Microeconomics

Effects of Subsidies
2

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 health care. Subsidies could also be given to producers to protect their products...
intrinsic theory of value
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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...
Consumer and Producer Surplus
3

Consumer Surplus and Producer Surplus

In Economics, consumers are assumed to be trying to maximize their utility, i.e. the satisfaction they gain from consuming a product. They choose certain quantity of goods that would maximize their utility with their limited income. Consumer Surplus and Producer Surplus represent different areas on demand and supply curve respectively. Consumer Surplus Consumer Surplus is...
the lipstick effect
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The Lipstick Effect

The lipstick effect is the theory that when facing an economic crisis or the economy is in a recession, consumers will be more willing to buy less costly luxury goods. For example, instead of buying expensive fur coats, women will instead purchase expensive lipstick or luxury cologne. Psychology Behind The Lipstick Effect The underlying implication is that consumers...
Price Discrimination
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Price Discrimination

In Economics, Price Discrimination occurs when a firm sells a good or service to different buyers at two or more different prices, for reasons not necessarily associated with cost. Price discrimination results in greater revenue for the firm. For example, Hotel rooms, airline tickets and professional services all offer different prices for different customers. When you are paying...
Price Elasticity of Supply
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Price Elasticity of Supply

In Economics, Price Elasticity of Supply is the responsiveness of quantity supplied when the price of the good changes. It the ratio of the percentage change in quantity supplied to the percentage change in price. Price Elasticity of Supply is always positive, because the Law of Supply says that quantity supplied increases with an increase...

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