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Using a price ceiling diagram, analyse the impact a maximum price might have on the market for food.

A maximum price is a price set below the market equilibrium by the government which firms are not allowed to exceed. This can result in creating disequilibrium in the market resulting in excess demand. In th...
IM
Answered by Izma M. • Economics tutor
9189 Views

Discuss the possible consequences of the imposition of an indirect tax on cigarettes for the different stakeholders in the market.

An indirect tax (when a government places a tax on goods or services) on cigarettes is an example of the correction of a negative externality of consumption (a market failure). This is when the consumption o...
RD
Answered by Rhea D. • Economics tutor
16071 Views

Distinguish between the concepts of income elasticity of demand (YED) and cross price elasticity of demand (XED)

In economics, elasticities are an indicator of the responsiveness of demand after a change in price or income . Income elasticity of demand is the relative change in demand of one good or service following a...
MC
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Explain why a perfectly competitive firm will make normal profit in the long run.

A perfectly competitive market structure possess 4 defining characteristics. 1- Homegenous goods (all goods produced by different suppliers are of same quality and form, eg. Oranges) 2. No barriers to entry ...
JT
Answered by James T. • Economics tutor
7902 Views

Using at least one diagram, explain the difference between demand-pull and cost-push inflation.

Inflation is defined as a persistent increase in the average price within a country, in other words a decrease in the purchasing power of a currency. There are two main groups that the reasons for inflation ...
RH
Answered by Rachel H. • Economics tutor
7191 Views