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G202 Exam 1 > G202 Exam 1: Topic 1 > Flashcards

G202 Exam 1: Topic 1 Flashcards

1
Q

What does P.E.S.T. stand for?

A

Political, Economic, Social, Technology

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2
Q

What are the metrics for non-market players?

A

Processes

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3
Q

What is corporate social strategy?

A

Integrating non-market forces (PEST) into your market strategy

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4
Q

How does corporate social strategy help a company’s bottom line?

A

Aware of upcoming trends that will later become requirements (i.e., clean emissions standards, recycled material) and obtain those resources before they become very expensive

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5
Q

What two acquisitions did BP make in early 21st century?

A
  • ARCO (oil and gas)

- Solarex ( solar energy)

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6
Q

What was BP’s strategy in acquiring Solarex?

A
  • Became largest solar energy company in world
  • Launched “Beyond Petroleum” campaign to re-brand
  • Differentiate - become attractive to SRI’s (socially responsible investors)
  • Balance relationships with NGO’s
  • Manage regulatory risks
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7
Q

What is a potential risk when companies use strategies like BP to acquire companies to improve image?

A
  • Heightened public expectations (especially from NGO’s)
  • Can attract too much attention/scrutinization from NGO’s and activists
  • i.e., Greenpeace awarded BP the “Greenwash of the Year”
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8
Q

What are four major market inefficiencies?

A

Property rights, market power abuses, quality concerns, externalities (pollution, etc.)

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9
Q

How does public policy affect inefficiencies?

A

Can correct existing inefficiencies or be the cause of an inefficiency

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10
Q

What is the socially efficient production level?

A

Qe (Where demand and supply meet)

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11
Q

When markets fail, how do NGO’s respond?

A

More likely to have interactions with the government

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12
Q

What is demand based on?

A

Value to consumers

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13
Q

What is supply based on?

A

Cost to producers

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14
Q

What are the effects of taxes?

A
  • Government revenue is collected
  • Increased prices to buyers
  • Decreased prices to sellers
  • Reduced quantity bought and sold
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15
Q

What are the effects of subsidies?

A
  • Increase supply
  • Decrease prices to buyers
  • Increased prices to sellers
  • Increased quantity bought and sold
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16
Q

What is productive regulation?

A

Causes sellers to incur higher operating costs (compliance costs)

17
Q

What are the results of productive regulation?

A
  • Increased prices to buyers
  • Decreased prices for sellers
  • Reduced quantity bought and sold
18
Q

How is productive regulation different from taxation?

A
  • Does not raise revenue for government

- Government goal: decrease trade

19
Q

Why are voters assumed to be rationally ignorant?

A
  • It is costly to become informed on political issues (time, opportunity cost)
  • Not likely an individual vote makes a difference
20
Q

Why are politicians assumed to be vote maximizers?

A
  • Ability of politicians to achieve goals depends on election/re-election
  • Therefore, politicians provide info about themselves/rivals to voters at no charge
21
Q

Why are bureaucrats assumed to be budget maximizers?

A
  • Not elected

- Seek promotions, higher pay, prestige, etc. which comes with bigger budget

22
Q

What is the Shortsightedness Effect?

A

Politicians support projects that have current benefits and deferred costs

23
Q

Why does the public sector have so much operational inefficiency?

A
  • Little incentive to lower costs or make profit

- Have to spend all of the budget to get the same amount the next year

24
Q

Lobbying/Rent Seeking

A

Devoting resources to influence public policy formation in order to bring more income to your interests

25
Q

What are the functions of lobbyists?

A
  • Find political opportunities and threats
  • Inform politicians and influence public opinion
  • Form coalitions with other groups w/ similar interests
26
Q

Special interest effect

A

Small group of people receive benefits at expense of large group (small groups gain political power because the costs of large groups taking action outweigh benefits)

27
Q

Majoritarian Politics

A
  • Widely dispersed opposition and support
  • No special interest groups take action on either side
  • i.e., social security
  • Lobbying does not occur
28
Q

Client Politics

A
  • Widely dispersed costs, concentrated support
  • One special interest group is active in favor of an issue
  • i.e., USDA Foreign Advertising Fund
  • Lobbying will likely be successful
29
Q

Interest Group Politics

A
  • Concentrated costs and benefits
  • Active special interest groups on both sides of issue
  • i.e., legalization of marijuana
  • Successful lobbying will be costly
30
Q

Entrepreneurial Politics

A
  • Concentrated costs, widely dispersed benefits
  • One special interest group is active against an issue
  • i.e., nuclear waste dumps
  • Successful lobbying will be costly

G202 Exam 1 (3 decks)

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