Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Microeconomics > Application Examples > Flashcards

Application Examples Flashcards

(86 cards)

Start Studying
1
Q

+Scarcity

A

Water scarcity in India
Water prices increased significantly, burdening families and farmers
1 of 17 countries where water stress is extremely high

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Demand shift left

A

Print newspapers has been on a downward trend due to cheaper online substitutes and social media news outlets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Demand shift right

A

Electric bicycles demand increased due to government pushes to phase out fuel powered cars, moving towards more environmentally friendly modes of transport

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Supply shift right

A

Temporary VAT cut for UK hospitality industry to 5%
Reduces costs of production for these firms and led to greater quantity and lower prices of restaurant meals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Supply shift left

A

Bad weather across southern Europe in the last 2 years and drought in Africa resulted in poor harvests for olives, cocoa and coffee beans increasing prices significantly

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

PED and TR

A

Lego reported huge increases in both revenue and profit in 2021 after price increases given brand loyalty and the desire for home games with Covid restrictions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Price inelastic supply

A

Royal Mail and Heathrow airport are operating with no spare capacity despite rising demand for their service

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Complements (XED)

A

Printers and printer ink
Razors and blades
Games consoles and games

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Substitutes (XED)

A

Coca-Cola and Pepsi
Airlines
Nike and Adidas trainers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Normal goods (YED)

A

Foreign holidays

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Inferior goods (YED)

A

Own brand food
Bus travel

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Indirect tax

A

Fuel duty in France
Nov 2018 to fight against climate change, and was met with mass protests

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Subsidy

A

Subsidies for private provision of influenza vaccinations for children up to 12, pensioners over the age of 50, pregnant women and the disabled in Hong Kong

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Minimum price

A

Coco in Ivory Coast and Ghana
As of 2025- $3/kg
Intervention does not take place

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Maximum price

A

Basic food items in Venezuela

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Negative externalities

A

Smoking cigarettes (£2bn-£6bn annual cost to NHS) drinking alcohol (£3.5bn annual cost to NHS), eating unhealthily (£6.5bn annual cost to NHS) gambling (£1.2bn annual cost to society)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Positive externalities

A

Education (higher incomes and tax revenue collections), healthcare and vaccinations (reduced spread of disease benefitting wider society)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

De-Merit goods

A

Vaping has negative externalities in consumption but also missing info regarding the ingredients of vapes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Merit goods

A

Sun cream helps to fight against cancer, premature ageing and wrinkles

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Information failure

A

Imperfect information: lack of info regarding nutrition content of food and drinks at venues
Asymmetric info: UK vet market is an oligopoly, leading to withholding information regarding prices, treatment and medicine options

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Public goods

A

Flood defences: non excludable and non rival, resulting in a free rider problem and a missing market hence why government intervention occurs in the UK

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Common access resources

A

Deforestation in Kuala Lumpur
Aggressive palm oil industry and timber companies are the prime reason tied with limited govt restrictions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Indirect tax and market failure

A

UK sugar tax on fizzy drinks came into force in Apr 2018, which led to 50% of companies changing their recipes. However general consumption of sugar has been increasing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Subsidies and market failure

A

Museums in the UK have received subsidies since 2001 to provide free entry for consumers. Aim to educate the public, increase patriotism and widen horizons

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Regulation and market failure
Plastic waste: countries such as Germany have imposed a deposit recycling scheme where consumers pay extra when buying an item with recyclable packaging and only receiving it back after successfully recycling it
26
Regulation and market failure
Road space rationing Beijing: to reduce pollution levels for 2008 Beijing olympics authorities introduced policies having identified excessive car use as the biggest contributor to air pollution in the city
27
State provision and market failure
NHS: free at the point of consumption provided by the state to overcome issues of under provision and inequity in the free market
28
Tradable pollution permits and market failure
The ETS (emissions trading scheme): cap and trade response to the Kyoto protocol where countries agreed to reduce carbon emissions in a fight against climate change
29
Minimum pricing and market failure
Alcohol in Scotland and Wales: 30% increase in 2025 to reduce consumption of alcohol. In average in Scotland every adult drinks 20 units of alcohol per week
30
Maximum pricing and market failure
Rent control in New York, San Francisco, Berlin and Paris aims to control rent increases where those on lower incomes would be squeezed out of the market
31
Government failure
Black market for cigarettes in the UK (worth £2bn a year) due to heavy cigarette duty and strict regulation
32
Law of diminishing marginal returns
Coffee shops operate in the short run where land and capital are fixed. They face law of diminishing marginal returns if they over employ staff during busy times
33
Economies of scale
Airline industry is known for large EoS. Bulk buying fuel and planes, financial with loans
34
Diseconomies of scale
Failure of Thomas cook was blamed on ineffective control of management
35
Profit maximisation
Pharmaceutical companies have a clear profit maximisation focus
36
Profit satisficing
Walmart paying workers higher wages after Trump cut corporation tax
37
Revenue maximisation
Twitter up until 2018 was focused on satisfying shareholders with a revenue focused approach
38
Sales/growth maximisation
Netflix for the first decade had a focus of building a large user account base willingly maximising sales with low prices offered
39
Survival
In the USA and UK the fast food market is extremely competitive, and difficult for new firms to enter and become profitable. Despite this firms such as Five Guys and Shake Shack have joined with a short run objective to survive the start up phase
40
Corporate Social Responsibilities (CSR)
Walt Disney Company pride themselves on the strength of their CSRs, focusing on labour standards, conservationism and charitable giving.
41
Perfect Competition
Tuk tuk market in countries such as Thailand, as there a large number of small buyers and sellers selling homogenous services at similar prices with perfect information. (EVAL) However, they price discriminate against tourists that do not have perfect information
42
Competitive Markets
Airline travel has become intensely competitive since the deregulation in the 1990s.
43
Competitive Markets - Loss Making Industries
UK high street restaurant chains like Jamie's Italian operate in a highly competitive market but have struggled immensely given Covid lockdowns and the rise of takeaway delivery services
44
Monopoly Power
Google Search has global market share of 92% In 2023, 38% of all online US sales were made through Amazon
45
Natural Monopoly
Water companies in the UK are natural monopolies with very high fixed costs of building and maintaining pipe infrastructure as well as water treatment allowing them to benefit from large EoS
46
First Degree Price Discrimination
Amazon in 2005 were found guilty of practicing FDPD, charging different consumers different prices for identical goods, using cookies to gather information about consumer spending habits
47
Third Degree Price Discrimination - 'Surge' or 'Dynamic' Pricing
Uber and Lyft practice surge pricing, raising prices at times when demand on the app is very high and the number of drivers available is low. Train companies and airlines change prices depending on commute times
48
Monopolistic competition
The clothing market in the UK as there are many buyers and sellers, each selling a differentiated good with low barriers to entry. Firms compete on non-price factors including branding, advertising, quality and shopping experience
49
Oligopoly - Price competition
The UK supermarket industry with the top 4 firms controlling 70% of the market. This industry is known for price discounting, matching and price wars on staple items
50
Oligopoly - Non-Price comp
Global soft drink industry, where Pepsi and Coca-Cola compete on advertising, branding, and new product development
51
Oligopoly- Price fixing cartel (Overt collusion)
In 2007 British Airways and Virgin Atlantic colluded to fix airfares using fuel price rises to justify sudden fare surcharges
52
Oligopoly- Price Leadership (Tacit collusion)
Big six energy providers in the UK control 94% of the market Supermarket fuel providers have dominant control of the UK fuel market
53
Contestable Markets
Global hotel market has changed dramatically due to the entry of Airbnb revolutionising the nature of travel and accommodation Takeaway delivery is now hugely contestable with Deliveroo disrupting the pre-existing dominant and stagnant market
54
Monopoly Regulation- Price Caps
UK energy price cap, from Jan 2019 prices for energy on variable rate tariffs have been capped by OFGEM Rail Fares- ORR (rail regulator) caps yearly fare rises by RPI for peak journeys
55
Monopoly Regulation- Pharmaceuticals, Big tech and energy
Advanz was fined £100m in 2021 for monopoly abuse, increasing the price of thryoid drugs by 6000% over a ten year period - Prices rose from £4.46 in 2006 to £259.19 by 2017 with NHS spending increasing from £600k to £30m
56
Monopoly Regulation- Performance Targets/Quality standards
Train companies and airlines have performance targets to limit the amount and length of consumer delays. Train companies must pay compensation to passengers for delays of 15 minutes or more on certain lines, and 30 minutes on other lines
57
Monopoly Regulation- Mergers
In 2018, ASDA and Sainsbury's proposed a merger which would have given them a combined market share of 30%. However the CMA blocked it given serious competition concerns in 463 areas of the UK
58
Monopoly Regulation- Regulatory Capture
OFGEM have been late to intervene in the water company market as they have been turning a blind eye to poor infrastructure investment
59
Privatisation
Royal Mail was privatised in 2013 as it was loss making to the taxpayer and in serious decline/highly inefficient. The sale to the private sector sector aimed to re-vitalise the company with funds and a profit motive
60
Deregulation- Airlines in EU Open Skies
Airline deregulation took effect taking away state control of fares and service routes and allowing EU airlines to offer services without the requirement to land at or take off from a home airport
61
Deregulation- UK buses
1980s the road service licensing whereby firms had to obtain a license to operate a route from the council was abolished. This theoretically created a contestable market and meaningful competition as multiple bus companies could offer services on the same routes
62
Nationalisation- UK railways
UK labour party has renationalised rail services citing the East Coast mainline, which has led to limited delays and problems that previous owners were experiencing
63
Nationalisation- Great British Energy
GB Energy is a publicly owned and run renewable energy company in the UK able to build new renewable energy projects whilst still competing with private firms in the same industry
64
Behavioural Economics- Limits to rationality
Bounded rationality - Imperfect info: Vaping, Cigarettes, Unhealthy Food and drink
65
Bounded Rationality - Too much choice
Cars, Skincare, Savings, Groceries
66
Bounded Rationality - Lack of time
Grocery shopping, Household bills
67
Bounded self control
Cigarettes, Alcohol, Exercise, Healthy eating
68
Bounded Selfishness (Altruism)
Anonymous charitable giving, Saving for children, Contributing towards public goods
69
Rules of thumb - Emotional decision making
Buying medicine when in pain, Buying food when hungry
70
Rules of thumb - Repetitive consumption
Barbers, Ordering food, Coffee
71
Rules of thumb - Consumer inertia
Gas/Electricity bills, Pensions, Savings, Insurance
72
Cognitive bias - Anchoring
RRP Pricing, Psychological pricing, Museum donations, Regional house prices
73
Cognitive bias - Framing
Pay per month/Week, Low fat, Low sugar
74
Cognitive bias - Availability bias
Smoking, Lottery (Gambling)
75
Cognitive bias - Social norms
Seatbelts, Drink driving, Tipping, Vaccinations, COVID actions
76
Cognitive bias - Loss aversion
Financial investments, Pensions, Not selling loss making assets with better returns available elsewhere
77
Cognitive bias - Herding
Housing market, Stock market, Cryptocurrency
78
Behavioural economics - Nudge Policy
Framing: Cigarettes, Healthy foods, Calorie content, Smart meters Choice Architecture: Canteens and restaurants, Supermarkets Restricted choice: Vending machines, School menus, Public smoking bans Mandated choice: Organ donation, Different bins for recycling Default choice: Pension enrollment, Salad as a side dish
79
UK labour market in action
Demand shift right and higher wages: Sales consultants, Software developers, Cybersecurity specialists, Lawyers
80
Demand shift left and lower wages
Retail workers, Interior designers, Administrative roles
81
Supply shift right and lower wages
Dental nurses, Holiday reps, Plumbers, Construction workers
82
Supply shift left and higher wages
Lorry drivers, Chefs, Hospitality workers, Security staff
83
Monopsony employer
The UK government is a monopsony employer of teachers with 93% of schools in the state sector
84
Trade unions in the UK
Trade union density in the UK was 22.4% in 2023 compared to 50% in 1970s. 49.2% in the public sector compared to 12.3% in the private sector
85
Minimum wage in the UK
National living wage (for those over 21) stands at £12.21/hr
86
Wage differentials- Pay gaps and inequalities in the UK
The gender pay gap among full time employees stands at 7% down from 30% in 1990s The under 40s full time gender pay gap is at 3%, with education opportunities being equal

Microeconomics (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions