Economics SA Paper 2 Section B Review | Baamboozle - Baamboozle

Discuss whether or not a government should impose a maximum price on food.

it set below the equilibrium, will result in shortages, may result in firms making losses and so reducing quality of food or employment of workers

Discuss whether or not a government should impose a maximum price on food.

Yes, some people will be able to purchase food at a lower price

Analyse, using a production possibility curve (PPC) diagram, the effect of an increase in enterprise in economy.

Enterprise is a factor of production, more enterprise increases productive capacity so it causes economic growthit causes

What is an increase in demand?

An increase in demand is caused by a change in an influence on demand other than a change in the price of the product

What is an extension in demand?

An extension in demand is caused by a change in the price of the product, rise in quantity demanded. it is shown by a movement along the demand curve

Define demerit goods

A product which is more harmful to consumers than they realise / the government considers, It is over-consumed / overproduced it creates external cost

Discuss the disadvantage of a market economic system.

Poor consumers will have little influence on what is produced as they have little purchasing power

Discuss the advantage of a market economic system.

Prices may be low, quality may be high, high efficiency due to competition and the profit motive

Analyse how taxation could reduce market failure.

Tax revenue can be used to e.g. subsidise products with external benefits example buses

Explain two advantages of conserving natural resources

resources will last longer / decrease rate of depletion, future generations will be able to benefit from the resources

Define social benefit

The total benefit to society of an economic activity or external benefit + private benefit

Discuss whether graduate should pay the full cost of their university education.

No, poor families may not be able to afford the cost, this could reduce the number of graduates, lowering potential output, increasing income inequality

Discuss whether graduate should pay the full cost of their university education.

Yes, they will learn new skills/gain qualifications, their employment opportunities are likely to increase, they are likely to earn a high wage

Analyse, using a production possibility curve, effect an increase in the number of graduates will have on an economy

with a higher quality of labour, a country will be capable of producing more/there will be economic growth

Explain two reasons university graduates usually earn more than they have not gone to university.

graduates are more likely to be skilled and this makes them more productive

Define opportunity cost.

opportunity cost is the (next) best alternative forgone

Discuss whether governments should discourage demerit goods consumption.

No, industry employs large numbers, may reduce the output/revenue from them, reducing GDP/economic growth and causing unemployment

Discuss whether governments should discourage demerit goods consumption.

Yes, they may cause external costs e.g. pollution, global warming, damaging people’s health, reducing living standards, damaging local economies

Analyse how a government could promote the purchase of merit goods

Subsidise merit good producers, reducing production costs, lowering price, improving quality, making them more affordable

Explain two causes of a shift of demand curve to the left.

decrease in the price of a substitute, if a substitute becomes cheaper people will switch to it

Define price-inelastic demand

When demand changes by a smaller percentage than the change in price and when PED is less than 1.