What are Public Goods? Public goods are goods that are commonly available to all people within a society or community and that possess two specific qualities: they are non-excludable and non-rivalrous. Everyone has access to use them, and their use does not deplete their availability for future use. Non-excludability – Individuals or groups of individuals…
What are Club Goods? In economics, club goods – also sometimes referred to as scarce or artificially scarce goods – are a subset of public goods that possess one of the two key factors that public goods carry – namely, being non-rivalrous. Characteristics of Club Goods Club goods are non-rivalrous, so they’re not in danger…
What are Flow of Funds Indicators? The flow of funds indicators are metrics used by governments to track the flow of money to and from the national economy. The accounts show the sources of all funds received in the economy and the uses they have been put to in the economy. The national government, investors,…
What are Common-Pool Resources (CPRs)? Common-pool resources (CPRs), also referred to as common goods, are goods that typically possess a natural or constructed system of resources. CPRs are non-excludable, meaning that individuals or populations typically can’t be prevented from using them, even if they aren’t paying for them. They are, however, rivalrous, meaning that their…
What is Standardization? Standardization is the process of creating protocols to guide the creation of a good or service based on the consensus of all the relevant parties in the industry. The standards ensure that goods or services produced in a specific industry come with consistent quality and are equivalent to other comparable products or…
What are Economies of Scale? Economies of scale refer to the cost advantage a firm experiences as it increases its output. The advantage arises due to the inverse relationship between the per-unit fixed cost and the quantity produced. The greater the quantity of output produced, the lower the per-unit fixed cost. Economies of scale also…
What is a Price Ceiling? A price ceiling is a limit on the price of a good or service imposed by the government to protect consumers by ensuring that prices do not become prohibitively expensive. For the measure to be effective, the price set by the price ceiling must be below the natural equilibrium price….
What is Hyperinflation? In economics, hyperinflation is used to describe situations where the prices of all goods and services rise uncontrollably over a defined time period. In other words, hyperinflation is extremely rapid inflation. Generally, inflation is termed hyperinflation when the rate of inflation grows at more than 50% a month. American economics professor Phillip…
What is Disinflation? Disinflation is used to describe the slowing of price inflation. In other words, it is a decrease in the rate of inflation. The term should not be confused with deflation, which is used to describe a negative inflation rate. Disinflation vs. Deflation The terms disinflation and deflation are commonly mixed up. The…
What is a Common Market? A common market is a formal agreement where a group is formed amongst several countries that adopt a common external tariff. In a common market, countries also allow free trade and free movement of labor and capital among the members of the group. The trade arrangement is aimed at providing…
