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The only road connecting two populated islands is currently a freeway. During rush hour, there is congestion because of the heavy traffic. The marginal external cost from congestion rises as the amount of traffic on the road increases. At the current equilibrium, the marginal external cost from congestion is $5 per vehicle. Would a toll charge of $5 per vehicle lead to an economically efficient amount of traffic? If not, would you expect the economically efficient toll to be larger than, or less than $5?
Weapons of Conflict The trade unions and the employers (or their associations) have many ways of enforcing their demands on each other. They include: Strikes: The stri
Q. Development of Skilled Labour - External Economies? As the industry grows training facilities for labour will increase. This helps development of skilled labour that would i
What is the Permanent Income Hypothesis? What is the theory's potential relevance for assessing the effects of temporary tax cuts for the purpose of fiscal stimulus? If you were
Suppose that the price elasticity of demand for cereal is -0.75 and the cross-price elasticity of demand between cereal and the price of milk is -0.9. If the price of milk rises by
Gross Domestic Product A measure of national economic activity, GDP is measured from two approaches. GDP can be viewed as the total value of all goods and services produced in
INTERNATIONAL TRADE Definition It is the exchange of goods and services between one country and another. International Trade can be in goods, termed visibles or in servi
The Current Account This records all transactions involving the exchange of currently produced goods and services and is subdivided into i. Visibles: A record
define scarcity and opportunity cost..
Environmental issues factors This is governed by the below factors: The type of economic system of the country Business cycles Industrial policy of the countr
Q. Define Profit maximisation theory? Profit maximisation theory defines that firms (corporations orcompanies) will establish factories where they see potential to achieve the
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