Real life examples Flashcards
Example of Scarcity
Water in india. Prices have increased significantly, high demand from population growth
Example of demand shift left
Demand for peloton bikes has fallen due to reports of dangerous design faults
Example of demand shift right
Electric cars
Example of supply shift right
Subsidies on fuel to reduce costs of production for producers in INDIA
Example of supply shift left
Uk subsidies for home solar panels ended in 2019
Example of price inelasic demand
Pharmaceutical firms increasing prices of essential medicines given patent protection and profit motives; Pfizer
Example of price elastic supply
Covid vaccine manufacturers responded quickly
Example of compliment goods (XED)
Printers and printer ink
Example of subsititute goods
Coke and pepsi
Example of normal goods
Holidays
Example of inferior goods
Margerine
Example of indirect taxes, having negative consequences
Fuel duty in France in November 2018, met with mass protest, not passed
Example of subsidy
Inluenza vaccinations in hong kong
Example of min price,to protect primary commodity producers
Cocoa in Ghana, as of 2024 it is $1.62/kg.
NO INTERVENTION BUYING, instead farmers suplemented with income top up
Example of max. price
Basic food items in Venezuela / rent control in NY
Example of negative externalitiesin conusmption
Smoking cigarretes
Example of positive externalities
Physical exercise
Example of de-merit goods
Red meat, over consumed, risk of diabetes
Example of merit goods
Education
Example of public goods
Flood defences
Example of common acces resources
Deforestation in Kuala Lumpur.
Malaysia lost 15% of its forest coverage since 2000
Example of indirect tax to solve overconusmption / overproduction market failure
UK Sugar tax. Made 50% of companies change their recipes to ensure sugar volumes fell below tax threshold
Example of subsidies to solve market failure
Museums in UK since 2001 to provide free entry. Can be considered merit goods
Example of regulation to solve market failure
Plastic Waste in UK ; banning plastic straws
Example of state provision to solve market failure
The NHS, costs taxpayer between £150bn and 200 bn a year
Example of tradeable pollution permits to correct market failure
The Emissions Trading Scheme (ETS)
in the EU.
Since introduction in 2005, carbon emisions have fallen and are 21% lower in 2020
Example of minimum pricing to solve negative externalities in consumption market failure
Alcohol in scotland
Min price of 50p per unit of alcohol to reduce consumption.
Reduced consumption by around 8%
Excess revenue kept by retailers
Example of maximum pricing to solve market failure
Rent control in NY
Examples of Goverment failure
Black market for cigarretes in UK worth £2bn a year
Long wait times at NHS
Example of law of diminishing marginal returns
Coffee shops, land and capital are fixed, if over employ staff
Example of EOS
Airline industry; purchasing economies of airoplanes
Example of DEOS
Failure of Thomas Cook travel agency due to ineffective control from management
Example of profit maximisation
Pfizer, given strong research costs
Example of profit satisficing
in 2018, Walmart reacted to Donald Trumps cooporation tax cut by paying workers higher wages
Example of revenue maximisation
1996 Rupert Murdoch reduced price of The Times to 10p on mondays to drive at compeition, selling at loss.
Example of sales maximisation
Costa Coffee in UK with aim to get ahead of rival Starbucks by opening more stores
Facebook when it was initially founded
Example of survival
New firms entering UK fast food market such as Five Guys, short term objective to survive
Example of CSR
The Body Shop dont test on animals
Example of perfect competition
Tuk Tuks in india however there is slight barrier to entry
Example of competitive markets
Airline travel since deregulation in 1990s in UK
Example of monopoly power
Google, global market share of 92%
Example of natural monopoly
Water companies in UK, regulated by Ofwat
Example of First degree price discrimination
Amazon in 2005 were found guilty using cookies
Example of third degree
Uber using Surge pricing
Example of Monopolistic competition
Clothing market in UK. theory suggest no DE however is nature of comp
Example of Oligopoly, price competition
UK supermarket industry, top four firms control 70%, price wars and price matching schemes
Example of Oligopoly, non-price competition
Global soft drink industry; ‘duopoly’ Coke and pepsi control 70%. Compete on non-price factors
Example of Oligopoly, price fixing cartel (overt collusion)
truck maker Scania fined in 2017 for organising price fixing cartel
Example of Oligopoly, price leadership (tacit collusion)
Big six energy companies in UK control 94% of market. Rarely seen price compeition and lots of time seen price following
Example of lowering barriers to entry increasing competition contestable markets
Global hotel market due to entry of AirBnB, technology allowed
Example of monopoly regulation, price caps
UK energy price cap; from 2019 prices for energy on variable rate tariffs have been capped by OFGEM
Example of monopoly regulation, performance targets
Train companies limiting length of conusmer delays
Example of monopoly regulation, merger policy
in 2018 ASDA and Sainsburys wanted to merge, getting 30% market share.
CMA blocked
Example of monopoly regulation, regulatory capture
Boeing accepted fault for 2 fatal crashes in 2019, but made agreement with US government making them imune from legal prosecution by paying 2.5bn in fines
Example of privatisation
Royal mail in october 2013, before was loss-making
Raised 2 billy for gov, strict regulation from Ofcom
11,000 jobs were lost in 3 years prost privitisation
Example of deregulation
EU open skies
Airline deregulation in 1990s
UK bus market in 1980s, ended with Oligopolies
Example of nationlisation
Uk Railways labour party has suggested they get nationalised
Example of monopsony employer
NHS staff UK
Example of trade unions
TU density in UK was 22.3% in 2022 compared to 50% in 1970s
