Already since the start of the year the FTSE-100 has fallen 7%. Yesterday, the stock market fell 3% of 190 points on fears related to the growing credit crunch. In particular, American bank Citibank wrote off $18billion from its mortgage defaults. It hopes this will draw a line under the losses in the derivatives market. …
Economies of scale occurs when increased output leads to lower long run average costs. Diagram of Economics of Scale Note Economies of Scale occurs upto Q2. After Q2 dis-economies of scale starts to occur Basically as a firm expands it receives increasing returns to scale. To understand why economies of scale occur it is useful …
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 …
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 …