Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business and Economics A2 > Unit 4B- case study questions > Flashcards

Unit 4B- case study questions Flashcards

1
Q

how much is the external cost of smoking costing the NHS?

A

£2.5-£6BN a year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

name 5 ways the government have intervened to try and reduce the market failure associated with tobacco?

A

…increased taxation levels on tobacco.
…banned smoking in public places.
…cannot advertise tobacco based products.
…created anti-smoking campaigns.
…cannot sell to people under the age of 18.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

if you increase taxation levels on tobacco products, what type of tax is it?

A

regressive tax- it will affect lower income earners more.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

give 3 pros/cons of smoking e-cigarettes?

A

pros:
…less negative externalities.
…reduced external cost to NHS.
…healthier substitute-95% more healthy.
…reduces market failure associated with tobacco products.

Cons:
…lack of information available.
…do not know the true cost to society.
…a study from Hong Kong suggested that e-cigarette consumption contains 1 million times more cancer substances than outdoor air.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what is a merit good?

A

a good that benefits society.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

what is a public good?

A

a good that can be used by anyone in society. i.e. a streetlight.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

what are the two types of efficiency?

A

allocative efficiency- supplying goods/services to meet customers needs/wants.
productive efficiency- when products are produced at the lowest possible cost.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

define market failure?

A

market failure occurs when there is a overconsumption of merit goods and under consumption of demerit goods.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what is a externality?

A

a third party spill over affect in production or consumption of a good.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

describe 3 days in which the tobacco market can fail?

A

negative externalities.
external cost- NHS.
market structures.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

name 4 private costs of tobacco consumption?

A

…bad health.
…cost of cigarettes.
…appearance i.e. teeth and fingers.
…additional.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

name 4 external costs of tobacco consumption?

A

NHS COST (£2.5-£6)
2nd hand smoking
lost output
cigarettes breaks.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

external benefits to society of tobacco consumption? (give 3)

A

…revenue to manufactures.
…job creation.
…helps out local/small shops for sales.
…tax revenue for government- which can be put into education.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

give 5 strategies the government can use to reduce the market failure?

A

…protectionist policies- taxation.
…education- educate people about the health risks.
… legislation- no smoking in public places.
..subsides- a grant by the government to help lower the price and increase supply.
…anti- smoking campaigns.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what is COBA (Cost Benefit Analysis)

A

is an appraisal strategy to calculate the social costs and social benefits to society.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

what is the flow of income?

A

measures the income that is spent in the economy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

name 3 injections in the circular flow of income? (going into businesses)

A

…investment.
…government spending.
…exports.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

name 3 leakages that goes into the circular flow of income? (goes out of houses/incomes)

A

…savings.
…imports.
…taxation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

what is aggregate demand?

A

is the total demand in the economy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

what is aggregate supply?

A

is the total amount supplied in the economy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

give 3 factors that will lead to more aggregate demand in the economy?

A

…cutting interest rates.
..cutting income taxation.
…raising incomes- more money to spend.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

give 4 reasons in how to reduce negative externalities?

A

…regulations.
…environmental- pay polluters not to pollute.
…taxation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

what are the 3 types of government polices?

A

…Fiscal.
…Monetary.
…Supply side.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

describe what the “Fiscal policy” is?

A

changing the rate of interest to influence the amount of (AD) in the economy. It uses government government, taxation and borrowing to change the patterns of demand in the economy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

describe what the “Monetary Policy” is?

A

the use of interest rates ad the supply of money to achieve macro-economic objectives. It’s main objective is changing the interest of AS,

26
Q

give 4 reasons how the UK government currently legislate tobacco?

A 
...taxation levels (77%)
...anti smoking campaigns.
...cannot promote smoking.
....age restrictions.
...the three government policies are implemented.
27
Q

what are the smoking trends for people in the UK? (what % of people smoke)

A

2014- 20% of men smoked.
2014- 14% of women smoked.
2014- the most common smoking age is between 20-24 at 26%, due to social life/fashion.
8% of 15 year olds smoke at least once a week (WHO)

28
Q

what is the difference between equality and equity?

A

equality- making sure everyone is treated fairly and no less favourable.
equity- the quality of being fair and impartial or either, the values of shares issued in a company.

The difference is equity makes sure everyone is equal on common grounds, whereas equality makes sure everyone is treated fairly.

29
Q

what are the two types of poverty?

A

absolute and relative.

30
Q

what are the costs of poverty? (give 4)

A

…the government paying out benefits to support these people.
…increased in social cost- anti social behaviour i.e. crime.
…unemployment levels increase- less disposable income to be spent in the economy.
…less opportunities in jobs- as they have no education or qualifications.

31
Q

what is a regressive tax?

A

takes a higher proportion of lower income earners money. i.e. taxation levels increased on cigarette packs.

32
Q

what are the benefits of tobacco consumption? (give 3)

A

…tax income from tobacco sales is £12BN, which can be used to help reduce the budget deficit.
…tobacco firms create jobs for the UK, which lowers unemployment levels (circular flow of income).
…benefits local/smaller firms for the sales.

33
Q

what are the benefits and negatives of raising taxation levels on tobacco consumption? (give 2 each)

A

benefits:
…good source of tax revenue for the government.
…should make consumers switch to alternatives such as e-cigarettes, which contain less negative externalties which should reduce the external costs.

negatives:
…could increase shadow markets from countries such as France (Evidence I).
…regressive tax leads to greater inequality, 39% of people would see on effect on this who smoke currently.

34
Q

give 4 external costs of smoking tobacco/cigarettes?

A

…absenteeism- less output as people have breaks/days off work.
…smoking can be seen as a “gateway drug”.
…passive smoking- affects people around you.
…the cost of litter (£13m a year)
…cost to the NHS of treating patients (£2.5-£6BN a year).

35
Q

how is it hard to reduce the consumption of tobacco based products? (give 3 reasons)

A

…price inelastic good, therefore if taxes were raised consumption would fall by less than proporitatly.
…addictive.
…

36
Q

give 2 benefits and cons of banning smoking in public places?

A

benefits:
…reduces 2nd hand smoking consumption.
…more non-smokers may go to leisure attractions i.e. pubs, as no one is smoking anymore-multiplier effect.

negatives:
…people may smoke in other places, i.e. their houses, effecting their children’s health.
…less spending in the economy.
…reduced productivity, as they need cigarette breaks i.e. work.

37
Q

give 2 benefits and cons of smoke free campaigns?

A

benefits:
…it informs people about the true cost of smoking.
…in can help educate the uneducated and the vulnerable groups.
…encourage people to quit, its a cheap/quick process.

negatives:
…inelastic good, therefore may be a waste of time.
…people could rebel- i.e. the younger groups.
…opportunity cost.

38
Q

give 5 facts i could use for smoking related illnesses?

A

…over 100,000 deaths in the UK are smoking related.
…over 9500 children are administrated to hospital each year.
…treating smoking related patients costs the NHS £50million a week.

39
Q

name 5 things that are bad about e-cigarettes?

A

…relatively new product product- so dont know true cost to society.
…e-cigarettes still contain nicotine.
…the batteries of e-cigarettes have been known to explode.
…banned in several public places.

40
Q

what is government failure? and give 2 examples in terms of tobacco?

A

it occurs when a policy intervention leads to deeper market failure.

i.e. when the government banned smoking in public places, lead to a lose in pub revenue and spending in the economy.
…as they keep increasing taxation, could lead to further black markets.

41
Q

what is a direct tax and give 2 examples?

A

a direct tax is one that directly takes your income, and goes straight to the government. i.e. corporation and income tax.

42
Q

why does the government intervene? (give 3 reasons)

A

…to correct the market failure.
…protect the publics interest.
…to reduce social costs i.e. negative externalties.

43
Q

what is the difference between income tax and indirect taxes?

A

income tax reduces inequality i.e. progressive tax.

indirect tax increases inequality i.e. regressive tax.

44
Q

give 2 examples of an indirect tax?

A

VAT & excise duty.

45
Q

what is the poverty trap?

A

you will receive more money from the government in benefits than you would in that specific job.

46
Q

give 3 policies the government could obtain to reduce the poverty trap?

A

…increase minimum wage.
…cap max benefits.
…tax threshold.

47
Q

give 2 problems associated with the poverty trap?

A

…inequality could increase, as it makes it harder to get a job. Therefore, unemployment levels rise and tax revenue decreases.
…high unemployment could be a serious issue for the UK government.

48
Q

what are the 4 main objectives of the UK government in terms of controlling the economy?

A 
Macroeconomics
...low/steady inflation rates.
...sustained economic growth.
...keep unemployment low.
...BOP- keep sustained.
49
Q

what does supply side policy affect, AS or AD?

A

AS

50
Q

what is the difference between an expansionary policy and a contractionary policy?

A

Expansionary- increase government spending, lower tax and percentage levels to help stimulate growth.
contractionary- is the opposite.

51
Q

why does the government redistribute wealth/income? (give 5 reasons)

A

…reduce inequality.
…reduce absolute and relative poverty.
…

52
Q

what are the issues with unemployment and what government policy would you use to prevent further levels?

A

…you would prevent it by using a expansionary policy- as it will cost economic growth and government spending to these people.

…less GDP in the economy.
…more government spending on education/welfare.

53
Q

define the 3 government polices?

A

Monetary- uses interest rates to influence levels of AD.
Fiscal- changing taxes to government expenditure.
Supply side- they are designed to increase productivity, and the supply in the economy.

54
Q

what is a demerit good?

A

goods are over provided by the free market. i.e. smoking, alcohol and gambling.

55
Q

what is a cartel?

A

an agreement between several businesses to reduce competition.

56
Q

what is a subsides?

A

A subsidy is an amount of money given directly to firms by the government to encourage production and consumption. A unit subsidy is a specific sum per unit produced which is given to the producer.

57
Q

what is external benefits?

A

a side effect which is enjoyed by the third party.

58
Q

what is the equation for social costs?

A

SC=PC+EC

59
Q

give 3 reasons how education could help reduce the market failure?

A

…tackles the imperfect information.
…educate people about the true cost to society.
…allows people to make a more informed decision.

60
Q

what business should i use when talking about cigarettes firms?

A

BAT (british American Tobacco)

61
Q

define economic growth?

A

an increase in the amount of goods/services produced per head of the population over a certain period of time. It is measured by GDP.

62
Q

describe 3/4 ways in how the government failures in this market?

A

…taxation level on tobacco- regressive tax, leading to further inequality.
…banning smoking in public places, could lead to lose of revenue for some businesses such as pubs.
…could be more smokers in the long term, if they prescribe e-cigarettes i.e. vulnerable groups.
…increased taxation- can lead to further black markets/smuggling.

Business and Economics A2 (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions