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Econ micro advanced information > Paper 1 context > Flashcards

Paper 1 context Flashcards

1
Q

What is context on climate change?

  1. What is the impact?
  2. How has UK tried to mitigate this?
  3. What is convincing about climate change?
A
  1. Over the last decade the average temp has been 0.8 degrees warmer
  2. In 2008 UK passed climate change act to reduce emissions by 80%.
  3. The CCC suggests that reaching zero emissions by 2050 will only cost 1% of GDP.
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2
Q

What is the context on carbon tax?

1.What could be the impact of carbon if no intervention.
2.

  1. What would be the benefit of the carbon tax?
A

CARBON TAX PROPOSED BY GREEN PARTY
1-Green Party suggests that 800 million of tonnes of carbon in 2021 were emitted.

  1. The Royal College of physicians report that the cost of air pollution is 22.6 billion.
  2. 80 billion tax revenue can be raised.
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3
Q

What is the context of alcohol?

1-How has a min price been implemented on alcohol?

-2 What is the impact of alcohol on the UK economy?

A
  1. -Alcohol Act in Scotland 2012, minimum 50p

2. Costs NHS of 3.5 billion alcohol.

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4
Q

What is the context of NHS?

  • How much spending is on it?
  • What is the benefits of vaccines?
A
  • Approx 16 billion will go to NHS 2022/2023

- Yearly 6 million working days are lost due to seasonal influenza.

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5
Q

What is the context of University education?

  • What do universities contribute?
  • What is the shortage in higher education?

-What is the average graduate salary

A
  • They contribute 95 billion and 800,000 jobs
  • Skill shortage in UK: Lack of engineer graduates as there is 182,000 more are needed per year to 2022.
  • The median graduate salary is 34,0000
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6
Q

-How can you link Indirect taxes to context?

A
  • Excise duty on fuel is 53 pence per litre

- VAT is 20%, during pandemic hotel sector had 5% reduced rate for supplies.

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7
Q

What is the link of direct provision to context?

A

-Government is set to spend 16 billion NHS 2022/2023

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8
Q

What is the link of provision of information to context?

A

-Traffic light system on food , red amber green.

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9
Q

What is the link to subsidies?

A

-In 2016 891 million was given to subsidise bio fuels

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10
Q

What is the link to regulation intervention?

A

-Government law that you cannot buy alcohol under 18

-

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11
Q

What firm profit maximises? and what did they spend on this?

A

-Apple spends 19 billion a year on R and D

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12
Q

What firm revenue maximises?

A

-Amazon revenue maximises and makes 150 billion and profits have been stable

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13
Q

What firm sales maximises?

A

-Firms that newly have entered the market or if they want to gain market share quickly

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14
Q

What firms may choose to profit satisfice?

A

-Firms that have the principal agent problem eg Enron

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15
Q

What is an example of firms that could show x-inefficiency?

What is an example that could show productive efficiency?

A
  • State owned firms like National rail may worry more about keeping people in employment rather than cutting costs.
  • Shell may operate on lowest ATC point but pollute.
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16
Q

What are three examples of government failure?

A
  • 9% of furlough scheme was fraudulently claimed 5.5 billion.
  • The government has spent 10 billion on tests.
  • The CAP intervened through higher prices for farmers, however this has lead to higher environmental degradation.
17
Q

What is the context of excessive administration costs?

A

-Large amount is spent on NHS purely for administration costs

18
Q

What is the context of unintended consequences?

A

-Was meant to smooth out price fluctuations but actually led to overproduction.

19
Q

What is the context for contestable market?

A

-The Bank industry is getting more contestable through online EGG and Virgin business.
-Government is trying to reduce costs and barriers to switching bank accounts. (The CMA have made this easier), made the switching process easier.
(CASS) current account switching service.

-Uber is an example

20
Q

What is the context for supermarkets being contestable?

A

Contestable

  • New firms like Aldi and Lidl have entered the market.
  • Tesco made profit on 2.4 billion
  • Not contestable
  • Pricing strategies price wars between Asda and Tesco.
  • High sunk costs eg Supermarkets.
21
Q

What is the context for the price mechanism?

A
  • Local COVID impacted supply chains and food price index increased by 7.5%
  • National the high demand in London average house price is 688k
  • In 1973 OPEC put OIL embargoes on USA this caused a disequilibrium between supply and demand which and by rising price this causes those who value it most highly.
22
Q

What is an example of an oligopolistic market in the UK?

A

-The supermarket market is dominated by Tesco, Sainsburys and Asda.
-Tesco have 27%
-Sainbury’s 15.3%
-Asda 14.8%
The big 4 have a firm concentration of 67.1%

23
Q

What is an example of collusion?

A

-Asda colluded with Wiseman dairy to increase the price of diary products. The OFT fined 116 million.

24
Q

How does interdependence link to supermarkets?

A

-If Tesco does a christmas sale by lowering prices

25
Q

What are examples of competition authorities.

A
  • CMA
  • FCA
  • European Commission of competition.
26
Q

What is an example of a merger that was stopped from happening by the CMA?

Why were the CMA concerned?

A
  • Asda and Sainsburys merger 2019.
  • They have a combined total of 2,000 shops in the UK.

-CMA suggested it would lead to higher prices and longer checkout queues for consumers.

27
Q

What are the regulatory bodies?

A

OFWAT- Water

-OFGEM- Energy

28
Q

What is the context of Price regulation?

A
  • RPI-X is used in airports.

- RPI-X+K could lead to sudden price changes

29
Q

What links to monopolies and quality standards?

A

EG Royal Mail must deliver s certain number of letters a and electricity companies are forced to have enough electricity to prevent black outs.

30
Q

How does yardstick competition link to context?

A

-Network rail failed to meet performance of long distance sector 2013-2014.

31
Q

How does promotion of competition through small firm

A

-Enterprise investment scheme and seed investment schemes that provide tax relief for those who invest in small companies.

32
Q

What is deregulation linked to context?

A
  • Deregulation Act 2015.

- Mass deregulation of financial industry decreased leading to poor business behaviour, which led to GFC.

33
Q

What is the context of privatisation?

A

-In 1994 and 1997 the railway was privatised.

34
Q

What is the context that can be used in 3.5.2 supply of labour?

A
  • 182,000 less engineers than required and labour shortages costing 90 billion.
  • Labour immobility (apprenticeship levy) some firms have to pay 0.5% of payroll which goes into an apprenticeship fund.
  • Geographic immobility government can give support to houses as yearly rent is 50% greater than median income.
35
Q

What is a link to profit regulation and context?

A

Government have recently reduced Corp tax from 21% to 20%

Econ micro advanced information (5 decks)

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