In economics, the law of supply and demand, the quantity demanded of a good or service increases if its price falls. To see how strong this effect is, we can use the concept of elasticity. More specifically, the price elasticity of demand (PED). Depending on what we are analyzing, different […]
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We live in a globalized world where virtually all countries interact and engage in trade. Most of them have various trade connections with a multitude of different countries. As a consequence, there is a significant amount of competition. This raises the question of how smaller countries with relatively weak economies […]
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Firm behavior in competitive markets is probably one of the most fundamental subjects in economics. That is mainly due to the fact that most markets we encounter in reality are competitive, at least to a certain degree. Competition is characterized by a multitude of firms offering the same (or a […]
Read moreIn economics it is often assumed that companies try to maximize profit. That is, they try to maximize revenue while at the same time minimizing costs. In order to do that, firms need to look “at the margin”. That means, they have to keep an eye on changes in revenue (i.e. marginal […]
Read moreA Monopoly is one of the four typical market structures. It describes a situation where a single firm (or individual) is the sole producer and seller of a product or service in an entire market. It is characterized by a lack of competition. As a result, the monopolist has the ability […]
Read moreThe principle of supply and demand is one of the most important concepts in microeconomics. It helps us understand how and why transactions on markets take place and how prices are determined. To learn more about supply and demand we mainly need to look at consumers and producers. Consumers In this case, […]
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