Definition of experience effects When a single personal experience has a profound impact on future decisions by individuals. Example of experience effects 1. Bad experience never use the company again. A friend of mine was on an American Airlines flight when the wings caught fire. They had to make an emergency landing. As a result, …
One of the great events in European economic history was the great plague of the 14th Century. The Black Death, which swept across Europe (killing up to 30% of citizens), led to a profound change in economic circumstances. Due to the shortage of labour, peasants were freed from their serfdom. With great demand for labour, …
Measuring economic welfare is not an exact science. Often in economics, we focus on GDP statistics (measuring national output). However, quality of life depends on many other factors apart from just GDP. Quality of Life Indicators GDP – the total output of an economy. This is a guide to national output and influences the level of …
Skimpflation is a situation where firms – in response to higher costs – reduce the quality of a good/service. Skimpflation means consumers get less for the same price. Skimpflation is related to inflation in that rising prices and costs in the economy lead to lower living standards for consumers. The difference is that although prices …
Definition A surplus occurs when the amount of a good or assets exceeds the quantity actively used. If a firm supplies one 1,000 Christmas Trees, but there is demand for only 400, then it will have a surplus of 600 unsold Christmas Trees. If the price was stuck at P2, the supply (Q3) would be …
Markets are places where buyers and sellers can meet to sell and purchase goods and services. Markets provide places for firms to sell their goods and gain revenue. Markets provide places for consumers to buy the goods and services that they need. Markets are mostly self-regulated, relying on the principles of supply and demand to …
It is argued cutting corporation tax rates can increase total tax revenue. This is because: Lower corporation tax will encourage more multinationals to invest in that country Lower tax rates enable firms to invest more – this leads to higher growth and therefore, higher tax revenues. Lower tax rates reduce the incentive for firms to …
Definition – Collective bargaining refers to the negotiations between a group of workers and firms. Workers, usually through a trade union, form a unified approach to negotiate wages and work conditions with their firm (or group of firms). Collective bargaining can involve many different aspects of work – including pay, health and safety, working hours, …