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One cause of inflation is due to the wage rate increasing at a faster rate than output. The cost of production for firms increases and to maintain profits they are likely to raise prices. When the prices ...

British market for high - sugar soft drinks represents a market failure. The drinks are a demerit good and are over - consumed (Figure 1 to draw: the graph showing supply and demand curves denoted as S an...

A negative externality is a type of market failure that occurs when the consumption or production of a good has an external cost on a third party that is not involved in the transaction. This external cos...

A subsidy is a government payment designed to increase supply and thus reduce the costs of production of goods and services. They are commonly used to right market failure.

Expansionary fiscal policy is the increase of government expenditure and/or the reduction of taxation. Government expenditure is an injection into the circular flow of income, whereas taxation is a leakag...