A product market refers to a place where goods and services are bought and sold A factor market refers to the employment of factors of production, such as labour, capital and land. Product market Demand for product markets comes primarily from households The main sellers of goods are different kinds of firms. Demand for goods …
Environmental sustainability is concerned with whether environmental resources will be protected and maintained for future generations. Issues of environmental sustainability Environmental sustainability is concerned with issues such as: Long-term health of ecosystems. Protecting the long-term productivity and health of resources to meet future economic and social needs, e.g. protecting food supplies, farmland and fishing stocks. …
What is the primary sector? The primary sector is concerned with the extraction of raw materials. It includes fishing, farming and mining. In less developed economies, the primary sector will comprise the biggest part of the economy. Typically as an economy develops, increased labour productivity will enable workers to leave the agricultural sector and move …
Explain the role of the main economic groups: consumers, producers and the government. Within an economy, there are three main groups of agents. Producers Consumers Government 1. Consumers Individuals and households who provide labour to firms and purchase goods and services. Consumers pay income tax on wages and pay indirect taxes on purchases, for example, …
Capital depreciation refers to the decline in value of a capital asset. To give a simplified example, if a machine is bought for $10,000 but only has a useful lifespan of five years, then every year, the value of this machine will decline by $2,000. After three years, the machine is worth $4,000. There has …
Cobweb theory is the idea that price fluctuations can lead to fluctuations in supply which cause a cycle of rising and falling prices. In a simple cobweb model, we assume there is an agricultural market where supply can vary due to variable factors, such as the weather. Assumptions of Cobweb theory In an agricultural market, …
The domino effect refers to how one action can have a knock-on effect to related subjects. Knock one domino over, and you don’t just affect the first domino, but all the ones who stand in its path. In economics, the domino theory is often used to explain how an economic problem in one country can …
Readers Question: What’s the relationship between a countries economy and it’s stock market? Is it always true that the stock market reflects a country’s economic conditions? Generally speaking, the stock market will reflect the economic conditions of an economy. If an economy is growing then output will be increasing and most firms should be experiencing …