Readers Question: ‘Society may come to the view that too much inequality is unacceptable or undesirable’ Assess whether inequality can cause economic problems, such as market failure. What are the advantages and disadvantages of inequality? Inequality means there is a gap between the highest income earners and the lowest income earners. (inequality can also relate …
A big issue in economics is the tradeoff between efficiency and equity. Efficiency is concerned with the optimal production and allocation of resources given existing factors of production. For example, producing at the lowest cost. See: Different types of efficiency Equity is concerned with how resources are distributed throughout society. Vertical equity is concerned with …
Microeconomic topics Consumer and producer surplus Demand Substitute goods Complements Economies of scale Elasticity Price elasticity of demand Cross elasticity of demand Income elasticity of demand Price elasticity of supply Market equilibrium Production possibility frontiers Positive and normative statements Opportunity cost Specialisation and division of labour Market failure Positive externalities – the benefit to a …
Definition of Consumer Surplus This is the difference between what the consumer pays and what he would have been willing to pay. For example: If you would be willing to pay £50 for a ticket to see the F. A. Cup final, but you can buy a ticket for £40. In this case, your consumer …
Microeconomics is concerned with the economic decisions and actions of individuals and firms. Within the broad church of microeconomics, there are different theories that emphasise certain assumptions and expectations of economic behaviour. The most important theory is neo-classical theory, which places emphasis on free-markets and the assumption individuals are rational and seek to maximise utility. …
Capitalism is an economic system characterised by: Lack of government intervention Means of production owned by private firms. Goods and services distributed according to price mechanism (as opposed to government price controls) Capitalism – pros and consWatch this video on YouTube Pros of capitalism “A society that puts equality before freedom will get neither. A …
There are different forms of socialism but for this blog will use the form of democratic socialism advocated by Socialist parties in Western Europe. For example, Nordic countries where government spending is between 40-50% of GDP. This brand of socialism believes in: Redistribution of income and wealth through a progressive tax system and welfare state. …
Definition: The environmental Kuznets curve suggests that economic development initially leads to a deterioration in the environment, but after a certain level of economic growth, a society begins to improve its relationship with the environment and levels of environmental degradation reduces. From a very simplistic viewpoint, it can suggest that economic growth is good for …