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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World's Top 10 Economies by Imports

World’s Top 10 Economies by Imports

In our globalized economy international trade is one of the most critical drivers of economic growth. While virtually all countries engage in international trade, some of them are more active than others. We have already created a list of the world’s top 10 countries by exports a while ago.  But for […]

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World's top 10 Economies by Exports

The World’s Top 10 Economies by Exports

International trade is one of the most important drivers of economic growth. Most countries export a significant share of the goods and services they produce to other countries. These exports are extremely important, because they have a direct impact on economic growth, employment, and the standard of living within the […]

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Ordinary Goods vs Giffen Goods

Ordinary Goods vs. Giffen Goods

The law of demand is one of the most fundamental economic concepts. It states that the quantity demanded of a good decreases as its price increases (and vice versa). While this holds true for most goods and services, there are some exceptions to the rule. Therefore, we can distinguish at […]

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Limitations of the Consumer Price Index (CPI)

Limitations of the Consumer Price Index (CPI)

The consumer price index (CPI) is a measure of the overall price level of goods and services bought by a typical consumer in a particular economy.  Its goal is to measure the cost of living and show the effects of inflation on individual consumers. However, like most indicators, the CPI […]

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What is the tragedy of the commons

What is the Tragedy of the Commons?

The tragedy of the commons is a famous economic story that illustrates why common resources tend to get overused from the perspective of society. The narrative is based on the assumption that every individual tries to get the highest possible benefit from a given resource. In the case of common […]

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What is the Gini Index

What is the Gini Index?

The Gini index (i.e. the Gini coefficient) is a statistical measure of distribution, developed by Corrado Gini in 1912. In an economic context it is commonly used as an index of economic inequality that measures income or wealth distribution among the population. The index ranges from 0 to 1, although […]

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Difference between Cournot and Bertrand Competition

Difference between Cournot and Bertrand Competition

An oligopoly is a market structure where only a few sellers serve the entire market. Because of their strong position in the market, these firms have the power to influence the price. That means, unlike in a market with perfect competition, they are no longer price takers, but price makers. […]

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World's Top 10 Economies by Per Capita GDP

The World’s Top 10 Economies by Per Capita GDP

GDP is without a doubt one of the most common measures of economic strength. It is used by economists and policy makers to measure and compare the economic power of countries all around the world (see also Gross Domestic Product). In an earlier article we have created a list of […]

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