Real life examples economics Flashcards
1
Q
Give an examples of a market where asymmetric information could exist.
A
- Health insurance - consumer more info than insurer as they know their health problems
- Second hand car market (used) - seller as they know more about cars and the history of the vehicle.
- Tenants and land lords
2
Q
Give an example of a public bad.
A
- Discrimination in the labour force
- web viruses
- Disposal of waste - disposal of sewage into rivers - impact on the environment/social costs
3
Q
What is the most successful low cost airline?
A
Ryanair - founded 1984
4
Q
What type of economies of scale has Ryanair achieved?
A
- Hyper-efficiency in streamlining operation - using a single aircraft type
- purchasing economies of scale - bargaining power with suppliers - lower fuel prices + maintenance costs.
- Operational efficiencies - outsourcing of ground/baggage handling, investment in IT covering all their digital ticketing and flight planning
5
Q
What is an example of dynamic pricing?
A
Ryanair uses dynamic pricing to maintain a very high passenger load factor (variable demand-led prices online)
6
Q
Give an example of ancillary revenue?
A
extra prices charged for luggage with ryanair
tesla - having to buy charging cable for car
Apple ipad - magic key board + pen
