Definition of Consumer Surplus This is the difference between what the consumer pays and what he would have been willing to pay. For example: If you would be willing to pay £50 for a ticket to see the F. A. Cup final, but you can buy a ticket for £40. In this case, your consumer …
Economic development implies an improvement in economic welfare through higher real GDP, but also through an improvement in other economic indicators, such as improved literacy, better infrastructure, reduced poverty and improved healthcare standards. Policies for economic development could involve: Improved macroeconomic conditions (create stable economic climate of low inflation and positive economic growth) Free market …
Definition Trade diversion occurs when tariff agreements cause imports to shift from low-cost countries to higher-cost countries. Trade diversion is considered undesirable because it concentrates production in countries with a higher opportunity cost and lower comparative advantage. Trade diversion may occur when a country joins a free trade area with a common external tariff. Example …
The short run, long run and very long run are different time periods in economics. Quick definition Very short run – where all factors of production are fixed. (e.g on one particular day, a firm cannot employ more workers or buy more products to sell) Short run – where one factor of production (e.g. capital) …
A look at some different topics related to the economics of food. Will a rise in population lead to a shortage of food? I think most people have heard of The Dismal Prophecy of Malthus. (though Economics was termed the ‘dismal science’ for different reasons) Writing in the late eighteenth century, T.Malthus argued that the …
How does a recession/economic downturn influence how firms will set the price of goods and services? A recession is a period of negative economic growth – falling real incomes and rising unemployment. In a recession, consumers are likely to have lower income and be more sensitive to prices. There is also the threat of unemployment …
A list of different types of economic goods. Income elasticity of demand and types of goods Income elasticity of demand (YED) measures the responsiveness of demand to a change in income. Normal good A normal good means an increase in income causes an increase in demand. It has a positive income elasticity of demand YED. …
A specific tax is a fixed amount of tax placed on a particular good. It is also referred to as a per-unit tax, and the tax will depend on the quantity sold (not price). Examples of specific taxes A tax of £0.40 on 500 ml sugary drinks. A tax of £3.92 per 20 pack of …