Wants increase with income.
Incomes are distributed unequally.
High demand leads to high prices.
Limited resources have alternative uses.
Other firms enter the industry.
Higher prices are charged than under competitive conditions.
Market output increases.
There are economies of scale.
Continually increases its average standard of living.
Maximises investment in capital goods.
Is operating with full employment of labour.
Can only produce more of one good by producing less of another.
Demand for the good
Subsidies granted to producers
The rate of growth of labour productivity
The elasticity of supply of the good
The product being over-priced.
Over-production of the product.
Too little consumption of the product.
Too few resources devoted to producing the product.
An organisation might buy in the open market to maintain a minimum price in the market for a product.
Governments restrict supplies of a product coming onto an open market in order to lower prices of the product.
Buffer stocks are kept to sell if the price of a product starts to fall
Buffer stocks are sold when there are surpluses in the market.
The wages of apple pickers.
Real incomes in the economy.
The price of substitutes.
The popularity of apples.
A fall in demand for holidays in China.
No change in demand for holidays in Peru.
A 14% increase in demand for holidays in Italy.
A 2% increase in demand for holidays in Spain.
Demand is perfectly inelastic and a firm’s labour costs fall.
Demand is perfectly elastic and a firm’s labour costs rise.
Supply is perfectly elastic and the price of a substitute good falls.
Demand is perfectly inelastic and a firm’s labour costs rise.
A positive statement is one which can be tested against the facts.
A positive statement is one which never contains words such as ‘could’ or ‘should’.
A normative statement is one which can be scientifically proven to be true or false.
A normative statement is one which never contains words such as ‘is’ or ‘will’ or ‘always’.
It results in lower rewards being paid to factors of production when demand for the output they produce increases
It will lead to a distribution of output amongst individuals on the basis of greatest need.
The prices of non-renewable resources will tend to rise as the stock of such resources nears depletion.
It will always ensure that competition between firms prevents high profits being earned.
Greater than 1.
The introduction of pollution permits to limit positive externalities
The use of a buffer-stock scheme to stabilise the price of a public good
The imposition of a maximum price for a merit good
The provision of a subsidy for a product which generates negative externalities
A monopoly restricting output
The production of a negative externality
A firm deciding to produce a private good
A government subsidising agricultural production
Positive externalities in consumption.
Positive externalities in production.
Negative externalities in consumption.
Negative externalities in production.
Equilibrium price and quantity would remain at OP1 and OQ1.
It would encourage suppliers to increase production from OQ1 to OQ2.
The amount sold would increase from OQ1 to OQ2.
The market price would fall from OP1 to OPmin.
The government is subsidising the production of renewable energy.
The social cost of electricity generated from renewable resources is greater than the private cost.
The government is subsidising the negative externalities arising from the production of ‘green energy’.
Electricity suppliers are paying higher average prices for their electricity because some of the electricity is generated from ‘green sources’.
The free market price will be too high.
There will be over-production of the good of HJ.
The free market output will be too high.
There will be under-consumption of the good of HJ.
The benefits of monopoly power.
The benefits of increased specialisation.
Diseconomies of scale.
Increased productive efficiency.
The production of potatoes be subsidised.
A tax be imposed on consumers of potatoes.
Potatoes be released from the buffer stock.
Potatoes be purchased for the buffer stock.
Only W and Y
Only V, W and X
Only V, W, X and Y
V, W, X, Y and Z
Specialisation shifts the production possibility boundary to the left.
Labour replaces capital to produce goods and services.
Specialisation requires an economy to produce on its production possibility boundary.
The division of labour makes it cost-effective to provide workers with specialist equipment.
Here's an interesting quiz for you.