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Explain two ways in which central banks use monetary policy to influence the economy.

Monetary policy, the instruments by which central banks and adjust the value and supply of a currency, most notably take the forms of interest rate changes and credit expansions. Firstly, the lowering of int...
Answered by • Economics tutor
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Is profit maximisation the most important objective of firms?

Usually in traditional Economic theory we assume firms are profit maximising. In reality this may not be the case. Short run firms seek to maximise sales - e.g. Amazon to gain market share (monopoly power). ...
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Answered by Jed W. • Economics tutor
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Using knowledge of PED, when should a firm decrease the price of a good to maximise revenues?

A firm should only decrease the price of a good if the good is price elastic (PED>1). This is because in percent decrease in price will result in a greater percent increase in quantity demanded so revenue...
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Describe the impact of a close competitor lowering the price for their good has on the price and output of a firm, use a demand-supply diagram to help explain your answer.

If a competitor firm lowered the price of their good, assuming the cross price elasticity of demand (XED) for the two goods is positive, then demand will fall as consumers switch to the competitor's goods. t...
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Answered by Lewis G. • Economics tutor
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Explain price elasticity of demand

Price elasticity of demand (PED) - the percentage change in quantity demanded, divided by the percentage change in price There are several factors that influence the elasticity of demand for a given product:...
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Answered by Maria S. • Economics tutor
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