Living standards vary significantly across the globe. Wealthy economies, such as the US have an average GDP per head (at PPP) of $59,495 in the US (IMF 2017) This compares to an average annual income as low as $808 Burundi. (IMF 2017) There are many reasons for these divergences in income including – historical trends, …
Summary Education has positive benefits for the rest of society. If university education is left to market forces, there may be under-provision, and the economy may suffer from a lack of skilled graduates. Furthermore, in a free market, higher education would become the preserve of wealthy families who can afford to send their children to …
In economics producers – often referred to as firms or companies play a role in using inputs (different factors of production) and producing goods and services (output). Firms play a key role in deciding what to produce and how to produce. Different types of firms Individual entrepreneurs – self-employed individuals Private companies – often small/mid-sized …
A product market refers to a place where goods and services are bought and sold A factor market refers to the employment of factors of production, such as labour, capital and land. Product market Demand for product markets comes primarily from households The main sellers of goods are different kinds of firms. Demand for goods …
Factors of production refer to the different elements that are used in producing goods and services. Factors of production are inputs into the productive process. The four main factors of production are: Land – this is raw materials available from mining, fishing, agriculture Capital – This is a manufactured item used to aid production, for …
Readers Question – what explains the strength of the German economy post-war? In the aftermath of the Second World War, the German economy was devastated by years of war, price controls, rationing and the loss of patents and top scientists to the US. However, by 1950, the economy was transformed by investment, economic growth and …
Definition: Shrinkflation occurs when firms reduce the size or quantity of a good and keep prices the same. Shrinkflation is an alternative to increasing prices, and you could argue it is a disguised form of inflation because if you wanted to buy exactly the same quantity of the good, you would have to spend relatively …
Economic growth means an increase in real GDP – this leads to higher output and higher average incomes. Governments often try to increase the growth rate because it will have various advantages. These include Benefits of economic growth Increased consumption. Firstly, higher GDP implies the economy is producing more goods and services and therefore consumers …