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What are the two different types of circular flow of income models?

The first is in a closed economy, where there are just households and firms present and thus no exchange between the two in terms of spending and transfer of goods and services. The second is in an open econ...
RT
Answered by Rohan T. • Economics tutor
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Bill's Diner is an American burger restaurant. There is an increase in import costs of products needed from America, and change in perceptions of fast food such as burgers, due to an increase in health warnings. Discuss the effects on the market. (6)

A decrease in supply (1) A decrease in demand (1) A reduction in overall market quantity (1) An indeterminable effect on price (1) Effect will depend upon relative size of the shifts (1) and the price elasti...
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Answered by Daanial C. • Economics tutor
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Discuss how effective a reduction in income tax would be in encouraging economic growth.

A cut in income tax means that workers have more disposable income. They are likely to spend some of this rise in income, leading to more demand in the economy. Firms will raise output to meet the increased ...
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Answered by Rebecca D. • Economics tutor
2610 Views

Why are subsidies a more efficient way of reducing prices than price ceilings are?

To begin with, the main difference between subsidies and price ceilings is that subsidies move the market equilibrium as they shift supply outwards (show on a diagram), which occurs because producers now fac...
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Answered by Anna Z. • Economics tutor
22664 Views

Please show, using a diagram with explanation, the effect on the UK market for t-shirts of a flood in Bangladesh, a leading cotton growing nation.

Student should realise that the flood will reduce global supply of cotton, causing the supply curve on the diagram to shift left. The market equilibrium will therefore move along the demand curve until the p...
MM
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