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Slide 1

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Quick fire Economics Multiple
Choice…read more

Slide 2

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· Composite Demand= Demand for a good which
has more than one use
· Derived Demand= Occurs when a good is
necessary for the production of other goods
· A movement along the demand curve takes place
only when the price of the good changes
· Demand means effective demand, based on the
ability as well as willingness to pay
· Excess demand= When consumers wish to buy
more than the firms wish to sell, with the price
below the equilibrium price…read more

Slide 3

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· Market supply= The quantity of a good or
service that all firms in a market are willing to
· Supply= The quantity of a good or service that
firms plan to sell at given prices in a given
period of time
· Profit Maximisation is the main objective of a
firm…read more

Slide 4

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Conditions of supply
· Cost of production: wage costs, raw material
prices, energy costs, cost of borrowing
· Technical Progress
· Taxes imposed on a firm, such as VAT, excise
duties, the business rate
· Subsidies granted by the government to firms.
Increase the supply…read more

Slide 5

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· Ad Valorem Tax= A % expenditure tax such as VAT
· Expenditure Tax= A tax levied by the government
on spending by consumers. The firms selling the
good pay the tax to the government, but
customers pay indirectly via a rise in the price of
the good. This shifts the supply curve to the left.
Decrease the supply
· Unit tax/Specific tax= A tax levied on a unit of a
good, irrespective of the goods price…read more

Slide 6

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What can shift supply?
· Increase in supply: Subsidy, technological
advances and a decrease in the cost of
· Decrease in supply: Taxes, An increase in the
cost of production, Bad harvests or an
increase in wage costs…read more

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Slide 9

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