Readers Question: Is outsourcing beneficial for multinationals and their home countries? Outsourcing occurs when a firm delegates an aspect of a business to another firm. This may be to a firm in another country. For example, a large multinational may outsource cleaning to an outside cleaning firm. It may also ‘outsource’ its customer support call …
A takeover occurs when one firm (acquiring) buys another firm (target). Takeovers can be classed as friendly or hostile. A successful takeover will lead to an effective merger and the new firm having a greater market share. Friendly takeovers In a friendly takeover, the bidding firm approaches a firms managing board to make an offer …
Definition of Atomistic Competition: A market structure where firms are so numerous that the market represents perfect competition. In atomistic competition there will be the following features: Many small firms The absence of economies of scale Firms do not have the ability to set prices (they are price takers) Low Profits and low prices for …
Average cost (AC) is the total cost (TC) divided by quantity. AC= TC/Q Average variable cost (AVC) is the total variable cost (VC) divided by quantity AVC = VC/Q FC = Fixed costs – not changing with output VC = Variable costs – which do change with output TC Total costs = FC+VC Short-run average …
Readers Question: Why do some firms prefer to remain small? In recent times, the tendency is for product markets to be dominated by large multinational corporations who can benefit from various economies of scale. However, despite this general trend, there are still advantages to being a small firm. Benefits of being a small firm Concentrate …
Readers question: Firstly, I wholeheartedly praise the magnificent work done by you in exhibiting economic knowledge and demystifying it to us, the mediocre audience. I seriously question one fact that you presented about capitalism and how it “inevitably causes monopoly”. I grew really surprised and perplexed the moment I read that in “The problems of …
The EU has many achievements of which it can rightly claim. Long period of peace and prosperity, unrivalled in European history. Secured transition to democracy for countries such as Spain and post-Communist countries in Eastern Europe Free trade and free movement has helped improve economic growth and living standards. Working on European wide problems, such …