Archives: Terms

Definition of Marginal Tax Rate The marginal tax rate (MTR) is the rate of tax applied to an individual’s next unit of income. That means it is the rate of tax applied to the next dollar of income a person earns. It is important to note that the marginal tax […]

Definition of Market A market is defined as a place where buyers and sellers come together to exchange goods and services. That means it is a physical or digital platform where buyers and sellers can interact and negotiate prices for goods and services. Example To illustrate this, let’s look at […]

Definition of Market Economy A market economy is an economic system in which the production and distribution of goods and services are determined by the interactions of buyers and sellers in the marketplace. That means it is a system in which the prices of goods and services are determined by […]

Definition of Market Failure Market failure is defined as a situation in which the free market fails to allocate resources efficiently. That means it occurs when the market does not produce the desired outcome, either because of an inefficient allocation of scarce resources or because of a lack of competition. […]

Definition of Market for Loanable Funds The market for loanable funds describes the market for savings and investments. It is based on the idea that the demand for loanable funds comes from borrowers who want to invest in projects (i.e., businesses that demand funds), and the supply of loanable funds […]

Definition of Income Effect The income effect is an economic concept that describes the change in the demand for a good or service due to a change in the consumer’s income. That means it is the effect of a change in income on demand for a good or service because […]

Definition of In-Kind Transfers In-kind transfers are a type of government assistance program in which the government provides goods or services directly to individuals or households in need. That means instead of providing cash, the government provides the needy with goods or services that they need. Example To illustrate this, […]

Definition of Import Quota An import quota is a restriction on the amount of a certain good that can be imported into a country. That means it is a type of protectionist trade policy that limits the quantity of a certain good that can be imported and sold domestically. Example […]

Definition of Implicit Costs Implicit costs are input costs that are not directly paid for but still have an economic impact. That means they are the costs that don’t require an actual cash payment by the company, like opportunity costs of using resources. They are the counterpart to explicit costs and […]