Archives: Terms

Definition of Legal Monopoly A legal monopoly refers to a situation in which a company or individual has exclusive control over the production, distribution, or sale of a particular good or service. This control is granted by the government through legal means, such as patents, copyrights, or licenses. As a […]

Definition of Leakage Leakage is a term used in economics to describe the outflow or loss of income from a system or economy. It refers to the portion of income that is saved, taxed, or used to pay for imports, rather than being spent within the domestic economy. Leakage is […]

Definition of the Law of One Price The Law of One Price states that in competitive markets, identical goods should have the same price when expressed in a common currency. This principle is based on the assumption that there are no restrictions on trade, transportation costs, or other barriers that […]

Definition of the Law of Diminishing Marginal Utility The Law of Diminishing Marginal Utility states that as a consumer increases consumption of a specific product, the satisfaction, or utility, derived from each additional unit of that product decreases. In other words, the more we consume of a product, the less […]

Definition of Law of Diminishing Marginal Productivity The Law of Diminishing Marginal Productivity states that as more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually decrease. In other words, after a certain point, the additional output produced by […]

Definition of Land Value Tax (LVT) The Land Value Tax (LVT) is a tax levied exclusively on the value of land. Unlike most other taxes, it does not take into account the improvements or buildings on the land, only the value of the land itself. LVT is based on the […]

Definition of Land Value Land value refers to the monetary worth of a piece of land. It is determined by various factors including location, accessibility, natural resources, and potential for development. Land value plays a significant role in real estate markets and is a key factor in determining the price […]

Definition of Land Land, in economics, refers to all naturally occurring resources that are used to produce goods and services. It includes not only the surface of the earth but also the minerals, water, forests, and other natural resources found within it. Land is one of the four factors of […]

Definition of Laissez-Faire Laissez-Faire is an economic and political ideology that advocates for minimal government interference in the economy. The term is French and translates to “let do” or “leave alone.” In a laissez-faire system, markets are allowed to operate freely without government regulations or interventions. Example To understand laissez-faire […]

Definition of Laffer Curve The Laffer Curve is a graphical representation that illustrates the relationship between tax rates and tax revenue. It suggests that there is an optimal tax rate that maximizes government revenue. The curve is named after economist Arthur Laffer, who popularized the concept in the 1970s. Example […]