A Carbon tax is a specific tax on the consumption of goods which cause carbon dioxide emissions. C02 emissions have been identified as a major source of global warming and therefore, governments have been keen to reduce carbon emissions. Advantages of Carbon Taxes The market price is P1 – but this ignores the external cost …
Carbon Trading is a scheme where firms (or countries) buy and sell carbon permits as part of a programme to reduce carbon emissions. Usually firms are given a certain quote to pollute a certain amount. If they wish to pollute more than their allowance then they have to buy more permits. If they pollute less …
Summary: Cardinal utility gives a value of utility to different options. Ordinal utility just ranks in terms of preference. Cardinal Utility is the idea that economic welfare can be directly observable and be given a value. For example, people may be able to express the utility that consumption gives for certain goods. For example, if …
A cartel occurs when two or more firms enter into agreements to restrict the supply or fix the price of a good in a particular industry. A cartel is a formal type of collusion. Cartels are considered to be against the public interest. This is because cartels aim to: Increase price Distort normal workings of …
Cash Flow. This is the pattern of a firms receipts of income and outgoings of expenses. To survive businesses need to ensure sufficient cash flow and not just profitability. For example, if a business sells goods, but, doesn’t receive payment for a long time, it may go out of business even though on paper it …
Definition of Cash Ratio – The ratio of cash to total liabilities a bank will hold. For example, suppose that a bank has deposit of £100 billion. If if has a cash ratio of 1%, it will need to hold £1billion on cash reserves. A cash ratio determines how much credit can be created from …
Definition of ceiling prices – When there is a limit placed on the increase of prices in a market. In a buffer stock scheme, governments attempt to reduce price volatility. Therefore, ceiling prices may be placed for certain goods; this prevents the price of food rising too rapidly. If prices do rise and governments have …
Definition – A centrally planned economy is an economy where decisions on what to produce, how to produce and for whom are taken by the government in a centrally managed bureaucracy. Central planning is also referred to as a ‘Command economy’ or ‘Communist economy.’ WIth Central planning, the theory is that the government will take …