Three Types of Tax Systems

Three Types of Tax Systems

Taxes are one of the most controversial topics in economics. While most people agree that they are necessary, there is a lot of disagreement over how the tax burden should be distributed across the population. Nowadays, most taxes are designed according to what we call the ability-to-pay principle. This principle […]

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How to Calculate Average Total Cost

How to Calculate Average Total Cost

Average total cost (i.e. ATC) is defined as the sum of all production costs divided by the quantity of output produced. That is, it measures how much a firm has to spend on each unit of output it produces. This concept is extremely important to understand how firms set prices and […]

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Three Types of Price Discrimination

Three Types of Price Discrimination

Price discrimination occurs when firms charge individual customers (or groups of customers) different prices for the same goods or services. That means, instead of charging all consumers one single price, they set different prices for different customers, depending on the maximum amount these customers are willing to pay. This allows the firms […]

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Three Government Policies towards Externalities

Three Government Policies Towards Externalities

Negative externalities often cause markets to fail, i.e. to reach an inefficient outcome for society as a whole. When that happens, the government can respond in one of two ways. It can use command-and-control policies to directly regulate problematic behavior, or it can use market-based policies to provide incentives that […]

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Most Popular Posts of 2018

Most Popular Posts of 2018

With the beginning of 2019, another exciting year has passed for Quickonomics. That means, it’s time for our annual review of the most popular posts again. Over the course of last year, Quickonomics has managed to grow its audience even further and strengthen its position as a reliable online source in the […]

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Causes of Monopoly Markets

Three Causes of Monopoly Markets

In an economic context, a monopoly is a firm that has market power. That means, unlike firms in a competitive market, a monopolist has the ability to influence the market price of the good or service it sells. By definition, a firm is considered a monopoly if it is the […]

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The Limits of Homo Oeconomicus

The Limits of Homo Oeconomicus

In economics, we often assume that people act like what we call a Homo Oeconomicus. That means, they are always rational. More specifically, a Homo Oeconomicus always maximizes utility (as a consumer) or profits (as a producer). To do this, they rationally weigh all the costs and benefits and always chose […]

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How to Calculate Elasticities Using the Midpoint Method

How to Calculate Price Elasticities Using the Midpoint Formula

Price elasticity of demand is a measure that shows how much quantity demanded changes in response to a change in price.  It is calculated as the percentage change in quantity demanded divided by the percentage change in price (see also Elasticitiy of Demand). However, as you will notice sooner or […]

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Production Possibility Frontier

How to Draw a Production Possibility Frontier

The production possibility frontier (PPF) is a graph that shows all maximum combinations of output that an economy can achieve, when available factors of production are used effectively. It is also known as the transformation curve or the production possibility curve. The PPF is a great concept because it beautifully […]

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How to calculate equilibrium price and quantity

How to Calculate Equilibrium Price and Quantity

In economics, the market equilibrium is defined as a state in a market where there is no pressure for change. That is, there is no pressure for price to move up or down. The primary forces behind this are supply and demand. As long as demand is greater than supply […]

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