Diminishing Marginal Utility

A concept from economics that describes decreasing utility or desire for more of the same product or service. The “law” states that the more we have of a given product the less satisfaction (or utility) we receive from each additional unit (for example, the first slice of pizza delivers more pleasure than the second and this decreases with each additional slice). This concept is often accepted as fact by economists and is at the core of... Read More

Supply-side Economics

A school of macroeconomic thought which emphasizes the importance of tax cuts and business incentives in encouraging economic growth. This follows the belief that businesses and individuals will use their tax savings to create new businesses and expand old businesses, which in turn will increase productivity, employment, and general well-being.  Read More

Perfect Markets

Most of neoclassical economics (and current economic theory) is based on the assumption that markets are perfect in the following ways: all parties know and share the same information, rational decision-making on the parts of buyers and sellers, low or no transaction costs, perfect competition, no monopolies, and equal access. In reality, none of the conditions are usually present, creating a situation where current economic theories of market dynamics... Read More