Readers Question. What is economic welfare? can you please elaborate on how it affects an economy? Definition of economic welfare: The level of prosperity and quality of living standards in an economy. Economic welfare can be measured through a variety of factors such as GDP and other indicators which reflect the welfare of the population …
Demand for labour is a derived demand. This means it depends on demand for the product the worker is producing. If there is an increase in demand for visiting coffee shops, it will lead to an increase in demand for baristas (people who make coffee) The demand for labour will also depend on labour productivity, …
Many business leaders are strongly arguing that Britain urgently needs to expand its airport capacity in the south-east. The easiest and quickest method to increase airport expansion would be to expand Heathrow to include a third runway and sixth terminal. However, there is vocal opposition from local residents and green groups against expanding Heathrow. Opponents …
The main macroeconomic objectives of the government will include: low inflation, increasing the sustainable rate of economic growth full employment and balance of payments equilibrium. Full employment involves zero or very low unemployment. In practice, there will always be some frictional unemployment as people are looking for new jobs or leaving school. Economists suggest an …
Readers Question: Identify and explain clearly the determinants of a nation’s productive capacity. How does the concept of productive capacity differ from a nation’s actual GDP? A production possibility frontier shows potential output. Here an investment in capital goods enables the PPF curve to shift to the right. Factors that affect productive capacity A nation’s …
A negative externality is a cost imposed on a third party from producing or consuming a good. This is a diagram for negative production externality. This shows the divergence between the private marginal cost of production and the social marginal cost of production. A negative externality leads to overconsumption and deadweight welfare loss. Diagram for …
In economics, marginal analysis means we look at the last unit of consumption/cost. It gives a different picture to the total cost. For example, the total cost of flying a plane from London to New York will be several thousand Pounds. However, with a plane 50% full, the cost of carrying one extra passenger is …
The 1920s are sometimes referred to as the ‘roaring twenties’, but for the UK economy, it was a period of depression, deflation and a steady decline in the UK’s former economic pre-eminence. In the US, the economy boomed on the back of mass production techniques, growing efficiency – and increasingly a credit bubble, which would …