Readers Question: To what extent does the kinked demand curve model explain price rigidity in oligopoly? Often prices appear to be relatively stable in oligopolistic markets. There are different models to explain periods of price stability. The most predominant one being the kinked demand curve model, though this has received substantial criticism and economists have …
Will the UK’s decision to leave the EU cause recession? Factors which could cause Brexit recession Loss of confidence. Many foreign investors may be deterred from investing in the UK because of uncertainties that they may have higher costs for accessing the Single Market. This decline in investment could lead to fall in aggregate demand. …
Recently, Liverpool supporters protested about plans to increase the price of many ticket (the most expensive seat in the Main Stand will now be £77). Many supporters complain that football tickets have risen well above the rate of inflation in recent years, making football less accessible to supporters on lower-incomes. But, what are the economic …
When food prices rise in the developed world, it is an inconvenience, something to grumble about. But, when food prices rise in the developing world, it can make a difference between going hungry and getting enough to eat. Food inflation is volatile. Agricultural prices tend to fluctuate because demand and supply are both inelastic and …
Supermarkets have strict criteria for the cosmetic appearance of fresh fruit and vegetables. The result of these criteria is that a high percentage (10-40%) of a farmers harvest can be rejected because the vegetables do not meet these standard rules of conformity. This problem of rejected vegetables was highlighted on a recent BBC programme ‘War …
A look at the different economic factors that determine the price of gold Essentially the price of gold is determined by: Supply of gold Demand for use in goods such as jewellery. Speculative demand to hedge against inflation and economic uncertainty. In early August 2011, gold touched $1,716.19. Adjusted for inflation, the record gold price …
Readers Question: What is the name of a type of good that only has value to someone if no one else possesses it? A snob or ostentatious good is a good where the main attraction is related to its image of being expensive, exclusive and a symbol of social status. These goods will have restricted …
Readers Question. I came across a company recently which farms mussels of the coast of a small town in Bulgaria, and I started thinking about its structure in the economy. I know since it produces a homogeneous product along with hundreds of other mussel farmers, it must be in perfect competition, however this mussel company …