Natural Monopolies

Most of us are well-acquainted with the idea of a monopoly: when there is only one firm prevailing in a particular industry. However, from a regulatory view, monopoly power exists when a single firm controls 25% or more of a specific market. For example, De Beers is known to have a monopoly in the diamond industry. Natural monopolies are a specific…
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Subsidies

Subsidies defined as a form of support given to producers of a product that help reduce the cost of production, which increases production and consumption of that product. Goods that governments want to increase the use of are subsidized; such as education or healthcare. Government subsidies are usually given in the form of grants or loans.The…
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Consumer Price Index (CPI)

The Consumer Price Index (CPI) is usually represented by a basket of goods or products. It measures the average change in the price of this basket of goods over a defined period of time. Economists and Policymakers widely use the Consumer Price Index as a measurement for the inflation rate. The CPI is also used as a deflator to convert other…
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Absolute Advantage

According to Adam Smith, who is regarded as the father of modern economics, countries should only produce goods that they have an absolute advantage in. A country is said to have an absolute advantage if the country can produce a good at a lower cost than another. Furthermore, this means that fewer resources are needed to provide the same amount…
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The Easterlin Paradox

The Easterlin Paradox was theorized by Professor Richard Easterlin, who is an Economics Professor at the University of Southern California. In his paper titled, "Does Economic Growth Improve the Human Lot? Some Empirical Evidence", he concluded that a country's level of economic development (i.e., the increase in the standard of living) and level…
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