Econ Memory Aids

Question 1

Shifts in demand

Answer 1

P - population
A - Adverts/ age
S - Substitute good price
I - Income
F - Fashion
I - interest
C - Complement good price

Question 2

Shifts in supply

Answer 2

P - Population/ productivity
I - indirect tax
N - number of firms
T - technology
S - subsidies
W - weather
C - costs

Question 3

Internal economies of scale

Answer 3

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R - risk-bearing
F - financial
M - managerial
T - technology
M - marketing
P - purchasing

Question 4

External economies of scale

Answer 4

T - Transport
R - R&D
S - Suppliers

Question 5

Diseconomies of scale

Answer 5

C - control
C - communication
C - co-ordination
M - motivation

Question 6

Barriers to entry and exit

Answer 6

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P - patents
E - EOS
R - regulations
M - market leaders
S - sunk costs
B - brand loyalty
A - adverts
R - R&D

Question 7

Conditions for contestable markets

Answer 7

• Low regulations
• Low barriers to entry or exit
• Low sunk costs
• High potential entrants
• good information
• Possible “Hit & Run” supernormal profit

Question 8

Contestable markets pros and cons

Answer 8

Pros: all types of efficiency
A - allocation efficient
PE - productive efficiency
X - x efficiency
D - dynamic efficiency

Cons:
- Instability
- less long-term investment

Question 9

Pros and cons of mergers

Answer 9

Pros:
M - market power
E - EOS
C - Competition elimination
S - savings
S - synergies

Cons: Don’t condone large merger jumps
D - DEOS
C - costs on consumers
L - legal issues
M - monopoly power
J - job loss

Question 10

Demand for labour

Answer 10

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W - Wages
D - demand derived
P - productivity
P - price of FOP
T - technology
R - regulations

Question 11

Supply for labour

Answer 11

B - benefits
M - migration
W - wages
A - age
P - population
L - legislation
E - Education

Question 12

Free trade benefits

Answer 12

A - Allocative efficiency
C - Choice
C - Competition
E - Economic growth
P - Prices
P - Productive
T - Technology
D - Dynamic efficiency

Question 13

Free trade cons

Answer 13

D - Deficit (trade)
O - Over-reliance
U - Unemployment
S - Standards
E - Environment

Question 15

Reasons for protectionism

Answer 15

T - tax revenue
I - infant industry
D - deficit
E - employment
D - dumping

Question 16

Reasons against protectionism

Answer 16

C - choice
A - allocative inefficiency
P - price/ costs
R- retaliation
I - inelastic demand