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Economic Environment

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Introduction

Economic Environment Coursework 1. (i) An increase in immigration would affect the British production possibility curve as it would force the curve to move to the right. An increase in immigration would lead to an increase in available labour and so Britain would be able to produce more goods. (ii) A major war would affect the production possibility curve as it would move the curve towards producing more weapons in order to fight. This could also have a reverse affect on the curve as soldiers will be needed in war therefore less labour would be available to produce goods. (iii) A decrease in unemployment would affect the production possibility curve as it would move the curve to the right. This is because there would be an increase in production of goods as there has been an increase in the workforce. ...read more.

Middle

If the money made from the congestion charge is put into public transport then this would cause the price of public transport to fall, therefore the quantity using it should increase. If this is the case then public transport companies will supply more to take advantage of the quantity using public transport causing the supply curve to shift from S0 to S1. 3. (i) A serve frost would lead to a decrease in the coffee harvest so the supply curve would move from S0 to S1, which would drive up the price of coffee production. This increase in the price of coffee production would also lead to an increase in price for the consumer and so we would move up the demand curve, which would lead to a decrease in quantity purchased. ...read more.

Conclusion

This shift means that car manufactures would need to decrease the price of cars in order to keep demand the same, but in doing so they would be moving down the supply curve and so would be less enticed to manufacture so many cars. 5. A monopoly is a type of market that has many buyers but only one supplier; this can cause major problems to the economic efficiency. The monopolist can decide the market price of the product and has "market power". This can be done as there are no close competing substitutes, which could cause a problem to smaller firms trying to enter the market with similar products, but not being able to due to the dominance of the monopolist. In a monopoly there are barriers to entry which prevent rivals entering the market to compete; these barriers are legal protecting a firm from competition from potential threats. ...read more.

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