exponential population growth and linear resource supply.
The Malthusian Trap is a theory that suggests population growth tends to outpace agricultural production, resulting in periodic adjustments in wages and living standards. This concept shows how agricultural limitations can restrict sustainable population growth over time.
