SWOT analysis is a method to analyse the existing position of a firm and how it is likely to perform in the future S- Strengths of firm W- Weakness of firms O – Opportunities T – Threats Example, Waterstones booksellers Strengths Established as premier book retailer in UK Good distribution network Prime retail location in …
Champagne is a very good example of a luxury good. (a change in income causes a bigger % change in demand) Furthermore, supply of Champagne is limited to certain regions of France. With this monopoly power over supply, French wine producers have been able to set very high prices. Champagne can easily go for over …
Readers Question: discuss whether economic actions by individuals always results in net benefit to the society “Many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own …
Readers Question: “Merger activity represents a major force for structural change in competitive markets. Examine the principal objectives underlying such strategic developments and consider the degree of success enjoyed by firms in pursuit of those objectives.” This question is a rather complicated way of saying: Discuss why firms wish to merge. Using examples, discuss whether …
The Neo-Classical Theory of Firms makes the following assumptions Firms are profit maximisers. Firms will maximise profits where MR=MC In the short run, firms are subject to diminishing returns. In the short run, capital is fixed, therefore MC is upwardly sloping after diminishing returns sets in. Prices are flexible. If there is a shortage of …
Readers Question: Please explain the role that property plays in a country’s economic development. Property rights are important for giving firms the incentive and confidence to invest. Firms need a profit incentive to invest in buying capital and investing in equipment. Without the guarantee of private property, their profit is a risk. This is important …
Readers Question: What economic factors should I consider if I want to know the relationship between innovation and the presence of patents/copyrights? Do copyright/patents (generally Intellectual Property Rights) stifle innovation? Does it slow down economic growth? There is some debate. But, one argument is that patents are necessary to encourage innovation. If firms were unable …
A report by the European Union EU, found that on average UK car prices were 10% higher than in EU. In some cases, the difference in price could be much greater. Some people have taken advantage of this price difference to buy a new car on the continent. [BBC report] OCR exam question: Discuss factors …