An economic shock is a negative event affecting the economy it can involve Demand-side shock Supply-side shock Global shock Loss of confidence in the currency and banking system. Policies to deal with economic shocks include Monetary policy – to reduce inflation or boost economic growth Fiscal policy – higher government borrowing to finance higher government …
Third Degree Price Discrimination involves charging a different price to different groups of consumers for the same good. These groups of consumers can be identified by particular characteristics such as age, sex, location, time of use. In the real world, third-degree price discrimination is quite common. For a firm to practise price discrimination it requires: …
Definition of automation Automation refers to the process of automatically producing goods through the use of robots, control systems and other appliances with a minimal direct human operation. Within manufacturing industries, automation has led to increased labour productivity as fewer workers are needed to produce the same number of manufactured goods. A perceived downside of …
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 …
Definition of Monopoly A pure monopoly is defined as a single seller of a product, i.e. 100% of market share. In the UK a firm is said to have monopoly power if it has more than 25% of the market share. For example, Tesco @30% market share or Google 90% of search engine traffic. Monopoly …
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 significant issue in the US political economy is the perceived transgressions of Chinese economic policy. These tend to revolve around: Undervalued Yuan – making Chinese imports cheaper Current account (trade) deficit. China exports more goods and services than imports – switching demand from US firms to Chinese firms. Copyright infringements and lack of intellectual …
The law of unintended consequences refers to how economic decisions may have effects that are unexpected. Usually, this refers to an economic law which distorts consumer or producer behaviour in a way that is not expected. For example, a law may be implemented with the best intentions to help a group, but, if there are …