A new government scheme has been launched today to tackle our sluggish economic growth. 'Business Link' (for more information and research, visit their website) has started a new scheme called 'My New Business' to give advice to potential entrepreneurs. Could this be a potential supply side policy aimed at shifting our LRAS curve rightward?
Read this short article which explains the potential benefits the scheme will bring to our economy. Click here.
To find out more about supply side policies and supply side economics, see my notes posted here!
Showing posts with label Incentives. Show all posts
Showing posts with label Incentives. Show all posts
Monday, 14 November 2011
Sunday, 28 August 2011
Word of the Day
OFT
The Office for Fair Trading uses market structure, conduct and performance indicators to scan the UK economy for evidence of monopoly abuse. This is used to analyse and evaluate costs/benefits of monopoly. The OFT, along with the Competition Commission, creates incentives for firms to resist temptation to exploit possible monopoly power. Firms will not want to risk getting caught by these regulatory bodies therefore uses these incentives.
The Office for Fair Trading uses market structure, conduct and performance indicators to scan the UK economy for evidence of monopoly abuse. This is used to analyse and evaluate costs/benefits of monopoly. The OFT, along with the Competition Commission, creates incentives for firms to resist temptation to exploit possible monopoly power. Firms will not want to risk getting caught by these regulatory bodies therefore uses these incentives.
Wednesday, 24 August 2011
Word of the Day
Functions of price
1. The signalling function
Prices give information to consumers to help them decide what they should buy. A simple example would be to take the example of cameras. If a disposable camera is more expensive than a digital camera, then this conveys information to the consumer that a digital camera may have more functions, take better pictures, be easier to use…etc.
2. The rationing function
Prices can allocate resources accordingly given that consumers have a fixed income. It rations and allocates scarce resources among competing uses. For example, if my income was fixed at £20,000 per annum, I may choose not to buy a £150 handbag because my income may not support such a purchase. However if my income was £170,000 per annum, I might choose to purchase the handbag because I can afford to given my income levels.
3. The incentive function
Prices create incentives for consumers to alter their economic behaviour. For example, if a retailer cuts the price of bread by 50%, consumers are given incentives to buy a loaf of bread. This is because a loaf of bread is cheaper relative to other goods that the same amount of money can buy.
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