Paper 1 context

Question 1

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?

Answer 1

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.

Question 2

What is the context on carbon tax?

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

3. What would be the benefit of the carbon tax?

Answer 2

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

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

Question 3

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?

Answer 3

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

2. Costs NHS of 3.5 billion alcohol.

Question 4

What is the context of NHS?

• How much spending is on it?
• What is the benefits of vaccines?

Answer 4

• Approx 16 billion will go to NHS 2022/2023

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

Question 5

What is the context of University education?

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

-What is the average graduate salary

Answer 5

• 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

Question 6

-How can you link Indirect taxes to context?

Answer 6

• Excise duty on fuel is 53 pence per litre

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

Question 7

What is the link of direct provision to context?

Answer 7

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

Question 8

What is the link of provision of information to context?

Answer 8

-Traffic light system on food , red amber green.

Question 9

What is the link to subsidies?

Answer 9

-In 2016 891 million was given to subsidise bio fuels

Question 10

What is the link to regulation intervention?

Answer 10

-Government law that you cannot buy alcohol under 18

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Question 11

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

Answer 11

-Apple spends 19 billion a year on R and D

Question 12

What firm revenue maximises?

Answer 12

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

Question 13

What firm sales maximises?

Answer 13

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

Question 14

What firms may choose to profit satisfice?

Answer 14

-Firms that have the principal agent problem eg Enron

Question 15

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

What is an example that could show productive efficiency?

Answer 15

• 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.

Question 16

What are three examples of government failure?

Answer 16

• 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.

Question 17

What is the context of excessive administration costs?

Answer 17

-Large amount is spent on NHS purely for administration costs

Question 18

What is the context of unintended consequences?

Answer 18

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

Question 19

What is the context for contestable market?

Answer 19

-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

Question 20

What is the context for supermarkets being contestable?

Answer 20

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.

Question 21

What is the context for the price mechanism?

Answer 21

• 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.

Question 22

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

Answer 22

-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%

Question 23

What is an example of collusion?

Answer 23

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

Question 24

How does interdependence link to supermarkets?

Answer 24

-If Tesco does a christmas sale by lowering prices

Question 25

What are examples of competition authorities.

Answer 25

- CMA - FCA - European Commission of competition.

Question 26

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

Answer 26

- 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.

Question 27

What are the regulatory bodies?

Answer 27

OFWAT- Water | -OFGEM- Energy

Question 28

What is the context of Price regulation?

Answer 28

- RPI-X is used in airports. | - RPI-X+K could lead to sudden price changes

Question 29

What links to monopolies and quality standards?

Answer 29

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

Question 30

How does yardstick competition link to context?

Answer 30

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

Question 31

How does promotion of competition through small firm

Answer 31

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

Question 32

What is deregulation linked to context?

Answer 32

- Deregulation Act 2015. | - Mass deregulation of financial industry decreased leading to poor business behaviour, which led to GFC.

Question 33

What is the context of privatisation?

Answer 33

-In 1994 and 1997 the railway was privatised.

Question 34

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

Answer 34

- 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.

Question 35

What is a link to profit regulation and context?

Answer 35

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