Theme 1 AO3 Flashcards
1
Q
What will happen to a firms costs when they grow?
A
Utilise EOS > use technical/purchasing EOS > costs will be reduced.
2
Q
A good has a PED of 2. A firm increases their price. What happens?
A
Firm increase price > less consumers purchase > firm loses out on sales > growth will be stunted.
3
Q
What happens if the government impose a maximum price?
A
Max price imposed > more affordable for consumers > more of that product sold.
4
Q
Assess how the government can reduce negative externalities of producing plastic such as pollution.
A
Impose an indirect tax on the firms > increased costs for the firms > they produce less plastic > less pollution.
