Category: A-Level
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Government Failure
Government Failure is a phenomenon that occurs when the government’s intervention in the economy or society produces outcomes that are worse than if the government had not intervened at all. Formally defined as ‘When the government intervention leads to an inefficient allocation of resources and a net welfare loss.’ While the government is often seen…
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Future High-Value Degrees
This is an article adapted from an essay I wrote for the RES competition, answering the question ‘Which university degrees do you think will be considered “high value” in 5-10 years’ time, and why?’. Education is the foundation of society, the accelerant of growth and the key to development. In the UK, higher education enrolment…
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Auction Theory
Looking into auction theory and the information asymmetries, among other problems, faced. Building on the previous article about information asymmetries, one specific example in which this can happen are auctions – there can be information asymmetries between buyers themselves, as it is unknown how much each potential buyer is willing to pay. So, the buyers…
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What is Supply-Side Policy?
After exploring demand-side policies, we will move on to supply-side policies. In this article, we will look at who carries it out and why, and in future articles, we will see the different forms of supply-side policy. Supply-side policy is managed by the government, and its main focus is increasing long-run aggregate supply or LRAS.…
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The Multiplier
In my article on Government Spending, I mentioned how the multiplier effect could take place – here, we will look more in-depth into how to calculate this multiplier and what affects it The Multiplier is essentially an economic factor multiplied by the initial injection into the economy to find the increase in real GDP caused.…
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Income Elasticity of Demand (YED)
Moving on to look at YED, we will see how demand varies with income and the types of relationships that a YED value can identify. Formally defined, YED, or income elasticity of demand, is the responsiveness of demand to a change in real income. It is calculated by the % change in demand over the…
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Price Elasticity of Supply (PES)
Moving on to the final elasticity, we will look at the responsiveness of supply to changes in price – how much producers will change output in response to a price change. What is PES? As the name suggests, PES measures the responsiveness of supply to a change in price. All economic agents have one main…
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Fiscal Policy: Government Spending
After observing the effects of tax rates, we will move on to look at government spending, the multiplier and the impacts on specific macroeconomic objectives. Another demand-side policy that comes under the fiscal branch is government spending. This is a lot simpler to understand, as Government Spending is a component of AD – an increase…
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Cross Elasticity of Demand (XED)
Moving on to the final demand elasticity, we will look at XED – how the demand for one good varies based on the price of another. XED, or cross elasticity of demand, observes the responsiveness of demand of good A to a change in the price of good B. This allows us to assess the…
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Price Elasticity of Demand (PED)
Defining the first elasticity of demand: PED PED measures the responsiveness of demand to a change in the price level. As we already know, the demand curve is downwards sloping as at a higher price, consumers demand less of a good (due to diminishing marginal returns). However, this can vary depending on certain factors that…
Economics 101 