A market is efficient if profit opportunities are eliminated almost instantaneously.Continue reading “Efficient Markets”
Marginal cost is the cost of producing one more unit of output.Continue reading “Marginal Cost”
Sunk cost is cost that cannot be avoided, regardless of what is done in the future, because it have already been incurred.Continue reading “Sunk cost”
The real value of a product or service is the value of other products or services you could buy with the same money. Opportunity cost is the best alternative we give up when we make a choice.Continue reading “Opportunity cost”
I love reading your comments on my blogs. It helps me understand how people think. I should have started at the beginning. It is important to understand that Economics is a Behavioral/Social science. Economics is about how people make choices and the collective effect those individual choices have on society as a whole. It is to a large extend based on quantitative data.Continue reading “Economics”
The Foreign exchange market have 2 main functions:
- Currency Conversion
- Insurance against Foreign Exchange Risk
Ever wondered how the foreign exchange market works? Today’s article is the first in a series about International business and the foreign exchange marketContinue reading “The Foreign Exchange Market”
Perfect competition means:
- There are many small companies relative to the size of the industry (no monopolies or companies big enough to control prices)
- Products produced by the different companies are identical. There are perfect substitutes and demand for the products are perfectly elastic.
- Entry and exit barriers are low. Competitors can freely enter and exit the market.
A company’s primary objective is to maximize profit. This post shows how economic profit is calculated and how it relates to the basic decisions companies make in a perfectly competitive market.
Households must make three basic decisions:
- How much of each product or service to demand.
- How much labor to supply
- How much to spend today and how much to save for the future