Elasticity in Economics: The Four Measures and How to Use Them
Elasticity in economics measures how strongly markets respond to changes in price, income, or related prices. Explains all five elasticities,...
Microeconomics
Uncover individual economic decisions, supply-demand dynamics, and market behaviors that drive our world.
Missing Markets Economics: When Prices Fail to Exist
Missing markets economics studies the trades that never happen. When information, property rights, or excludability fail, no price emerges and...
Positive Externality Diagram: Subsidies and Underproduction
The positive externality diagram shows how markets underproduce vaccinations, education, and research, and how a per-unit subsidy at marginal external...
Negative Externality Diagram: Taxes and Welfare Loss
The negative externality diagram shows how a Pigouvian tax set at marginal external cost shifts supply to MSC, eliminating the...
Private Cost and Social Cost: Externality Curves Explained
Private cost is what firms pay; social cost adds the spillovers they ignore. The MPC, MSC, and MSB curves explain...
Deadweight Loss: Welfare Cost of Market Distortions
Deadweight loss is the welfare triangle that disappears when taxes, tariffs, monopolies, or price controls cut off mutually beneficial trade...
Core of an Exchange Economy: Blocking Coalitions
core of an exchange economy analysis explains how blocking coalitions restrict feasible trades and why competitive markets shrink the stable...
Contract Curve: Pareto Efficient Allocations
contract curve analysis derives Pareto-efficient allocations in an Edgeworth box by equating two agents’ marginal rates of substitution at tangency...
Giffen Goods: When Demand Curves Slope Upward
Giffen goods are inferior staples whose demand rises with price because the income effect overwhelms substitution. Jensen and Miller's 2008...
Marginal Rate of Substitution: Slope, Concavity, and Choice
The marginal rate of substitution is the slope of the indifference curve at a point and the ratio of marginal...