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Micro Flashcards

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1
Q

What did Hong Kong subsidise?

A

Vaccines

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2
Q

What does China significantly subsidise?

A

Solar panels and electric vehicles, resulting in large overproduction at low costs

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3
Q

what did sanctions on Russian imports impact for europe

A

Gas, electricity and food supplies

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4
Q

Give 5 examples of price inelasticly demanded goods

A

Oil, Medicines, electricity, Gas, Coca Cola

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5
Q

Give 5 examples of price inelasticly supplied goods

A

Houses, Heathrow (air travel), Royal Mail (postal delivery), timber, UK energy

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6
Q

Give some examples of inferior goods

A

Fast food, staycations, Bus travel, own brand food

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7
Q

Give some examples of indirect taxes on goods

A

Cigarette duty, sugar tax, alcohol duty, Carbon tax, VAT

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8
Q

What is the UK subsidising?

A

Electric cars, heat pumps, Reseaarch and development, Museums

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9
Q

Which country imposed maximum prices on basic grocery items (coffee, flour, toilet rolls, oil, milk, meat, butter) and what was the result?

A

Venezuela; Excess demand caused mass shortages resulting in smuggling, black markets and huge amounts of queing.

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10
Q

Other examples of maximum prices

A

energy price cap: UK, France, Spain, Portugal
University tuition fees in UK (although rising)
Rent control: New York, San Francisco, Berlin

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11
Q

Give some examples of negative externalities

A

Eating unhealthy foods: 6.5 billion pound cost to NHS
Alcohol: 3.5 billion pounds cost to NHS
Cigarettes: 2-6 billion pounds cost to NHS
Congestion: 8 billion annual cost of lost UK output from delays
Air pollution: 42.88 million pounds annual health and social care costs 6

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12
Q

Give some examples of positive externalities

A

Excercise: save NHS money + lower work/school absanteeism
Education: higher incomes + tax revenue collection
Healthcare: Reduced spread of disease
public transport: lower congestion + air pollution
Reneable energy: Less air pollution + climate change benefits

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13
Q

What demerit good did china address and what did they do?

A

Gaming: restricted to one hour on weekdays and 2 hours on weekends for under 18s

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14
Q

Give an example of Asymmetric information

A

The UK Vet market is concentrated with only 6 firms controlling 60% of the market - has led to vet practices withholding information regarding prices, treatment + medicine options

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15
Q

Give 3 examples of moral hazard

A

Drivers taking excessive risk as insurance companies bear majority of cost
Banks giving out risky loans, expecting to be bailed out or receive liquidity from government
Water companies with excessive debt hoping for government support

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16
Q

Give an example of Tragedy of the commons

A

Deforestation in Malaysia is the fastest in the world - lost 15% of it’s forest coverage since 2000. Driven by palm oil companies + timber companies and low government restrictions

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17
Q

When was the sugar tax introduced and how much is taxed?

A

2018,
drinks with 5-8g of sugar per 100 ml = 18p per litre
8g+ = 24p per litre

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18
Q

How did Beijing reduce congestion and reduce air pollution by 40%?

A

road space rationing:
- odd, even license plate policy
- end number license plate policy
- Yellow sticker label policy (similar to ULEZ)

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19
Q

Give some examples of state provision to solve market failure

A

the NHS
UK denstistry
Education
free school meals for ‘vulnerable’ students

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20
Q

Pollution permits

A

ETS (emission trading scheme) in EU introduced in 2005. Carbon emissions in EU in 2020 were 21% lower than 2005.

At the end of every year, firms must trade in their permits and face heavy fines if actual pollution exceeds the number of permits they hold

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21
Q

Give two black markets in the UK and how much they are worth

A

Cigarettes - 2 billion pounds
alcohol - 1.8 billion pounds

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22
Q

What is an an example of government failure in the form of unintended consequences in their recycling scheme?

A

UK can’t handle all the plastic needed to be recycle so lots is sent to China, India, Malaysia, Thailand, Vietnam and Indonesia but it just ends up in landfill or burned over there due to impurities. Even plastic that is recycled has environmental costs due to transporting it there

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23
Q

What is an an example of government failure in the form of unintended consequences in the EU’s common fisheries scheme?

A

Dead fish are thrown back into the water so it looks like fishermen did not exceed their quota.

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24
Q

What is an an example of government failure in the form of unintended consequences in the UK governments state provision of education and healthcare?

A

large wait times at A&E, non essential treatment being delaye, primary school classes becoming excessively large

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25
Give examples of firms that suffer from diminishing marginal returns in the short term due to lack of land and capital?
Coffee shops, pizza shops, restaurants, fruit and vegetable farms and factory based manufacturing
26
Give three industries that significantly benefit from economies of scale
airline industry (bulk buying planes, taking out loans, managerial + marketing EoS) UK supermarkets (technical, purchasing, managerial, financial) Energy companies (purchasing + technical)
27
Give some examples of diseconomies of scale
yahoo arising from communication problems between directors, managers and workers, leading to failed attempts to improve performance Heinz workers complained about poor culture and lack of motivation Failure of travel agent Thomas Cook partly blamed on ineffective control from management
28
Give examples of two industries where profit maximising is highly incentivised
Pharmaceuticals - strive for maximum profits which can be reinvested into drug development. New drugs can then be patented, giving them monopoly over that drug Electronic companies have similar incentives for profit maximising. Companies such as Huawri, Panasonic, Intel and Microsoft file for the most patents in a year
29
Give an example of profit satisficing from a firm
In 2018, following Trump's corporation tax cut, Walmart increased worker wages and offered bonuses of up to $1000, demonstrating stakeholder satisfaction above profit maximisation
30
Give some examples of firms taking part in revenue maximisation
Twitter till 2018 to justify business success to stakeholders in 1996, stagecoach (bus company) used predatory pricing to drive out Darlington bus company from the market
31
Give examples of firms who have been known for focussing on sales/growth maximisation instead of profit maximisation to gain market share
Netflix, Amazon, Aldi, Lidl, Tesla, Octopus energy
32
Give some examples of markets that come close to perfect competition (lots of buyers + sellers, very similar products sold)
Tuk Tuks Large fruit, vegetable and fish markets foreign exchange market bakeries New york Pizzerias
33
Give some examples of highly competitive markets in the UK
short haul airline travel Fast food Supermarkets Takeaway Delivery Retail
34
Give some examples of firms with monopoly power
Google search (92% market share) Amazon (38% of all online sales made through amazon in 2023) Ticketmaster Durex Lego Stagecoach UK Eurostar Tesla
35
Give some examples of industries with natural monopolies
Water (OFWAT uses RPI-K price regulation on them) Gas + electricity distribution (national grid) Internet distribution (BT openreach, virgin) Rail track and infrastructure (Network Rail)
36
Give three examples of firms found to be practicing first degree price discrimination (charging different prices for the identical goods and services)
Amazon - using browser cookies to display different prices in 2005 Victoria's Secret - sending same catalogues with different prices in 1996 B&Q rewarding customers with loyalty cards in 2013
37
Give some examples of companies that use third degree price discrimination (charge different prices based on the PED for different consumers)
Trains (off-peak, peak) Airlines (School holidays, just before flights) Uber + lyft (surge pricing when there is high demand on the app)
38
Give some examples of monopolistically competitive markets
Clothing Hotels Restaurants Taxis Coffee shops Bars/nightclubs Cars
39
Give some examples of oligopolies that engage in price competition
The supermarket industry (top four firms control 70% of the market) short haul airlines Boeing and Airbus (duopoly)
40
GIve some examples of oligopolies that engage in non-price competition
The soft drink industry (duopoly with coca cola and Pepsi) payment processors (Visa and Mastercard)
41
Give some examples of Oligopoly cartels that went wrong
Scania - fined 880m euros for colluding with 5 other truck companies for over 14 years Virgin Atlantic + British airways colluded on airfares - virgin eventually broke the deal and snitched on BA leading to a huge fine + damage to reputation for BA
42
Give some examples of contestable markets
Hotel market - technology allowed Airbnb to make the market highly contestable Airline travel - deregulation led to lower barriers to entry. Could lead to hit and run behaviour the taxi market became much more contestable once uber entered Takeaway delivery ( deliveroo + uber eats) electric car market (BYD) Fast food shaving travel agents couriers coffee shops online shopping (Shein/Temu)
43
Give a disadvantage of Price caps and an example to back this up
Can result in firms having to leave the market if price cap does not rise alongside costs for businesses. For example, in the latter half of 2021 up to 2023, wholesale gas prices increases 4x, but the price cap failed to match this, resulting in widespread bankruptcies of small energy retailers.
44
Give an example of regulation applied to monopolies to stop their abuse of power
Energy manufacturers in Uk face a 38% windfall tax on profits from oil or gas extraction up until 2030. Tax used to support households struggling to pay rising energy bills
45
give some examples of regulation on monopolies to maintain standards
trains/airlines compensate passengers if passengers arrive at their destination 30 minutes/ 2 hours late Energy companies cannot cut off gas/electricity to vulnerable households during winter
46
Give some examples of monopoly mergers that were blocked/regulated
Asda + Sainsbury's (blocked) Vodafone + Three (accepted with regulations) Microsoft + activision Six flags + cedar fair
47
Give two examples of industries/firms that may have been involved in regulatory capture
Water companies (OFWAT late to intervene because of generous dividends to shareholders) Boeing (immune from legal prosecution after 2 fatal crashes in 2019 because it payed fines to US government instead)
48
Give an example of deregulation and explain whether it was effective or not
deregulated bus industries: firms no longer had to obtain license from local council to drive a certain route. Ineffective because incumbent firms used anti-competitive strategies to drive out competitors e.g. predatory pricing.
49
Give an example of a firm that was privatised but is now set to be nationalised again
Railways. Privatisation was not profitable and relied on many subsidies from the government. Therefore it has been decided to renationalise the rail industry when franchisee agreements end
50
Give 4 examples of monopsony employers
NHS - 88% of UK relies on solely on NHS provided healthcare. employs 1.5m workers UK government - employs teachers in 93% of state schools in the state sector Walmart - employs 1.5m workers in US alone (third largest employer worldwide) McDonalds - employs 1.9m workers globally (fourth largest employer)
51
How has trade union density changed over the years?
22.4% in 2023 compared to over 50% in 1970s. Due to reductions in trade union power due to regulations
52
What was the effect of trade unions in 2022-2023
managed to increase wages in most cases between 4-10%, however cost UK £500M in lost GDP during 2022/2023 financial year
53
What is the minimum wage?
NLW = £12.21/hour for 21+ those on low incomes now receive £6000 more in real terms than without minimum wage, equivalent to 66% of median earnings
54
How has the gender pay gap changed?
only 7% now down from 30% in 1990s
55
what is the regional pay gap?
London and south east earn on average £765/week compared to between £580 and £600 for the north east,
56
what are the average salaries for some different professions?
investment banker = £60,000 premier league footballer = £4m nurse = £36,000 teacher = £38,000
57
What is the UK's gini coefficient?
0.357 now, much lower than 2008 where it was 0.386
58
What is the UK wealth Gini coefficient?
0.62 - wealth more unequal than income
59
How much do the top 1% of earners in the UK (income > £188,000) contribute to total income tax revenue?
30% up from 25% at the end of 2010 and 21% at the end of 2000
60
what percetnage of income earners pay no tax?
42%
61
How much do bottom third of income tax payers contribute to income tax revenue?
just 0.01% showing the strong effects of the progressive tax system
62
give some examples of regulation used in the UK to promote equity for workers
1) Banning long term zero hour contracts 2) Banning fire and rehire practices 3) making sick pay, parental and bereavement leave a compulsory offer for all employees
63
Give an example of a good whose demand has decreased recently
tech goods due to lower real incomes in the UK
64
Give an example of a good whose demand has increased recently
non alcoholic drinks, signifying a trend towards healthier beverage alternatives
65
Give some examples of markets whose supply shifted left recently
European food, gas and electricity supplies given sanctions on russian imports due to war in Ukraine, resulting in retaliation from Russia
66
Which companies recorded high profits after increasing prices of their inelastically demanded goods
Coca-cola, energy companies, lego, Pfizer
67
Give some examples of complement goods
Printers and printer ink, Razors and blades, coffee machines and capsules, games consoles and games, lamps and bulbs
68
Give some examples of substitute goods
Coca cola and pepsi, Nike and adidas trainers, Airlines, fast food menu items
69
Give some examples of indirect taxes
Sugar tax, alcohol duty, cigarette duty, carbon tax, VAT, vaping duty
70
What is now subject to VAT as well from 1st Jan 2025?
Private school fees, leading expected revenue for the gov of 1.5bn but concerns regarding affordability issues damaged reduced overseas student demand
71
What things has the UK subsidised
Electric cars Research and development Museums heat pumps
72
Give some more examples of price inelastically demanded goods
feul, cigarettes, iPhones, alcohol, hospital parking
73
Give an example of minimum prices
minimum price of 65p per unit imposed in Scotland on alcohol
74
Give some examples of demerit goods
Gaming, Alcohol, vaping, red meat, gambling, cigarettes, energy drinks, tanning beds
75
Give some examples of merit goods
Healthcare, education, museums, solar panels, home insulation, health food
76
Give some examples of asymmetric information
private doctors selling unnecessary medication drivers taking unnecessary risks when they have insurance Banks engaging in risky profit seeking activity water companies with excessive debt tradesman services
77
Give some examples of public goods
Roads streetlights beaches road signs military defence

Economics examples + stats (6 decks)

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