Reader’s Question: What are the importance of economics to a business student? There is a strong overlap between business and economics. A Business student needs to take into account these various aspects of Economics. At various times I have taught Business Studies in addition to Economics. Several topics are the same. These are the key …
2024 has seen UK house prices seamingly defy gravity once more, with prices rising back close to the all-time peak. If you bought an average house at the start of 2020, you would be sitting on capital gains of £53,000. A 25% rise. What Will happen to UK House Prices in 2025?Watch this video on …
Marginal utility theory examines the increase in satisfaction consumers gain from consuming an extra unit of a good. Utility is an idea that people get a certain level of satisfaction/happiness/utility from consuming goods and service. Marginal utility is the benefit of consuming an extra unit This utility is not constant. Often we get diminishing marginal …
Microeconomics is concerned with the economic decisions and actions of individuals and firms. Within the broad church of microeconomics, there are different theories that emphasise certain assumptions and expectations of economic behaviour. The most important theory is neo-classical theory, which places emphasis on free-markets and the assumption individuals are rational and seek to maximise utility. …
Utility maximisation refers to the concept that individuals and firms seek to get the highest satisfaction from their economic decisions. For example, when deciding how to spend a fixed some, individuals will purchase the combination of goods/services that give the most satisfaction. Utility maximisation can also refer to other decisions – for example, the optimal …
The equimarginal principle states that consumers will choose a combination of goods to maximise their total utility. This will occur where The consumer will consider both the marginal utility MU of goods and the price. In effect, the consumer is evaluating the MU/price. This is known as the marginal utility of expenditure on each item …
Variable costs are costs which change with output. As output increases the firm needs to use more raw materials and employ more workers. These costs vary with changes in the output. Variable costs exclude the fixed costs which are independent of output produced. Examples of variable costs Raw materials. Aluminium, plastic, rubber, coffee beans. All …
Question number 3 from What would Keynes do? – If I enjoy drinking beer. How much should I drink? Key quote “My only regret in life is that I did not drink more champagne.” John Maynard Keynes. If something is good to do – does it mean it is good to do it to excess? This …