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What is Opportunity Cost?

Opportunity cost is defined as the next best alternative foregone. An example of this is: Someone gives up going to see a movie to study for a test in order to get a good grade. The opportunity cost is the c...
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Answered by Varad H. • Economics tutor
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Explain why an increase in labour productivity is likely to reduce the deficit on the current account of the balance of payments.

A current account deficit arises when import expenditure exceeds export revenue. An increase in labour productivity implies that there is an increase in efficiency in production and also a rise in output for...
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Answered by Tom E. • Economics tutor
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How do automatic stabilizers work?

Automatic stabilizers are a form of autonomous adjustment that the economy does in booms and recessions. To understand automatic stabilizers we need to first know how fiscal policy works and know what a busi...
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Answered by Giorgio O. • Economics tutor
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Explain the difference between marginal returns to factor and returns to scale?


The short-run is defined as the period during which one cannot vary at least one of the factors of production, i.e. at least one factor of production is fixed. The long-run is defined as the period during wh...
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Answered by Julia S. • Economics tutor
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Explain the concept of price elasticity of demand? How does one calculate it? What is the relationship between price elasticity of demand and firms’ total revenue?

Price elasticity of demand (PED) is a measure of the responsiveness of demand for a product after a change in that product’s price. It is calculated with the following formula: PED = %change in quantity dema...
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Answered by Julia S. • Economics tutor
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