Everyday Economics – ‘As seen on TV’

Why do firms label their products to say they have been advertised on TV when this information may seem irrelevant and doesn’t appear to convey a message to the consumer about the quality or function of the good?

Well in fact, such a practise, does convey a message to consumers. At least about the quality. To advertise on TV firms have to spend thousands if not millions of pounds to secure an advert slot. To spend this much money on promoting and marketing a product it shows that the producers are confident that the product will sell well, and to do this it must be worthwhile and of a high quality. [...]

Everyday Economics

Economics is universal and surrounds our daily life, in practise it can be used to answer a wide range of questions that arise from daily life. No, this introduction isn’t a response to a University Interview question asking what economics is, but instead is an introduction to a new feature we are introducing – Everyday Economics.
This feature aims to answer a variety of different puzzles that can be found in daily life and answered by economic theory.

When confronted with a reality puzzle there are a number of economic tools we can use to try and solve the question. Some of these tools (of which you can learn more of the theory on, in our Lessons Page) are listed below, in no particular order:

1. [...]

Privatisation – Good or Bad?

Privatisation (also known as denationalisation) is a policy undertaken by a government, whereby an industry owned by the government (thus the nation) is placed into the hands of the private sector. This is often done through an Initial Public Offering on a stock market, but could be also done through a sale to a single entity. There are a number of reasons why a government may decide to privatise a holding:

  • Sell off loss making enterprises – if the government is making a loss on a firm it owns it may wish to sell it. By doing this it reduces the amount it has to pay for the loss, and a private firm may be able to turn its fortunes around, and turn it into a profit making firm, potentially increasing government tax revenue and reducing unemployment (and thus unemployment benefit spending).