economics

Subsidy for Solar Panels to reduce Power Use

Subsidy for Solar Panels to reduce Power Use

Readers Question: What effect it will have (on electricity market) if there is an introduction of subsidies to consumers who install green energy sources e.g. solar panels? If there is a subsidy to green energy sources it will shift supply (of solar panels) to the right and therefore reduce the price of solar panels. The effect will be a slight reduction in demand for conventional electricity sources as some people now get energy from solar panels. Diagram Showing Effect of a SubsidyHowever,…

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Competition in the Electricity Market

what effect will it have on the equilibrium of price and quantity if there is a change in the regulatory environment designed to encourage greater competition in electricity generation? If the regulatory environment is successful in increasing competition we would expect lower prices and greater output. For example, if the regulators found a way to reduce barriers to entry. This would encourage more competitors into the market, leading to lower prices. A lower price of electricity is likely to lead to a higher quantity, but, the effect will be limited. Demand…

Price of Oil and Electricity

Price of Oil and Electricity

Readers Question: what will happen to the equilibrium price and quantity if there is an increase in the price of oil that is used in electricity generation? If there is an increase in the price of oil, it means that the cost of electricity will increase. Therefore, the supply curve will shift to the left. This will cause an increase in price from p2 to p1 The quantity will fall from Q2 to Q1Note: However, demand for electricity is likely to be inelastic. This…

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Policies for Dealing with Economic Shocks

Q) UNDERTAKE AN EVALUATION OF THE CAUSES OF ECONOMIC INSTABILITY AND THE ROLE, IF ANY, THAT THE GOVERNMENT CAN PLAY IN REDUCING ECONOMIC INSTABILITY BY CONSTRAINING THEIR DISCRETION IN POLICY MAKING Basically, what can the government do to reduce economic instability? Dealing With Demand Side Shocks 1. Monetary Policy. Changing interest rates can affect AD. For example, in a recession the government can cut interest rates to boost demand and increase growth. However, there are many limitations of this 1. Monetary policy is usually operated by an independent Central Bank. Their target is low…

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Economics for Business Students

Reader’s Question: What are the importance of economics to a business student?There is a strong overlap between business and economics. A Business student needs to take into account these various aspects of  Economics. At various times I have taught Business Studies in addition to Economics. Several topics are the same. These are the key areas of overlap. Macro Economic Effects on Business Monetary Policy – Monetary policy involves changing interest rates to try and meet the government’s inflation target of 2% +/- 1. Interest rates have a significant effect on business….

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Industrial Economics Edexcel

Economics Syllabus for A Level (Edexcel) Unit 4: Industrial Economics 1. Birth and Growth of New Firms 2. Costs 3. Production Decisions 4. Alternative Motives of Firms 5. Efficiency (productive and allocative 6. Perfect Competition 7. Imperfect Competition 8. Oligopoly 9. Monopoly 10. Price Discrimination 11. Pricing and Non Pricing Decisions • Cost Plus Pricing • Predatory Pricing • Limit Pricing • Advertising and sales promotion policies 12. Collusion and Cartels 13. Barriers to Entry and Exit 14. Contestable Markets 15. Competition Policy 16. Regulation of Privatised IndustriesA Level Economics.co.uk

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Short Answer Economic Questions

1. What is the formula for AD 2. Which is the largest component of AD 3. If there is an increase in imports what happens to AD? 4. What is the nominal GDP 5. If there is an increase in the rate of income tax what is the effect on AD 6. Define productivity 7. What is the savings ratio? 8. What is gross fixed capital investment 9. If there is an increase in wages what will be the effect on SRAS and AD 10. To increase the value of the exchange rate what needs to happen to interest rates? 11. If there is a depreciation in the exchange rate…