economics

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Tesco Value Goods – Why are they Unattractive?

Why do Firms Make some Goods Unattractive / difficult to buy? It may seem strange but sometimes firms purposefully want to make a good unattractive. Why is this? Tesco value products have unattractive design. It shouts out “I’m cheap and low quality”. What happens is that customers with inelastic demand, – people who give importance to looks and packaging will avoid it. They will happily spend 3 times as much for a similar product with nice packaging. Therefore, the company can get the best of both worlds.Customers who are price sensitive…

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Different Approaches to Economic Problems

In this essay – Difference between economists and non economists , I looked at the different ways that economists and non economists might approach issues. The analysis involves making various generalisations, which of course may be inaccurate for some. However, it is interesting for students of economics to consider various ‘tools’ which economists should try and use when dealing with economic questions. Some of the issues include:Rationality – Economic theory assumes rationality, yet in the real world we see people often making ‘irrational decisions. Behavorial economics tries to deal…

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Neo Classical Theory of Firms

Readers Question: A. The standard criticisms of the neo-classical theory of firms? B. Assess the value, if any of these criticisms, and then attempt estimate the value of the neo-classical theory, if any still remains. The Neo-Classical Theory of Firms makes the following assumptionsFirms are profit Maximisers. Firms will maximise profits where MR=MC In the short run, firms are subject to diminishing returns. In the short run capital is fixed, therefore MC is upwardly sloping after diminishing returns sets in.Criticism of Neo-Classical Theory of FirmsFirms often seek to maximise…

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What is Most Serious Economic Problem Facing the UK 2008?

I asked my Economics students to conduct a questionnaire, asking people in the street various questions about Economics. One Question was: What do You consider to be the Most Serious economic problem Facing the UK at the moment. These are the most popular responses to far.House Prices (50% of responses) Government Debt Ignorance because of fear no response No ProblemsWhat I would consider the most serious Economic Problem:High levels of consumer debt / bankruptcy (more…)

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Macro Economics Syllabus

Macro economics syllabus The Global Economy 1. TRADE • Causes of Globalisation • International Exchange • Trade Liberalisation and protectionism • Trading Blocks and (WTO) 2. Balance of Payments • Dealing with balance of payments disequilibria 3. Exchange Rates 4. EURO (EMU) 5. International Competitiveness • UK’S Changing competitive situation • Gov’t Policies to improve competition 6. Inward Investment by MNCs 7. External Shocks to economy 8. Public Expenditure and Taxation • Different types of taxes • Impact of Taxes and spending on income distribution • PSNCR • International comparisons 9. Fiscal, Monetary and Supply Side Policies 10. Unemployment and Inflation 11. NAIRU, understand distinction between short run and long run Phillips CurveMacro Economics Essays

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Common Mistakes in Economics

1.Rising House prices cause falling demand. This is a little tricky because if we take an ordinary demand curve, an increase in the price will cause lower demand, there is a movement along the demand curve and so less is bought. However the problem here is that rising house prices are invariably caused by rising demand. Therefore, it is incorrect to say that rising house prices cause a fall in demand. Rather what happens is that rising demand for housing causes the price to rise.

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Policies to Increase Equilibrium National Output

Explain briefly the effects of a decrease in foreign income on UK exports. Then, using diagrams based on the Keynesian model, explain carefully how this affects: (i) the equililbirum level of income, and (ii) the balance of trade. I have answered this question previously Keynesian approach Discuss what policy measures could be used to return the equilibrium level of output to its original level, and the possible limitations of these policies. If National Output is below full capacity. Basically the government has 2 main policies available. Fiscal Policy. To increase AD, the…

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Housing Market for AQA Unit 3

The Housing Market is a synoptic unit, meaning that it incorporates both micro and macro economic material taught in unit 1 and unit 2. To some extent, you can very well on this paper as long as you have understood all the main principles of unit 1 and unit 2. There is a long list of terms for the Housing market, which will be helpful for dealing with specific issues. Macro Questions on Housing Market It is important to be able to understand the impact of house prices on the macro…