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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Difference between Individual and Market Supply

In economics, supply is defined as the quantity of a specific good or service that producers are willing to provide over a given period of time. This definition looks at all producers combined (i.e. aggregate data). However, individual producers may be willing to provide significantly different quantities of any given […]

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The world's top 10 Economies by GDP

The World’s Top 10 Economies by GDP

Gross Domestic Product (i.e. GDP) is one of the most common measures of economic output and strength.¬†Virtually all countries around the world measure and report their GDP on a regular basis. This allows us to directly compare their economic power. Fortunately, the World Bank provides a comprehensive database of economic […]

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Difference between Individual and Market Demand

Difference between Individual and Market Demand

In an economic context, demand is defined as the quantity of a specific good or service that consumers are willing and able to buy over a given period of time. As you can tell, this definition looks at all consumers combined (i.e. aggregated data). However, individual consumers may have different […]

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How to Calculate Economic Profit

How to Calculate Economic Profit

Economic profit is defined as the difference between total revenue and total cost, including both explicit and implicit cost. The inclusion of implicit cost is what separates economic profit from the more common accounting profit (which only accounts for explicit cost). Even though the latter is more commonly used in […]

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