Zusammenfassung der Ressource
Microeconomics
- Government Intervention
- Subsidies
- Supply curve shifts to the right
- Costs the government more money
- Can cause an increase in tax
- Can cause a reallocation of funds
- Will cause an opportunity cost of reducing those services
- Price Ceiling
- Reduces prices so things are more affordable for low income groups
- Leads to an excess of demand
- Can create a black market
- Costs the government more money to set regulations
- Price Floor
- Especially on Demerit Goods
- Leads to an excess of supply
- Except on goods which demand is inelastic
- Taxation
- On Demand
- Indirect Tax on goods
- Decrease demand
- On Supply
- Cause a shift to the left on the supply curve
- Increasing Price
- Buffer Stock Schemes
- Governments buy up excess supply of agricultural goods and sell it when supply is low
- Agricultural Goods
- Volatile Supply
- Depends on factors such as weather
- Causes fluctuations in prices
- Advantages
- Maintains farmers income
- Consumers are able to afford goods
- Disadvantages
- Expensive
- Requires significant amount of start up capital
- Cost of storage
- Merit & Demerit Goods
- Merit
- Under-consumed in a free market
- Lack of information, people don't know the benefits
- Demerit
- Over-consumed in a free market
- People are unaware of the lack of benefits the receive from consumption
- E.g. Smoking & Alcohol
- Negative Externalities
- When demerit goods are consumed they have a negative effect on a third party
- E.g. drinking to much alcohol and harm property of an innocent third party
- Production
- Social costs exceed private cost