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 …
Vertical integration occurs when two firms at different stages of production merge. It involves going up or going down the supply chain. Example of vertical integration. Brewery merging with chain of pubs Software supplier merging with Computer firm Coffer grower merging with a coffee retailer such as Nescafe Car firm Renault merging with a tyre …
Readers Question: What are the advantages and disadvantages of leaving pension provision to the private sector? Could you please explain with the help of economic theory? Advantages of Leaving Pensions to the Private Sector Private Sector is thought to be more efficient. The private sector has profit motives to gain the best return for investors, …
Definition – A maximum price occurs when a government sets a legal limit on the price of a good or service – with the aim of reducing prices below the market equilibrium price. For example, the government may set a maximum price of bread of £1 – or a maximum price of a weekly rent …
A summary for understanding exchange rates. Factors that affect exchange rates and the impact of exchange rates on the economy. Terminology Depreciation/devaluation – fall in value of exchange rate – exchange rate becomes weaker (see also: definition of devaluation and depreciation) Appreciation – increase in the value of exchange rate – exchange rate becomes stronger. …
Collusion occurs when rival firms agree to work together – e.g. setting higher prices in order to make greater profits. Collusion is a way for firms to make higher profits at the expense of consumers and reduces the competitiveness of the market. In the above example, a competitive industry will have price P1 and Q …
A look at the arguments for and against privatisation. Privatisation involves selling state-owned assets to the private sector. It is argued the private sector tends to run a business more efficiently because of the profit motive. However, critics argue private firms can exploit their monopoly power and ignore wider social costs. Privatisation is often achieved …
Readers Question: ‘Society may come to the view that too much inequality is unacceptable or undesirable’ Assess whether inequality can cause economic problems, such as market failure. What are the advantages and disadvantages of inequality? Inequality means there is a gap between the highest income earners and the lowest income earners. (inequality can also relate …