Mineral and energy resources No less conspicuous is the richness of China in useful minerals, after the decades between the two centuries saw the multiplication of mineral discoveries. First, China is by far the largest coal producer in the world (nearly 2 billion tonnes in 2006) and probably holds the largest unused reserves. The industrialization […]

Superior goods are characterized by the fact that demand does not decrease when the price increases. Goods that fall into this category are more in demand by consumers if they have a higher income. That is why one often recognizes superior goods when the economic situation of an entire economy improves. The counterpart to the […]

Inelastic demand is characterized by little or no changes in the quantity sold in the event of price changes. Price increases therefore only lead to a comparatively small decrease, while price reductions do not lead to a strong increase in demand. In this lesson we explain the different types of inelastic demand and what effects […]

The reservation price is the price that a consumer is just about willing to pay for a certain good. This marks the upper limit of his willingness to pay and is an important indicator for companies with regard to pricing and pricing. In this lesson we explain the reservation price and how it relates to […]

Absolute cost advantages describe the state that one country has financial advantages over another country in the production of a certain commodity. As a result, the countries without the absolute cost advantages opt for external procurement and against in-house production. The absolute cost advantages are based on Adam Smith’s theory of the same name. Countries […]

The loss of welfare is an economic variable. Companies have to accept a loss of welfare if, due to market disruptions, they can no longer produce the amount of goods that would be possible without these market disruptions. Private households are affected by the welfare loss if the disposable income decreases due to a market […]

Welfare can be differentiated according to social and economic aspects. Social welfare is based on the fact that a person has enough means available to shape their own life as independently as possible. Welfare in the economic sense examines the question of how the scarce resources in an economy can be divided up in such […]

The model of the economic cycle in economics describes the exchange of goods and money within an economy. Flows of money and goods flow in opposite directions and correspond to each other in terms of value. A distinction is made between the simple, the extended and the complete economic cycle as well as the economic […]

If an economy is in external equilibrium, there is no difference between the import and the export of goods and services. External balance is one of four goals set by the magic square. The specifications of the magic square are intended to support the achievement of the economic policy goals of a state. The key […]

The demand function is the representation of the demanded quantity of a product at the respective price. It is therefore a function of the price, since the demand is dependent on the price. Usually, when the price of a product goes down, demand increases. In contrast, demand falls when prices for certain products rise. The […]

The upswing phase is an economic phase that is characterized by significant economic growth. This is easily perceived by rising numbers of orders and investments, an increasing utilization of capacity and a falling unemployment rate. The boom follows the upswing phase. The low phase ( depression ) precedes it. In this lesson we will explain […]

Microeconomics is a sub-area of economics that focuses on the investigation and analysis of the behavior of individual economic subjects. The classic sub-areas of microeconomics include household theory, production theory and price theory. Decision problems and coordination processes between the economic subjects, the necessity of which arises from a production process based on the division […]

One speaks of a market failure when the desired economic results cannot be achieved via the market mechanism. The coordination initiated by the market deviates from the optimal allocation of factors of production from an economic point of view and thus gives rise to a need for economic policy action. In this lesson we will […]

In microeconomics, consumer surplus is a measure of welfare and thus the advantages that consumers can achieve in a market. The term pension stands for the advantage or benefit of a person. The consumer surplus expresses the willingness of customers to pay. The further the actual price is below what the customer is just willing […]

Complementary goods are goods that complement or condition one another in terms of their usefulness and are therefore often in demand together. They are to be distinguished from substitute goods that can replace other – mostly similar – goods. In this lesson we will explain to you what exactly complementary goods are, what typical properties […]

In microeconomics, an inferior good is a good whose demand changes in a certain way as a result of a change in income on the part of consumers. In most cases, these are low-value products that are replaced by higher-quality products as income rises. In this lesson we explain the typical characteristics of an inferior […]

The indifference curve is about a microeconomic representation as part of household theory. With the help of the indifference curve, several combinations of goods are shown, all of which bring the same benefit to a consumer. This approach is based on the assumption that consumers simply do not care what good they need in a […]

Different forms of market emerge because the number of suppliers and buyers varies. One of these types of market is the supply oligopoly. It is a form of oligopoly in which a few suppliers face a large number of equal buyers. This market situation is convenient for the providers. The competition is manageable. In addition, […]

In economics, the term household is understood to mean an economic variable that forms a uniform will and can act in a uniform manner. The number of members is irrelevant. There are different households in private and public forms. While private households are the focus of consideration for companies, economics is also dedicated to public […]

The demand curve is a graphical representation of the demand for a specific good. The course of this curve depends on two variables: the price of the goods (y-axis) and the quantity demanded (x-axis). The lower the price, the higher the amount demanded. In this lesson we will explain the meaning of the demand curve, […]

The marginal utility represents the increase in utility for a consumer when he asks for one more unit of a product. For example, the first cold drink on a hot summer’s day is very beneficial. With each additional glass, the benefit continues to decrease. To determine the marginal utility, the first derivative of the utility […]

Opportunity costs (waiver costs): net benefit, actual benefit & opportunity The opportunity costs are alternative costs that show lost income or benefits in comparison to another alternative course of action. They are also referred to as the cost of a missed or missed opportunity and a waiver cost. In this lesson we explain how opportunity […]

The equilibrium price is understood to be a market price at which both the supply and the demand in a market for a certain good match. The determination of the respective equilibrium price is based on the assumption that companies want to sell their goods at a maximum price. For the consumers, the contrary assumption […]

The price elasticity of demand is an economic variable. This key figure is used to determine how a price change by market providers affects consumer demand. Price elasticity of demand means that there is little or no decline in consumer demand if a provider only increases prices slightly. If the market is elastic, can companies […]

The types of unemployment indicate what causes unemployment. In addition to voluntary and involuntary unemployment, the types of unemployment can be divided into the following four categories: frictional unemployment seasonal unemployment cyclical unemployment structural unemployment This lesson covers the types of unemployment. You will find out why it is important to differentiate between the individual […]

The producer surplus is the difference between the production costs of a product (reservation price ) and the equilibrium price. In other words, it is the net advantage that a company receives from the sale of a product if it can sell it above the reserve price. However, the producer surplus is not to be […]

In the case of elastic demand, the quantity demanded changes relatively strongly in relation to a comparatively small change in price or income. The price elasticity of demand measures how a 1% change in price affects demand. In this lesson, we’ll explain the types of elastic demand and the impact they can have on pricing […]

According to polyhobbies.com, the snob effect describes an unnatural demand behavior. The snob is a consumer who only becomes active as a consumer on the market when exclusive goods are offered there. But the snob is less concerned with the quality of the goods. He buys luxury goods and other expensive goods because he wants […]

The term domestic demand is generally understood to mean that demand for goods and services that arises only in Germany and thus in the area of ​​the internal market. Together with export demand, it forms total demand. In this lesson we explain the concept of domestic demand, its structure and then clarify the most important […]