Market failure
Market failure refers to when a market.....
Does not allocate resources in the most efficient way
The market equilibrium is the optimal allocation for producers and consumers because....
There is no surplus (wasted resources) and no shortage (consumers who would have paid but miss out)
The Formula for PES
Change in QS%
_____________
Change in P%
True or False? All the money made from sales is known as profit
False (Revenue)
Are there high barriers to entry or low barriers to entry in Perfect Competition
Low barriers to entry
Social Cost £7,500,000
Private Cost £235,000
What is the external cost?
7,500,000-235,000=£7,265,000
Class A has 29 students and they produce 43.5 pages of work
Class B has 17 Students and they produce 25 pages of work.
Which class has higher productivity
Class A 1.5 pages per student per hour
Class B 1.47 pages per student per hour
If the PED of a product is 0.353 the good has ________ demand
Inelastic
A firm sells 300 units at £5. It has fixed costs of £200 and variable costs of £1.50 per unit. What is the average profit per unit?
TR=300x5=£1500
TC=200+(1.5x300)=£650
Total Profit= 1500-650=850
Average profit=850 divided by 300=£2.83
Calculate the Market share % for each company in the games console market
Sony-£13.08 billion
Nintendo-£9.88 billion
Microsoft-£3.74 billion
Sony-49%
Nintendo-37%
Microsoft-14%
Using a market diagram for Vapes draw what happens if the government launches a successful public information campaign about the dangers of vaping.
Demand shifts left.
Using a market diagram illustrate a minimum wage that has been applied above the equilibrium wage in the labour market.
Horizontal line above equilibrium showing a surplus of labour (unemployment)
Using a market diagram for electric cars illustrate what happens if there is a new big tax on petrol cars.
Demand shifts right
Using a market diagram for games consoles illustrate the impact of Nintendo, Sony and Microsoft gaining huge economies of scale.
Supply shifts right
place the three market structures in order from most competitive to least competitive.
Most Competitive
PC
Oligopoly
Monopoly
Least competitive
give two external costs of the sale of a petrol car
Noise pollution
Air pollution
Traffic congestion
To hire a specialised worker for 1 month costs Moody's Mail Ltd. £3,075. A general worker costs £1,925 per month.
At the end of the month the specialised worker has completed 500 tasks. The general worker has completed 230 tasks.
Should Moody's Mail Ltd. specialise?
3075 divided by 1925=1.6 (1d.p)
So for the price of 1 specialised worker we could hire 1.6 general workers. Who we assume would complete 1.6 times as much as 1 general worker.
1.6x230=368 tasks
368<500 so Moody's mail should employ specialised workers
Old price: 46.4
New Price:150
Old Quantity demanded: 4
New quantity demanded:1
Calculate the PED
Change in price=(150-46.4)=103.6
as a %=103.6 divided by 46.4=2.23 as a %=223%
Change in QD=(1-4)=-3
as a %= -3 divided by 4=-0.75 as a %=-75%
-75 divided by 223=0.34 (2d.p)
A firm sells 750 units at £8.50. It has fixed costs of £720and variable costs of £4.80 per unit.Calculate the average profit.
TR=750x8.5=£6375
TC=720+(4.8x750)= £4320
Profit=6375-4320= £2055
average profit=2055 divided by 750=£2.74
Give two cause of monopolistic power
Economies of scale
Patent
Legislation/nationalisation
Sole ownership of a key resource
Merger
List 3 ways a government could fix the market failure caused by a positive externality
Tax a substitute
Subsidise the good/service
Provide the good/service for free
Public information campaign
Legislation
What is the difference between division of labour and specialisation.
Division of labour is splitting a more complex task into smaller parts whereas specialisation is gaining expertise in a task through repetition increasing efficiency.
Why is the demand curve downward sloping?
Income effect
Substitution effect
What is the difference between opportunity cost and financial cost.
Financial cost is your total spent fixed and variable costs whereas opportunity cost is the next best alternative you could have spent/saved/invested that time and money in.
The CMA are the market regulator if you see price fixing or unfair business practices what is the number to call?
020 3738 6000