Application Evidence Flashcards
Inward shift of demand of restaurant dining
UberEats and Deliveroo allow delivery that remove inconveninece of travelling
Opentable reports a year-over-year change of seated diners in restaurants in the UK was 32 percent on February 2022.
Outward shift of demand (e-commerce)
Coronavirus caused closure of brick and mortar stores so people turned to the internet
e.g. Amazon announced a 200% increase in profits to the previous quarter in 2020
Price inelastic ( energy )
energy regarded as essential for the economy and are neccesities
e.g. oil prices went up to $120 per barrel while consumption remained around 100 million barrels a day IEA Oil 2021 report
Inward shift of supply (brexit)
tarrifs on Uk imports and exports which increase cost of production
e.g. U.K. exports to EU countries falling by 45 percent on the previous month and imports decreasing by 33 percent
Outward shift of supply (innovation)
‘the digital revolution’ in the early 2000’s increased the effiicency of their supply chains and lowered the cost of production
e.g. Moore’s Law: number of transistors in a dense integrated circuit (IC) doubles about every two years
Price inelasticity of supply (housing)
Housing in prime locations
e.g. Green belt in London prevents houses being built in certain areas of London; house prices rose by just 4.2% in the year
Government intervention to prevent monopilistic markets (BT)
OFGEM regulates the electricity industry
BT used to own the majority of the fibre-optic cable network and charged higher prices
OFGEM forced BT to open up the cable network in April 2017 and BT reduced their landline price by 7 pounds a month
Example of regulatory capture
theory that regulations can become dominated by regulatees from the companu
e.g. 2016 public outcry when energy companies stopped showing consumers how much profit they make off each house hold even though this meant firms could increase prices to exploit consumers and they wouldn’t necessarily be aware
Deregulation (airlines)
Reducing government intervention would increase competivity
Following the 1970 Airline Deregulation Act several firms were able to join the market which then triggered the rise of ‘low cost’ airlines that forced incumbents to lower ticket prices
Beneficial effect of Privatisaion (water)
prior to privatisation of the water industry, water quality in the UK was very poor but once privatised there was an intial investment of £160 billion to improve water quality
Failure of privatisation
Firms operating in probation were handed over to the private industry but since then has been bailed out by the government several times
until the government planned to renationalise these firms by 2021
Government Failure of Tradeable Pollution Permits (ETS)
Folowing 2008 the huge fall in economic activity meant firms no one needed the permits no longer so prices fell and it veamce chepaer to buy permits than find alternative cleaner ways
Government failure of provision
Ordered the wrong PPE; £8.7 billion wasted
