A-Level Economics Tutor

Discuss the Effects of a Subsidy on a Market with Positive Externalities A subsidy is a payment given by the government to firms, causing supply to shift to the right. The diagram below shows the impact of a subsidy on gym membership. Supply is the number of goods and services

Discuss the Effects of an Indirect Tax on a Market with Negative Externalities An indirect tax is an extra cost of production imposed on firms by the government. It causes supply to shift to the left, as shown by the diagram below. Supply is the quantity of goods and services

Negative Externalities in Production Market failure occurs when there is a misallocation of resources. The market for magazines have negative externalities in production, as shown by the diagram below. Negative externalities occur when there is a cost to the third party from the production of the good or service. The

Positive Externalities in Consumption Market failure occurs when there is a misallocation of resources. A bicycle helmet is a merit good, as it causes positive externalities in consumption, shown by the diagram below. Positive externalities occur when there is a cost to the third party from the consumption of the

Negative Externalities in Consumption Market failure occurs when there is a misallocation of resources. Fast food is a demerit good, as it causes negative externalities in consumption, shown by the diagram below. Negative externalities occur when there is a cost to the third party from the consumption of the good

Explain how a firm can experience Diseconomies of Scale When a firm become larger and produces more output, they are impacted by both economies of scale and diseconomies of scale at the same time. After the minimum efficient scale, diseconomies of scale will outweigh economies of scale. Diseconomies of scale

Explain two causes of a change in price One factor that could cause an increase in the price of tea is an increase in the price of coffee. Demand is the number of goods and services that people are willing and able to buy at each given price. If demand

Year 12 Microeconomics The basic economic problem Explain features of the basic economic problem using a production possibility frontier 1. Productive efficiency 2. Allocative efficiency 3. Opportunity cost Demand and supply Causes of a price change 1. Increase in demand 2. Decrease in supply 3. Decrease in demand 4. Increase

One impact of trade agreements is lower prices. Trade agreements mean that countries can trade freely without protectionist measures such as tariffs. A tariff is a tax on imports and the diagram shows the effects of removing tariffs on the economy. The diagram shows a regular demand and supply curve

One benefit of free trade is that it enables countries to specialise. Specialisation can lead to an increase in world output. Free trade is the act of trading without protecionist barriers. Comparative advantage is when a country produces the good or service with the lowest opportunity cost. Comparative advantage theory