Micro Application 2018

Question 1

Basic Economic Problem

Answer 1

Worldwide Food Scarcity

India + South Africa- Water Scarcity

Question 2

INCREASED DEMAND

Answer 2

Spanish Holidays- Brexit
Commodities- e.g. Oil —> Increased China Incomes
Low/No Alcohol Drinks- change in tastes

Question 3

DECREASED DEMAND

Answer 3

Student Housing (UK)- Increased University Cost
Print Newspapers- Tech Advancements
Dining in- Deliveroo etc.

Question 4

INCREASED SUPPLY

Answer 4

India Subsidies- Gas, Fuel + Rice

Air Travel in UK- Increased Contestability

Question 5

DECREASED SUPPLY

Answer 5

Fizzy drinks- Sugar Tax
Ice Cream (Vanilla)- Increased Vanilla Price
Gas/Electricity- Weather issues

Question 6

INELASTIC PED

Answer 6

Cigarettes, Alcohol, Sugary Drinks, Fast Food
Public Transport
iPhone- iPhone X revenue increase- Brand Loyalty
Basic Commodities

Question 7

INELASTIC PES

Answer 7

Basic Commodities
Gas/Electricity
—Difficult to Store
Housing
Heathrow + Gatwick Airport
—Lack of Spare Capacity

Question 8

XED COMPLEMENTS

Answer 8

Printers + Ink
Games Consoles + Games
Nespresso machines + Capsules

Question 9

XED SUBSTITUTES

Answer 9

Fast Food Chains- especially Burger chains

Smartphones

Question 10

YED NORMAL GOODS

Answer 10

Restaurant Dining, Foreign Holidays
Designer Clothing
Theatre
House Renovation

Question 11

YED INFERIOR

Answer 11

Fast Food
Store-Brand Food
Staycations
Public Transport- more Uber + Cars

Question 12

NEGATIVE EXTERNALITY IN PRODUCTION

Answer 12

Manufacturing- Resource Depletion + Degradation

Deforestation- Loss of Biodiversity + Desertification

Question 13

NEGATIVE EXTERNALITY IN CONSUMPTION- Demerit Goods

Answer 13

Cigarettes, Alcohol, Sugar, Fat

Chewing Gum, Sun Beds, Red Meat

Question 14

POSITIVE EXTERNALITY IN PRODUCTION

Answer 14

In-work Training
R&D
Childcare

Question 15

POSITIVE EXTERNALITY IN CONSUMPTION- Merit Goods

Answer 15

Vaccinations, Healthcare + Exercise
Education + School Lunches
Public Transport

Question 16

PUBLIC GOODS

Answer 16

Flood Defences, Roads, Bridges, National Parks
Road Signs, Street Lights, Traffic Lights
Defence

Question 17

Common Access Resources

Answer 17

Seas + Air(Oxygen)

Forests

Question 18

INDIRECT TAX + MARKET FALIURE

Answer 18

Cigarette, Alcohol, Sugar + Carbon Taxes
Latte Tax needed?- Coffee cups are recyclable
—Over 90% not recycled- only 5 plants across UK
Plastic Tax?

Question 19

SUBSIDIES + MARKET FAILURE

Answer 19

Electric/Autonomous Cars
Solar Panels
Public Transport
R&D, In-work Training + Adult Training

Question 20

REGULATION + MARKET FAILURE

Answer 20

BANS- Smoking+smoking advertising, Plastic Straw?, France Soft Drink refill
LIMITS- Alcohol + Cigarette age limits
COMPULSORY-Forced negative smoking advertising, Nutrition Information
QUOTAS- caps on CO2 Emissions, Fishing Quotas
INNOVATIVE REGULATION- UK Deposit Recycling Scheme

Question 21

STATE PROVISION

Answer 21

NHS
State Schools
Public Goods

Question 22

MAX. PRICE + MARKET FAILURE

Answer 22

Rent Control- New York + Berlin
Energy Price Cap
Basic Food Items- Venezuela

Question 23

Tradable Pollution Permits

Answer 23

Kyoto Protocol

ETS (EU)- Carbon Credits

Question 24

MIN. PRICE + MARKET FAILURE

Answer 24

Scotland- Alcohol- 50p per Unit

Question 25

PERFECT COMPETITION

Answer 25

No real life examples Market stalls Foreign Exchange

Question 26

HIGHLY COMPETITIVE MARKETS

Answer 26

Fast Food, Cars, Short-haul Airlines | Supermarkets

Question 27

MONOPOLISTIC COMPETITION

Answer 27

Taxis, Clothing, Restaurants, Hotels Streaming Services Coffee Shops Hairdressers/Salons

Question 28

OLIGOPOLY- COMPETITIVE

Answer 28

Supermarkets Soft Drinks Cars, Mobile Phones Short-haul Flights

Question 29

OLIGOPOLY- Non-Competitive

Answer 29

Energy Market Supermarket Fuel Bus Companies

Question 30

MONOPOLY POWER

Answer 30

``` Google Search- 88% Durex- 80% in Necessity market Gazprom- EU Gas Tesco- 28% UPS- 26% London Underground Merlin Attractions- Theme Park provider ```

Question 31

PRICE DISCRIMINATION

Answer 31

1st Degree- Amazon | 3rd Degree- Rail, Airlines, Theatre, Hotels

Question 32

NATURAL MONOPOLY

Answer 32

Network Rail | Utilities

Question 33

CONTESTABLE MARKETS

Answer 33

Taxis, Hotels, Fast Food Airlines, Parcel Delivery, Tech Firms Online Retailers

Question 34

LOSS MAKING COMPANIES

Answer 34

``` Maplin Toys ‘R’ Us New Look Monarch Airlines BlackBerry ```

Question 35

Economies of Scale

Answer 35

``` Energy Supermarkets Airlines Tech Firms Online Retailers ```

Question 36

PROFIT MAXIMISATION

Answer 36

Pharmaceuticals | Electronics

Question 37

SALES MAXIMISATION

Answer 37

Costa (UK) Netflix Amazon Spotify

Question 38

Corporate Social Responsibilty

Answer 38

Disney Starbucks Microsoft Ben + Jerries

Question 39

Monopoly Regulation

Answer 39

RPI- trains, Gatwick + Heathrow, Water (UK) Merger-NPower + SSE, Sainsbury’s + ASDA Deregulation- Airlines, Buses

Question 40

DEMAND FOR LABOUR

Answer 40

Pilots, Air-traffic controllers, Child Minders App Developers, Bank Clerks Advertising Agencies

Question 41

INELASTIC WED- Wage Elasticity

Answer 41

Premier League Footballers | Plumbers + Electricians

Question 42

ELASTIC WED- Wage Elasticity

Answer 42

Call Centre Workers- substitutable with technology

Question 43

INCREASED LABOUR SUPPLY

Answer 43

Shelf Fillers- graduates entering non-graduate jobs

Question 44

DECREASED LABOUR SUPPLY

Answer 44

Low Skilled work- Brexit Uncertainty

Question 45

INELASTIC WES- Wage Elasticity

Answer 45

``` Doctors Engineers Accountants Pilots Lawyers ```

Question 46

ELASTIC WES- Wage Elasticity

Answer 46

Travel Agents Driving Instructors Waitresses

Question 47

MONOPSONY EMPLOYER

Answer 47

NHS State Schools McDonalds

Question 48

UK LIVING WAGE

Answer 48

£7.83 per hour- over 25s

Question 49

UK GINI COEFFICIENT

Answer 49

0.34

Question 50

Policies to Redistribute Income

Answer 50

Tax Rich- Labour Party UK Transfer Payments/Benefits- Labour Party UK Spending on Education and Healthcare Increase Minimum/Living Wage Northern Powerhouse- Reduce Regional Inequalities + Decrease Dependence on South