Economists use the term 'Black markets' for situations where
Goods are sold at prices above legal or official prices
Illegal substances are sold
Transactions are not recorded in the GDP figures
Buyers and /or sellers are not paying taxes as they should
If the price is a market is fixed by the government below equilibrium.
There is excess equilibrium
There is excess supply
There is excess demand
There is equilibrium
Economist say that there has to be some form of rationing whenever
Merit goods are produced
Inflation occurs
There are externalities
An example of an indirect tax is
Income tax
VAT
A tax of profits
Inheritance tax
If the market price is below the equilibrium price
Demand will be less than supply
Quantity demanded will be less than quantity supplied
Quantity demanded will be greater than quantity supplied
Quantity demanded will equal quantity demanded
Agricultural prices tend to be unstable because :
supply is price elastic
Demand is price elastic
Supply is stable
Demand and supply are price inelastic
It is necessary to ration a good whenever
A surplus demand
Supply exceeds demand
Demand exceeds supply
There is a perfectly inelastic demand for the good
If a government were to fix a minimum wage for adult workers,economist would predict
Wages in general would fall as employers tried to hold down costs
The costs price of firms employing cheap labour would increase
Fewer young workers would be employed
There would be more unemployment
Nationalization occurs when:
The government sells assets to the private sector
The government bans a product
The government takes ownership of a business
The government taxes a product to raise its price
If the price in a market is fixed by the government above equilibrium.
