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Behavioral Economics

Behavioral Economics
Adverse Selection

Sometimes known as “anti-selection,” Adverse selection describes circumstances in which either buyers or sellers use information that the other group does not have, specifically about risk factors related to a particular business undertaking/transaction.

Prateek Agarwal
Prateek Agarwal
March 24, 2020
Behavioral Economics
Opportunity Cost

Opportunity cost is the positive opportunities missed out on by choosing a particular alternative (the next-best option). In other words, it’s what you don’t get to do when you make a choice.

Prateek Agarwal
Prateek Agarwal
January 12, 2020
Behavioral Economics
Availability Bias

Availability bias describes the way in which human beings are biased toward judging events’ likelihood/frequency based on how easily their minds can conjure up examples of the event occurring in the past.

Prateek Agarwal
Prateek Agarwal
July 29, 2019
Behavioral Economics
Time Inconsistency

The concept of time inconsistency can help us understand why some people procrastinate at work until the last minute, why we often buy gym memberships and don’t end up going, and much more.

Guest Author
Guest Author
August 15, 2018
Behavioral Economics
Decisions Involving Uncertainty

Decision-making under uncertainty is a complex topic because all decisions are made with some degree of uncertainty.

Guest Author
Guest Author
July 02, 2018
Behavioral Economics
Reference Dependent Preferences

Reference dependent preferences are those that depend on comparisons to reference points (often the current state (the status quo), past states, expectations about future states, or social comparisons).

Guest Author
Guest Author
May 29, 2018

Cost Theory

Cost Theory
Economic Profit

Economic profit is different from the general business term ‘profit’. The general assumption is that firms are producing goods to maximize profits.

Prateek Agarwal
Prateek Agarwal
April 22, 2021
Cost Theory
Economies of Scale

Economies of scale are achieved when increasing the scale of production decreases long-term average costs. In other words, the cost of production per unit decreases as a company produces more units.

Prateek Agarwal
Prateek Agarwal
April 13, 2020
Cost Theory
Diseconomies of Scale

Diseconomies of scale are the product of decreasing returns to scale. In other words, they happen when a business grows to the point that its per-unit costs begin to rise, rather than continuing to decrease as with economies of scale.

Prateek Agarwal
Prateek Agarwal
April 03, 2020
Cost Theory
Perfect Competition

Perfect competition or pure competition is a type of market structure. It is important to note that this form of market structure does not actually exist in the real world and is thus considered to be theoretical.

Prateek Agarwal
Prateek Agarwal
March 31, 2020
Cost Theory
Oligopoly Market Structure

In an oligopoly market structure, there are just a few interdependent firms that collectively dominate the market. While individually powerful, each of these firms also cannot prevent other competing firms from holding sway over the market.

Prateek Agarwal
Prateek Agarwal
March 02, 2020
Cost Theory
Monopolistic Competition

In monopolistic competition, there are many small firms who all have minimal shares of the market. Firms have many competitors, but each one sells a slightly different product.

Prateek Agarwal
Prateek Agarwal
February 27, 2020

Development Economics

Development Economics
Malthusian Theory of Population

The Malthusian Theory of Population is a theory of exponential population growth and arithmetic food supply growth created by Thomas Robert Malthus.

Prateek Agarwal
Prateek Agarwal
November 21, 2020
Development Economics
The Demographic Transition Model

The demographic transition model (DTM) shows shifts in the demographics of a population during economic and social development. This transition is two-fold: both death and birth rates go from high to low over time as development progresses.

Prateek Agarwal
Prateek Agarwal
March 26, 2020
Development Economics International Economics
Purchasing Power Parity

Purchasing power parity (PPP) is a theory that says that in the long run (typically over several decades), the exchange rates between countries should even out so that goods essentially cost the same amount in both countries.

Prateek Agarwal
Prateek Agarwal
February 02, 2020
Development Economics
Foreign Aid

Foreign aid is defined as the voluntary transfer of resources from one country to another country. This transfer includes any flow of capital to developing countries. A developing country usually does not have a robust industrial base and is characterized by a low Human Development Index (HDI).

Prateek Agarwal
Prateek Agarwal
August 08, 2019
Development Economics
Relative Poverty

Relative poverty is the level of poverty which changes depending on the context–it’s relative to the economic context in which it exists. Relative poverty is present when a household income is lower than the median income in a particular country.

Prateek Agarwal
Prateek Agarwal
June 02, 2019
Development Economics
The Easterlin Paradox

The Easterlin Paradox was theorized by Professor Richard Easterlin, who is an Economics Professor at the University of Southern California. In his paper titled, “Does Economic Growth Improve the Human Lot? Some Empirical Evidence”, he concluded that a country’s level of economic development and level of happiness are not connected.

Prateek Agarwal
Prateek Agarwal
December 03, 2018

Financial Economics

Financial Economics
The Federal Reserve

The Federal Reserve (known more informally as “the Fed”) is the central bank of the United States of America. It is made up of a network of 12 regional Federal Reserve banks, but the Fed’s power centers in its New York bank.

Prateek Agarwal
Prateek Agarwal
April 02, 2019
Financial Economics
The Glass-Steagall Act

The Glass-Steagall Act (1933) separated depository institutions aka retail banks from investment banks and limited securities, activities, and affiliations within commercial banks and securities firms.

Prateek Agarwal
Prateek Agarwal
January 25, 2019
Financial Economics
Commercial Banks

Commercial Banks are a type of financial institution that provides loans, accepts deposits, and offers financial products and services like savings accounts or a certificate of deposit to individuals and businesses.

Prateek Agarwal
Prateek Agarwal
September 24, 2018
Financial Economics
Monetary System

A Monetary System is defined as a set of policies, frameworks, and institutions by which the government creates money in an economy. Such institutions include the mint, the central bank, treasury, and other financial institutions. There are three common types of monetary systems – commodity money, commodity-based money, and fiat money.

Prateek Agarwal
Prateek Agarwal
February 09, 2018
Financial Economics
The Stock Market

A stock market (also known as an equity market or share market), is a collection of buyers and sellers of stocks. These stocks represent ownership interests in companies. These may include publicly or privately traded securities. The New York Stock Exchange (NYSE) is an example of a share market.

Prateek Agarwal
Prateek Agarwal
December 17, 2017
Financial Economics
Financial Intermediaries

A financial intermediary is a financial institution that connects surplus and deficit agents. The classic example of a financial intermediary is a bank that consolidates deposits and uses the funds to transform them into loans.

Prateek Agarwal
Prateek Agarwal
August 20, 2017

International Economics

International Economics
Absolute Advantage

According to Adam Smith, who is regarded as the father of modern economics, countries should only produce goods that they have an absolute advantage in.

Prateek Agarwal
Prateek Agarwal
November 21, 2020
International Economics
Trading Bloc

A trading bloc is a formal agreement between two or more regional countries that remove trade barriers between the countries in the agreement while keeping trade barriers for other countries.

Prateek Agarwal
Prateek Agarwal
April 15, 2020
International Economics
Letter of Credit

A Letter of credit is an obligation of a bank, usually irrevocable, issued on behalf of their customer and promising to pay a sum of money to a beneficiary upon the happening of a certain event or events.

Prateek Agarwal
Prateek Agarwal
March 03, 2020
International Economics
Comparative Advantage

Comparative advantage is a situation in which a country may produce goods at a lower opportunity cost than another country, but not necessarily have an absolute advantage in producing that good.

Prateek Agarwal
Prateek Agarwal
February 18, 2020
Development Economics International Economics
Purchasing Power Parity

Purchasing power parity (PPP) is a theory that says that in the long run (typically over several decades), the exchange rates between countries should even out so that goods essentially cost the same amount in both countries.

Prateek Agarwal
Prateek Agarwal
February 02, 2020
International Economics
Trade Barriers

There are four types of trade barriers that can be implemented by countries. They are Voluntary Export Restraints, Regulatory Barriers, Anti-Dumping Duties, and Subsidies.

Prateek Agarwal
Prateek Agarwal
July 28, 2019

Introduction to Economics

Introduction to Economics
Inferior Good

The term “inferior good” describes a good for which demand decrease as incomes increase. They are the opposite of “normal goods,” which are goods for which demand increases as incomes increase.

Prateek Agarwal
Prateek Agarwal
March 11, 2021
Introduction to Economics
Economic Systems

The way scarce resources get distributed within an economy determines the type of economic system. There are four different types of Economic Systems; a traditional economy, a market economy, a command economy, and a mixed economy.

Prateek Agarwal
Prateek Agarwal
April 20, 2020
Introduction to Economics
Free Market

A free market economy is a type of economy that promotes the production and sale of goods and services, with little to no control or involvement from any central government agency.

Prateek Agarwal
Prateek Agarwal
April 16, 2020
Introduction to Economics
Capitalism

Capitalism is an economic system in which private individuals and/or companies own the four factors of production. The four factors are land, capital, land/natural resources, and entrepreneurship.

Prateek Agarwal
Prateek Agarwal
April 02, 2020
Introduction to Economics
What is Economics?

Economics, a discipline and set of methodologies within the social sciences, can be described in a multitude of ways. The field focuses on the distribution, consumption, and production of wealth; one can also say that economists study human behavior and choice regarding buying and selling.

Prateek Agarwal
Prateek Agarwal
March 11, 2020
Introduction to Economics
Command Economy

In a command economy system, it is not the free market but the government that makes important decisions like which goods to produce, what amount of these goods to produce, and how much they cost. The government also makes decisions about incomes and investments.

Prateek Agarwal
Prateek Agarwal
February 25, 2020

Macroeconomics

Macroeconomics
The Accelerator Effect

The Accelerator Effect, a Keynesian concept, is used to explain the level of investment in an economy. The accelerator effect refers to a positive effect on private fixed investment of the growth of the market economy.

Prateek Agarwal
Prateek Agarwal
May 07, 2021
Macroeconomics
Expansionary Monetary Policy

Expansionary monetary policy is a form of macroeconomic monetary policy that seeks to amplify economic growth and aggregate demand. In order to do so, regulatory authorities like central banks “loosen” monetary policy by increasing the money supply and/or lowering interest rates.

Prateek Agarwal
Prateek Agarwal
March 09, 2021
Macroeconomics
Frictional Unemployment

Frictional unemployment is a form of unemployment that specifically arises in a healthy economy. In most cases, frictional unemployment is voluntary.

Prateek Agarwal
Prateek Agarwal
January 15, 2021
Macroeconomics
Demand Side Policies

Demand side policies affect aggregate demand to affect output, employment and inflation.They can be classified into fiscal policy and monetary policy.

Prateek Agarwal
Prateek Agarwal
December 07, 2020
Macroeconomics
Business Cycle

The different phases and fluctuations that an economy goes through over time, such as periods of booms (expansions) and economic recessions (contractions), are collectively known as the business cycle.

Prateek Agarwal
Prateek Agarwal
December 07, 2020
Macroeconomics
Cost-Push Inflation

A fall in Aggregate Supply is the cause of Cost-Push Inflation. An interaction of cost-push inflation & demand-pull inflation results in a wage-price spiral.

Prateek Agarwal
Prateek Agarwal
November 21, 2020

Microeconomics

Microeconomics
Indirect Tax

An indirect tax is a tax applied on the manufacture or sale of goods and services. There are two types of indirect taxes – ad valorem tax and specific tax.

Prateek Agarwal
Prateek Agarwal
April 30, 2021
Microeconomics
Constant Returns to Scale

The concept of “returns to scale” describes the rate of increase in production relative to the associated increase in the factors of production in the long run. In other words, it describes how effectively and efficiently—in other words, profitably—a particular company or business is producing its goods or services.

Prateek Agarwal
Prateek Agarwal
April 23, 2021
Microeconomics
Externalities

Externalities are a form of market failure. Externalities are defined as the spillover effects of the consumption or production of a good that is not reflected in the price of the good.

Prateek Agarwal
Prateek Agarwal
April 21, 2020
Microeconomics
Price Elasticity of Demand (PED)

Price Elasticity of Demand (PED) is defined as the responsiveness of quantity demanded to a change in price. The demand for a product can be elastic or inelastic, depending on the rate of change in the demand with respect to the change in the price.

Prateek Agarwal
Prateek Agarwal
April 19, 2020
Microeconomics
Economies of Scope

When there are economies of scope, the long-run marginal and average costs for a given actor (whether a firm or, on a larger scale, an economy) lessen with the production of complementary goods/services.

Prateek Agarwal
Prateek Agarwal
April 09, 2020
Microeconomics
Deadweight Loss

A deadweight loss is a cost to society as a whole that is generated by an economically inefficient allocation of resources within the market. Deadweight loss can also be referred to as “excess burden.”

Prateek Agarwal
Prateek Agarwal
March 18, 2020

News

News
The 25 Best Economics Podcasts Of 2020

2020 has been a year for the books. Between a global pandemic, a recession, and social movements rippling through societies, it’s more important than ever before to make sense of the world around us. Which is why we’ve done it again. We went through the wringer to bring you our top picks for the 25 […]

Prateek Agarwal
Prateek Agarwal
October 05, 2020
News
Top 100 Economics Blogs of 2020

Welcome, and thank you for joining us for the 5th annual Top Economics Blogs list! We are happy, once again, to introduce to you a freshly updated list of economics blogs for 2020.

Prateek Agarwal
Prateek Agarwal
June 15, 2020
News
The US Healthcare System

In 2010, the U.S. saw the passage of the historic Affordable Care Act (ACA) which was the most significant piece of health policy legislation in fifty years.

Prateek Agarwal
Prateek Agarwal
May 16, 2020
News
The 10 Best URL Shorteners

A URL Shortener is a technique in which a URL may be made substantially shorter in length and still direct to the required page. A URL Shortener achieves this using a redirect on a domain name that is short. The short URL links to the web page that has a long URL.

Prateek Agarwal
Prateek Agarwal
February 05, 2020
News
The 25 Best Economics Podcasts Of 2019

Here’s an update to our list of the 25 best economics podcasts, which we’ve done every year since 2016–and it only gets more popular each year, as the medium of podcasting grows increasingly widespread and gains more mainstream traction.

Prateek Agarwal
Prateek Agarwal
September 16, 2019
News
The Best Economics Books [2020]

Whether you have no formal knowledge of economics, or you took a couple of economics courses in college, or you’re a current economics major, you might be looking for interesting and well-written economics books to help you gain a deeper understanding of this complex and influential discipline.

Prateek Agarwal
Prateek Agarwal
July 15, 2019

Latest posts

Macroeconomics
The Accelerator Effect
Prateek Agarwal
Prateek Agarwal
May 07, 2021
Microeconomics
Indirect Tax
Prateek Agarwal
Prateek Agarwal
April 30, 2021
Microeconomics
Constant Returns to Scale
Prateek Agarwal
Prateek Agarwal
April 23, 2021
Cost Theory
Economic Profit
Prateek Agarwal
Prateek Agarwal
April 22, 2021
Introduction to Economics
Inferior Good
Prateek Agarwal
Prateek Agarwal
March 11, 2021
Macroeconomics
Expansionary Monetary Policy
Prateek Agarwal
Prateek Agarwal
March 09, 2021
Macroeconomics
Frictional Unemployment
Prateek Agarwal
Prateek Agarwal
January 15, 2021
Macroeconomics
Demand Side Policies
Prateek Agarwal
Prateek Agarwal
December 07, 2020