Alternatives to GDP


GDP measures gross domestic product. It is a measure of a nations economic output/income/expenditure. GDP is an excellent guide to the total number of marketable goods and services produced and consumed in an economy. It is a useful economic statistic – especially for managing the economic cycle, but has often become a short-hand for economic …

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Effect of Higher Oil Prices


A look into the effect of higher oil prices on economies, firms and consumers.   Readers Question: With oil prices rising towards $100, what are the economic effects of rising oil prices? In the short term, higher oil prices will lead to higher costs of production, increased inflation, and decreased living standards for consumers of …

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Categories oil

Economic solutions to global warming


Global warming is a major economic and social problem facing the world. One study by Swiss Re, a provider of insurance suggested global warming could cost $23 trillion in lost output by 2050. In addition to the economic costs are perhaps the much more important costs to the environment, natural habitats and the life chances …

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Paradox of Value – Definition, Explanation, Examples


Definition The observation that some goods (e.g. water) which are more essential to human life can be cheaper than non-essential goods (e.g. diamonds) Explanation The paradox of value examines why goods that are not essential to life can command a much higher price than goods that are essential to life. For example, a classic example …

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Experience effects – definition, explanation and examples


Definition of experience effects When a single personal experience has a profound impact on future decisions by individuals. Example of experience effects 1. Bad experience never use the company again. A friend of mine was on an American Airlines flight when the wings caught fire. They had to make an emergency landing. As a result, …

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Why are workers quitting their job post Covid?


One of the great events in European economic history was the great plague of the 14th Century. The Black Death, which swept across Europe (killing up to 30% of citizens), led to a profound change in economic circumstances. Due to the shortage of labour, peasants were freed from their serfdom. With great demand for labour, …

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Surplus – Definition, causes and effects

Definition A surplus occurs when the amount of a good or assets exceeds the quantity actively used. If a firm supplies one 1,000 Christmas Trees, but there is demand for only 400, then it will have a surplus of 600 unsold Christmas Trees. If the price was stuck at P2, the supply (Q3) would be …

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What is the role of markets in an economy?


Markets are places where buyers and sellers can meet to sell and purchase goods and services. Markets provide places for firms to sell their goods and gain revenue. Markets provide places for consumers to buy the goods and services that they need. Markets are mostly self-regulated, relying on the principles of supply and demand to …

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