This article follows on from the previous gains from trade article. People consume goods produced domestically and overseas. Interdependence and trade mean more goods and services are available in increased variety. Differences in costs determines the value of trade. Production costs -> absolute advantage. The producer that requires a smaller quantity of inputs to produce … Continue reading Microeconomics – Comparative & Absolute Advantage
Consider your typical morning… Your bed sheets are made from cotton grown in India and woven in Madeira, your alarm clock was made in China. You pour a glass of orange juice that was made from oranges grown in Spain, the year-round demand for fruits and vegetables are made possible through trade. You watch the … Continue reading Microeconomics – Interdependence & Gains from Trade
A textbook definition of macroeconomics says that “[it] is the study of the economy as a whole, including growth in incomes, changes in prices, and the rate of unemployment.” (Mankiw, 2010) Extending over global, regional and national economies. Economists advise on policies for the government regarding important economic indicators. Macroeconomics though can often cause mistakes … Continue reading What is Macroeconomics?
A bit cliché to refer to Leonard E. Read I, Pencil, though a simple explanation for introductory economic students, covering how the market works with not central direction but how social cooperation works from individuals pursuing their own interests. In turn, resources are allocated by the combined and decentralised actions of billions of people. Source: … Continue reading I, Pencil