The sunk cost fallacy is when we continue an action because of our past decisions (time, money, resources) rather than a rational choice of what will maximise our utility at this present time. For example, because we order a big meal and have paid for it, we feel a pressure to eat all the food. …
War has always had substantial economic costs, but war is becoming increasingly costly for both belligerents and bystanders. This is due to both the monetary costs of fighting and the economic fallout of sanctions. During the cold war, there was a theory that nuclear war would ensure a mutual self-destruction – and this assured mutual …
The money supply measures the total amount of money in the economy at a particular time. It includes actual notes and coins and also any deposits which can be quickly converted into cash. There are different measures of the money supply depending on how you count it. Narrow definitions include all the money supply which …
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, …
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 …
A business has a variety of potential objectives from profit maximisation to cultivating good relationships with various business stakeholders. Economic theory often assumes that firms are rational profit maximisers. However, in the real world, there are many other objectives that a firm can pursue. Business Objectives of firmsWatch this video on YouTube Profit Maximisation. The …