Quick Revision Quiz

The excess supply (or ‘glut’) that results is wasteful (e.g. Thai government’s spending on the ‘rice mountain’)

Any of the following: -Reduces the available supply to the market, through lack of price incentive -Landlords don’t bother to maintain their properties. -Landlords become choosier -Tenants stay in their properties for longer than they would otherwise, restricting available properties for newcomers. -Rent-controlled properties often go to those on higher incomes, as they have the means to track down the cheaper apartments.

When the growth of the entire industry leads to falls in Average Costs for all companies in the industry. Also applies to when a firm is in an area of growth or high population, leading to infrastructure that leads to its own costs falling.

An increase in price

Because factors of production are better at making one type of good compared to the other, as you increase production you use the factors that are less well suited toward producing that good. Opportunity cost therefore increases, making the PPF gradient steeper and therefore concave.

less

(X-M) will increase, as exports are cheaper and imports are more expensive. AD shifts right. → Economic growth increases → Inflation Rises → Unemployment Decreases → Trade balance improves

Advantages: ◦ Diversification of product offering → Less risk if demand for your product decreases. ◦ Chance to find new ‘synergies’ across industries, e.g. finding new ways to connect diverse products. Disadvantages: ◦ Lack of experience in new industry.

-VAT -Tobacco duty

. . . increase