◆ THE ECONOMY
How economies actually work
Markets, firms, prices, and policy, the forces shaping every dollar in your world.
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The Economics Foundation
How economists actually think: scarcity, prices, firms, and markets, built up from the ground. Jump in anywhere.
Start withThe Gini Coefficient and the Lorenz Curve: Measuring Inequality in a Single Number
The Gini coefficient compresses a whole income distribution into one number between 0 and 1. Here's what it measures, how to compute it, and where it misleads.
Read more →- Housing Markets: What Happens When Supply Can't Keep Up With Where People Want to Live
- The Tenth Cook Changes Nothing: How Production Functions Explain Every Output Limit You'll Ever Hit
- Government vs. Market: When Public Provision Makes Sense and When It Doesn't
- Why Competition Drives Economic Profits to Zero — and What That Tells Investors
- The Budget Constraint: Where Your Preferences Meet Reality
- Where Classical Economics Breaks Down: The Rise of Behavioral Economics
- Capital as a Factor of Production: What It Is, How It's Priced, and Why It Matters
Browse by category
- What GDP Actually Measures (and What It Misses)
- How to Read the Monthly Jobs Report Like You Know What You're Doing
- The Law of Demand: Why Price and Quantity Move in Opposite Directions
- Consumer Surplus: The Hidden Value Markets Create
- The Value That Simply Vanishes: Deadweight Loss and What Monopoly Really Costs
- Allocative vs. Productive Efficiency: Two Ways Markets Can Get It Right
The Firm & Production 21Competition & Monopoly 22Imperfect Competition 14Labor Economics 12Factor Markets 8
All of Firms & Markets · 77 →Common questions
Excess Capacity: The Inefficiency Built Into Monopolistic Competition
Excess capacity is the gap between the output a firm produces and the output at which its average total cost is minimized.
Read more →Average Total Cost: The Cost Per Unit That Determines Profitability
Average total cost (ATC) is total cost divided by quantity produced — the cost per unit of output.
Read more →The Prisoner's Dilemma: Why Rational Choices Produce Bad Outcomes
The Prisoner's Dilemma is a game in which two rational players each choose a dominant strategy that makes both worse off than if they had cooperated.
Read more →Pigouvian Subsidy: Paying for the Benefits Others Provide
A Pigouvian subsidy is a payment to producers or consumers of goods with positive externalities, set equal to the marginal external benefit.
Read more →What Is Scarcity? The Economic Problem That Never Goes Away
Scarcity means wants always exceed available resources. It is the starting premise of all economics — and it shapes every choice, from organ transplants to…
Read more →Unintended Consequences: Why Policies Often Produce Surprises
Unintended consequences are outcomes of policies or interventions that were not anticipated or desired by their designers.
Read more →The Total Revenue Test: The Fastest Way to Identify Demand Elasticity
The total revenue test uses the direction of revenue change after a price change to determine whether demand is elastic or inelastic — no elasticity formula…
Read more →Lorenz Curve: Visualizing Income Inequality
The Lorenz curve plots the cumulative share of income held by cumulative income percentiles.
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