market approaches

Question 1

using a free market approach?

Answer 1

• freely consume goods e.g sugar which normally are high taxed, without it. >more choice
• can reduce illegal smuggling of goods
• means production will take place where demand is,the decrease or increase in demand affected by income can force businesses to cater to customers>EFFICIENT ALLOCATION OF RESOURCES SOLVES ECONOMIC PROBLEM

Question 2

cross price elasticity of 0.5 is

Answer 2

substitute. it is between 0-1

Question 3

disadvantages free market

Answer 3

• negative externalities-firm dont care abt pollution only want to make profit. gov cant stop them
• firms maybe sacrifice quality in a bid to get those extra profits ‘cutting corners’

Question 4

cross price elasticity of -1?

Answer 4

COMPLIMENT bc it is NEGATIVE