What is Frictional Unemployment? Frictional unemployment is a type of unemployment that arises when workers are searching for new jobs or are transitioning from one job to another. It is part of natural unemployment and hence is present even when the economy is considered at full employment. Unlike other kinds of unemployment, frictional unemployment does not increase…
What is Nash Equilibrium? Nash Equilibrium is a game theory concept that determines the optimal solution in a non-cooperative game in which each player lacks any incentive to change his/her initial strategy. Under the Nash equilibrium, a player does not gain anything from deviating from their initially chosen strategy, assuming the other players also keep…
What is Structural Unemployment? Structural unemployment is a category of unemployment caused by differences between the skills possessed by the unemployed population and the jobs available in the market. Structural unemployment is a long-lasting condition that is caused by fundamental changes in the economy. Structural unemployment is a significant problem in economics because of its…
What is Scarcity? Scarcity, also known as paucity, is an economics term used to refer to a gap between availability of limited resources and the theoretical needs of people for such resources. As a result, entities are forced to decide how best to allocate a scarce resource in an efficient manner so that most of…
What are Demographics? Demographics refer to the socio-economic characteristics of a population that businesses use to identify the product preferences and purchasing behaviors of customers. With their target market’s traits, companies can build a profile for their customer base. They can determine their key customers or target market and create marketing materials. Demographics also affect…
What is a Duopoly? A duopoly is a type of oligopoly, characterized by two primary corporations operating in a market or industry, producing the same or similar goods and services. The key components of a duopoly are how the firms interact with one another and how they affect one another. In a duopoly, two companies…
What is an Oligopolistic Market or Oligopoly? The primary idea behind an oligopolistic market (an oligopoly) is that a few companies rule over many in a particular market or industry, offering similar goods and services. Because of a limited number of players in an oligopolistic market, competition is limited, allowing every firm to operate successfully….
What is the Gold Standard? In the simplest terms, the gold standard is a monetary system that ties a currency’s value directly with gold. Therefore, the currency can be exchanged for a set amount of gold and is guaranteed by the government. Historically, gold has been one of the most popular exchange mediums that have…
What is Fiscal Policy? Fiscal policy refers to the government’s budgetary policy, which involves controlling its level of spending and tax rates within the economy. The government uses the two tools to influence the economy. It is the sister strategy to monetary policy. Although both fiscal policy and monetary policy are related to government revenues…
What is Conflict Theory? Conflict Theory, developed by Karl Marx, purports that due to society’s never-ending competition for finite resources, it will always be in a state of conflict. The implication of this theory is that those in possession of wealth and resources will protect and hoard those resources, while those without will do whatever they…
