Theme 1

Question 1

Ad Valorem Tax

Answer 1

An indirect tax where the value of the tax depends on the good.

Question 2

Asymmetric information

Answer 2

One party has more information than the other, leading to market failure

Question 3

Capital

Answer 3

Is a FoP and a technological resource- it’s a man-made aid to production.

Question 3

Capital goods

Answer 3

Are goods that are produced in order to aid production of consumer goods

Question 4

Ceteris Paribus

Answer 4

All other things remaining the same

Question 5

Command economy

Answer 5

The FoP are allocated by the state

Question 6

Complementary goods

Answer 6

-XED and are where an increase in the price of good B leads to a fall in demand of good A.

Question 7

Consumer goods

Answer 7

Are goods bought and demanded by households and individuals

Question 8

Consumer surplus

Answer 8

The difference between the price that consumers are willing and able to pay and the price they actually pay.

Question 9

XED

Answer 9

The responsiveness of demand for one good to a change in the price of another.