Cost Theory

non-durable goods
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Durable & Non-Durable Goods

urable goods are those goods that don’t wear out quickly and last over a long period of time. Examples of durable goods include land, cars and appliances. While non-durable goods or soft goods are those goods that have a short life cycle. They are generally used up all at once or have a lifespan of less than three…

monopolistic competition
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Economics of Monopolistic Competition

n Monopolistic Competition, there are many small firms who all have very small shares of the market. Firms have many competitors, but each one sells a slightly different product. Firms are neither price takers (perfect competition) nor price makers (monopolies). Example of Monopolistic Competition The athletic shoe market: When you walk into a sports store to…

Oligopoly
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Market Structure: Oligopoly

n an Oligopoly market structure, there are a few interdependent firms dominate the market. They are likely to change their prices according to their competitors. Ex: If Coca Cola changes their price, Pepsi is also likely to. Examples of Oligopolies In the wireless cell phone service industry, the providers that tend to dominate the industry are Verizon, Sprint,…

Free Market
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Free Market: Advantages & Disadvantages

 free market economy promotes the production and sale of goods and services, with little to no control or involvement from any central government agency. Advantages Of A Free Market Consumer Sovereignty In a free market, producers produce what consumers want at a reasonable price. It gives the consumer more choice for their purchases.  Absence of Bureaucracy Free markets…

Theory of Contestable Markets
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Theory of Contestable Markets

What is the Theory of Contestable Markets? he Theory Of Contestable Markets occurs when barriers to entry into the market are weak or low, there is the threat of potential entry, which increases competition in the market. This market is called a contestable market. Thus, even a monopoly may be forced to act as there were many more…

Cost Theory
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Theory of Production: Cost Theory

the Cost Theory, there are two types of costs associated with production – Fixed Costs and Variable Costs. In the short-run, at least one factor of production is fixed, so firms face both fixed and variable costs. The shape of the cost curves in the short run reflect the law of diminishing returns. Cost Theory…

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