How important are seasonal trends in the automotive sector?

June 30, 2024 No Comments

A: The automotive industry has some definite seasonal trends, with peak demand occurring in the spring and fall, and lowest sales in December, January and February. The auto industry is an important element of the entire U.S. economy. The automobile sales level is often seen

How is a market failure corrected?

June 30, 2024 No Comments

Imperfect market outcomes are corrected through a reallocation of resources or change in incentive structure. Economists have different opinions about the nature of market failures and what (if any) measures need to be taken to prevent or correct them. What is a Market Failure? It’s

How is an economy formed and why does it grow?

June 30, 2024 No Comments

A: Broadly speaking, an economy is an inter-related system of human labor, exchange and consumption. An economy forms naturally from aggregated human action – a spontaneous order, much like language. Individuals trade with each other to improve their standards of living. Improved standards of living

How is covariance used in portfolio theory?

June 30, 2024 No Comments

A: Covariance is used in portfolio theory to determine what assets to include in the portfolio. Covariance is a statistical measure of the directional relationship between two asset prices. Portfolio theory uses this statistical measurement to reduce the overall risk for a portfolio. A positive

How is marginal analysis used in making a managerial decision?

June 30, 2024 No Comments

A: Marginal analysis plays a crucial role in managerial economics, the study and application of economic concepts, to managerial decisions. The idea is to predict and measure the impact of per unit changes on an organization’s goals, ultimately identifying the optimal resource allocation given the

How is marginal revenue related to the marginal cost of production?

June 30, 2024 No Comments

A: The marginal cost of production and marginal revenue are economic measures used to determine the amount of output and the price per unit of a product that will maximize profits. A rational company always seeks to maximize its profit, and the relationship between marginal revenue

How is productivity calculated?

June 30, 2024 No Comments

A: Productivity measures the efficiency of a company’s production process. It is calculated by dividing the outputs produced by a company by the inputs used in its production process. Common inputs are labor hours, capital and natural resources, while outputs are generally measured in sales

How does the law of supply and demand affect the housing market?

June 30, 2024 No Comments

A: The law of supply and demand is a basic economic principle that explains the relationship between supply and demand for a good or service and how the interaction affects the price of that good or service. The relationship of supply and demand affects the

How is profit maximized in a monopolistic market?

June 30, 2024 No Comments

A: In a monopolistic market, there is only one firm that produces a product. There is absolute product differentiation because there is no substitute. One characteristic of a monopolist is that it is a profit maximizer. Since there is no competition in a monopolistic market,

How does the law of supply and demand affect the stock market?

June 30, 2024 No Comments

A: The law of supply and demand affects the stock market by determining prices of the individual stocks that make up the market. The major factors that affect demand for stocks are economic data, interest rates and corporate results. Economic data reveals more information about

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