micro Econ context

Question 1

what shifts demand?give an example

Answer 1

technological advancement-decreased demand for restaurant dining due to Uber Eats and in print journalism
shocks-covid pandemic slowed the aviation industry
ecommerce businesses increased demand due to covid eg amazon and at home excersise eg peleton

Question 2

what are some price elastic and price inelastic goods and services

Answer 2

elastic-furniture stores and motor vehicle stores
inelastic-electricity and water industries

Question 3

what are some perfectly in/elastic goods and services

Answer 3

don’t exist to a lot of people
inelastic-lifesaving drugs eg insulin in America
elastic-book shops (lots of alternatives)

Question 4

unitary price elastic

Answer 4

clothing

Question 5

factors influencing supply w examples

Answer 5

natural disasters-turkey and syria earthquakes shifted In housing
tariff-uk December 31st 2020-decreased supply of fruit and veg
innovation-digital revolution in 2000s

Question 6

perfectly inelastic supply

Answer 6

housing in major cities-london green belt policy

Question 7

objectives of firms

Answer 7

covid vaccine:moderna -profit max Pfizer-ethicality-distributed vaccines free of charge
lush-ethicality objective as they do not test on animals
British Gas 2020 new minimum price-reversed to retain market share
survival-covid furlough schemes-lack of firms’ finance

Question 8

perfect competition

Answer 8

agricultural industry
India:farming accounts for 55% of all jobs and 120 million people,e employed in the sector

Question 9

monopolistic competition

Answer 9

fashion industry-tech advancement means use of online stores like boohoo and asos has allowed many buyers and sellers differentiated goods and lowered barriers to entry
furthermore budget airlines in the airline industries as planes are leased which allows for money sellers -wizzair,easy jet,jet2,ryanair

Question 10

oligopoly

Answer 10

big 4 supermarkets own 70% of market share
Morrisons pay workers min £10 an hr
tesco set up leisure centres to boost areas
CSR

Question 11

duopoly

Answer 11

boeing and airbus hold 90% of market share geopolitical and profit competition as Arbus is European and Boeing is American

Question 12

monopoly

Answer 12

google, apple ,amazon
parler banned from App Store due to capitol incident - ‘prevention of free speech’

Question 13

barriers to entry

Answer 13

legislation-FSA
apple monopoly power-imovie,garageband etc and amazon-amazon fresh and amazon prime
intellectual property rights used by pharmaceutical companies
climate change alternative industry-creative destruction of ford-norway uses electric cars

Question 14

contestability

Answer 14

tech in the gaming industry has allowed fr competitors to develop apps and software-threat of entry

Question 15

macro background for labour markets

Answer 15

2020-uk unemployment at 4.9%

Question 16

trade union and pay discrimination

Answer 16

equal pay act-1970
friedman and thatcher’s dislike of trade unions due to real wage inflexibility-thatchers weakening of tu’s and Friedmans idea of continued discrimnation from tu’s

Question 17

monopsony power

Answer 17

product market:NHS and big 4 supermarkets
labour market:NHS and Walmart(2.3 million)
most companies who can afford to pay workers higher wages do so to maintain brand strength -plt sweatshop scandal

Question 18

distribution of wealth and income

Answer 18

covid has wiped out years of distributed incomes:
halted tourism
north south divide(southerners work in service industries and so cam work from home whereas northerners get fired as they work in manufacturing industries)
uk most unbalanced economy in Europe in terms of wealth and income

Question 19

cases of intervention

Answer 19

bt exploits monopoly powers they used to own most of the fibre optic network
ofgem forces bt to open market to competitors
2018-cma blocks sainsburys and Asdas merger

Question 20

regulation

Answer 20

establishing of digital markets unit -regulates firms w strategies market status (Facebook and google) in an ex ante manor
uk must be careful as this can deter investment
apple banning parler-concerns on free speech
regulatory capture-2016 energy companies stop showing profits to consumers and OFGEM side w/ no justification

Question 21

de regulation

Answer 21

airline deregulation act in 1970s allowed for rise of contestability and low cost airlines
postal services market becomes more contestable due to deregulation of royalty mail

Question 22

privatisation

Answer 22

privatisation of the water industry-before this water quality was bad-investment of 160 billion reduces pollution and improves quality-positive externality

however probation industry has had to be nationalised due to outcrys when it was private

Question 23

government failure

Answer 23

cap and trade-gfc slowed activity therefore process permits dropped-failure as gov was unable to foresee this and had to make the MSR(market stability reversal)
mccarran-fergusson act 1945-states in us vary laws-tried to establish insurance firm regulation but was time consuming and expensive to monitor