What's it: Elasticity of demand measures the responsiveness of a product's demand to changes in determining factors such as its price (own-price), the price of other goods, and income. To calculate this, you divide the percentage change in
Microeconomics
Deadweight Loss: How to Calculate, Example
What's it: Deadweight loss is the loss of surplus by producers or consumers because the market is in disequilibrium. These losses reduce the economic surplus (social welfare) because it is not captured by either party transacting in the market
Imperfect Competition: Characteristics, Types
What's it: Imperfect competition is a market structure in which sellers or buyers have market power over prices, which prevents the market from operating under perfect competition. Because they have market power, market participants are often in
Duopoly: Examples, Characteristics, Types, Implications
What's it: Duopoly is a market structure in which only two sellers (producers). This is the basic form of oligopoly competition. The two players serve multiple buyers and sell competing goods and services. In this market, players have a high
Market Power: Determining Factors, Effects, How to Measure
What's it: Market power is the firm's ability to influence its products' prices in the market. Market power enables firms to charge a higher price than the equilibrium price in a competitive market. We call companies having market power as
Conspicuous Consumption: Meaning, Reasons, Importance
What's it: Conspicuous consumption refers to consumption expenditure not to maximize basic utility but to give others an impression. Long story short, people buy products because they want to show off their wealth and social status. In