25 markerzzz

Question 1

evaluate why wage differences exist in labour market

Answer 1

Difference in demand
Difference in productivity
Trade unions have differing power levels to negotiate with

Question 2

why do firms engage in collusive behaviour

Answer 2

Reduce contestability - reduces cost of direct competition
Restrict output to keep prices high
Pass the cost of regulation etc to consumers - raises producer surplus, reduces uncertainty and controls supply

Question 3

microeconomic consequences of switching from combustion to EV

Answer 3

reduction in negative externalities
EV manufactures see higher profits
Loss of tax revenue

Question 4

costs of monopsony of operating in book retailing market

Answer 4

Cost to supplier is lower prices for paper and ink
Wage cuts and job losses long term for the publishing
Lower supernormal profits for the suppliers

Question 5

Role of financial sector in developing economies

Answer 5

Facilitate savings (harrod domar model)
Facilitate lending
Expansionary monetary policy
BUT High financial illiteracy, risk of corruption and robust financial systems needed, so all three may mitigate the effect

Question 6

Micro effects of taxes

Answer 6

Lower revs and profits for firms
Increase in positive externalities
Increase in govt tax

Question 7

effects of increase in protectionism for country of choice

Answer 7

US steel imports tariffs from china
Increase in government revenue
Higher prices for some goods (diagram)
Unemployment increases as higher overall prices causes low demand

Question 8

micro and macro factors influencing growth and development

Answer 8

macro: govt spending in healthcare and education ->labour productivity gets higher so lras and ad shift and HDI improves. but budget deficit in short run, causing fiscal austerity in future

micro: high number of skilled labour leaving -> inhibits growth as labour prod is low -> population has lower disposable income so SoL low. but remittances from abroad could improve SoL.

Question 9

micro and macro factors impact of change in level of investment

Answer 9

micro: increased investment into R&D and capital -> increased confidence and also SoL due to increased demand. but also unemployment as human capital is replaced.

macro: Shift in AS through investment in education etc. Diagram showing AS shift left. increases spare capacity (concerns surrounding lack thereof). but it is hard to implement due to opp. costs, and measure the true effect of due to time scales

Question 10

is monopoly good for consumers

Answer 10

No - higher prices (profit max) BUT r&d possible??
No - higher barriers so less choice
No - bad quality product due to lack of incentive to innovate

Question 11

impact of NMW increase

Answer 11

Low tax rev as informal sectors may be more favourable to employers (no need to pay NMW)
Firms reach shutdown point as they face high costs BUT higher productivity
Excess demand for jobs as they incentive to work rises (diagram)

Question 12

macro and micro impact of large IF spending

Answer 12

AD and AS shift, multiplier, lower unemployment BUT fiscal austerity, depends on size of multiplier
Business costs down but confidence up. Transport costs down, investment means confidence up.

Question 13

macro and micro impact of rise in interest rates

Answer 13

Lower AD, lower consumption. multiplier effect like higher unemployment as saving is more likely.
Rise in fixed costs and decrease in investment. R&D lowers so dynamic efficiency lowers.

Question 14

macro and micro influences on competitiveness

Answer 14

Micro: Regulation levels. could mean high sunk costs for firms tryna enter market, disincentive. also means domestic firms cant compete internationally as heavily regulated/not enough dynamic efficiency. BUT depends on industry + strength of trade unions for safety stuff

Macro: Levels of IF. good IF means more confidence and FDI. means lower transport costs, lower utility costs, higher mobility of human capital adnlabour. BUT hard to measure this

Question 15

macro and micro effects of supply side policies

Answer 15

Micro: Improved labour productivity and quality of labour force. From healthcare and education reforms.

Macro: Lower inflation, as more space capacity. speak about effects. higher confidence in economy to attract FDI

Question 16

macro and micro effect of tax on demerit goods

Answer 16

micro: externalities stuff. however long term, hard to measure. but PED of crisps, magnitude of tax.
macro: cost push inflation. one off price rise. LRAS left. magnitude of tax dependent, depends if firms pass on costs or not.

Question 17

macro and micro effect of tax on demerit goods

Answer 17

micro: externalities stuff. however long term, hard to measure. but PED of crisps, magnitude of tax.
macro: cost push inflation. one off price rise. LRAS left. magnitude of tax dependent, depends if firms pass on costs or not.

Question 18

micro and macro effect of increased government intervention

Answer 18

micro: increased regulation so higher costs, fall in profits, firms may enter shutdown or have decreased dynamic efficiency, so less r&d and higher prices and lower choice for consumers. BUT depends on type of regs, reg capture

Macro: poverty goes down, minimum wage enforced, inequality goes down. BUT job loss can occur if firms cant afford

Question 19

micro and macro impacts of expansionary fiscal policy

Answer 19

micro: increased profits for firms. increased

macro: AD shift right, LRAS right, spare capacity, effects of inflation minimised, higher IF means greater productivity and output. BUT expensive and long run plus opp cost