QUICKONOMICS

Quickonomics provides a platform where everyone who is interested in economics can get easy access to relevant and interesting economic

content.

FOUR PRINCIPLES OF DECISION MAKING IN ECONOMICS To do that, we’re going to look at four basic principles of individual decision making that are important in an economic context: (1) People face trade-offs, (2) Trade-offs lead to opportunity cost, (3) People think at the margin, and (4) People respond to incentives. 1. People face Trade-offs. We can’t always get everything we want in

life

ADAM SMITH'S FOUR CANONS OF TAXATION ECONOMIC EFFECTS OF POPULATION GROWTH THREE MONETARY POLICY TOOLS Central banks control the money supply in the economy through monetary policy. To do that, they can resort to three main monetary policy tools: open market operations, the discount rate, and reserve requirements. Open market operations are a means to control the money supply by buying or selling bonds on the open market using newly

created money.

OVERCONFIDENCE BIAS EXPLAINED ARE NFTS A GOOD INVESTMENT? What is an NFT? NFT stands for non-fungible token.That means NFTs are digital assets or a type of cryptocurrency that is stored on a blockchain. Unlike other fungible cryptocurrencies that use a blockchain like Bitcoin, where all coins are alike, NFTs are unique

and cannot be

FACTORS THAT CAUSE A SHIFT IN THE LABOR SUPPLY CURVESEE MORE ON

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HOW TO DRAW A PRODUCTION POSSIBILITY FRONTIER DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITIONSEE MORE ON

QUICKONOMICS.COM

QUICKONOMICS

Quickonomics provides a platform where everyone who is interested in economics can get easy access to relevant and interesting economic

content.

FOUR PRINCIPLES OF DECISION MAKING IN ECONOMICS To do that, we’re going to look at four basic principles of individual decision making that are important in an economic context: (1) People face trade-offs, (2) Trade-offs lead to opportunity cost, (3) People think at the margin, and (4) People respond to incentives. 1. People face Trade-offs. We can’t always get everything we want in

life

ADAM SMITH'S FOUR CANONS OF TAXATION ECONOMIC EFFECTS OF POPULATION GROWTH THREE MONETARY POLICY TOOLS Central banks control the money supply in the economy through monetary policy. To do that, they can resort to three main monetary policy tools: open market operations, the discount rate, and reserve requirements. Open market operations are a means to control the money supply by buying or selling bonds on the open market using newly

created money.

OVERCONFIDENCE BIAS EXPLAINED ARE NFTS A GOOD INVESTMENT? What is an NFT? NFT stands for non-fungible token.That means NFTs are digital assets or a type of cryptocurrency that is stored on a blockchain. Unlike other fungible cryptocurrencies that use a blockchain like Bitcoin, where all coins are alike, NFTs are unique

and cannot be

FACTORS THAT CAUSE A SHIFT IN THE LABOR SUPPLY CURVESEE MORE ON

QUICKONOMICS.COM

HOW TO DRAW A PRODUCTION POSSIBILITY FRONTIER DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITIONSEE MORE ON

QUICKONOMICS.COM

THE PROSPECT THEORY EXPLAINED The prospect theory is a behavioral model that describes how people make decisions that involve risk. It suggests that we value gains and losses differently and that most of us are loss-averse. That means the pain of losing something is greater than the pleasure of gaining something. As a result of risk tolerance is different depending on the THE SECTORS OF THE ECONOMY The Sectors of the Economy. According to the three-sector theory, all economic activity can be classified into one of three sectors: the primary sector, the secondary sector, and the tertiary sector. As a rule of thumb, we say the more advanced an economy is, the more its focus shifts from the primary, through the secondary to the tertiary

sector.

TYPES OF INTERNAL ECONOMIES OF SCALE There are six types of internal economies of scale: technical, managerial, marketing, financial, commercial, and network economies of scale. Technical economies of scale are achieved through improvements and optimizations within the production process. Managerial economies of scale occur based on the employment of a specialized workforce. THE DISTRIBUTION OF TAX BURDENS The distribution of tax burdens is always a subject of heated debate. From these debates, two fundamental principles have emerged on how to distribute the burden of a tax: the benefits principle, and the ability-to-pay-principle. The benefits principle suggests that people should pay taxes based on the benefits they receive from the

government.

THREE VERSIONS OF THE EFFICIENT MARKET HYPOTHESIS The Efficient Market Hypothesis (EMH) is an investment theory that states asset prices fully reflect all relevant and available information. There are three versions of the EMH: a weak, semi-strong and a strong version. The Weak Efficient Market Hypothesis suggests that current asset prices reflect all information on past prices. THREE GOVERNMENT POLICIES TOWARDS EXTERNALITIES By Raphael Zeder | Updated Jun 26, 2020 (Published Jan 31, 2019). Negative externalities often cause markets to fail, i.e. to reach an inefficient outcome for society as a whole. When that happens, the government can respond in one of two ways. It can use command-and-control policies to directly regulate problematic behavior, or it can use market-based policies to provide incentives

that

HOW TO CALCULATE PRICE ELASTICITIES USING THE MIDPOINT By Raphael Zeder | Updated Jun 26, 2020 (Published Nov 30, 2018). Price elasticity of demand is a measure that shows how much quantity demanded changes in response to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price (see also Elasticity of Demand).However, as you will notice sooner or later, this formula has an GOVERNMENT POLICIES TO REDUCE POVERTY Poverty is a problem everywhere in the world, and governments play an essential role in the fight against it. They can employ at least four different policies to reduce poverty: minimum wage laws, social security, negative income taxes, and in-kind benefits. Minimum wage laws require all employers to pay their employees a minimum amount of

wage

WHY THE SHORT-RUN AGGREGATE SUPPLY CURVE IS UPWARD SLOPING By Raphael Zeder | Updated Jun 26, 2020 (Published Feb 29, 2020). According to classical macroeconomic theory, the aggregate supply curve is perfectly vertical in the long run. However, in the short term (i.e., over a period of one or two years), it is upward sloping.That means a decrease in the overall price level results in a lower quantity of goods and services supplied and vice versa. DIFFERENCE BETWEEN INDIVIDUAL AND MARKET SUPPLY However, it is important to distinguish between two different types of supply: individual and market supply. Individual supply describes the willingness of an individual firm to provide a specific quantity of a good or service to the market over a given period of time. Meanwhile, market supply describes the quantity of a specific good or

QUICKONOMICS

Quickonomics provides a platform where everyone who is interested in economics can get easy access to relevant and interesting economic

content.

FOUR PRINCIPLES OF DECISION MAKING IN ECONOMICS To do that, we’re going to look at four basic principles of individual decision making that are important in an economic context: (1) People face trade-offs, (2) Trade-offs lead to opportunity cost, (3) People think at the margin, and (4) People respond to incentives. 1. People face Trade-offs. We can’t always get everything we want in

life

ADAM SMITH'S FOUR CANONS OF TAXATION OVERCONFIDENCE BIAS EXPLAINED ECONOMIC EFFECTS OF POPULATION GROWTH THREE MONETARY POLICY TOOLS Central banks control the money supply in the economy through monetary policy. To do that, they can resort to three main monetary policy tools: open market operations, the discount rate, and reserve requirements. Open market operations are a means to control the money supply by buying or selling bonds on the open market using newly

created money.

HOW TO DRAW A PRODUCTION POSSIBILITY FRONTIER THREE VERSIONS OF THE EFFICIENT MARKET HYPOTHESIS The Efficient Market Hypothesis (EMH) is an investment theory that states asset prices fully reflect all relevant and available information. There are three versions of the EMH: a weak, semi-strong and a strong version. The Weak Efficient Market Hypothesis suggests that current asset prices reflect all information on past prices. WHY THE SHORT-RUN AGGREGATE SUPPLY CURVE IS UPWARD SLOPINGSEE MORE ON

QUICKONOMICS.COM

DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITIONSEE MORE ON

QUICKONOMICS.COM

QUICKONOMICS

Quickonomics provides a platform where everyone who is interested in economics can get easy access to relevant and interesting economic

content.

FOUR PRINCIPLES OF DECISION MAKING IN ECONOMICS To do that, we’re going to look at four basic principles of individual decision making that are important in an economic context: (1) People face trade-offs, (2) Trade-offs lead to opportunity cost, (3) People think at the margin, and (4) People respond to incentives. 1. People face Trade-offs. We can’t always get everything we want in

life

ADAM SMITH'S FOUR CANONS OF TAXATION OVERCONFIDENCE BIAS EXPLAINED ECONOMIC EFFECTS OF POPULATION GROWTH THREE MONETARY POLICY TOOLS Central banks control the money supply in the economy through monetary policy. To do that, they can resort to three main monetary policy tools: open market operations, the discount rate, and reserve requirements. Open market operations are a means to control the money supply by buying or selling bonds on the open market using newly

created money.

HOW TO DRAW A PRODUCTION POSSIBILITY FRONTIER THREE VERSIONS OF THE EFFICIENT MARKET HYPOTHESIS The Efficient Market Hypothesis (EMH) is an investment theory that states asset prices fully reflect all relevant and available information. There are three versions of the EMH: a weak, semi-strong and a strong version. The Weak Efficient Market Hypothesis suggests that current asset prices reflect all information on past prices. WHY THE SHORT-RUN AGGREGATE SUPPLY CURVE IS UPWARD SLOPINGSEE MORE ON

QUICKONOMICS.COM

DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITIONSEE MORE ON

QUICKONOMICS.COM

THE SECTORS OF THE ECONOMY The Sectors of the Economy. According to the three-sector theory, all economic activity can be classified into one of three sectors: the primary sector, the secondary sector, and the tertiary sector. As a rule of thumb, we say the more advanced an economy is, the more its focus shifts from the primary, through the secondary to the tertiary

sector.

THE PROSPECT THEORY EXPLAINED The prospect theory is a behavioral model that describes how people make decisions that involve risk. It suggests that we value gains and losses differently and that most of us are loss-averse. That means the pain of losing something is greater than the pleasure of gaining something. As a result of risk tolerance is different depending on the TYPES OF INTERNAL ECONOMIES OF SCALE There are six types of internal economies of scale: technical, managerial, marketing, financial, commercial, and network economies of scale. Technical economies of scale are achieved through improvements and optimizations within the production process. Managerial economies of scale occur based on the employment of a specialized workforce. THE DISTRIBUTION OF TAX BURDENS The distribution of tax burdens is always a subject of heated debate. From these debates, two fundamental principles have emerged on how to distribute the burden of a tax: the benefits principle, and the ability-to-pay-principle. The benefits principle suggests that people should pay taxes based on the benefits they receive from the

government.

GOVERNMENT POLICIES TO REDUCE POVERTY Poverty is a problem everywhere in the world, and governments play an essential role in the fight against it. They can employ at least four different policies to reduce poverty: minimum wage laws, social security, negative income taxes, and in-kind benefits. Minimum wage laws require all employers to pay their employees a minimum amount of

wage

THREE TYPES OF TAX SYSTEMS Simply put, the more money people have, the more taxes they should pay. Starting from there, we can identify three types of tax systems, depending on how quickly the tax rate rises ( i.e., how more people have to pay) as income increases. Namely, the three types are (1) proportional taxes, (2) regressive taxes, and (3) progressive taxes. DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITION There are two common models that describe the monopolistic competition in an oligopoly. They are called Cournot and Bertrand Competition (both named after their inventors). The main difference between the two is the firm’s initial decision to set a fixed price or a fixed quantity. We’ll see what exactly that means in the following

paragraphs.

THREE TYPES OF PRICE DISCRIMINATION In a Nutshell. Price discrimination allows firms to increase profits by charging individual customers (or groups of customers) different prices for the same goods or services. Depending on the information available and the given circumstances, three types (i.e. degrees) of price discrimination can be applied: first, second and third-degree. HOW TO CALCULATE PRICE ELASTICITIES USING THE MIDPOINT By Raphael Zeder | Updated Jun 26, 2020 (Published Nov 30, 2018). Price elasticity of demand is a measure that shows how much quantity demanded changes in response to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price (see also Elasticity of Demand).However, as you will notice sooner or later, this formula has an LIMITATIONS OF GDP AS AN INDICATOR OF WELFARE Limitations of GDP as an Indicator of Welfare. Gross Domestic Product ( GDP) is essentially an indicator of aggregate economic activity. In addition to that it is also frequently used to describe social welfare. The idea behind this is that GDP tends to correlate with consumption, which in turn is commonly used as a proxy for welfare.

QUICKONOMICS

Quickonomics provides a platform where everyone who is interested in economics can get easy access to relevant and interesting economic

content.

FOUR PRINCIPLES OF DECISION MAKING IN ECONOMICS To do that, we’re going to look at four basic principles of individual decision making that are important in an economic context: (1) People face trade-offs, (2) Trade-offs lead to opportunity cost, (3) People think at the margin, and (4) People respond to incentives. 1. People face Trade-offs. We can’t always get everything we want in

life

ADAM SMITH'S FOUR CANONS OF TAXATION OVERCONFIDENCE BIAS EXPLAINED ECONOMIC EFFECTS OF POPULATION GROWTH THREE MONETARY POLICY TOOLS Central banks control the money supply in the economy through monetary policy. To do that, they can resort to three main monetary policy tools: open market operations, the discount rate, and reserve requirements. Open market operations are a means to control the money supply by buying or selling bonds on the open market using newly

created money.

HOW TO DRAW A PRODUCTION POSSIBILITY FRONTIER THREE VERSIONS OF THE EFFICIENT MARKET HYPOTHESIS The Efficient Market Hypothesis (EMH) is an investment theory that states asset prices fully reflect all relevant and available information. There are three versions of the EMH: a weak, semi-strong and a strong version. The Weak Efficient Market Hypothesis suggests that current asset prices reflect all information on past prices. WHY THE SHORT-RUN AGGREGATE SUPPLY CURVE IS UPWARD SLOPINGSEE MORE ON

QUICKONOMICS.COM

DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITIONSEE MORE ON

QUICKONOMICS.COM

QUICKONOMICS

Quickonomics provides a platform where everyone who is interested in economics can get easy access to relevant and interesting economic

content.

FOUR PRINCIPLES OF DECISION MAKING IN ECONOMICS To do that, we’re going to look at four basic principles of individual decision making that are important in an economic context: (1) People face trade-offs, (2) Trade-offs lead to opportunity cost, (3) People think at the margin, and (4) People respond to incentives. 1. People face Trade-offs. We can’t always get everything we want in

life

ADAM SMITH'S FOUR CANONS OF TAXATION OVERCONFIDENCE BIAS EXPLAINED ECONOMIC EFFECTS OF POPULATION GROWTH THREE MONETARY POLICY TOOLS Central banks control the money supply in the economy through monetary policy. To do that, they can resort to three main monetary policy tools: open market operations, the discount rate, and reserve requirements. Open market operations are a means to control the money supply by buying or selling bonds on the open market using newly

created money.

HOW TO DRAW A PRODUCTION POSSIBILITY FRONTIER THREE VERSIONS OF THE EFFICIENT MARKET HYPOTHESIS The Efficient Market Hypothesis (EMH) is an investment theory that states asset prices fully reflect all relevant and available information. There are three versions of the EMH: a weak, semi-strong and a strong version. The Weak Efficient Market Hypothesis suggests that current asset prices reflect all information on past prices. WHY THE SHORT-RUN AGGREGATE SUPPLY CURVE IS UPWARD SLOPINGSEE MORE ON

QUICKONOMICS.COM

DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITIONSEE MORE ON

QUICKONOMICS.COM

THE SECTORS OF THE ECONOMY The Sectors of the Economy. According to the three-sector theory, all economic activity can be classified into one of three sectors: the primary sector, the secondary sector, and the tertiary sector. As a rule of thumb, we say the more advanced an economy is, the more its focus shifts from the primary, through the secondary to the tertiary

sector.

THE PROSPECT THEORY EXPLAINED The prospect theory is a behavioral model that describes how people make decisions that involve risk. It suggests that we value gains and losses differently and that most of us are loss-averse. That means the pain of losing something is greater than the pleasure of gaining something. As a result of risk tolerance is different depending on the TYPES OF INTERNAL ECONOMIES OF SCALE There are six types of internal economies of scale: technical, managerial, marketing, financial, commercial, and network economies of scale. Technical economies of scale are achieved through improvements and optimizations within the production process. Managerial economies of scale occur based on the employment of a specialized workforce. THE DISTRIBUTION OF TAX BURDENS The distribution of tax burdens is always a subject of heated debate. From these debates, two fundamental principles have emerged on how to distribute the burden of a tax: the benefits principle, and the ability-to-pay-principle. The benefits principle suggests that people should pay taxes based on the benefits they receive from the

government.

GOVERNMENT POLICIES TO REDUCE POVERTY Poverty is a problem everywhere in the world, and governments play an essential role in the fight against it. They can employ at least four different policies to reduce poverty: minimum wage laws, social security, negative income taxes, and in-kind benefits. Minimum wage laws require all employers to pay their employees a minimum amount of

wage

THREE TYPES OF TAX SYSTEMS Simply put, the more money people have, the more taxes they should pay. Starting from there, we can identify three types of tax systems, depending on how quickly the tax rate rises ( i.e., how more people have to pay) as income increases. Namely, the three types are (1) proportional taxes, (2) regressive taxes, and (3) progressive taxes. DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITION There are two common models that describe the monopolistic competition in an oligopoly. They are called Cournot and Bertrand Competition (both named after their inventors). The main difference between the two is the firm’s initial decision to set a fixed price or a fixed quantity. We’ll see what exactly that means in the following

paragraphs.

THREE TYPES OF PRICE DISCRIMINATION In a Nutshell. Price discrimination allows firms to increase profits by charging individual customers (or groups of customers) different prices for the same goods or services. Depending on the information available and the given circumstances, three types (i.e. degrees) of price discrimination can be applied: first, second and third-degree. HOW TO CALCULATE PRICE ELASTICITIES USING THE MIDPOINT By Raphael Zeder | Updated Jun 26, 2020 (Published Nov 30, 2018). Price elasticity of demand is a measure that shows how much quantity demanded changes in response to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price (see also Elasticity of Demand).However, as you will notice sooner or later, this formula has an LIMITATIONS OF GDP AS AN INDICATOR OF WELFARE Limitations of GDP as an Indicator of Welfare. Gross Domestic Product ( GDP) is essentially an indicator of aggregate economic activity. In addition to that it is also frequently used to describe social welfare. The idea behind this is that GDP tends to correlate with consumption, which in turn is commonly used as a proxy for welfare.

QUICKONOMICS

Quickonomics provides a platform where everyone who is interested in economics can get easy access to relevant and interesting economic

content.

FOUR PRINCIPLES OF DECISION MAKING IN ECONOMICS To do that, we’re going to look at four basic principles of individual decision making that are important in an economic context: (1) People face trade-offs, (2) Trade-offs lead to opportunity cost, (3) People think at the margin, and (4) People respond to incentives. 1. People face Trade-offs. We can’t always get everything we want in

life

ADAM SMITH'S FOUR CANONS OF TAXATION OVERCONFIDENCE BIAS EXPLAINED ECONOMIC EFFECTS OF POPULATION GROWTH THREE MONETARY POLICY TOOLS Central banks control the money supply in the economy through monetary policy. To do that, they can resort to three main monetary policy tools: open market operations, the discount rate, and reserve requirements. Open market operations are a means to control the money supply by buying or selling bonds on the open market using newly

created money.

HOW TO DRAW A PRODUCTION POSSIBILITY FRONTIER THREE VERSIONS OF THE EFFICIENT MARKET HYPOTHESIS The Efficient Market Hypothesis (EMH) is an investment theory that states asset prices fully reflect all relevant and available information. There are three versions of the EMH: a weak, semi-strong and a strong version. The Weak Efficient Market Hypothesis suggests that current asset prices reflect all information on past prices. WHY THE SHORT-RUN AGGREGATE SUPPLY CURVE IS UPWARD SLOPINGSEE MORE ON

QUICKONOMICS.COM

DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITIONSEE MORE ON

QUICKONOMICS.COM

QUICKONOMICS

Quickonomics provides a platform where everyone who is interested in economics can get easy access to relevant and interesting economic

content.

FOUR PRINCIPLES OF DECISION MAKING IN ECONOMICS To do that, we’re going to look at four basic principles of individual decision making that are important in an economic context: (1) People face trade-offs, (2) Trade-offs lead to opportunity cost, (3) People think at the margin, and (4) People respond to incentives. 1. People face Trade-offs. We can’t always get everything we want in

life

ADAM SMITH'S FOUR CANONS OF TAXATION OVERCONFIDENCE BIAS EXPLAINED ECONOMIC EFFECTS OF POPULATION GROWTH THREE MONETARY POLICY TOOLS Central banks control the money supply in the economy through monetary policy. To do that, they can resort to three main monetary policy tools: open market operations, the discount rate, and reserve requirements. Open market operations are a means to control the money supply by buying or selling bonds on the open market using newly

created money.

HOW TO DRAW A PRODUCTION POSSIBILITY FRONTIER THREE VERSIONS OF THE EFFICIENT MARKET HYPOTHESIS The Efficient Market Hypothesis (EMH) is an investment theory that states asset prices fully reflect all relevant and available information. There are three versions of the EMH: a weak, semi-strong and a strong version. The Weak Efficient Market Hypothesis suggests that current asset prices reflect all information on past prices. WHY THE SHORT-RUN AGGREGATE SUPPLY CURVE IS UPWARD SLOPINGSEE MORE ON

QUICKONOMICS.COM

DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITIONSEE MORE ON

QUICKONOMICS.COM

THE SECTORS OF THE ECONOMY The Sectors of the Economy. According to the three-sector theory, all economic activity can be classified into one of three sectors: the primary sector, the secondary sector, and the tertiary sector. As a rule of thumb, we say the more advanced an economy is, the more its focus shifts from the primary, through the secondary to the tertiary

sector.

THE PROSPECT THEORY EXPLAINED The prospect theory is a behavioral model that describes how people make decisions that involve risk. It suggests that we value gains and losses differently and that most of us are loss-averse. That means the pain of losing something is greater than the pleasure of gaining something. As a result of risk tolerance is different depending on the TYPES OF INTERNAL ECONOMIES OF SCALE There are six types of internal economies of scale: technical, managerial, marketing, financial, commercial, and network economies of scale. Technical economies of scale are achieved through improvements and optimizations within the production process. Managerial economies of scale occur based on the employment of a specialized workforce. THE DISTRIBUTION OF TAX BURDENS The distribution of tax burdens is always a subject of heated debate. From these debates, two fundamental principles have emerged on how to distribute the burden of a tax: the benefits principle, and the ability-to-pay-principle. The benefits principle suggests that people should pay taxes based on the benefits they receive from the

government.

GOVERNMENT POLICIES TO REDUCE POVERTY Poverty is a problem everywhere in the world, and governments play an essential role in the fight against it. They can employ at least four different policies to reduce poverty: minimum wage laws, social security, negative income taxes, and in-kind benefits. Minimum wage laws require all employers to pay their employees a minimum amount of

wage

THREE TYPES OF TAX SYSTEMS Simply put, the more money people have, the more taxes they should pay. Starting from there, we can identify three types of tax systems, depending on how quickly the tax rate rises ( i.e., how more people have to pay) as income increases. Namely, the three types are (1) proportional taxes, (2) regressive taxes, and (3) progressive taxes. DIFFERENCE BETWEEN COURNOT AND BERTRAND COMPETITION There are two common models that describe the monopolistic competition in an oligopoly. They are called Cournot and Bertrand Competition (both named after their inventors). The main difference between the two is the firm’s initial decision to set a fixed price or a fixed quantity. We’ll see what exactly that means in the following

paragraphs.

THREE TYPES OF PRICE DISCRIMINATION In a Nutshell. Price discrimination allows firms to increase profits by charging individual customers (or groups of customers) different prices for the same goods or services. Depending on the information available and the given circumstances, three types (i.e. degrees) of price discrimination can be applied: first, second and third-degree. HOW TO CALCULATE PRICE ELASTICITIES USING THE MIDPOINT By Raphael Zeder | Updated Jun 26, 2020 (Published Nov 30, 2018). Price elasticity of demand is a measure that shows how much quantity demanded changes in response to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price (see also Elasticity of Demand).However, as you will notice sooner or later, this formula has an LIMITATIONS OF GDP AS AN INDICATOR OF WELFARE Limitations of GDP as an Indicator of Welfare. Gross Domestic Product ( GDP) is essentially an indicator of aggregate economic activity. In addition to that it is also frequently used to describe social welfare. The idea behind this is that GDP tends to correlate with consumption, which in turn is commonly used as a proxy for welfare. PRO TIP: Subscribe to Quickonomics on YouTube.

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