Economics

Economics Learning Economics

07/09/2026

What is import?
A. Selling goods to another country
B. Buying goods or services from another country
C. Producing goods locally
D. Saving money in a bank

07/09/2026

What is export?
A. Buying goods from another country
B. Selling goods or services to another country
C. Buying goods from local markets
D. Selling goods only within a city

Regional Trade Integration is a process in which countries in the same region reduce or remove trade barriers among them...
07/09/2026

Regional Trade Integration is a process in which countries in the same region reduce or remove trade barriers among themselves to increase trade, investment, and economic cooperation.

Simple Example

Suppose Bangladesh, India, Nepal, and Bhutan agree to reduce tariffs on goods traded among them.

Bangladesh exports garments to India with lower tariffs.

India exports medicines to Bangladesh with lower tariffs.

Nepal exports agricultural products more easily.

Bhutan exports electricity to neighboring countries.

As trade barriers fall, trade among these countries increases.

06/09/2026

What is appreciation of a currency?
A. Currency loses value
B. Currency gains value compared with other currencies
C. Prices always increase
D. Exports become zero

06/09/2026

What is depreciation of a currency?
A. Currency becomes more valuable
B. Currency loses value compared with other currencies
C. Prices of all goods fall
D. Exports become zero

05/09/2026

What is exchange rate?
A. Price of a good
B. Price of one country's currency in terms of another country's currency
C. Total income of a country
D. Government spending

05/09/2026

What is a budget deficit?
A. Government revenue is greater than government spending
B. Government spending is greater than government revenue
C. Government revenue equals spending
D. Exports are greater than imports

An externality occurs when the production or consumption of a good affects a third party who is not directly involved in...
05/09/2026

An externality occurs when the production or consumption of a good affects a third party who is not directly involved in the market transaction.

Types of Externalities

1. Negative Externality:
It occurs when an activity imposes a cost on others.
Example: Factory pollution.

2. Positive Externality:
It occurs when an activity provides a benefit to others.
Example: Education.

Key Points

- Negative externality → Social Cost > Private Cost
- Positive externality → Social Benefit > Private Benefit

Market failure occurs when the free market fails to allocate resources efficiently, resulting in an inefficient allocati...
05/09/2026

Market failure occurs when the free market fails to allocate resources efficiently, resulting in an inefficient allocation of resources and a loss of social welfare.

In a perfectly competitive market, the price mechanism generally helps allocate resources efficiently. However, under certain conditions, the market may fail to produce the socially optimal level of output. This situation is called market failure.

Causes of Market Failure

The major causes of market failure are:

1. Externalities:
Externalities occur when the production or consumption of a good affects third parties who are not directly involved in the market transaction.

- Example: Air pollution is a negative externality.
- Education can create positive externalities.

2. Public Goods:
Public goods are goods that are non-rival and non-excludable. Because people can benefit without directly paying for them, the private market may provide an insufficient amount of these goods.

- Example: National defense and street lighting.

3. Information Asymmetry:
Information asymmetry occurs when buyers and sellers do not have equal information about a product or transaction.

- Example: A seller of a used car may know more about the car's condition than the buyer.

4. Market Power:
Firms with significant market power, such as monopolies, may restrict output and charge higher prices than under perfect competition. This can lead to an inefficient allocation of resources.

Effects of Market Failure

- Inefficient allocation of resources.
- Overproduction or underproduction of goods and services.
- Loss of social welfare.
- Higher social costs.
- Inequality in the distribution of resources.

04/09/2026

What is public debt?
A. Money saved by consumers
B. Money borrowed by the government
C. Profit earned by firms
D. Tax paid by consumers

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