Paper 1 context Flashcards
What is context on climate change?
- What is the impact?
- How has UK tried to mitigate this?
- What is convincing about climate change?
- Over the last decade the average temp has been 0.8 degrees warmer
- In 2008 UK passed climate change act to reduce emissions by 80%.
- The CCC suggests that reaching zero emissions by 2050 will only cost 1% of GDP.
What is the context on carbon tax?
1.What could be the impact of carbon if no intervention.
2.
- What would be the benefit of the carbon tax?
CARBON TAX PROPOSED BY GREEN PARTY
1-Green Party suggests that 800 million of tonnes of carbon in 2021 were emitted.
- The Royal College of physicians report that the cost of air pollution is 22.6 billion.
- 80 billion tax revenue can be raised.
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?
- -Alcohol Act in Scotland 2012, minimum 50p
2. Costs NHS of 3.5 billion alcohol.
What is the context of NHS?
- How much spending is on it?
- What is the benefits of vaccines?
- Approx 16 billion will go to NHS 2022/2023
- Yearly 6 million working days are lost due to seasonal influenza.
What is the context of University education?
- What do universities contribute?
- What is the shortage in higher education?
-What is the average graduate salary
- 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
-How can you link Indirect taxes to context?
- Excise duty on fuel is 53 pence per litre
- VAT is 20%, during pandemic hotel sector had 5% reduced rate for supplies.
What is the link of direct provision to context?
-Government is set to spend 16 billion NHS 2022/2023
What is the link of provision of information to context?
-Traffic light system on food , red amber green.
What is the link to subsidies?
-In 2016 891 million was given to subsidise bio fuels
What is the link to regulation intervention?
-Government law that you cannot buy alcohol under 18
-
What firm profit maximises? and what did they spend on this?
-Apple spends 19 billion a year on R and D
What firm revenue maximises?
-Amazon revenue maximises and makes 150 billion and profits have been stable
What firm sales maximises?
-Firms that newly have entered the market or if they want to gain market share quickly
What firms may choose to profit satisfice?
-Firms that have the principal agent problem eg Enron
What is an example of firms that could show x-inefficiency?
What is an example that could show productive efficiency?
- 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.
What are three examples of government failure?
- 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.
What is the context of excessive administration costs?
-Large amount is spent on NHS purely for administration costs
What is the context of unintended consequences?
-Was meant to smooth out price fluctuations but actually led to overproduction.
What is the context for contestable market?
-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
What is the context for supermarkets being contestable?
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.
What is the context for the price mechanism?
- 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.
What is an example of an oligopolistic market in the UK?
-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%
What is an example of collusion?
-Asda colluded with Wiseman dairy to increase the price of diary products. The OFT fined 116 million.
How does interdependence link to supermarkets?
-If Tesco does a christmas sale by lowering prices
What are examples of competition authorities.
- CMA
- FCA
- European Commission of competition.
What is an example of a merger that was stopped from happening by the CMA?
Why were the CMA concerned?
- 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.
What are the regulatory bodies?
OFWAT- Water
-OFGEM- Energy
What is the context of Price regulation?
- RPI-X is used in airports.
- RPI-X+K could lead to sudden price changes
What links to monopolies and quality standards?
EG Royal Mail must deliver s certain number of letters a and electricity companies are forced to have enough electricity to prevent black outs.
How does yardstick competition link to context?
-Network rail failed to meet performance of long distance sector 2013-2014.
How does promotion of competition through small firm
-Enterprise investment scheme and seed investment schemes that provide tax relief for those who invest in small companies.
What is deregulation linked to context?
- Deregulation Act 2015.
- Mass deregulation of financial industry decreased leading to poor business behaviour, which led to GFC.
What is the context of privatisation?
-In 1994 and 1997 the railway was privatised.
What is the context that can be used in 3.5.2 supply of labour?
- 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.
What is a link to profit regulation and context?
Government have recently reduced Corp tax from 21% to 20%
