Glossary Category: Economics - Page 30 - 3auk

market failure

Market failure happens when the free market is unable to distribute resources in the best possible way, resulting

Dynamic efficiency occurs when an economy improves its performance over a long period, rather than just at a

Pareto optimality, also known as Pareto efficiency, is a state where resources are distributed in a way that

Allocative efficiency happens when resources are used to produce the mix of goods and services that society values

Productive efficiency happens when a company or an economy produces goods at the lowest possible cost, using the

The equi-marginal principle explains how a rational consumer with a limited budget chooses to spend their money. To

Limitations of marginal utility theory refer to the weaknesses and unrealistic assumptions within the utility maximisation model, which

An indifference curve is a graph showing different combinations of two goods that provide a consumer with the

The indifference curve model is a tool used in economics to understand consumer choices. However, it has several

A Giffen good is a rare type of inferior good where the amount people want to buy increases