Globalisation is a complex and controversial issue. This is a look at some of the main benefits and costs associated with the greater globalisation of the world economy. Definition of Globalisation The process of increased integration and co-operation of different national economies. It involves national economies becoming increasingly inter-related and integrated. Globalisation has involved: Greater …
Readers Question. Can Labour be blamed for the economic crisis (i.e. did they really ‘overspend’)? My view is that the global economic crisis is to blame, and that Labour could have spent less but that this is easy to say with the benefit of hindsight. I don’t think there is any economist who would try …
In recent years, many advanced (high-income) economies have seen a marked fall in unemployment but only very slow or even negative real wage growth. This phenomenon of slow wage growth, despite falling unemployment, is marked in countries such as the UK, Japan and the US. Reasons to explain this slow growth of wages include Low …
Readers question: Are subsidies more effective than minimum prices when supporting farmers? Subsidies involve governments giving money direct to farmers. A minimum price is when the government ensures a legal price that prices cannot fall below that level. Minimum prices will increase incomes for farmers. Farming can see volatile prices because supply can vary and …
Price skimming is a business strategy to set a high price on entry to the market and then reduce the price over time. The logic of price skimming is to take advantage of customers who have inelastic demand and are willing to pay the high price. When these consumers have bought the good, the firm …
Penetration pricing is a strategy used by a firm who wishes to enter a new market and gain a high market share through selling at a low price. The aim of penetration pricing is to attract a loyal customer base through offering the most competitive price in the market and undercutting rivals and well-known brands. …
A loss leader is a product that is sold at less than cost. The firm sells this product at a loss as a way to encourage consumers to shop and buy other goods. The firm hopes to recoup the lost profit by increased sales of more profitable items. A good example of a loss leader …
Readers Question: List and briefly describe the positive and negative attributes of multinational corporations (MNCs). Multinational corporations are large companies with operations in several countries across the world. For example, Apple, Ford, Coca-Cola, Alphabet (Google) and Microsoft. Their size and turnover can be greater than the total GDP of many developing economies. Benefits of Multinational …