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…

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…

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….

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

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…