Micro Examples for literally everything (A* Content) Flashcards
Basic Economic Problem
Water Scarcity:
India, South Africa, Middle East
Food Scarcity Worldwide
Demand Shift Right
Spanish Holidays demand increasing
Commodities Oil
Loungewear during COvid
Demand Shift Left
Student Housing - as it gets more expensive
Print Newspapers
Supply shift right
Subsidisation of Indian Gas, fuel, rice
Air Travel
Supply Shift Left
Fizzy Drinks from the sugar tax
Gas/Electricity supply
PED Inelastic
Addictive: Cigs, Alcohol, Sugary Drinks, Fast Food
Necessity: Public Transport, IPhone
PES Inelastic
Basic Commodities
GAs Electricity
Housing
HEathrow/Gatwick
XED Complements
Nepresso Machines/Capsules
Printers/Ink
Games Consoles/Games
XED Substitutes
Fast Food Burgers
YED Normal Goods
Restaurant DIning
Holidays
Designer
Theatre
YED Inferior Goods
Fast Food
Public Transport
Staycation
Own Brand items
Obesity Market Failure
20% of all 10-11 year olds are obese
25% adults obese
Cost to NHS of obesity
£16bn cost NHS a year
Sugar Tax impact
Cut sales by around 10% in the first year
PED of Cigarettes
-0.8 to -0.6
Cost of Cigarettes to the NHS
£3-6bn a year
Cost of Alcholic Drinks to NHS and general society
NHS £3-5 billion
Soceity £21 billion for police and more
PED Beer
-0.3 and -0.7
but wine and spirits are more elastic (goes beyond 1)
Gambling cost to society
£1.2 billion - anxiety, crime, depression
Cost of Road COngestion to UK society
Lost output and productivity costed £20 billion a year
Air pollution compared to Sweden and US
64 times more likely to die of air pollution than Sweden and twice than US
Cost of providing education + Health
£80 billion a year
£110 billion a year
2/7 of entire budget
instead of increasing supply, possibly reducing excess demand through digital health or role of private sector
Public Goods
Flood Defences, Roads, Bridges, Beaches, Traffic Sings, Street Lights
Regulation
Ban on Smoking Advertising
Ban on refilling sugary drinks (France)
Forced negative advertising on cigarettes
Traffic Light System
Fishing Quotas in EU
Alcohol minimum price in Scotland
10% fall
Maximum price cap
Energy price cap by Theresa May
Perfect Competition
Market Stalls, Tuk Tuks
Monopolisitic Competition
Taxis, Clothing, Restaurants, Hotles, Coffee Shops, Hairdressers
Oligopoly (competitive)
Supermarkets, Soft Drinks, Car, Mobile Phones
Oligolpoly (non-competitive)
Energy, Supermarket, US Domestic Airline
Monopoly Power
Google Search - 93%
Durex - 80%
Merlin Attractions
3rd Degree Price Discrimination
Rail, Airlines, Uber, Hotels
Natural Monopoly
Rail, Infastructture, Utilities
Contestable Markets
Taxis, Hotles, Fast Food, Airlines, Parcel Delivery, Streaming
Loss Making Companies
Blackberry, Prezzo
Economies of Scale
Energy, Supermarkets, Airlines, Tech Firms, Online Retailers
Profit Maximisation
Pharmaectuicals, Electronics
Sales Max (growth max)
Costa (UK) Netfllix, Amazon, Spotify
CSR
Disney, Starbucks (suppliers pay), Microsoft (Gates Foundation), Lush (no animal testing)
RPI
Trains, Gatwick
RPI - X
Heathrow landing charges
RPI -/+ K
Water
Quality Control
Railways (lateness), Internet (speeds), Energy (can’t cut vulnerable)
Merger Regulation
Activision and Blizzard stopped
Privatisation
Royal Mail 2013
Railways 1992
Deregulation
Airlines 1990s
Nationalisation
Proposed nationalisation of railways, energy and royal mail
Demand for Labour increasing
Pilors, Child Minders, APp Developers
Demand for Labour decreasing
Bank Clerks, Advertising Agency (due to increasing costs)
WED Labour Inelastic
Premier League Footballers, Plumbers, Electricians
WED Labour Elastic
Call Centre
(tech and big cosst)
Supply of Labour left
low skilled work after brexits
WES Labour - inelastic
Doctors, ENgineers, Accountants, Pilots, Lawyers
WES Labour - Elastic
Travel Agents, Waitress, Driving Instructors
Monopsony Employer
NHS, State Schools, Walmart, McDonalds
Policies to Redistribute Income
Australia - 2018 raised marginal tax band 45% –> 47%
Transfer Payments - Corbyn proposal to remove cap and implementing new benefits
Hunt £3.3 billion to NHS + £2.2 billion for education
Rising Minimum Wage to £10.90
What is the CMA investigating about fuel
IF petrol and diesel prices are too slow to fall when wholesale prices fall
How does the market structure of fuel contribute to sticky prices
Kinked Demand Curve -predicts sticky prices
Example of agglomeration external economies of scale
- Silicon Valley, California
- Napa Valley California (winemaking)
- Financial Services in the City of London
Examples of economies of scale that larger hotel chains in the UK benefit from
- Bulk Purchasing
- Technology - invest in centralised reservation systems
- Marketing and Branding
Monopoly Power and Insulin Prices
Marginal Cost around $4 (according to American Medical Association)
Average Price of a vial of insulin is $540 in 2019
Market Share of Insulin Manufacturers
Eli Lilly: 46%
Novo Nordisk: 31%
Sanofi: 23%
3 firm concentration ratio of 100%
Why are insulin prices so high in the US?
- Lack of price regulation
- Complex Supply Chain means lots of added profit mark ups
- Patent protections allow a legal monopoly
- High FIxed costs of research and development
Why are insulin prices lower in the EU?
- Price Regulation for insulin
- Monopsony Power Eu negotiates prices for member states
- Patent Lws in the US are longer
Bidens price cap and pressure
price cap for elderly on state program
Eli Lily cut insulin prices by 70%
How does Ryanair improve profitability
- Hedge against world oil prices
- Aim to drive mc down to 30 euros (exc. oil)
- Oursourcing ground maintenance
- Purchasing economies of scale
- Single Fleet - standardisation
How does Ryanair increase it’s load factor
Utilising dynamic pricing to fill as many seats as possible
2018 - 96% of flights full
Deregulation of Parcel Services
Royal Mail lost legal monopoly, increased compeition has led to an increase in the number of parcel delivery companies
Rise of Challenger Banks
Monzo: digital-only bank offers currenty accounts, credit cards and personal loans
Revolut: digital only bank
Starling Bank and Atom Bank
State owned industries in the UK
Network Rail
Channel 4
National Air Traffic Service
Ordnance Survey
NHS
Network Rail
Responsible for maintaining and operating the rail infastrucutre in the UK
NATS
Public-Private parnetship in managing safe and efficient flow of air traffic in UK airspace
Telecoms Market Share
BT, Sky and Virgin Media top 3 control 75%
2020 Virgin Media and 02 merger
combine 2nd largest broadband network with it’s largest mobile operator
How do telecoms compete
- Competition on monthly tariffs
non-price:
2. Length of Contracts
3. Bundling of services
4. Free vouchers, free calls
5. Quality and reliability of network connections
6. Quality of customer service
Broadband and universal credit
Heavily discounted prices around (15-20) compared to average of £79
Telecom infastructure providers
Mostly Virgin and BT
Alt-nets
Increasing market contestability from ‘alt-nets’ in specific towns and cities
e.g. CiityFibre, Hyperopttic, Gigaclear and Community FIbre
Utilise fibre optic technoloy - tiny threads of grass to carry modulated light along exisitng undergroudn pathways
4% of UK businesses now have access to 2 or mroe fibre optic networks
CityFibre
Backed by £4bn from Goldman Sachs; 3rd largest network infastrucutre
FTP (Fibre to The Premises) to millions
Ofwat regulatory failure
capital investment has fallen since nationalisation
(fell by 15% from 2020-21)
Only ‘9% of rivers, lakes and coastal waters meat the minimum ‘good ecological status’
Borrowed £53 billion used to pay £72 billion in dividends
