Real life examples Flashcards
(45 cards)
Price Ceiling — Venezuela
Venezuela imposed a price ceiling on basic food items (e.g. milk, flour), leading to shortages and black markets.
Price Floor — European Union (CAP)
The EU’s Common Agricultural Policy (CAP) sets minimum prices for agricultural products, creating surpluses and requiring government purchase.
Indirect Tax — Mexico’s Sugar Tax
Mexico implemented a tax on sugary drinks in 2014 to reduce obesity and increase government revenue.
Subsidy — India Fertilizer Subsidies
The Indian government subsidizes fertilizer to help lower costs for farmers and increase agricultural output.
Negative Externality — Beijing Air Pollution
Beijing suffers from severe air pollution due to industrial production, affecting public health and increasing healthcare costs.
Positive Externality — Education in Finland
Finland’s investment in free education provides long-term benefits like high productivity and innovation.
Merit Good — Healthcare in the UK (NHS)
The NHS provides free access to healthcare, a merit good under-consumed in a free market.
Demerit Good — Cigarettes in Australia
High taxes and plain packaging regulations aim to reduce cigarette consumption due to health risks.
Market Failure — Traffic Congestion in London
Congestion pricing was introduced in London to internalize the external costs of traffic.
Monopoly — Google
Google has significant market power in the search engine industry (~90% global market share), raising concerns over competition.
Oligopoly — U.S. Airline Industry
The airline industry is dominated by a few major firms (e.g. Delta, United), showing interdependence and price rigidity.
Elastic Demand — Restaurant Meals
Consumers are highly responsive to price changes in dining out, showing elastic demand behavior.
Inelastic Demand — Insulin in the U.S.
Insulin has inelastic demand due to its necessity, despite high prices.
PED & Indirect Tax — Fuel in the UK
The government taxes petrol heavily, but inelastic demand means consumers still purchase it.
Income Elasticity — Luxury Cars in Germany
Sales of BMWs and Mercedes rise more than proportionately with income, showing high YED.
Economic Growth — Ireland (2015–2019)
Ireland experienced rapid GDP growth due to FDI and tech sector expansion.
Recession — Germany (2023)
Germany entered a technical recession in 2023 due to high energy prices and falling industrial output.
Unemployment — South Africa
South Africa has persistently high unemployment (around 30%), particularly youth unemployment.
Inflation — Argentina
Argentina faces hyperinflation, with rates exceeding 200% in 2023, eroding purchasing power.
Deflation — Japan (1990s–2010s)
Japan experienced prolonged deflation due to weak demand and low consumer confidence.
Demand-Side Policy — U.S. Fiscal Stimulus (2020)
The U.S. implemented stimulus checks and increased government spending to counter COVID-19 recession.
Supply-Side Policy — Singapore
Singapore invested in education and R&D to improve productivity and competitiveness.
Structural Unemployment — Spain
Spain’s mismatch between skills and job market needs causes high structural unemployment.
Cyclical Unemployment — U.S. (2008)
The 2008 financial crisis led to a sharp rise in cyclical unemployment.
