Firms will benefit:
→ Increased profits (more consumer surplus is taken as firm's revenue)
→ Better capacity utilisation
Consumers will benefit:
→ If they are in the group with lower PED, they will have a lower price.
→ Real GDP growth to recover from a recession.
→ Higher inflation if already at capacity.
Fixed Costs + Variable Costs
Social . . . Social
Fiscal policy that requires action from the government to occur.
e.g. The chancellor makes a change to tax policy.
→ Lower wage rates
→ Decreased raw material prices
→ Decreased taxation e.g. VAT
→ Strong currency
