Price Elasticity of Demand

Price Elasticity of Demand (PED) is defined as the responsiveness of quantity demanded to a change in price. It is also the slope of the demand curve. We calculate the slope as "rise over run." For example, if I increase the price of a phone from $300 to $500, then how much can I expect my demand to fall? This answer will depend on various…
Read More...

Marginal Rate of Substitution

The Marginal Rate of Substitution (MRS) is defined as the rate at which a consumer is ready to exchange a number of units good X for one more of good Y at the same level of utility. The Marginal Rate of Substitution is used to analyze the indifference curve. This is because the slope of an indifference curve is the MRS. Marginal Rate of…
Read More...

Introduction to Behavioral Economics

Introduction to Behavioral Economics Behavioral economics is a field of economics that attempts to understand why people behave ‘unexpectedly’ in contrast to the traditional economic theory of the rational individual. One common example in behavioral economics is the jam study: people are more likely to purchase (and be satisfied with) a jar of…
Read More...

Malthusian Theory of Population

The Malthusian Theory of Population is a theory of exponential population growth and arithmetic food supply growth. Thomas Robert Malthus, an English cleric, and scholar published this theory in his 1798 writings, An Essay on the Principle of Population. He believed that through preventative checks and positive checks, the population would be…
Read More...

Indifference Curve

An indifference curve depicts a line representing all the combinations of two goods that consumers place equal value. That is to say, they would be indifferent to either good. The consumer has no preference for either combination of goods on the same line because they are understood to provide the same level of utility to the consumer.…
Read More...

The Environmental Kuznets Curve

The Environmental Kuznets Curve is used to graph the idea that as an economy develops, market forces begin to increase and economic inequality decreases. More specifically that as the economy grows, initially the environment suffers but eventually the relationship between the environment and the society improves. The Environmental Kuznets Curve…
Read More...