General Concepts 1 min read
Incomplete markets
An incomplete market is one where some of the necessary conditions for market formation exist, but not all of them.…
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General Concepts 3 min read
Pure public goods
The market mechanism is likely to fail to supply pure public goods because entrepreneurs are unlikely to enter the market,…
General Concepts 1 min read
Missing markets
A significant market failure is the failure to produce some goods and services, despite being needed or wanted. Markets can…
General Concepts 1 min read
Index numbers
Economists frequently use index numbers when making comparisons over time. An index starts in a given year, the base year, at…
General Concepts 1 min read
Marginal analysis
Economic decisions are taken in a marginal way, which means that decisions to produce, or consume, are made one at a time.…
General Concepts 1 min read
Increasing opportunity cost
Opportunity cost can be thought of in terms of how decisions to increase the production of an extra, marginal, unit…
General Concepts 2 min read
Pareto efficiency
Any point on a PPF, such as points ‘A’ and ‘B’, is said to be efficient and indicates that an…
General Concepts 1 min read
Interpreting PPFs
Firstly, we can describe the opportunity cost to Mythica of producing a given output of computers or textbooks. For example, If Mythica produces 3m…
General Concepts 1 min read
Production possibility frontiers
An opportunity cost will usually arise whenever an economic agent chooses between alternative ways of allocating scarce resources. The opportunity…
General Concepts 1 min read
Samuelson’s three questions
America’s first Nobel Prize winner for economics, the late Paul Samuelson, is often credited with providing the first clear and simple…
General Concepts 2 min read
Choice and opportunity cost
Choice and opportunity cost are two fundamental concepts in economics. Given that resources are limited, producers and consumers have to make choices between…
General Concepts 1 min read
The economic problem
All societies face the economic problem, which is the problem of how to make the best use of limited, or scarce,…
