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 …