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What would be the effect on the UK Economy of an increase in the Bank of England Base Rate?

AD=C+I+G+X-M1) Increased cost of borrowing-Consumption Variable rate mortgages will now have higher monthly interestrepayments. This leads to a decrease in disposable income for consumers.Consumers will ther...
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Answered by Alex N. • Economics tutor
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Choose an example of a demerit good and and a policy which may be used by the UK Government to help reduce its consumption

A demerit good is a good which is generally both harmful or unhealthy to the consumer - in most instances, they also carry negative externalities, which are costs imposed onto third parties. An example of su...
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Should maximising profits be the main objective of a business?

In order to answer, one should consider the benefits of profit maximisation. These may include: satisfying shareholders, using money for savings in order to stay afloat, reinvesting profits into technology (...
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Answered by Caitlin D. • Economics tutor
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Consider the following production function: Q = K^a + KL^(b+2), find the marginal product of capital.

The marginal product of capital (MPK) is defined as the additional unit of output, all things being equal, that comes with an additional unit of capital used. The equation for MPK is: change in output/change...
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Answered by Zachary F. • Economics tutor
5044 Views

Mr. A has utility function U(x,y) = ln(x) + ln(y) and budget constraint M = px + qy, solve for the demand functions x* and y* ?

We want to maximize U(x,y) subject to the constraint M = px + qy, where M is monetary income and p,q are the prices of x and y respectively. Since this is a constrained optimization problem we can use the la...
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Answered by Gian S. • Economics tutor
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