Day: October 23, 2020

Budget deficit – the excess of government spending over revenue; the main causes of government budget deficits include: Commitment to social welfare programmes Demographic trends Fundamental macro economic shifts eg slower growth in productivity, volatile inflation, increasing structural unemployment; together Read More …

Hyper inflation-that which tends to get out of hand/control such that the value of money declines rapidly to a tiny fraction of its former value and eventually to almost nothing, so that a new currency has to be adopted. It Read More …

Productivity/efficiency – skill and expertise Real wage rate (the proportion of TC accounted for by labour cost) Mobility and the marginal rate of technical substitution between labour and other factors of production particularly capital. Technology – depending on the resource Read More …

Production costs – a function of factor prices. Technology Government policy (taxes & subsidies) Natural factors/events (e.g weather, pests, diseases etc) Prices of other related goods (substitutes & complements) Transport and communication Political stability/atmosphere Future expectations Changes in the supply Read More …

The law of diminishing returns states that “As additional units of a variable factor are added to a given quantity of a fixed factor, with a given state of technology, the marginal product and the average product of the variable Read More …

Case For: Infant Industry Argument – If an industry is just developing, with a good chance of success once it is established and reaping economies of scales, then it is necessary to protect it from (external) competition temporarily until it Read More …

With a given import quota, an increase in demand will result in a higher domestic price and greater domestic production and lower consumption; however, with a given import tariff, an increase in demand will increase consumption and imports. An import Read More …

Effective market separation e.g in terms of time, age, geographical location etc. Absolute control over supply. Different price elasticity of demand in different markets.

Price discrimination with a view to increasing total revenue by charging a higher price in the relatively price inelastic (or low elastic demand) market and a lower price in the elastic demand market. Government’s indirect tax policy with a view Read More …

The balance of Payments of a country is a record of all financial transactions between residents of that country and residents of foreign countries. (Residents‟ in this sense does not just refer to individuals but would also include companies, corporations Read More …