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How can we use price elasticity of demand to determine the incidence of a tax on a good?

We can determine weather the burden of a tax will fall on consumers or suppliers by looking at the price elastcity of demand. Although both groups will usually share the incidence of the tax, the group with ...
CM
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What is Quantitative Easing and evaluate how it impacts an economy?

Quantitative Easing is the introduction of new money into the money supply and is performed by the central bank. There are several effects associated with quantitative easing, one such positive impact is tha...
BW
Answered by Brandon W. • Economics tutor
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If mpc = 0.6, what will be the final change in National Income arising from an initial increase in Investment of £200m?

In this case, mpc is the Marginal Propensity to Consume, which is a value between 0 and 1 representing the proportion spent on consumption of an extra unit of income received by a consumer. It is used formul...
DB
Answered by Daniel B. • Economics tutor
19091 Views

Explain why the average and marginal revenue curves for a perfectly competitive firm are horizontal while those of a monopoly slope downwards.

The average revenue curve for a perfectly competitive firm is horizontal due to the fact that it faces perfectly elastic demand at the market determined price. This is because there is a significant amount o...
JS
Answered by James S. • Economics tutor
50686 Views

Explain two government policies which could reduce a deficit on the current account of the balance of payments.

One policy the government could use is to put a tariff on imports. Tariff Diagram As the diagram shows, a tariff on imports would shift the world supply curve up to W+T and increase the price of imports. Thi...
WS
Answered by Wendy S. • Economics tutor
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