Public Goods A?public good?is substantially different to a?private good Private goods?are goods which firms are able to provide to?generate profits. They can generate profits as these goods are?exc...
Externalities & Different Types of Costs Externalities?occur when there is an external impact?on a third party?not involved in the economic transaction These impacts can be?positive or negative...
Understanding Market Failure In a?free market, the price mechanism determines the most?efficient allocation?of scarce resources in response to the competing wants and needs in the marketplace Scarc...
Alternative Views of Consumer Behaviour Free markets?are built on the assumptions of?rational decision making In classical economic theory, the word 'rational' means that?economic agents?are able t...
Indirect Taxes An?indirect tax?is paid on the consumption of goods/services It is only paid if consumers make a?purchase It is usually levied by the government on?demerit goods?to reduce the quanti...
Producer & Consumer Surplus Consumer surplus?is the difference between the amount the?consumer is willing to pay?for a product and the price they have?actually paid For example, if a consumer i...
Functions of The Price Mechanism The price mechanism is the interaction of demand and supply in a free market This interaction?determines prices?which are the means by which?scarce resources are al...
Price Determination & Equilibrium Price Determination In a?free market?economy, prices are determined by the?interaction of demand and supply?in a?market A?market?is any place that brings?buyer...
Price Elasticity of Supply (PES) The?law of supply?states that when there is an increase in price (ceteris paribus), producers will increase the quantity supplied and vice versa Economists are inte...
