The Demand Curve

Is it true or false to say that Demand 2 is elastic and Demand 1 is inelastic?







It is false - but why?

The Supply Curve

On the left we see a supply curve.

As you can see, the supply curve goes up from left to right.

OK so far?



But.....

As the price rises, there will come a time when a lot of firms join the industry. Surely then the supply curve would flatten out?

Also, as production incrases, firms will get economies of scale - so surely the supply curve will shift to the right?

Thoughts...

Is Economics any use?

Poverty

CET/Free trade

Round Europe there is a Common External Tariff.

Therefore tariffs are OK to protect farmers, yes?

But, hang on, tariffs against EU farmers restrict free trade and therefore are against the greater good...aren't they?

So how can tariffs be good and bad?

Visitors

I see Teachers and students have been visiting here - and yet not commenting. Surely the 35+ posts here cannot all be true - because if they are then much of the Economics that is taught in schools is false!

The Bank of England should seek to deliberately increase inflation!

The reasoning behind this would be to ensure that there were negative real interest rates.

If the Bank of England commits itself to producing significant inflation then real interest rates could become negative.

Thus people might borrow money (at 0% interest) and repay in their (devalued) pounds.

This would give people a significant incentive to borrow and spend.

A little more inflation might be preferable to rising unemployment or a series of fiscal measures that pile on debt bequeathed to future generations.

The idea of negative interest rates may strike some people as absurd, the concoction of some impractical theorist. Perhaps it is. But remember this: Early mathematicians thought that the idea of negative numbers was absurd. Today, these numbers are commonplace. Even children can be taught that some problems (such as 2x + 6 = 0) have no solution unless you are ready to invoke negative numbers.