Micro - Examples

Question 1

Basic economic problem

Answer 1

Water scarcity in India, Cape Town South Africa

Question 2

Demand shifting right

Answer 2

Demand for Spanish holidays from the UK

Oil rising (key determinant in this is rising incomes in China)

Question 3

Demand shifting left

Answer 3

Less demand for student housing as Uni costs rising (staying home)

Printing newspapers

Deliveroo changing dining in demand

Question 4

Supply shifting right

Answer 4

Large subsidies in India for gas, fuel, rice

Air travel

Question 5

Supply shifting left

Answer 5

Fizzy drinks (sugar tax)

Vanilla ice cream as Vanilla price increased greatly

Question 6

PED Inelastic

Answer 6

Cigarettes, Oil, Public Transport, Necessity goods (food)

Question 7

PES Inelastic

Answer 7

Housing, Heathrow & Gatwick airport very little spare capacity

Question 8

YED Normal Goods

Answer 8

Restaurant dining, foreign holidays, designer goods

Question 9

YED Inferior Goods

Answer 9

Fast food, Public Transport

Question 10

Negative externalities in Production

Answer 10

Driving cars, Deforestation, Resource depletion

Question 11

Negative externalities in consumption (demerit goods)

Answer 11

Cigarettes, Alcohol, Chewing gum (on streets)

Question 12

Positive externalities in production

Answer 12

R&D, Childcare

Question 13

Public Good

Answer 13

Street lights, national parks, Roads

Question 14

Indirect Tax to fix Market Failure

Answer 14

Sugar tax, Carbon tax, Plastic tax

Question 15

Subsidies to fix Market Failure

Answer 15

Electric cars, Public Transport subisidies

Question 16

Regulation to fix Market Failure

Answer 16

Smoking bans, ban on smoking advertising, France banned refill of fizzy drinks, fishing quotas

Question 17

State Provision to fix Market Failure

Answer 17

NHS, State schools

Question 18

Tradeable Permits

Answer 18

EU Emission trading scheme

Question 19

Minimum price to fix Market Failure

Answer 19

50p per unit of alcohol in Scotland

Question 20

Max. Price to fix Market Failure

Answer 20

Rent control in New York, Boston. University

Question 21

Perfect Competition

Answer 21

Market stalls, Tuk-Tuk in India

Question 22

Monopolistic Competition

Answer 22

Taxis, Hairdressers, clothing

Question 23

Oligopoly

Answer 23

Supermarkets, mobile phones

Question 24

Oligopoly non-competitive

Answer 24

Energy, Bus companies

Question 25

Monopoly Power

Answer 25

Over 25% market share Google search, Durex, Merlin attractions (own most theme parks such as Alton Towers)

Question 26

Price Discrimination

Answer 26

3rd degree - Uber changing prices at time of inelastic demand

Question 27

Economies of Scale

Answer 27

Energy, Supermarkets, Airlines

Question 28

Profit maximisers

Answer 28

Pharmaceuticals

Question 29

Sales maximisation

Answer 29

Costa to gain advantage on Starbucks. Develop brand loyalty before then profit maximising Netflix in the past. Get customers and people with accounts then profit max.

Question 30

Corporate Social Responsibilities

Answer 30

Body Shop (no animal testing) Ben & Jerries (ingredient sourcing) Starbucks (coffee sourcing)

Question 31

Monopoly Regulation

Answer 31

Price capping on trains Quality control of rail providers (delay maximum per day) Internet providers (not enough speed must compensate)

Question 32

Mergers

Answer 32

Sainsburys and Asda merger blocked by CMA as it was thought it would lead to increased prices

Question 33

Privatisation

Answer 33

Royal Mail

Question 34

Demand for labour

Answer 34

Pilots, Air traffic controllers. Less demand for Bank clerks

Question 35

inelastic demand for labour

Answer 35

Premier League footballers, Footballer

Question 36

Elastic demand for labour

Answer 36

Call centre workers, easily replaceable

Question 37

Monopsony employer

Answer 37

NHS