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Sure, in case of managed floating exchange rate, the government sets up boundaries so that the exchange rate could fluctuate within those boundaries. If the exchange rate gets across those boundaries, the government intervenes in the market and brings back the exchange rate within that boundary.
The graphs are presented above. When the government announces subsidy for a firm, the supply curve for the firm shifts rightwards and it means that it has increased, due to this, the cost of the product decreases. However, in case of perfectly elastic demand, the provision of subsidy has little or no effect on the price level.explain the incidence of subsidies for perfectly elastic/inelastic demand and supply curves pls
Jazakallah Bro
That means for perfectly inelastic supply also there is no effect on price right?
and if it is normal inelastic/elastic demand , then who will bear most of the subsidies burden
Tax is a burden, subsidy is paid to the producer in case he's producing merit goods and thus generating positive externality. Subsidy allows the output to be reached at SOL/Optimum resource allocation point/Pareto opitmality point.
For perfectly elastic not in-elastic.
Who is going to benefit more(producr or consumers) ...if it is elastic and inelastic demand and supply curves
Whole Section?
No man, im like totally blank with equi marginal principles and all that.. Got any good notes?
I'll provide you with notes. It's not so hard, but please give me some time.
1) Just consider it a simple asset a business uses. During the period of Inflation, it's money value would rise but the real value would remain the same. Answer is B
good luck1) Just consider it a simple asset a business uses. During the period of Inflation, it's money value would rise but the real value would remain the same. Answer is B
I'll answer the rest tomorrow, Insha'Allah. Really tired now and I've my mock exam tomorrow.
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