Archives: Resources

Price Taker

What is a Price Taker? A price taker, in economics, refers to a market participant that is not able to dictate the prices in a market. Therefore, a price taker must accept the prevailing market price. A price taker lacks enough market power to influence the prices of goods or services. Price Takers in a…

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Eurozone

What is the Eurozone? All European Union countries that adopted the euro as their national currency form a geographical and economic region known as the Eurozone. The Eurozone forms one of the largest economic regions in the world. Nineteen of the 28 countries in Europe use the euro as their national currency and, thus, it…

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Gross National Product

What is Gross National Product (GNP)? Gross National Product (GNP) is a measure of the value of all goods and services produced by a country’s residents and businesses. It estimates the value of the final products and services manufactured by a country’s residents, regardless of the production location. GNP is calculated by adding personal consumption…

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J Curve

What is a J Curve? A J Curve is a chart where the line plotted falls at the beginning and rises gradually to a point higher than the starting point, forming the shape of the letter J. It reflects a phenomenon in which a period of unfavorable returns is followed by a period of gradual…

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Free Rider

What is a Free Rider? A free rider is a person who benefits from something without expending effort or paying for it. In other words, free riders are those who utilize goods without paying for their use. The Free Rider Problem The free rider problem is an economic concept of a market failure that occurs…

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Cost Allocation

What is Cost Allocation? Cost allocation is the process of identifying, accumulating, and assigning costs to costs objects such as departments, products, programs, or a branch of a company. It involves identifying the cost objects in a company, identifying the costs incurred by the cost objects, and then assigning the costs to the cost objects…

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Deadweight Loss

What is Deadweight Loss? Deadweight loss refers to the loss of economic efficiency when the equilibrium outcome is not achievable or not achieved. In other words, it is the cost born by society due to market inefficiency. Video Explanation of Deadweight Loss Below is a short video tutorial that describes what deadweight loss is, provides…

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Barriers to Entry

What are Barriers to Entry? Barriers to entry are the obstacles or hindrances that make it difficult for new companies to enter a given market. These may include technology challenges, government regulations, patents, start-up costs, or education and licensing requirements. American economist Joe S. Bain gave the definition of barriers to entry as “an advantage of…

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Economic Indicators

What are Economic Indicators? An economic indicator is a metric used to assess, measure, and evaluate the overall state of health of the macroeconomy. Economic indicators are often collected by a government agency or private business intelligence organization in the form of a census or survey, which is then analyzed further to generate an economic…

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Substitute Products

What are Substitute Products? Substitute products offer consumers choices when making purchase decisions by providing equally good alternatives, thus increasing utility. However, from a company’s perspective, substitute products create a rivalry. As a result, businesses may incur high marketing and promotional costs when competing for market share, which, in turn, reduces operating profits. Some companies are…

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