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For many, market failure is taken for granted as an accepted economic principle, when in fact it can be quite controversial. "Market Failure" is most commonly defined as a failure of the market to achieve economic efficiency, that is, a failure...
Efficiency is a word that is thrown around a lot these days. Many businesses are trying to be more efficient with their resources. Many individuals are trying to be more efficient with their time. In other words, they want more output for their...
Opportunity cost is the cost of giving up one thing in favor of another. More precisely, economists define opportunity cost as the highest valued alternative given up to pursue any given action.
Everything you do has an opportunity cost...
Present value is today's value of a future sum of money. For example, the present value of $100 a year from now, assuming a 10 percent interest rate, is $110.
Present value is another key economic principle, like opportunity cost, that...
Prices, and the personal freedom to set prices, make an ordered market economy possible.
Prices coordinate economic activity in three major ways:
Economist Joseph Schumpeter coined the term "creative destruction" to describe the evolutionary process in an economy in which new ideas, processes, equipment, products, technologies, skills and jobs are constantly destroying old ones. The...
Competition occurs when people or organizations reach for the same prize or goal at the same time. The prize might be a customer, a job, a grade, or an eBay item. When you think about it, there is little in life for which we don't compete. We...