KEY WORDS

Question 1

Ad Valorem Taxes + E.g

Answer 1

Typically assessed as a percentage of the value of the item or property being taxed, and they can be applied in various situations. So, the higher the value of the item or property, the higher the tax you’ll pay. e.g. Property

Question 2

Allocative Efficiency

Answer 2

Refers to a situation in which resources in an economy are distributed in such a way that the total benefits to society are maximized. Goods and services are produced in the quantities and at the prices that align with consumer preferences and where no resources are wasted.

Question 3

Asymmetric Information

Answer 3

Refers to a situation where one party in a transaction or interaction has more or better information than the other party. This imbalance can lead to inefficiencies in the market because the party with more information might take advantage of the less informed party.

Question 4

Capacity

Answer 4

Maximum potential output or the limit that an economy, firm, or industry can achieve given its resources, technology, and other constraints.

Question 5

Capital Intensive

Answer 5

Industries, businesses, or processes that require a large amount of capital investment (money, machinery, equipment, etc.) relative to labor. Rely more on physical capital than on human labour to produce goods and services

Question 6

Clearing Price

Answer 6

The price at which the quantity of a good or service supplied equals the quantity demanded. Price at which there is neither a surplus nor a shortage in the market, meaning every unit of the good or service produced is sold, and every buyer who wants to purchase at that price can do so. Balance of Supply and Demand

Question 7

Command Economy

Answer 7

economic system in which the government or central authority has significant control over the production, allocation, and distribution of goods and services.