OK, I have a question for you. This was the example which popped to mind as I was reading your entry. (price elastic products) Here in my Middle Eastern country, sheep are sold for meat. Each year, prior to the Festival of the Sacrifice (Muslim holiday where every family buys a sheep to butcher at …
Readers Question: When would you want to own a business that sells price-elastic products? Why? Price elastic products mean that if there is an increase in price, there will be a bigger % fall in demand. Therefore, with elastic goods, there is little incentive to increase the price because there will be a bigger % …
How do we avoid environmental damage in an expanding economy? It is not easy because a lot of environmental damage occurs as a result of negative externalities. In other words, the environmental damage from producing a good, driving a car primarily affects other people. Therefore, free markets are not efficient at dealing with environmental externalities. …
Readers Question: an orange juice sells at $3 when sugar price rise, orange juice sells at $3.2 but why when sugar price drop, orange juice still $3.20? Why? Sugar is an ingredient in the price of orange juice, therefore if the price rises, firms pass on the cost increases to consumers. Because all the firms …
Readers Question: What are the consequences of competition between supermarket affiliated petrol stations and independent petrol retailers? Before the supermarkets entered the market for selling petrol, there was much less competition in the market for petrol. Therefore, independent retailers were able to set higher prices and gain higher profit margins. I believe prior to the …
A.Darling’s first budget is good news for those who don’t drink, smoke or buy SUVs. No major changes, but these are some of the main features of the budget. Cigarettes up 11p a packet of 20. Beer up by 4p a pint, wine 14p a bottle, spirits 55p a bottle. Duties on alcohol will go …
On March 12th, Alistair Darling will deliver his first budget. With the economy slowing down, he is not left with much room for manoeuvre. Tax Revenues are less than the government hoped and the National debt is likely to soon exceed the government’s self imposed ceiling of 40% of GDP. In 2008-09 Mr Darling will …
The pound reached the symbolic value of $2 = £1 yesterday. This is the highest level since New Year’s Eve and is partly in response to the Bank of England’s caution in cutting interest rates. (Yesterday, the Bank left rates unchanged at 5.25%) Despite the slowdown in the housing sector the Bank still appear worried …