Economic Theory

Economies of scale are cost reductions that occur when companies increase production. The fixed costs, like administration, are spread over more units of production. Sometimes, a company that enjoys economies of scale can negotiate to lower its variable costs, as well.

The law of demand states that all other things being equal, the quantity bought of a good or service is a function of price.

The Laffer Curve is an economic theory that describes the potential impacts of tax cuts on government spending, revenue, and long-term growth. Economist Arthur Laffer developed it in 1974. He argued that tax cuts have two effects on the federal budget: arithmetic and economic.

The word “imperialism” comes from the Latin term imperium which means "to command." Imperialism is the policy or act of extending a country’s power into other territories or gaining control over another country’s politics or economics.

Late-stage capitalism describes the unrealistic perspectives of the wealthiest 1%. In the same vein, it highlights how the middle class is largely oblivious to the struggles of the poor.

In economics, inelastic demand occurs when the demand for a product doesn't change as much as the price. For example, if the price increases 20%, but the demand only goes down by 1%, the demand for that product is said to be inelastic.

Monetarism is an economic theory that says the money supply is the most important driver of economic growth. As the money supply increases, people demand more. Factories produce more, creating new jobs.

Businesses are always looking for methods to reduce costs and control the quality of the products and services they provide. Vertical integration is when a company is able to create a competitive advantage by integrating different stages of its production process and supply chain into its business.

Supply-side economics is the theory that says increased production drives economic growth. The factors of production are capital, labor, entrepreneurship, and land.

Comparative advantage is when a country produces a good or service for a lower opportunity cost than other countries. The benefits of buying the good or service outweigh the disadvantages. The country may not be the best at producing something, but the good or service has a low opportunity cost for other countries to import.