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  • Scarcity

    Foundations of Economics: The Law of Scarcity

    July 8, 2018 by

    Foundations of Economics: The Law of Scarcity Most of the basic laws of economics focus on ways to efficiently build wealth and prosperity over time.  But there are important financial concepts that turn this problem in the other direction, instead choosing to focus on the effects that a lack of available resources can have on… Read more

  • Economics

    Consumer Economics: What is the Market Absorption Rate?

    April 6, 2018 by

    Consumer Economics: What is the Market Absorption Rate? In school, some students avoid economics because they might feel as though the lessons have little-or-no application in the real world.  Unfortunately, this is usually not actually the case. Economics concepts play many roles in our daily lives – and if we can understand how these concepts… Read more

  • Global Economics: What is a Trade War?

    March 7, 2018 by

    In all of the recent news dealing with US President Donald Trump and the world economy, the term “trade war” is being used a lot more than would normally be the case.  But what does this term actually mean? Who are the winners and who are the losers? Does a “trade” war resemble a military… Read more

  • Commodities Economics: What Is Peak Oil?

    February 3, 2018 by

    With all of the recent discussions surrounding the possibility of electric cars, many economics investors have already started to move beyond crude in search of the next technological revolution.   But the reality is that the world economy is not even close to eliminating the use of fossil fuels, and it will be quite some… Read more

  • Financial Markets: How Savings Accounts Gain Interest

    January 5, 2018 by

    For most people, the first bank account they will have will likely be a savings account. This traditional account pays you interest in exchange for you keeping your money with the institution. Different financial institutions have different rules and interest rates, which can make the world of savings accounts tricky to navigate. However, once you… Read more

  • What is Opportunity Cost?

    December 11, 2017 by

    Opportunity cost sounds like a dry topic, but it is a concept that can be applied to many aspects of daily life. I recently found a quote from a famous author and realized that it applies to life, business, economics, opportunity cost, and just about every other aspect of our waking moments. “For every opportunity… Read more

  • Finances at Work: The Time Value of Money

    August 3, 2017 by

    Finances at Work:  The Time Value of Money Whenever we are looking to understand the true value of money, it is absolutely critical factor time into the equation.  This is ultimately because $1 Dollar received today is more valuable than $1 Dollar received tomorrow.  There are a few different reasons to explain why this is… Read more

  • Relation between Inflation and Interest Rates (graph)

    June 13, 2017 by

    A number of people and students wonder about the relationship between inflation rate movements and the quarterly interest rate (nominal and real interest rate). Here are observations based on Canadian data over a 50 years period that tracks T-Bill interest rate, consumer price index, and real interest rate.

  • Microeconomics Profit Maximization: Shutdown Point

    May 3, 2017 by

    Determining the Shutdown Point of a Firm This continues a previous post on profit maximization. The question we want to continue with is when should a firm shutdown? Then answer is when P (price) = AVC (average variable cost). This is the output where firms are indifferent between producing the profit-maximizing quantity (ie. loss-minimizing quantity)… Read more

  • Microeconomics Cost Formulas

    May 2, 2017 by

    Here is a list of some of basic microeconomics formulas pertaining to revenues and costs of a firm. Remember when you’re using these formulas there are a variety of assumptions, namely, that the the firm is profit-maximizing (making as much money as they can.) Here are total cost formulas, average variable, marginal cost, and more,… Read more

  • Trade Offs and Indifference Curves

    April 25, 2017 by

    Before we talk about choices, preferences, trade-offs and indifference curves, we should briefly look over some key terms. We assume people are rational decisions makers and that there is almost nothing someone is unwilling to trade for correct compensation. Non-Satiation Assumption: If some is good, more is better. Consumers always prefer more of any good… Read more

  • Shapes of Indifference Curves

    April 10, 2017 by

    The shapes of indifference curves are smooth with unique tangent at any bundle we have well define marginal rate of substitution (MRS). MRS is undefined if m (slope) = kinked. 1. Strictly convex: Using the example of any 2 bundles on (A & B) the indifference curve and construct a line segment between them. With… Read more

  • Intro to Demand Theory – How to Manage Constraints

    December 19, 2016 by

    Welcome to the next section following a discussion on utility and indifference curves (preferences of consumers). We are now into a discussion on demand theory; the previous posts are linked chronologically at the bottom of this post. Demand theory wants to explore the concept of: given constraints we must make choices among competing alternatives. Budget… Read more

  • Cobb Douglas Function – Demand Theory

    December 12, 2016 by

    In the past installments from DiscussEconomics on demand theory, now we’re venturing into the graphical and mathematical expressions of the Cobb Douglas demand function. Graphically expressed (utility maximizing) with the assumption well-behaved preferences. The interior solution characterized by two statements (the equals sign is really supposed to be three lines thus ‘is equal to): 1.… Read more

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