Economic growth per capita looks at the average increase in real GDP per person. We could have economic growth of 3% a year. But, if population growth is also 3%, then average incomes – Real GDP per capita will remain the same. If the population declines by 2% a year, but real GDP increases 1% …
Hysteresis is a concept which states that history affects the value of a current issue. In economics, hysteresis states that historical rates of unemployment are likely to influence the current and future rates of unemployment. If there is a recession and rise in cyclical unemployment, this temporary unemployment can affect the underlying structural rate and …
Definition of a free good. A free good is a good with zero opportunity cost. This means it can be produced by society in as much quantities as needed with little or zero effort.
Utility is a concept given to how much satisfaction/happiness a person gains from a particular action. Utility derived from the philosophy of utilitarianism. An early advocate of Utilitarianism was Jeremy Bentham who argued that utility was the accumulation of pleasure and avoidance of pain. The concept was refined by others such as J.S. Mill who …
What are the advantages and disadvantages for a developing economy, such as Ghana if it is dependent on primary products? Definition of Primary products: Raw materials and resources used in the productive process. Examples include metals, agricultural products and minerals. Advantages of Producing Primary Products For many developing economies, their main comparative advantage will be …
Discrimination in the labour market occurs when employers make decisions on wages and employment based on prejudices, such as race, gender, religion. It can lead to variations in wages for the same job and different employment rates. Kenneth Arrow defined discrimination as: “the valuation in the market-place of personal characteristics of the worker that are …
The Rotten Kid Theorem states that in a family with a wealthy altruistic parent – even selfish kids – can have a financial incentive to be harmonious and kind to their siblings. This theory of family behaviour was first proposed by Gary Becker in an article (1974). “A Theory of Social Interactions”. He later expanded …
Elasticity is a concept which involves examining how responsive demand (or supply) is to a change in another variable such as price or income. Price Elasticity of demand (PED) – measures the responsiveness of demand to a change in price Price elasticity of supply (PES) – measures the responsiveness of supply to a change in …