Month: July 2022

Understanding the difference between Moral Hazard and Averse Selection

Moral hazard and adverse selection are both used for economics, in risk-management and insurance to explain circumstances where one person is at disadvantage because of the actions of another.   Moral risk is when there’s an imbalance of data in the relationship between two individuals, and changes in the behaviour of one of them occurs following an agreement between the …

Understanding the difference between Moral Hazard and Averse Selection Read More »

The Trade Debt: Benefits as well as Disadvantages

Economics experts disagree on the fundamental issue of whether or not sustained trade is sustainable. What is a Trade Deficit? A trade deficit is when the amount of the nation’s imports surpasses its worth of the exports–with exports and imports being refer to both physical goods as well as services. In simple terms it is when a trade deficit occurs …

The Trade Debt: Benefits as well as Disadvantages Read More »

What is Money?

Money is the reason that makes the world go around. The economies are based in the trade of cash for goods and services. Economics experts define the concept of money, where it came from and the value it has. These are the many facets of money. Medium of Exchange Before the advent of the currency–that is, money, people would …

What is Money? Read More »

Performativity

What is the definition of performance in economics? The theory of performativity suggests that models of finance or economics are not merely measuring an aspect of reality but instead, assist in shaping this aspect of reality into what the model portrays. In other words, it is the idea that economic theory doesn’t just define what the …

Performativity Read More »

Efficiency Wages

What are the The Wages for Efficiency? In economics of labor the term “efficiency wages” refers to an amount of money that are paid to workers over what is considered to be the the minimum wage to ensure that they have the most skilled and productive workforce. The concept of efficiency wage suggests that an employer should pay …

Efficiency Wages Read More »

The Bullwhip Effect

What is The Bullwhip Effect? The bullwhip effect is an instance wherein tiny variations of consumption on the end that is retail of the distribution chain are amplified as you move through into the supply chain, from end of the retail chain up to manufacturing. This occurs when a retailer alters the amount of the product it buys via wholesalers depending on a …

The Bullwhip Effect Read More »