Archives: Terms

Definition of Marshallian Demand Function The Marshallian demand function, named after the economist Alfred Marshall, represents the relationship between the quantity of goods consumers are willing to buy and their prices, holding all other factors constant such as income levels and the prices of other goods. This function is central […]

### Market Structure Definition of Market Structure Market structure refers to the competitive environment in which businesses operate. It describes the characteristics that influence the nature of competition and pricing within a market. These characteristics include the number of firms, the similarity of the products they sell, the ease of […]

Definition of Market Failures Market failures occur when the allocation of goods and services by a free market is not efficient. In other words, there are situations where the market on its own fails to produce an optimal outcome, leading to a loss of economic efficiency. Market failures can be […]

Definition of Marginal Value Marginal Value, in the context of economics, refers to the additional benefit received by a consumer or a producer from consuming or producing one more unit of a good or service. This concept is fundamental to the understanding of how decisions are made in the marketplace. […]

Definition of Marginal Propensity to Save The Marginal Propensity to Save (MPS) is an economic metric that measures the proportion of each additional unit of household income that is saved rather than spent on consumption. It is a concept central to Keynesian economics, representing how much of an extra dollar […]

Definition of Marginal Propensity to Import (MPM) Marginal Propensity to Import (MPM) refers to the ratio of change in imports to a change in national income or disposable income. It is a measure of how much import spending changes with a change in income. MPM is a crucial indicator in […]

Definition of Marginal Propensity to Consume The Marginal Propensity to Consume (MPC) is a measure that represents the amount of additional income that households spend on consumption instead of saving. Specifically, it is the ratio of the change in consumption to the change in disposable income. In essence, MPC answers […]

Definition of Marginal Product of Capital The Marginal Product of Capital (MPK) is a concept in economics that refers to the additional output or production yield resulting from a one-unit increase in the capital input, holding all other inputs constant. This capital input could be in the form of machinery, […]

Definition of Marginalism Marginalism is an economic theory that explores how individuals make decisions based on the incremental or marginal benefits they anticipate from those decisions. It emphasizes the significance of margins in the economy, asserting that most economic decisions are made with considerations to changes or differences rather than […]

Definition of Marginal Efficiency of Capital Marginal Efficiency of Capital (MEC) is a concept in economics used to describe the rate of return expected from an additional unit of capital, such as machinery or equipment, given the cost of that capital. It represents the profit that businesses anticipate earning from […]