A product market refers to a place where goods and services are bought and sold A factor market refers to the employment of factors of production, such as labour, capital and land. Product market Demand for product markets comes primarily from households The main sellers of goods are different kinds of firms. Demand for goods …
Productivity is the output per input in a period of time Labour productivity measures the output per worker in a period of time. If productivity rises, firms can produce more with the same number of workers. This enables Higher wages for workers Increased output for the economy A reduction in costs. A firm can produce …
Profit is the total amount of money a firm makes when it has subtracted all costs from its revenues. Profit = total revenue – total cost. Profitability refers to how much profit a firm makes compared to a metric like expenses, assets, revenue or equity. It is a measure of a firm’s efficiency in translating …
Prospect theory is an economic theory which tries to describe the way people will behave when given choices which involve probability. Prospect theory assumes that individuals make decisions based on expectations of loss or gain from their current relative position. “An essential feature of Prospect Theory is that carriers of value are changes in wealth …
A bank is a financial institution which is involved in borrowing and lending money. Banks take customer deposits in return for paying customers an annual interest payment. The bank then uses the majority of these deposits to lend to other customers for a variety of loans. The difference between the two interest rates is effectively …
Definition Real GDP per Capita measures the average level of national income (adjusted for inflation) per person. It gives a rough indication of average living standards. GDP, (Gross Domestic Product) measures the national output/national income of an economy; this is a measure of the volume of goods and services produced in a given year. Real …
The resource curse is the observation that countries endowed with a rich source of natural resources can struggle to make effective use of these and often end up with low levels of economic development than countries with low levels of natural resources. There are various reasons put forward to explain this resource curse, such as …
The International Monetary Fund is a global organisation founded in 1944 in the post-war economic settlement which included the Bretton-Woods system of managed exchange rates. J.M.Keynes and Harry Dexter White both played an important role in its development. Its primary aim is to help stabilise exchange rates and provide loans to countries in need. Nearly …