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1
Q

policies to redistribute wealth/Y +eval

A

increase progressive taxes (less incentive to increase y reducing tr for gov)
reduce regressive taxes (lower tr for gov)
benefits (poverty trap and cost)
min/max W
legislation (anti discrimination, min W, hiring + firing) = cost to businesses, enforcement, gov failure
state provision (increase education + healthcare)

eval
incentives
state of gov finances
equity vs efficiency
normative judgements (high risk of failure)
is level of inequality that bad that need to intervene

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2
Q

legal barriers to entry

A

patents
licences
permits
red tape
standards
regulations
insurances
planning permission
H+S
working conditions

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3
Q

shifts of labour d curve reasons

A

p of product
d for product
productivity of labour
capital costs

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4
Q

shifts of labour s curve reasons

A

w in sub occupations
barriers to entry
non monetary characteristics
overtime
occupational mobility of labour
size of working pop
value of leisure time

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5
Q

non monetary characteristics in jobs

A

healthcare
job satisfaction
working conditions
holidays
location
company car
pension
promotion
training
working hours
working time
breaks

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6
Q

technical barriers to entry

A

Eos
natural monopoly
sunk costs
specialist machinery

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7
Q

strategic barriers to entry

A

predatory pricing
heavy advertising
brand loyalty
better products
mergers
flooding the market

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8
Q

elasticity of labour s curve

A

skills required
length of training period
vocation
time period (adapt, notice period, temporary change)
geographical and occupational immobility

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9
Q

nationalisation + - eval

A

+
set output at PQ
can give public sector workers and suppliers a fair W/P
high eos = high PE reducing ae and p
more focus on service provision
vehicle for macro control (more workers to reduce u and cut w for reducing i)

-
moral hazard
political priorities may override commercial issues (investment=risk)
high dos and xi
low sn profits so low de
opportunity costs

eval
costs vs delivery of key public services
strong regulation/comp better?
size (eos vs dos)
objective (not always profit max)

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10
Q

monopolistis comp eg

A

clothing
fast food
taxis
restaurants
hairdressers
nightclubs

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11
Q

ignoring externalities

A

self interest
over/under production/consumption
ai (misallocation of resources)

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12
Q

pc eval

A

eval
may still have de w low profits
level of eos
natural monopoly
where cost cutting occurs
type of g/s (necessities=static efficiency and luxury=dynamic)

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13
Q

gov encourages comp by

A

privatisation
deregulation
trade liberalisation
increasing consumer choice and knowledge and comp in public sector
discouraging m&a

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14
Q

collusive oligopoly features

A

firms have similar costs
low no of firms and unsaturated market
high barriers
ineffective comp policy
different goods
consumer loyalty
consumer inertiadet

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15
Q

determinants of pes

A

P roduction lag
S tocks (perishable goods cannot be stored = inelastic)
S pare capacity (u=elastic)
S ubstitutibility of FoPs
T ime period

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16
Q

oil d affected by

A

weather
living standards
substitutes
speculators
derived d (eg plastic)
economic activity

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17
Q

oil s affected by

A

sr:
war
opec

lr:
size of reserves
cost of extraction
efficiency and cost of tech

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18
Q

competitive oligopoly

A

one firm has significant cost advantages
high no of firms and saturated market
low barriers
effective comp policy
homogenous goods

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19
Q

why nmw

A

to prevent exploitation of workers leading to a more equitable distribution of y

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20
Q

tradable pollution permits to solve mf + and -

A

+
reduce pollution preventing mf
firms w low pollution benefit
lr incentive to invest in green tech

-
enforcement (measurement +opp cost)
imperfect info
pass on high costs as high p
worldwide mf

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21
Q

labour specialisation + -

A

+
higher labour productivity increasing efficiency
eos
reduced training cost

-
workers can get bored = reduced productivity in lr
less self sufficient
lower workplace flexibility (risking occupational u)

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22
Q

monopoly regulation

A

p caps
performance targets / qc
windfall taxes
merger policy
privatisation, deregulation, trade liberalisation

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23
Q

deregulation + - eval

A

+
increased comp (monopoly and pc nwg cs diagram)

-
loss of natural monopoly (wasteful duplication of resources)
formation of monopolies and oligopolies
less safety and protection for consumers

eval
sr vs lr (if monopoly in sr contestability decreases in lr
height of other barriers (just cause lower legal barriers does not = higher comp)
level of gov regulation (prevent anti-competitive behaviour)

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24
Q

solving mf

A

increases/reduces costs of production
changing p changing q to pq
+/- externality internalised
solves over/under consumption + production
increases ae (and gov rev - hypothecated tax)

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25
Q

indirect taxes to solve mf + -

A

+
solves mf

-
pid=no q change
imperfect info (if too high bm, firms shut down, move abroad)
regressive
paternalistic

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26
Q

barriers to exit eg

A

redundancy costs
penalties to leave contracts early
sunk costs
undervaluation of assets

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27
Q

invention and innovation leads to

A

higher quality w better equipment
increase/decreases barriers to entry
increases contestability (more info, bigger pool of potential entrants, lowers barriers)
monopoly power for 1st firm to utilise
increases labour productivity + efficiency
increases eos

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28
Q

why labour market is imperfect

A

labour is not homogenous (diff mrps, s, discrimination)
non monetary characteristics (pc assumes only w influences decisions - higher w to compensate for bad working conditions)
labour is not perfectly mobile (+imperfect info)
tus (w higher than market eqm)
monopsonies (w lower than market eqm)

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29
Q

unequal distribution of y+wealth + -

A

+
incentives to increase work and start businesses to increase y
trickle down effect
ae

-
poverty can remain high
only high y/wealth can afford to take risks as entrepreneurs
more crime and lower health and education

wealth
asset bubbles and property speculation
more wealth means more income (rent dividends interest)

income
restricts economic growth as no income means no c so no ad

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30
Q

wealth tax + - eval

A

+
more tr for gov
lowers inequality
targets windfalls increasing equity
can promote efficient reallocation of wealth

-
laffer curve arguments (discourages I, y generating activity and growth, emigration, tax loopholes)
admin challenges

eval
rate (higher=more negatives)
assets chosen
enforcement

31
Q

price mechanism + -

A

+
ae (consumers decide what is and isn’t produced
no cost or regulation needed
p kept to min

-
inequality likely
public goods
merit and demerit goods

32
Q

subsidies to solve mf + -

A

+
reducing costs of production … welfare gain
increases affordability

-
high gov + opp costs
imperfect info
how each firm will use sub (dependance, inefficiencies, deleverage, high w/dividends) - will not reduce costs
pid = no change in q

33
Q

d+s assumptions

A

independant
ceteris paribus
pc markets

34
Q

why firms dont profit max

A

dont know mc/mr
key stakeholders harmed (workers, environmental groups) + greater scrutiny from stakeholders = profit satisficing
other objectives + not-for-profit firms
profit max lr and need other goals sr (eg increase brand loyalty + awareness)

35
Q

why men earn more than women

A

f move in and out of labour force (children = reduces skills and experience so lowers mrp)
age of economic inactivity
education + qualifications (in developing)
f work in low paid jobs (part time, service, vocational, public)
high s of f in developed
discrimination

36
Q

why footballers earn more than teachers

A

footballers have higher mrp
high d and low s and inelastic (takes long time to get good enough)
monopsonist state employer of teachers
vocational element to teaching
reluctance of teachers to strike limiting tu power

37
Q

N-S divide in UK

A

restructuring of uk economy towards services (london)
- multiplier effect (low w = people spend less = labour is derived d)
- accelerator effect (low I in N)
structural immobility in N
oly best workers in N move S exacerbating problem

38
Q

conditions for p discrimination

A

p making power
prevent market seepage
must have info to differentiate between diff groups of people w diff peds

39
Q

ethnic group variances

A

minority groups have lower mrps
lack of language proficiency (esp in high w professions)
conc of minority workers in low w professions
discrimination

40
Q

free market/pc + -

A

+
E fficiency (pe, ae, de - only best products have high d)
P roductivity (to reduce costs)
I ncentives (to produce g/s consumers want)
C omp (more choice and higher quality)
more jobs and economic growth

-
monopolies
no public goods
merit + demerit goods
unethical cost cutting
lower eos
more inequality
creative destruction

41
Q

monopoly + - eval

A

+
natural monopolies
DE
stable employment
cross subsidisation
high eos may reduce p (lower mc means lower p than pc)

-
complacency
dos
XI as no need to increase efficiency
PI as mc≠ac
AI as MC≠P
lower choice
supplier exploitation due to monopsony power
inequalities in necessity markets for low y people

eval
de vs high w/dividends/deleverage
type of good/service (luxury=good + necessity=bad)
eos vs dos = depends on size
objective (can be welfare max)
regulation (prevents inefficiencies)
p discrimination (increases inequality)
competition and contestability + threat of
natural monopoly

42
Q

p discrimination + -

A

+
de
high eos may reduce p
some consumers benefit w lower p (elastic in 3rd and high q in 2nd)
cross subsidisation of loss making services
y redistribution
manages d preventing overcrowding (eg airlines at unpopular times)

-
ai (p>mc)
inequality (lower cs) and inequity (those charged higher p not necessarily richest)
admin costs to find diff segments
reputation risks

43
Q

sales max to

A

increase eos
principle agent problem
limit pricing (@break even deterring comp)
increase market share + therefore monopoly power
flood the market = increase brand recognition
easier to get loans

44
Q

tr max to

A

increase eos
principle agent problem
increase market share + therefore monopoly power

45
Q

Pmax to solve mf + -

A

+
more equity as more affordability
increase consumption of merit goods

-
shortages due to xs d (bm)
low p may = low quality
imperfect info
enforcement costs
high cost to produce own s/subsidise if gov not happy w xs d

46
Q

Pmin to solve mf + -

A

+
reduce q to pq for demerit
if intervention buying guarantees min y
protects producers from p volatility

-
if pid q wont decrease enough to solve mf
regressive
bm
imperfect info
high costs + AI if intervention buying

47
Q

nmw + -

A

+
reduce poverty
reduce w differentials
work over welfare
reduce benefits spending
increase productivity w morale boost

-
higher u
cost to businesses (shutting down + lack of international competitiveness)
youth lose out the most
those not on nmw may ask to increase w to maintain differential
poorest not in work so may not reduce poverty

48
Q

competition policy aims

A

prevents high p in high conc markets
increase comp
increase quality, standards and choice
regulates natural monopolies
ensures effective privatisation
ensures proper reinvestment of sn profits

49
Q

interrelated markers

A

derived d (complements)
competitive d (substitutes)
derived d (input d)
composite d (same input to make >1 output)
joint s (2nd good is byproduct of 1st)

50
Q

w differentials + - eval

A

+
incentive to increase skills/qualifications/training to get higher paid jobs - increases productivity reducing costs increasing comp
trickle down effect
increases enterprise
encourages work not welfare
promotes ae (w signals most suitable profession)

-
y inequality
less growth as poor have highest mpc
trickle down effect may not happen

eval
how much inequality
risk of gov failure
sr - w lr +

51
Q

causes of mf

A

+ and - externalities (self interest - profit or u max)
merit and demerit goods (info failure)
public goods (free rider problem + profit max)
tragedy of the commons (CAR - self interest)
y inequality
monopoly power
factor immobility

52
Q

gov failure

A

info failure (correctly valuing externalities)
admin and enforcement costs
unintended consequences (bm, impact on poor and firms, dependance, perverse incentives)
regulatory capture
political interference + consistency
moral hazard (banks + public sector)

53
Q

oligopoly eg

A

soft drinks industry
uk supermarkets
smartphones
global cars (Toyota, Honda, Volkswagen , and Renault-Nissan-Mitsubishi.)
entertainment (Universal Music Group, Sony, and Warner)

54
Q

natural monopoly eg

A

internet
water
gas
electric

55
Q

state provision + -

A

+
solves missing mf
increases consumption of merit goods
increases equity
reduces inequality as redistributes y

-
low efficiency as no profit motive
high costs
always xs d (pay w pain, waiting times, poor quality)
imperfect info (correct s)

56
Q

TU eval

A

generally makes efficient markets worse
if monopsony labour market can increase w and employment closer to pc outcomes (more monopsony power = more benefit)
strength of tu (union density - lower=less distortion)
union markup (higher=more success)

57
Q

limitations of business uses of elasticity

A

figures are only estimates
assume d+s are independent, ceteris paribus, pc markets
ped varies along the d curve

58
Q

natural monopolies

A

industries w high fc
competition results in a wasteful duplication of resources and a non exploitation of full eos

59
Q

high contestability if

A

low barriers
large pool of potential entrants
good info
incumbent firms subject to hit and run comp
high sn profits can be made

60
Q

Command economy + -

A

+
Max welfare (public and merit goods)
Low unemployment
Prevent monopolies

-
Poor decision making (info failure)
Low choice
Low efficiency
Low risk taking (no profit motive)

61
Q

Why no de in pc

A

R and d is risky
All firms make n profit
No reward for risk

62
Q

Extension of property rights + -

A

+
Inventive not to exploit car
Reduce q to pq
Money raised can reduce effects (internalise externality)

-
Enforcement costs
Equity (who gets rights)
Can affect >1 country
Difficult extending (air and sea)
Difficult putting value on property
Difficulty tracing source of environmental damage

63
Q

Skill shortages increasing costs

A

Firm employs workers who are less productive as less qualified

Training may improve productivity but poaching

64
Q

Indirect taxes affect pb and cb based on p e/i s and d

A

Ped = producers gain more low gov rev
Pid = consumers gain more high gov rev

Pes = high cb low pb
Pis = low cb high pb

65
Q

Subsidies affect pb and cb based on p e/i d

A

Pid = consumers gain more
Ped = producers gain more

66
Q

Privatisation + -

A

+
Xe ae de
Cs gain reducing p
Rev from selling firms

-
Lower focus on quality and service and onto profits and costs
Privatised public monopoly could become private monopoly
Limited comp immediately (firms may not flock to the industry)
Loss making services can be cut even if socially desirable
Loss of natural monopoly and eos

Eval
Level of comp post privatisation
Level of gov regulation (monopoly/oligopoly force socially desirable force higher or lower q for externalities

67
Q

profit max

A

mc=mr

68
Q

pe

A

mc=ac

69
Q

rev max

A

mr=0

70
Q

ae

A

mc=ar

71
Q

sales max

A

ac=ar

72
Q

destroyer p

A

at end

73
Q

trickle down effect + -

A

+
more I
more jobs
more spending
more tax revenue

-
may spend on M
may save
may move money abroad

74
Q

shifting s curve

A

productivity
indirect tax
no of firms
tech
subsidy
weather
costs of production

Micro (4 decks)

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