Economics Questions and Answers

Middlemen are agents who play the role of an intermediary in a distribution or transaction chain that facilitates interaction between parties. They include wholesalers, retailers, agents, and brokers.

For those who may be confused about a hawker being a middleman, remember a hawker does the same thing a retailer does, - sells to the final consumer. The difference between a hawker and a retailer is in the mode of conducting business. While a retailer may have a kiosk, shop, or store where their goods are sold, a hawker moves from one place to another to sell different products.

Governments influence the location of industry, by giving tax incentives, cheap rent, and other benefits to companies locating in certain areas of the country. These are often done in places which the government wants to develop economically.

Plough back profits also known as retained earnings are profits earned by a business, and reinvested in the business. What this means is that the business doesn't spend its profits, but put it back in the business. It is considered one of the cheapest sources of business financing as it does not require interest to be paid.

For a perfectly competitive firm, the average revenue curve is a horizontal, or perfectly elastic, line. It is the same as a marginal revenue curve which is also a horizontal line at the market price, implying perfectly elastic demand.

Variable cost has a positive relationship with output in such a way that if a firm produces more output, the variable cost will be greater, and if a firm produces no output, then the variable cost will be zero. The variable cost depends on the level of output.