Illustrate on four separate diagrams (as in Figure) the effect of different elasticity’s of demand and supply on the incidence of a subsidy.
Answer to relevant QuestionsWhy are agricultural prices subject to greater fluctuations than those of manufactured products?Consider situations where you might consider swapping items with someone. Why are such situations relatively rare? Can you think of circumstances in which this might be more common?Why do marginal cost curves intersect both the average variable cost curve and the average cost curve at their lowest point?Are there any shops in your area that stay open later than others? If so, does this affect the prices they charge? Why do you think this is?What are the potential costs and benefits of mergers to (a) shareholders; (b) managers; (c) customers?
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