A subsidy is an amount of money provided to firms to help reduce production costs which can then be passed on as lower prices, and which can encourage consumption.
Subsidies can be justified as a solution to the problem of market failures, including subsidising merit goods and public goods.
Labour markets The demand for labour - marginal productivity theory The demand for factors of production is derived from the demand for the products these factors help make. For example, if mobile phones are in greater demand, ...
Monopsony power Monopsony power exists when a single buyer or an association of buyers can dictate the prices they pay to suppliers, or control other aspects of the relationship that exists between themselves and their ...
Enterprise The origins of enterprise Firms start when entrepreneurs organise resources and take risks in the expectation of earning a profit. More specifically, enterprises tend to be set up for one or more of the following reasons: ...
Competitive labour markets The demand for labour - marginal productivity The demand for factors of production is derived from the demand for the products these factors make. For example, if mobile phones are in greater demand, then ...
Survival of small firms Despite the benefits of operating on a large scale, independent and non-subsidiary small and medium sized firms (SMEs) still survive, and indeed make up the vast majority of firms. According to ...