Supply And Demand Analysis Flashcards
What is an ad valorem tax?
Ad valorem taxes are a percentage if the price of a product, e.g. VAT.
What are specific taxes?
Specific taxes are a set amount per unit of a product.
What is incidence of tax?
Incidence of tax relates to how the burden of tax is distributed between different groups, e.g. consumers and producers.
What is a subsidy?
A subsidy is a grant from the government which has the effects of reducing costs of production.
Describe the demand for labour.
The demand for labour is derived demand. This means the demand for workers depends on the demand for the goods and services produced by those workers.
What factors affect the elasticity of demand for labour?
- The elasticity of demand for the final product.
- The proportion of total costs accounted for by wage costs.
- The ease/difficulty of replacing labour with machinery.
What factors affect the demand for labour?
- The demand for the final product.
- The relative price of capital and other factors.
- The productivity of labour.
- The price of the product.
- Labour market regulations.
What factors affect the elasticity of supply of labour?
- Skills, qualifications and experience needed.
- Level of unemployment in the economy.
What factors affect the supply of labour?
- Net migration.
- The real wage in other countries.
- Non-monetary factors like job security/satisfaction, prospects of promotion, hours of holiday and pension rights.
- Income tax rates.
- Qualifications and legal requirements.
- Childcare facilities and cost.
What is the National Minimum Wage (NMW)?
The NMW is a rate set by the government to specify the lowest legal amount that workers can be paid per hour.
What is the main aim of the NMW?
The main aim of the NMW is to prevent the exploitation of workers and to reduce inequality.
What is an indirect tax?
Indirect taxes are taxes on expenditure.
