To cannibalise your assets means that you create a new product which eat into sales of your old products. For example, suppose Microsoft have good sales for its X Box. If it introduced a new superior product, like the ‘X box mark 2’. Nobody would want to buy the old X Box. Therefore, sales of …
Readers Question from:Trevor Downer. Glasgow. From what little I know the theory of Economics appears to have very little scientific basis. Two “experts” will give two different answers, add a third “expert” and yet another answer is provided. Can someone explain to me why there is no easy answer to the problem of the Northern …
Since Economists are concerned with efficiency, I thought I would share some ideas about the efficient use of time, particularly on the internet. If you read this post, the chances are you spend a lot of time surfing the internet. But, how much of this time is profitably spent? Just because the internet has great …
Readers Question: When my class and I try to test the Marshall-Lerner condition it doesn’t always work. i.e. we assumed a country with just one export and one import and assumed their price elasticities added up to less than one. We gave each a price and quantity that led to a current account balance =0 …
“The thing to remember is that these markets are run by very clever and sophisticated people…” “It has some good words in it, like high.” “Yes, high is a good word, better than low anyway.” Very sharp commentary on the sub prime crisis. The scary thing is that there is very little exaggeration at all! …
Predicting exchange rates is not as easy as some experts may suggest. There are many factors at work in determining exchange rates – economic fundamentals are only part of the equation. To predict future exchange rate movements we need to look at a variety of factors. The most important include: Interest Rate Movements. Interest rates …
Readers Question: What is Amortisation? Amortisation is the running down of a loan through regular payments. A good example is a capital repayment mortgage. In this case, the homeowner pays monthly instalments paying both interest on the loan and also capital repayments. This means that after 30 years the loan will be paid off. The …
The different Stock Market Indexes in the UK FT 30. This is the oldest stock market index in existence. It came into existence in 1935. It is an index of the 30 biggest and most important companies listed on the stock market. It is not size alone that leads to inclusion. A cross section of …