25 mark essay plans

Evaluate the impact of rising energy bills on an industry of your choice

(aviation industry)

1. Increase in AVC short term (link to shutdown point)

Evidence - Jet fuel increased by 2x US since the Iran US war began

Evaluation - long term vs short term

2. Fall in contestibility (small firms are forced to exit)

Evidence - Spirit airlines collapsed

Evaluation - government intervention

Evaluate the level of contestibility in an industry of your choice

(aviation industry)

1. High fixed costs and sunk costs

Evidence - 62.5% 5 firm ratio

Evaluation - firms can lease planes

2. Low barriers to entry in regulation

Evidence - Ryan air and easy jet

Evaluation - brand loyalty

Evaluate government intervention to control household energy bills

1. Subsidies

Evidence - CfD renewable energy

Evaluation - elasticity

2. Maximum prices

Evidence - Ofgem price cap

Evaluation - fall in quality

Evaluate government intervention to reduce carbon emissions

1. Indirect tax

Evidence - fuel 57p per litre

Evaluation - elasticity

2. Subsidies

Evidence - CfD

Evaluation - EV batteries still pollute (lithium)

Evaluate whether a monopoly is likely to operate efficiently

1. No allocative efficiency

Evidence - Debeers restricting supply using London vaults

Evaluation - government intervention

2. Dynamic efficiency

Evidence - Debeers mining technology

Evaluation - inverted U hypothesis no incentive to innovate

Evaluate factors that influence the supply of labour

1. Migration

Evidence - 36-50% received their qualification outside of the UK

Evaluation - depends on the cause of the migration

2. Education

Evidence - medicine degree takes 5 years

Evaluation - short vs long term

Evaluate the disadvanantages of an increase in the NMW for a specific labour market

1. Increase in AVC (refer to shut down point)

Evidence - 10-20% of costs in the retail market are wages

Evaluation - depends on the previous NMW (could increase productivity)

2. Fall in employment/hours (back bending supply curve)

Evidence - retail

Evaluation - depends on non monetary incentives

Evaluate the consequences of increased market concentration referring to industries

1. Monopoly power (welfare loss) also link to price discrimination

Evidence - De Beers 1988-2000 80-90% diamonds restricted quantity

Evaluation - dynamic efficiency, long term, government regulations

2. Collusion

Evidence - British airways + others air cargo fuel surcharges

Evaluation - repercussions 270M

Evaluate the effects of consumers shifting from oil to electric

1. Fall in negative externalities

Evidence - Tesla

Evaluation - lithium batteries

2. Fall in tax

Evidence - fuel duty 57p

Evaluation - removal of NHS costs

Evaluate the effects of a monopsony operating in a market such as book retailing

1. Lower revenue for suppliers

Evidence - Supermarkets paying below COP for milk

Evaluation - GCA created to stop this

2. Fall in quality due to fall in profit

Evidence - Milk lower nutritional value due to lower quality feed

Evalutation - depends on extent of monopsony

Evaluate why wage differentials exsist in the labour market

1. Skills (link to MRP and education)

Evidence -

Evaluation - government subsidies

2. Geographical differences (agglomeration)

Evidence - North 1 job South 12

Evaluation - depends on the occupation

Evaluate the reasons behind why some firms engage in collusive behaviour

1. Higher price and lower quantity

Evidence - British airways + other airlines air cargo fuel surcharges

Evaluation - charged 270m fine

2. Maintain market share and avoid price wars

Evidence - ryan air and easy jet price war 2010

Evaluation - kinked demand prices remain rigid anyways

Evaluate whether a high market share is in consumer interest

1. Welfare loss and low competition

Evidence - De Beers 80-90% market share 1988-2000 restricting quantity

Evaluation - depends on the market government intervention

2. Natural monopoly

Evidence - national rail

Evaluation - depends on whether the economies of scale are passes onto consumers through higher prices

Evaluate the costs of nationalisation on a particular industry

1. Lower competition

Evidence - national rail

Evaluation - quotas, quality standards

2. Financial burden on tax payers

Evidence - national rail

Evaluation - benefits everyone broader basis

Evaluate the benefits of nationalisation on a particular industry

1. Allocative efficency

2. Natural monopoly