Readers Question: How much bargaining power do workers have? Bargaining Power is the ability for firms or workers to get what they want. An example of bargaining power is related to the power of trades unions. If a part-time worker works for a firm with monopsony power, they will have very low bargaining power. However, …
Readers Question: How do bond spreads affect the value of the Dollar or Euro? A bond yield refers to the interest payment that you receive from holding the bond yield. If the yield is 4%, you can expect £4 a year from a £100 bond. A bond spread refers to the differences in bond yields. …
A look at the relationship between inflation and unemployment and whether there is a trade off as suggested by Phillips Curve.
The great moderation refers to a period of economic stability characterised by low inflation, positive economic growth, and the belief that the boom and bust cycle had been overcome. In retrospect, economists look back on the great moderation in a different light because although inflation was low, there was great volatility in financial markets and …
Suppose a monopolist sells in a market with a demand curve p = a – bQ where p is price, Q is output and a = 25 and b = 2. The monopolist needs to replace its existing plant and machinery and has two choices. The first option is to spend $40 and produce at …
Diminishing returns Diseconomies of scale Economies of scale Objectives of firms Efficiency Production Possibility Frontiers Diagram of costs Opportunity cost Profit Profit and revenue Profit maximisation Do firms maximise profit?
Diagrams showing different types of elasticity – inelastic demand, elastic demand, inelastic supply, elastic supply. The effect of tax Inelastic Demand Elastic demand Elastic Supply Inelastic Supply Effect of elasticity on impact of subsidy Effect of Tax on Elastic Demand Effect of Tax on Inelastic Demand
– Positive economics: based on facts and testable theories e.g. inflation is 2% – Normative economics: based on opinion – Opportunity cost: is the sacrifice foregone of the next best alternative – Demand curve will shift to the right if real incomes rise, price of substitute rises, price of complement falls, changes in taste Giffen …