evaluation points for micro

Question 1

what are some evaluation points connecting to imperfect information?

Answer 1

• information failure is inevitable in a world of product complexity
• choice overload can make people choose the wrong option
• de-merit goods could be normative - should government decide what is a de-merit good?

Question 2

what are some trade union evaluation points

Answer 2

• trade union effectiveness depends on trade union density in an industry which has been in decline
• New Unionism focuses less on wage bargaining and more protecting employees
• Unions could lead to increase productivity meaning unemployment wont rise
• wage rise depends on WED

Question 3

what are some evaluation points for govt provisionpublic goods?

Answer 3

• lack of profit motive might lead to x-inefficiency
• will government provision lead to equity?
• might be better for the govt to fund private sector to do it e.g., Blairs joint enterprise
• market incentives and profit might be better for promoting innovation and dynamic efficiency.

Question 4

what is some evaluation of firms efficiency in a market?

Answer 4

• depends on contestability (limit pricing) - can change quickly
• how they use supernormal profits
• do they pay tax?
• what are their business objectives?

Question 5

what are some evaluation points on how much revenue a firm earns

Answer 5

• use of effective price discrimination
• Game theory - the extent to the interdependency
• changing behaviour of consumers - growth of Beyond
• extent of contestability
• cyclical demand

Question 6

what are some evaluation points for profits regarding costs?

Answer 6

• the extent to which shareholders hold managers to account (principle agent)
• the market share - x-inefficiency

Question 7

what are some evaluation points for barriers to entry?

Answer 7

• lower barriers to entry could lead to too many firms where the no. firms are undesireable
• could lead to lower dynamic efficiency if barriers decrease

Question 8

evaluation points for minimum efficient scale - the point where economies of scale have been maximised

Answer 8

• the MES indicates the amount of firms that an industry can support (30% MES means only 3 firms)
• small firms can still prosper in the presence of giants e.g., Aldi who only stocks around 1,400 items compared to traditional supermarkets who offer around 40,000