Switching costs are the costs that a consumer pays as a result of changing a brand or product.
Switching costs can be monetary, psychological, effort and time based.
Switching costs can be classified as high switching costs or low switching costs.
Companies tend to use high switching costs to prevent customers from switching to another brand.
Companies with hard-to-find products and low competition will use high switching costs to maximize profits.
Some companies that cannot charge higher switching fees will provide long wait times and product delays while maintaining their customer base at the expense of a strictly time-based switching cost.
“Best Effort” is a legal term that represents the obligation of a party to a contract to take all possible steps to fulfill the terms of the agreement.
Disequilibrium is when external forces cause an imbalance between supply and demand in the market. In response, the market enters a state in which supply and demand do not match.
Economic equilibrium is a state in which market forces are balanced, a concept borrowed from the physical sciences, where observable physical forces can balance each other.
An economist is an expert who studies the relationship between a society’s resources and its production or output, using a number of different indicators to predict future trends.
A trade-off between equity and efficiency arises when there is some conflict between maximizing net economic efficiency and achieving other social goals.