Gary Becker (1930 – 2014) was an American economist who helped to spread economics into fields of social science, such as sociology, demography and criminology. Becker undertook economic analysis in areas such as racial discrimination, the incentives of crime, drug addiction and family relationships. Becker also helped to popularise and develop the concept of human …
Socialism is an economic and political ideology concerned with greater equality of distribution and proposing solutions which involve greater co-operation and social solutions. Socialism is often associated with the concept of state ownership of the means of production. The aim is to run industry in the interests of society rather than in the interests of …
Environmental sustainability is concerned with whether environmental resources will be protected and maintained for future generations. Issues of environmental sustainability Environmental sustainability is concerned with issues such as: Long-term health of ecosystems. Protecting the long-term productivity and health of resources to meet future economic and social needs, e.g. protecting food supplies, farmland and fishing stocks. …
In behavioural economics, loss aversion refers to people’s preferences to avoid losing compared to gaining the equivalent amount. “losses loom larger than gains” (Kahneman & Tversky, 1979) For example, if somebody gave us a £300 bottle of wine, we may gain a small amount of happiness (utility). However, if we owned a £300 bottle of …
Involuntary unemployment is a situation where workers are willing to work at the market wage or just below but are prevented by factors beyond their control. These factors could include deficiency of aggregate demand, labour market inflexibilities, implicit wage bargaining and efficiency wage theory. In Keynesian theory, involuntary unemployment is associated with insufficient aggregate demand …
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 …
Definition consumer sovereignty Consumer sovereignty is the idea that it is consumers who influence production decisions. The spending power of consumers means effectively they ‘vote’ for goods. Firms will respond to consumer preferences and produce the goods demanded by consumers. It is a manifestation of the ‘invisible hand’ Others argue that consumer sovereignty is a …
Readers Question: if the production of food crops is increasing at a diminishing rate what factors of demand can reverse this trend. Increasing at a diminishing rate implies that agricultural output is struggling to grow – despite more fertilisers and capital investment. Diminishing returns means that as we employ more factors of production – the …