Definition of ‘Trade not aid’ This is the economic idea that the best way to promote economic development is through promoting free trade and not providing direct foreign aid. Logic of ‘Trade not Aid’ A culture of dependency. Foreign aid to developing economies is invariably wasteful and can create a culture of dependency. Also, recipients of …
Laissez-faire economics is defined as a situation with minimal government intervention. Under laissez-faire, governments and regulators ‘leave alone’ private firms to allow them to make decisions about production and output. In particular, laissez-faire involves zero / minimal government intervention on issues such as regulation, taxes and tariffs. Comparison between Laissez-Faire economics and social democracy Origin …
Monopsony occurs when there is one buyer and many sellers. In the labour market, a monopsony occurs with one employer and many workers wanting to gain employment. Arguably, monopsony power enables firms to ‘exploit’ workers by setting lower wages and employing fewer workers than in a competitive market. To visualise monopsony power, we could think …
Readers Question: Is outsourcing beneficial for multinationals and their home countries? Outsourcing occurs when a firm delegates an aspect of a business to another firm. This may be to a firm in another country. For example, a large multinational may outsource cleaning to an outside cleaning firm. It may also ‘outsource’ its customer support call …
Privatisation involves selling state-owned assets to the private sector. For example, in the 1980s, the UK government sold many state-owned industries, such as BP, BT and British Gas on the stock market. The main arguments for privatisation includes: Efficiency gains. When firms are privately owned, there is a greater profit incentive to increase efficiency. In …
Diseconomies of scale occur when long-run average costs start to rise with increased output. Economies of scale occur up to Q1. After output Q1, long-run average costs start to rise. Reasons for dis-economies of scale Poor communication in a large firm. It can be hard to communicate ideas and new working practices. Alienation: Working in …
Q. Evaluate the economic case for and against the UK government further increasing the tax on tobacco in order to reduce smoking. Increasing tax will lead to a fall in demand, although this may only be a small effect because demand is price inelastic. People are addicted and there are no close substitutes. Cigarettes are …
Basics of Labour Markets Demand for Labour Supply of Labour Wage Determination Marginal revenue product of labour Labour market imperfections Monopsony diagram Labour Market Imperfections Monopsony Trades unions Geographical immobiliities Discrimination in the labour market Government intervention in labour markets Minimum wages Minimum wages Minimum Wages for 16-18 year olds Disadvantages of minimum wages Would …