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Lowering interest rates boosts aggregate demand through a process known as the transmission mechanism. We can make this easier to understand by splitting AD into its component parts and examining each one...

Demerit goods are goods that cause negative externalities, which are external costs imposed upon a third party that was not involved in the economic transaction. Consumers may be unaware of the long term ...

The price mechanism is an indicator of how much consumers/society value a given product. It is the value allocated to each product & signals what to produce. This could be seen on the example of a mar...

Marginal cost curve shows the cost to produce an extra unit of output at all output levels.
The average cost curve shows the total cost divided by the output quantity at all output levels.
If th...

A positive externality is a good or service which benefits a 3rd party when it is consumed or produced. One example of a positive externality in production is passersby enjoying the smell of a coffee shop...