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.
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.
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.
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.
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.
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.”