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Microeconomics

Decision Fatigue

Decision fatigue refers to the deteriorating quality of decisions made by an individual, after continuously making decisions. Behavioral Economists now understand it as one of the causes of irrational trade-offs in decision-making. Decision fatigue may also lead to consumers making poor choices with their purchases.Effects of Decision…
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The Coase Theorem

The Coase Theorem states "that when there are conflicting property right, bargaining between the parties involved will lead to an efficient outcome regardless of which party is ultimately awarded the property rights, as long as the transaction costs associated with bargaining are negligible."The cost for a lawsuit would be the same for the two…
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Price Control – Price Floor

A Price Floor or a minimum price is an intervention to raise market prices if the government feels the price is too low. In this case, since the new price is higher, the producers benefit. Ex: farmers - many governments intervene by establishing price floors to ensure that farmers make enough money. The most common price floor is the minimum…
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Indirect Taxes

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. A specific tax is imposed on each unit, i.e. $0.50 on a pack of cigarettes, while an ad valorem tax (or percentage tax) is a percentage of the price like a sales tax of 10%. Indirect taxes…
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Subsidies

In Economics, subsidies are a form of support given to producers that help reduce the cost of production which results in an increase in production and consumption. Goods that governments want to increase the consumption of are subsidized; such as education or healthcare. Subsidies could also be given to producers to protect their products from…
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The Intrinsic Theory of Value

The Intrinsic Theory of Value (also known as the theory of objective value) is any theory of value in economics which holds that the value of an object, good or service, is intrinsic or contained in the item itself. These theories try to explain the exchange value or price of a good or service. Most such Intrinsic Theories of Value look at the…
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