Economics Real life examples by Phi Long Bui : Sheet1

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Real life Examples by Phi Long Bui Follow me on Insta:
2 Microeconomics
either allocate more resource for Ipad instead of iphones (single firm PPC), or choose between more food or housing
3 trade-offs by society
(country ppc). Choose to create between capital good or consumer goods
4 inward shift in PPF Flooding in Indonesia. Droughts in Irelands causing potatoe famine in 1850
5 commodities Grain, oil beef, electrcity, potatoes
Increase in advertising-caused demand to increase for yeezy shoes in Poland. Population increase (tourism in iceland)
6 demand increase
increased demand for housing. Increase in price of Colacola causes increase in demand for pepsi
Irelands potatoie famine in 1850, decreased supply. Increase in taxation (cigarettes in singapore by 3% specifc tax),
7 supply decrease
Louisiana oil spill decreased supply of seafood.

8 elastic PED products Luxury car, luxry products, Louis Vuitton, Iphones, Tesco breads
9 inelastic PED products Cigarettes, neccesities foods such as salt and Oils
10 elastic YED normal products luxury cars (Mercedes instead of Polonez)
11 inelastic YED normal products necessity goods (Fods such as sal and cooking oil)
12 YED inferior products Inferior: second hand goods. Market of badoxx shoes decreased (low quality shoes)
13 positive XED - substitutes Pepsi and coca cola
14 negative XED - complements hot dogs and hot dog buns. Playstation and playstation games
15 elastic PES products Manufactured goods (Iphones, playstation, cars)
16 inelastic PES products Primary commodities- wheat, potatoes
Specific tax: Singapore excise tax for cigarettes. Fat Tax in India. Ad volorem tax: 6% excise tax for soft drinks in
17 indirect tax
Malaysia
Taxi drives in tawin get 115,000 Taiwan dollars if they switch to hybrid cars. Malaysia has RM1.2 subsidy on wheat floor.
18 subsidy US subsidies cotton, they are the biggest exporter. China subsidies electric cars to combate rising air pollution. Obama
and China subsidies the production of electric cars

Foreigners can only buy proprty abouv Rm2million in malaysia. The government of usa destoryed cherries to get rid of
the surpus which the government bought (Price floor on cheeries). EU has common agricultural policy that adds price
19 price floor floor on products (Its inefficient but farmers pressure governments and claim that they need it). Minimum wage laws in
USA is $7.25. Vietnam set price floor on their food (caused people to fear that they are going towards a commnd
economy and fear it will damage business confidene). Wales put a price floor on alcohol to reduce alcohol consumption

Malyasia set a RM2.5 as price ceilling for cooking oils- government tried to ensure that producers are not charging
20 price ceiling consumers to much. Rent controls in new york city and australia. US imposed maximum price on petrol in 1970. In
california, people believe that housing are too expensive and pressured governments to lower the price.

negative externalities of consumption Cigaretees excise tax in singapore. AD valorem tax in malaysia 6% soft drinks. South africa introduced sugar tax in 2018
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and policies with the aim to reduce obesity by 10%. Scotland is imposing price ceiling to reduce negative externalities on cigarettes.

negative externalities of production

22 air pollution (EU), coal powered factories (China), coal stations, Factories polluting into thhe ocean (Zara scanadal)
and policies

positive externalities of consumption education, vacines, museums. Poland educates people. Policies: Advertising (Germany had a 5day programma with
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and policies WHO to promote eating fruits). Legislation (compulsary vaccines in Australia and Poland)

Medical firms that create new vacines and firms that engage R&D, Pharmaceutical companies (Jonshon and Jonhson),
positive externalities of production
24 Firms that engage in on the job training. Government are ecounraging honey keeping business as it provides positive
and policies
externality of bee keeping. Educating woman, as they benefit their children)

25 merit goods/services Hospitals, education, museums

26 demerit goods/services Cigarettes, alcohols

27 public goods/services public floods, roads, light house

Sellers: selling car over priced as consumers dont know itsd quality. Buyers: Insurance companies know less about the
28 Asymetric infomration customer and pay too little. Firm 'Lloyd' was charged for mi selling pensions and not providing informations. Uk
authorities require adverts to be honest and truthful

Oceans, fishing, Deforestation to use wood for production. Sweeden introduced carbon tax in airline industry. In USA,
you need to have license to fish in specific areas. India has tradable energy permits since 2014. France implemented a
common access resources
29 carbon tax in 2013 of 22 euros per tonny of Co2 emmited. Cap and trade schemes (Kyoto protocol, european union
and policies
emission trading scheme). Funding clean technologies: (China subsiding solar panels, Dutch invested in wind turbines).
Poland are using carbon tax to decrease global warmining. EU has cap and trade schemes (tradable permits).

30 Theory of Firms
31 economies of scale Cola cola has very cheap advertising cost compared to Hubo cola which are smaller in size

32 diseconomies of scale

Telephone providers, oil companies. "Petrobras" in Brazil (petroleum monopoly). South african monopoly (Debeers
company) mine 50% of worlds diamond- its significant market share allows it to have control over diamond prices. USG
33 monopoly claimed that Microsoft was acting like a monopoly by forcing computer companies to install its program. When the USG
won the case, Microsoft was forced to sell off chunks of its business, which created greater competition in the market,
leading to greater efficiency.

34 natural monopoly utility and public transportations. India railway transport that exstes for 163 years.

Nationalised firms: electricity providers in malaysia. Cardiff airport was purchased by welsh government. Privately
35 anti-monopoly legislation
regulated: microsoft, 3 of the worlds largest brewery (Budwesier, Corona, Stella)

36 perfect competition market Watermelons in shangai- They were so abudant every street seller sold their watermelons. Most agricultural products.

37 monopolistic competition fastfood chains (Similar pizza restaurants/ pizza hut, dominos, dominium), clothing ( Zara, H&M, Gap)

38 Examples of Oilgopolies Airline industries, mass media, Oil and gas industry

39 oligopoly (price ridgidity) Cell phone providers (T-mobile, orange- they use heavy marketing instead)

40 Oligopoly (tacit collusion) in 2014, EDF, a energy company was investigated in UK for coordinating prices with other firms.

41 Price leadership Kewllogs cereal breakfast (rest of the market following this biggest firm)

Organization of petrum exporting countries (OPEC)- composed of 13 countries who raise world price by cutting back its
42 oligopoly (collusion)
total output. Sephora was caught colluding their pricing. Visa and mastercard were fined 7 billion for fixing their fees.

43 non-price competition product differentiation (windows, MacOS). Heavy marketing and advertising by T-mobile and orange

44 anti-monopoly legislation Government prevented the merger of US airways and american airlines

45 Macroeconomics
46 recessions Great Depression (USA, around -25 % GDP for 4 years). Italy fell into a recession in 2018 (low consumer confidence)
GREEK economy was shrinking by 4.8% in 2010 due to decrease in AD (decrease in consumer confidence and private
47 consumer confidence
investment spending)
American recovery and reinvestment act of 2009- 800 billion into infastucture, education, and more unemployment
48 increse in government spending (Fiscal policy)
benefits. (saved 2 million job, -2 to 2% inflation, growth increased by 0.2%
49 decrease in direct taxes Italy in 2018 after falling into recession- there was a decrease in direct tax.
50 increase in infrastructure Sri lanka gamarplia program spending on infastructure and education
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Opening to trade causes structural unemployment (VIetnam opening trade with America caused structural
unemployment as firms in Vietnam could compete with low priced American drinks. During Ukraine military conflict,
many mines were shutting down as the mine industry decreased- causing unemployment. Manufacutring job in the USA
51 structural unemployment are being replaced with technology. When companies move and reallocate to different countries, nike changing their
factory from USA to china- cause unemployment in USA. Margaret Thatcher decided to close the coal industry (British
mines were increasingly uncompetitive in comparison to imports -> Labour privatised the coal mining industry to support
it) in the 80s so a lot of miners became structurally unemployed - protests, riots in 1984,

52 Frictional unemployment When people are in between jobs finding new jobs.

Caused by recession (Spanish recession in 2009).

53 Cyclical unemployent
Deep recession during Great Depression- had deflating price, (Cyclical unemployment and lower incomes)

54 seasonal unemployment In greece, tourism industry decreases in winter and increases in summer- emoloyees are made redudant in winter
55 natural rate of unemployment Most countries aim to have a natural rate of unmployment at 5%.

In Denmark, its ranked with one of the highest GNI per capita. This is due to flexible labour markets. Workers can be
fired relative quickly. This doesn’t make them redundant, becuase they move to better jobs quite quickly too. This
56 employment policies allowed Denmark to achieve lowest unemployment rate. Once a worker is fired, there Is a big use of unemployment
benefits. Benefits are given for only 4 years, which gives incentives for people to find jobs. Gov also provide jobs in job
centers. Gov provides free education to reduce structural unemployment.

In India, population increased and increased quality of living of Indians, causing slight inflation in the country. In 2013,
57 demand pull inflation
there was a 43% inflation in Syria due to increase in agregate demand with increase in consumer confidence.

58 Countries with deflation/inflation Deflation: Saudia arabia Inflation: Syria

59 Deflationary Gap Any country which operates with more than 5% unemployment (Ukraine)

in 1971, as Chile kept increasing minimum wage, resulted in cost push inflation. Oil crisis in 1973 caused an increase in
60 cost push inflation cost of raw materials. Hurrican katrina destoyed oil refinerise causing gas prices to increase and decreasing SRAS. Shift
in SRAS due to OPEC restricting their global supply of oil and increasing price of FOP

Sweden, Finland have low income inequality w/low Gini coefficient - Namibia, South Africa w/high income inequality
61 Gini index/coefficient
w/high Gini coefficients
62 Deflation Japan experienced it in 2006.
63 high tax countries Belgium, Scandinavia, Hungary
64 low tax countries Bahamas, Russia

progessive tax system- (Norway has very high tax rate for higher income people. There is direct government provision of
transport, school, health care, and transfer payments to unemployed and retired people. Obamacare subsidiesis
hospitals for low income households to increase access to healthcare. Highest earners in Belgium pay up to 55%
income tax (progressive tax). Transfer payments: 500 zloty plus in Poland and child allowances (Also considered as
65 Equity policies
expansionary fiscal policy. It will stimulate AD, increase disposable income for poorer people and lower gini coefficient.)
Denmark has very high income tax rates of 50% on average -This is progressive and contributes to income equality and
allows to pay for the merit goods. Evaluation: USA lowering tax brackets: Believing that lowering taxes in the top one
percent, who he assumes are entrepreneurs, will result in the creation of more businesses.

2008 global recession- economies used expansionary fiscal policies by increase government spending and taxes. In
66 fiscal policy in recession 2009, USA used fiscal policy package of 787USD billion to support USA economy in a recession. There was an increase
in government budget deficit. Australia increased money supply in 1920 to decresse interest rate and boost economy.
67 Expantionary monetary policy for growth Eurozone after financicial crisis in 2009 decrease their interest rate.

68 interventionist supply-side policy Gamparlia program in srilanka- to boost education and investment in infastructure

The american government deregulated the airline industry (stopped controlling the routes), which increased competition
69 market-based supply-side policy
[Some airports suffered as planes were not flying to non profitable areas].

Bill clinton raised tax from 28% to 36%, progressive taxation- Corporate tax also increased- Increase in unemployment-
70 Contractionary fiscal policy
1%, inflation decreased from 6.5 to 3%.

Japan decreased interest rate to 0.5 percent but did not stimulate the economy (Inflation decreased from 4% to below
71 Expansionary Monetary policy
2%).

0.7% to 1% in USA in march 2017 because consumer confidence was high in the economy due to consumer confidence
72 Contractionary Monetary Policy in labour market. In 2008, India raised interest rates to reduce inflation. America in 1970 raised interest rate from 5% to
13%-This led to lower inflationary pressures.

73 Supply side policies Sri lanka gamarplia program- investing in human capital and physical capital

Sweden doesnt have any minimum wage. Minimum wage causes higher levels of unemployment in EU. Countries with
minimum wage has 12% unemployment rate whilest those without had 8%. According to IMF, countries which opened
74 Market based their economy grew faster and reduced poverty much faster than countries which didnt including Vietnam. Eurozone is
increasing potential output to tackle high unemployment through labour market reforms. Denmark with its marker
reforms. in 1980, Czech privatised industries, leading to greater efficiencing and employment

500+ policy in Poland, Gamperlia program (spending on infasturcture, education). Australia fiscal stimulus, American
75 Expansionary Fiscal policy recovery act of 2009 with 831$ billion on infasturcture, eudcation, and extra unemployment benefits (saved 2 million jobs
and inflation increased)

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Price discrimination 3rd degree Movie tickers/flights/museums/ are cheaper for children and old aged people (Emirates, cinemacity)
77 Recession During great depression, recessision did not fix itself.
78 Phillips curve Shift in LRPC due to OPEC restricting their global supply of oil and increasing price of FOP
79 Economic growth Movement of foreign workers in 1960s to Germany increased AD and LRAS.
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