Economics

On a most basic level, business provides a means of income for a population. People need money to not only survive, but to enjoy their lives. In exchange for their labor, businesses give money to...

An organization’s span of control can be determined by the number of employees reporting to the manager/ supervisor. A narrow span of control refers to a structure with few employees reporting to...

Perhaps the best way to understand marginal costs, average total costs, and their intersection is to imagine yourself as a business owner. You've invented a new product, the wingding, and a small...

Before discussing the possible advantages and disadvantages of the price system, it should probably be established what a price system is. Generally, a price system refers to an economy in which...

Before getting into why a firm should be a price taker and not a price maker under perfect market conditions, let’s be clear about what the three terms in the question mean. Fortunately, these...

A circular flow model describes how money, resources, and goods (or services) move from households to corporations and back again. On one side of the model, we have the product market. Corporations...

There are a number of different types of economies throughout the world. Economic systems determine how the people of a country buy and sell goods and how production processes are controlled. The...

Strictly speaking, there is no such thing as a perfectly-competitive market in the real world. The formal definition of perfect competition requires an infinite number of firms with perfect...

There is a difference between consumer products and industrial products. Industrial products include the machinery and resources used to make consumer products. Sometimes these products are...

Marginal cost and marginal benefit are important factors when making economic decisions. Marginal cost is the cost of getting more of something. Marginal benefit is the gain we receive by getting...

The marginal cost curve shows the relationship between the marginal cost of a product and a level of output for that product. When production of a product is in its beginning stage, the marginal...

For the purpose of this answer, let’s assume that the employee is choosing between the two jobs and not analyzing each job independently. One benefit of Job A is the higher starting salary....

A monopoly market structure is characterized by the existence of a single seller. The concept of differentiation is inapplicable in such a market structure. The product or service offered is...

In order to answer this question, we need to define what opportunity cost is. In a nutshell, opportunity cost refers to the benefits that you have given up by choosing one particular option. In...

Microsoft is in a unique situation. They operate in several different, yet similar (and converging) markets, and have a vast power differential between the markets. In one area, they have almost...

No, there can never be zero opportunity cost for anything that we human beings do in this life. In order to see why this is so, let us first look at the definition of opportunity cost. Our...

It looks like you may be referring to labor or personnel economics in your question. Labor or personnel economics is related to human resources management in terms of wages, human capital...

To best answer this question, let's first look at the definitions of primary and secondary industries. A primary industry involves the collection and production of raw materials. For example, a...

Banks primarily act to help control the supply of money in circulation. Economically, the amount of liquid capital in the country is important to determining the strength of an economy. Banks use a...

These are very different kinds of costs. Sunk costs are the costs that you have already incurred. This is the money that you have put into some particular endeavor and which you can not recoup....

There is a difference between functional income distribution and personal income distribution. Personal income distribution focuses on how income is divided among individuals in a country. It...

Winston Churchill once famously noted that many "forms of Government have been tried and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed,...

A decrease in tax to GDP ratio of a country indicates: (B) less equitable distribution of national income. Let's consider why this is the correct answer: When income is distributed inequitably...

Fiscal policy and monetary policy are similar in two aspects. First, they both represent a nation’s policies to regulate its economy. They both can be expansionary to increase the aggregate demand...

Price elasticity of demand is the change in demand of a product based on the increase or decrease of the price of that product. It is of significant importance to the government because it is used...

In theory, eliminating the middlemen sounds like a good idea. This would help to lower costs for consumers who could buy products for less and for businesses who could sell their products for less....

Factor intensity can be defined with regards to factor proportions theory of production and trade, where the factor intensity can be narrowed down to individual products within an industry or in...

The reason money needs to be divisible is actually very simple and quite logical. To start with, divisibility is one of the four properties that makes a commodity, i.e., something of use or value,...

If a firm finds that the marginal product of capital is 60 and the marginal product of labor is 20, it will recognize that each dollar spent on capital resources will produce more than a dollar...

There are many factors that can affect consumer tastes. Consumer tastes, in turn, affect demand for various things. Among these factors are: Marketing. Good advertising campaigns can alter...

Export and import activities take goods or services created in one country into the market of another country. Exports and imports are vulnerable from many outside forces. Free trade agreements,...

Quality of capital per worker is an important factor in creating economic growth. As the quality of capital per worker increases, productivity increases and economic growth occurs. To understand...

To find the difference between appreciation and depreciation of a currency, let's start with how they are alike. Both appreciation and depreciation measure the value of one or more currencies...

The first issue is to distinguish two very different aspects of the mobile phone market from one another. Those are the market for physical hardware or phones themselves and the market for cellular...

Credit cards are not money. As the name implies, they give you credit: an IOU. The bank, in other words, is loaning you money when you use a credit card. You have to pay this money back within a...

There are two sides to any transaction. There is a seller, and there is a buyer. To use an example, when you enter a store to purchase something, you are the buyer. The store, or its owner, is the...

Our money supply isn’t backed by anything. There was a time when we could turn paper money into the government for gold coins, but that practice ended in 1934 when Congress changed the wording of...

Von Thunen was a German geographer who devised a model to explain the location of various forms of land use. In particular, his model was devised after observing land use around cities in Germany...

The government can help influence the allocation of resources, or the ways in which producers have access to the means of production and the ways in which goods and services are distributed among...

China does impose trade barriers, including tariffs, quotas, and other measures designed to restrict free trade. To get a sense of how China has trade barriers, let’s look specifically at the film...

The consensus opinion among the vast majority economists about the government's role in the time of economic crisis is Keynesian—that the federal government is there to prop up the situation by...

The GDP or gross domestic product of a nation refers to the total monetary value of all goods and services produced within the geographic boundaries of a nation in a particular duration of time....

The demand curve for labor is Q=100-5P and the supply curve is Q=5P. At the equilibrium point, the demand curve and the supply curve intersect each other. If the equilibrium price is Pe, the...

No, when the price level falls, the value of money does not fall. In fact, the reverse happens. When the price level rises, the value of money falls. When the price level falls, the value of...

Zero unemployment is theoretically possible, but economists would say that it is a bad idea. It would be possible to ensure that everyone had a job. All that would have to happen is that the...

The question of whether the economic principle of competition applies in both private and public organizations can be read in two ways. Perhaps it makes the distinction between companies that...

While monopolies can often charge more than a non-monopolistic firm could, they do not necessarily charge the highest price possible. This is for a number of reasons. First of all, charging a price...

Overall abundance does not mean that scarcity does not exist in certain markets or for certain people. This is because many factors can make an abundant resource scarce for some. Temporary crises...

When a firm is making the decision about whether to shut down, it considers only one kind of cost. In addition, it considers one aspect of revenue. The only cost that a firm should consider when...

External benefits are a form of positive unintended consequences. One of the areas in which this is most often discussed is energy efficiency. The less energy it takes to make a product, the lower...