Auctions are an event where different parties can bid for the right to purchase a good or service. Auctions are seen as a potentially efficient mechanism for the sale and purchase of goods. They are used for a variety of goods, but, in particular for rare expensive goods, which are hard to price. Auctions have …
The Chinese government have been criticised for the ‘manipulation’ of their currency. They would prefer not to use the word ‘manipulation’ perhaps they have an unofficial exchange rate target to keep Chinese currency undervalued to promote growth and exports. At the moment China only pegs its currency against the dollar and not a wider basket …
It’s the time of the year when many students are getting to start economics for the first time. It can be a little confusing with so many new concepts and words. But, if we had just one lesson, what could we teach about economics? Society wishes to optimise the distribution of resources. Economics considers how …
In the past few years, we have had a bewildering array of different crisis – credit crunch, financial crisis, fiscal crisis, banking crisis, economic crisis, depression economics, oil price shock, currency crisis, housing crashes and more. Arguably, we should be calling continued mass unemployment a crisis. In many ways, it is more serious than a …
Readers Question: Discuss the case for and against relying on the market mechanism to produce clean alternatives sources of energy that can replace fossil fuels such as oil and coal. (15) Fossil fuels are non-renewable resources. Therefore, as they run out, the price will rise. This will create an incentive for firms to look for …
Readers Question: Should we worry about water running out? In a way, water is a renewable resource. From a global perspective, water is almost infinite in supply. However, there can be serious water shortages in local areas. This is becoming an increasing problem due to population growth, climate change and rapid economic growth. Also, it …
Readers Question: How and why do firms use derivatives to hedge risk? Financial derivatives are a mechanism for managing risk. They involve options to buy or sell at a certain price in the future. This means that a firm can guarantee being able to buy or sell a contract at a certain price. Why Firms …