Draw a Supply/Demand diagram to show the incidence of tax when Demand is Inelastic
Draw a diagram to show External Economies of Scale
Explain the concept of natural monopoly and draw the diagram.
A natural monopoly has high fixed costs.
This leads to constantly falling AC and MC which is below AC across all output levels.
Qmes (minimum efficient scale) which is higher than all output levels.
Use the Trade Effect to explain the relationship between Price Level and AD
-Increased UK Price levels make UK exports less competitive.
-Higher prices mean lower Exports.
-(X-M) decreases.
How can businesses differentiate their products or services?
Businesses can differentiate their products or services by focusing on unique features, superior quality, customization options, exceptional customer service, innovative design, competitive pricing, effective branding and marketing, sustainability initiatives, and delivering an outstanding customer experience.
Say MPC = 0.9
What is the value of the multiplier?
Why does long-term unemployment/hysteresis create a cost on the economy?
-Workers who have been out of work for long periods of time may have lost the skills and habits of work.
-The lower skills may keep them out of the labour market, meaning LRAS is not as high as it could be.
How does a government budget/fiscal deficit occur?
When the government revenues (e.g. taxes) are lower than government spending.
Explain why SRAS slopes up from left to right.
As price levels increase, firms are willing to increase their output because the high prices offer incentives to make greater profits.