Core economics
Input substitution
Changing the mix of inputs while maintaining output.
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Choices, incentives, markets and the trade-offs behind everyday life.
How do people and businesses make choices?
Start with a concept below, or follow a connected learning path. Definitions are starting points: assumptions and evidence determine how an idea applies.
Core economics
Economic rent
Payment to a resource above the minimum needed to keep it in its current use.
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Shutdown condition
In the short run, stopping production may minimise losses when revenue cannot cover avoidable costs.
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Opportunity cost
The value of the best alternative you give up when making a choice.
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Price elasticity of demand
How strongly quantity demanded responds to a change in price, measured using percentage changes.
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Comparative advantage
Producing something at a lower opportunity cost than another producer.
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Marginal analysis
Comparing the extra benefit and extra cost of a small additional action.
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Inflation
An increase in the general price level over time, not simply one expensive item.
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