Welfare Economics and Market Efficiency: Consumer and Producer Surplus
Chapter 7: Welfare Economics
Key Questions
- What is consumer surplus? How is it related to the demand curve?
- What is producer surplus? How is it related to the supply curve?
- Do markets produce a desirable allocation of resources? Or could the market outcome be improved upon?
What is Welfare Economics?
Welfare economics studies how the allocation of resources affects economic well-being. The allocation of resources refers to:
- How much of each good is produced
- Which producers produce it
- Which consumers consume
Inflation, Unemployment, and Economic Growth: An In-Depth Analysis
Inflation and its Causes
What is Inflation?
Inflation refers to a sustained increase in the general price level.
Demand-Pull Inflation
Demand-pull inflation is caused by higher aggregate demand (AD). For example, in 2011-2012, the increase in tourism brought by mainland China’s free-visit policy increased Hong Kong’s export revenue of services. As exports (X) are a component of AD, this caused AD to increase. The increased competition for resources drove up factor costs, leading to a rise in the aggregate
Read MoreFood and Nutrition Policies in Mexico: A Historical Overview
Food and Nutrition Policy
Nutrition Policy: Establishes strategies to identify nutritional problems in the population, determine groups with deficiency problems, and outlines dietary interventions to improve the population’s nutritional status and quality of life.
Food and Nutrition Policy: “Policies aimed at ensuring people can access food to satisfy their needs and meet nutritional requirements for healthy living” (INSP, 2007:91). They encompass strategies for preventing hunger and malnutrition,
Read MoreBusiness Policy Review Guide: Ch. 6-11 – Vertical Integration, Diversification, & More
Business Policy Chapters 6-11 Review Guide
Chapter 6: Vertical Integration
Understanding the Supply Chain and Vertical Integration
The supply chain and how forward and backward vertical integration are accomplished:
- Backward Integration: Moving closer to the source of raw materials.
- Forward Integration: Moving closer to the end customer.
- Vertical Integration: Integration across the supply chain.
When and Why to Vertically Integrate
When does it make sense to vertically integrate? Why?
Integration makes sense
Read MoreMacroeconomics Key Concepts & Formulas
Macroeconomics Key Concepts
Categories of Unemployment
- Frictional Unemployment: Temporary unemployment as workers search for suitable jobs.
- Seasonal Unemployment: Short-term unemployment due to seasonal variations in industries (e.g., Santa Claus impersonators).
- Structural Unemployment: Unemployment caused by a mismatch between worker skills and job requirements.
- Cyclical Unemployment: Unemployment caused by economic downturns, primarily due to a lack of aggregate demand for labor. This is considered
Chilean Tax System: Direct & Indirect Taxes, VAT, & PPM
Chilean Tax System
True or False
V Debit notes issued are recorded at the book sale and increase the VAT tax debit.
F Companies decide if taxed in the first or second category.
V Depending on the difference between allowances paid during the year and the amount payable on such income tax, the taxpayer must pay to the tax or obtain a refund whose total income does not exceed 13.5 UTA.
F Second-rate tax only affects taxpayers whose total income does not exceed 13.5 UTA.
V The Chilean tax system is based
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