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Page 1

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Evaluation points for unit 1

Supply/demand

Size of the change
LR vs. SR
Other things not being equal e.g. under predictable shocks or uncertainty over future prices

PES LR VS. SR

Sr tends to be inelastic and lr more elastic
Finite resources= sr inelastic
Cut supplies when p decreases
New…

Page 2

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Increased taxes on demerit goods

Effects

Increased tax revenues
Higher prices
Less consumer/producer surplus
Protests


Evaluation

Compare to other countries e.g. LEDCs vs. MEDCs
Hard to place a monetary value on costs
Inelastic unfair on poor

Guaranteed minimum pricing scheme

Effects

More incentives to produce
Consumer surplus decreases
Producer surplus…

Page 3

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YES

Less demand for labour
People are still paid below e.g. illegal immigrants=lower taxes
Weak enforcement/monitoring

NO

Encourages people to work= less welfare state costs

Division of labour

Benefits

Increased productivity
Lower costs per unit
Lower training costs
More effective use of capital

Negatives

How many can work within a…

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