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Why might a perfectly competitive firm make abnormal profit in the short run but only normal profit in the long run?

In the short run there is a lack of firms in the industry as it is still new and firms have little incentive to enter it yet. This low supply of firms in the market means the market ruling price will be grea...
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Answered by Reubin B. • Economics tutor
27924 Views

What are the Macroeconomic Effects of Currency Fluctuations?

Currency and the Exchange rate can be a difficult topic to get your head around. I found a little cheat for remembering the different impacts of weaker or stronger currencies : SPICED which stands for Strong...
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Answered by Georgia C. • Economics tutor
4741 Views

What is elasticity of demand

First, think of 'elasticity' as a general word.it means "ability stretch". Therefore elasticity of demand could be understood to be how demand of a certain commodity strecthes or reacts in response...
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Answered by Cynthia O. • Economics tutor
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Why there is liquidity trap in the reality?

When the interest rate is low enough, monetary policy will fail to work, because: 1. interest rate cannot be lower than zero. Given the circumstances that the interest rate is low enough, the amount of money...
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Answered by Sijia Q. • Economics tutor
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Explain a policy that may reduce inequality in the United Kingdom

The key to answering a question like this is to know a basic policy that HM Government has implemented recently. You can have a few policies that you remember so that when a question like this comes up you i...
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Answered by Billy W. • Economics tutor
3863 Views