economics

Examples of economic problems

Examples of economic problems

The fundamental economic problem is the issue of scarcity – but unlimited wants. Therefore, an underlying features of economics is concerned with dealing how to allocate resources in society to make the most efficient and fair use of resources. Therefore economic is concerned with: What to produce? How to produce? For whom to produce? Scarcity implies there is only a limited quantity of resources, e.g. finite fossil fuels and a limited quantity of manufactured goods. Because of scarcity, there is a constant opportunity cost – if you use resources to consume one…

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The relationship between economics and politics

Readers question: Why cannot politics and economics be seen in isolation? Economics is concerned with studying and influencing the economy. Politics is the theory and practice of influencing people through the exercise of power, e.g. governments, elections and political parties. In theory, economics could be non-political. An ideal economist should ignore any political bias or prejudice to give neutral unbiased information and recommendations on how to improve the economic performance of a country. Elected politicians could then weigh up this economic information and decide.

The Economics of Doping in Cycling

The Economics of Doping in Cycling

Apart from economics my big interest is in cycling. This weekend, I’m  doing the UK national hill climb championships, a short race up a steep hill in Ramsbottom (the Rake). First prize is a nice cloth cotton cap and a pat on the back. It is unlikely there will be any dope tests (though there are sometimes dope tests at national championships) because they are really expensive and the race is so low key, there isn’t the sponsorship money to pay for them.

World Financial Crisis AD/AS diagram

World Financial Crisis AD/AS diagram

Readers Question: how to illustrate the world financial crisis by using the graphs of aggregate demand and aggregate supply? The financial crisis has essentially caused an unprecedented fall in aggregate demand. Aggregate demand has fallen because: Bank lending decreased due to the credit crisis and shortage of bank funds. The shortage of bank lending has reduced investment and consumers spending (both components of AD) Falling house prices. The credit crisis has reduced the availability of mortgages and therefore reduced demand for buying houses. Also house prices were…

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Why Are UK Retail Sales Increasing?

Readers Question: explain why two sectors of the UK economy are growing faster than other sectors ? According to the Office of National Statistics for March 2008 Retail Sales Volume Seasonally Adjusted (2000=100) increased to 140.3 an annual growth rate of 4.7% Manufacturing grew at only 0.9% Services grew at 3.2% latest statistics at ONS I have to admit I was a little surprised to see retail sales increase at 4.7%. Anyway it seems that retail sales and the service sector are still doing much better than manufacturing and production. These are some potential…