Distributive efficiency occurs when goods and services are consumed by those who need them most. Distributive efficiency is concerned with an equitable distribution of resources because of the law of diminishing marginal returns. The Law of diminishing marginal returns states that as consumption of a good increase we tend to get diminishing marginal utility. For …
Utility is a concept given to how much satisfaction/happiness a person gains from a particular action. Utility derived from the philosophy of utilitarianism. An early advocate of Utilitarianism was Jeremy Bentham who argued that utility was the accumulation of pleasure and avoidance of pain. The concept was refined by others such as J.S. Mill who …
The market supply curve shows the combined quantity supplied of goods at different prices. The market supply curve is the horizontal sum of all individual supply curves. Linear Supply curve A linear supply curve can be plotted using a simple equation P = a + bS a = plots the starting point of the supply …
Definition of Marginal Cost Marginal Cost is the cost of producing an extra unit. It is the addition to Total Cost from selling one extra unit. Q Total Cost (TC) Marginal Cost (MC) Average Cost (AC) 1 10 10 10 2 16 6 8 3 23 7 7.6 4 32 9 8 5 45 …
In a follow up to the previous post on the Luddite Fallacy. What would happen if we developed the ‘perfect – all-powerful robot’? Rather than looking at what happens if we start with no technology and increase, what if we start at the other end of the spectrum? Suppose technological advances lead to a robot …
Readers Question: why does economic growth not get noticed by the man on the street? Recently, the ONS released a report saying that real wages were 62% higher than in 1986. This is the result of sustained economic growth. (Real wages take into account inflation.) In April 2011 the average full-time employee in the UK …