MARKET INTERVENTIONS Flashcards
Market diagram showing an excess supply
Excess supply at £3 is (12000-6000)kgs
Excess demand in market with maximum price
Excess demand at price below market equilibrium price
Intervention in the market for rice (max price)
Diagram showing a price ceiling (maximum price) and price floor (minimum price) in the cocoa market
Impact of a specific indirect tax on the market
Tax revenue from an indirect tax = P1ABP2
Impact of an increase in an ad valorem tax on petrol on the market price and quantity of petrol
Impact of an indirect tax on market equilibrium price and quantity when demand is perfectly price inelastic and (i) Supply is perfectly elastic and (ii) supply is upward sloping. Blue areas indicate tax revenue raised from the tax.
Impact of an indirect tax on market equilibrium price and quantity when (i) Supply is perfectly elastic and (ii) demand is perfectly price inelastic. Blue areas indicate tax revenue raised from the tax.
Impact of a per unit producer subsidy on market equilibrium price and quantity
Impact of export subsidy on price of exports (vertical distance = subsidy per unit)