general theme 1 application points

Question 1

The economic problem

Answer 1

Scarcity: The NHS has limited resources—staff, beds, funding.

Opportunity Cost: HS2 delays showed the trade-off between transport investment and public service funding.

Question 2

Specialisation & Division of Labour

Answer 2

• UK factories like Nissan Sunderland use division of labour for car production.
• UK specialises in financial services and exports to EU & USA.

Question 3

Elasticity

Answer 3

PED: Cigarettes are price inelastic → tax revenue continues to rise even with higher duties.

YED: Waitrose products are income elastic—sales dropped slightly in 2022 due to falling real incomes.

XED: iPhones vs. Samsung = substitutes; petrol and cars = complements.

Question 4

Supply shocks

Answer 4

Brexit and Ukraine war

Question 5

Indirect Taxes & Subsidies

Answer 5

Sugar tax (2018): Tax on sugary drinks to reduce consumption.

Subsidies: Help to Buy scheme for first-time buyers

Question 6

taxes on cigarettes

Answer 6

16.5% of ratil price

Question 7

impact of sugar tax

Answer 7

A 2021 study by PHE (Public Health England) and others found: → 30% reduction in average sugar content of soft drinks between 2015 and 2020.

→ No significant reduction in total soft drinks sales volume, meaning people didn’t drink less, but drank less sugary versions.

Question 8

monopsonies application points

Answer 8

🚆 1. NHS (UK healthcare sector)
- The NHS is the largest employer of doctors, nurses, and other medical staff in the UK.
- Because there’s little alternative for doctors and nurses, the NHS has wage-setting power.
- May lead to lower wages than in a competitive labour market, even though the NHS is not profit-maximising.

✈️ 2. Amazon warehouses / delivery contractors
Context: Amazon often dominates as an employer in certain warehouse districts or rural areas.

• The government is a monopsony of teachers