Defenitions

Question 1

Regulatory capture

Answer 1

When someone who works in government moves job somewhere he may have an advantage

Question 2

Trade union

Answer 2

an organized association of workers in a trade, group of trades, or profession, formed to protect and further their rights and interests.

Question 3

Labour market

Answer 3

the availability of employment and labour, in terms of supply and demand

Question 4

Economic growth

Answer 4

an increase in the amount of goods and services produced per head of the population over a period of time

Question 5

Positive externalities

Answer 5

, a benefit received or transferred to a party as an indirect effect of the transactions of another party.

Question 6

The cost on a 3rd party as an indirect effect of other parties

Question 7

De merit good

Answer 7

A good or service which is seen as unhealthy, degrading or otherwise social undesirable

Question 8

Public good

Answer 8

A commodity of the government which is non-rejectable, non-rivalrous and non rejectable

Question 9

Quasi good

Answer 9

Has some charechteristics of a public good

Question 10

Price mechanism

Answer 10

The process of how supply and demand affects prices
Signalling - if a price changes, it is a signal to the consumer to change
Rationing - refers to scarcity of resources and the most efficient way to use them
Incentives - encouraging firms to increase their level of output

Question 11

Gig economy

Answer 11

A labour market which involves zero hour contract or short term work instead of a long term job

Question 12

Market faliure

Answer 12

When the price mechanism fails to allocate scarce resources efficiently or when the operation leads to a net welfare loss

Question 13

Types of market faliure

Answer 13

Externalities
Under-provision of public goods
Information gaps

Question 14

Private costs definitions

Answer 14

The costs/benefits of the activity to society as a whole
Demand curve =private benefits
Supply curve = private costs

Question 15

Merit goods

Answer 15

Goods or services that are seen as beneficial to individuals and society as a whole but are often under funded and under consumed
NHS. Education

Question 16

Examples of government intervention

Answer 16

Indirect taxes and subsidies - taxes put on goods with negative externalities
Tradable pollution permits - a permit which limits the amount of pollution a firm can produce per year, can however sell excess permits or buy even more from other firms
Provision of the good - fund through taxes if the social benefit is very high
Provision of information- granting information since lots of externalities are from lack of information
Regulation - this could limit consumer goods with negative externalities eg : banning advertising of smoking

Question 17

Free rider problem

Answer 17

Someone who receives a benefit from a public good without paying for it
Companies won’t invest in public goods due to a potential free rider problem

Question 18

Symetric information

Answer 18

When buyers and sellers have access to the same information and there is perfect knowledge

Question 19

Asymetric information

Answer 19

When one party has more info than the seller, usually the buyer than the seller, leading to them taking advantage
On the decline however with advancement of technology and advertising

Question 20

Examples of information gaps u

Answer 20

Pension, young people don’t invest
Drugs, people don’t look at long time problems

Question 21

Misallocation of resources

Answer 21

Due to imperfect information, there is a misallocation of resources and they are either under provided or over provided leading to not working at the equilibrium of supply and demand

Question 22

What is the principle agent problem

Answer 22

When the interest of the principal- the person making the decision on behalf of the agent, isn’t alighted with of the agent, the person who is affected by the decision
For example a parent telling their kid what school they’re going to

Question 23

Welfare loss

Answer 23

A decrease in economic and social wellbeing
If the cost exceeds the benefits
Occurs when the efficiency market quantity isn’t demanded and supplied

Question 24

What are economic agents

Answer 24

Central banks, governments, buisenesses and individuals

Question 25

Law of diminishing demands

Answer 25

The satisfaction derived from the consumption of additional unit of a good will decrease as more of a good is consumed

Question 26

4 factors of productions and how do they create income

Answer 26

Land - rent
Labour- salary
Capital - divided profit
Enterprise- profits

Question 27

Capital gains

Answer 27

When a product gains in value since it was brought

Question 28

Market distortion

Answer 28

When the prices and production are different than normal due to normal in a competitive market due to intervention

Question 29

When was Royal Mail fully privatised and why is it controversial

Answer 29

2016
Recently messed up leaking data when it was system’s fault but people got sacked and ended up killing themself

Question 30

What did jeremy Corbyn labour want to do in 2019

Answer 30

re-nationalise Royal Mail, rail operating companies, energy supply networks and regional water and sewage

Question 31

Examples of regulators

Answer 31

Ofgen
Ofset
Bank of England
Ofcom

Question 32

Market forces

Answer 32

Economic factors that will determine the price and quality of goods or services in a market

Question 33

Fiscal drag

Answer 33

Where inflation and earnings growth may push more taxpayers into higher tex brackets - show’s importance for government to change tax brackets