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Unit 1, image, image, image, image - Coggle Diagram
Unit 1
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Economic systems :
Market Economy
Disadvantages: Monopolies, Inequality, merit goods underptovided, pollution and over-consumptio of demerit goods
Advantages: Efficient allocatrion of resources, consumers have freedom to choose, avoids inefficiency and corruption, innovation and new businesses
Mixed Economy
Advantages: Reduces poverty, provides public goods and services, Regulate markets, efficiency
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Planned Economy
Advantages: Reduces Inequality, Protects environment, Prevent Monopolies and ensures full employment
Disadvantages: No profit motive, high administration cost and corruption, slow responde to market changes
Scarcity
What is scarcity?
scarcity exists where there’s not enough of something( products, services, resources, etc)
so people have to choose how to spend their resources in the most equitable way
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Merit and Demerit Goods
Merit goods are those effects which have a positive effect (either in society or in a personal point of view) and demerit goods are those products which have a negative effect
Merit goods examples:
Fruits, vegetables, education
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Awareness Vs. Taxes
Awareness campaign
the consumer is able to know why he should not consume the demerit good and make a conscious decision
Raising taxes
the demerit good is less accessible to the consumer because of its price and it is more complicated to the company to produce it because the taxes are high
Conclusion
In our opinion, the most effective option is raising taxes because the product is less accessible to everyone, so people will consume it less, and that will create another problem to the company in addition to the one that the government is already putting them by raising the taxes, so the company will be more fragile and vulnerable.
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