Some tips for writing economics essays Includes how to answer the question, including right diagrams and evaluation – primarily designed for A Level students. 1. Understand the question Make sure you understand the essential point of the question. If appropriate, you could try and rephrase the question into a simpler version. For example: Q. Examine the …
Information failure is a type of market failure where individuals or firms have a lack of information about economic decisions. There are different types of information failure: Information asymmetries – where one party has access to information that another party doesn’t. For example, the seller of a car may know it has some problem, but …
Definition and explanation of different types of goods Free good – no opportunity cost Private – Good with opportunity cost, rivalry and excludable Public good – non-rivalry, non-excludable Free Good A free good is a good needed by society but available with no opportunity cost. It is a good without scarcity. For example, air is …
Readers question: Please tell me some products for which equilibrium price is not favourable for some producers and consumers which invite the state to impose price restriction. The equilibrium price is the price determined in a free market; the price determined by the interaction of supply and demand. Under what conditions could this market price …
Classical economic theory assumes that individuals are rational. However, in the real world, we often see irrational behaviour – decisions which don’t maximise utility but can cause a loss of economic welfare. Irrational behaviour is not just isolated to a few ‘irrational individuals’ but can become the dominant choice for most people in society (e.g. …
Definition of Pareto efficiency Pareto efficiency is said to occur when it is impossible to make one party better off without making someone worse off. A Pareto improvement is said to occur when at least one individual becomes better off without anyone becoming worse off. Pareto efficiency will occur on a production possibility frontier. When …
Present bias occurs when individuals place a greater value on goods/income achieved in the present moment – rather than receiving the same goods/income in the future. It suggests given a choice between a payoff today and a pay off in the future; we will choose to have the pay off now. It suggests that people …