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Question 1

What is state provision of goods?

Answer 1

Through taxation, the government provides public goods or merit goods which are underprovided in the free market.

Question 2

What is a subsidy?

Answer 2

Government payments to a producer to lower their costs of production and encourage them to produce more.

Question 3

What does positive XED indicate?

Answer 3

Positive XED; if good B becomes more expensive, demand for good A rises.

Question 4

What is supply?

Answer 4

The ability and willingness to provide a particular good/service at a given price at a given moment in time.

Question 5

What is symmetric information?

Answer 5

Where buyers and sellers both have access to the same information.

Question 6

What are trade pollution permits?

Answer 6

Licenses which allow businesses to pollute up to a certain amount. The government controls the number of licenses and so can control the amount of pollution. Businesses are allowed to sell and buy the permits which means there may be incentive to reduce the amount they pollute.

Question 7

What does unitary price elastic good mean?

Answer 7

When PED/PES=1; a change in price leads to a change in output by the same proportion.

Question 8

What is utility?

Answer 8

The satisfaction derived from consuming a good.

Question 9

What is a weakness at computation?

Answer 9

A cause of irrational behaviour; when consumers are bad at making calculations, estimating probabilities and working out future benefits/costs.