Lecture Notes: Application Hour

Introduction

• Date/Time: Sunday Afternoon
• Purpose: To focus on application techniques for the micro paper, providing exam advice, and discussing different types of questions.
• Format: Short activities, questions, exam techniques
• Audience: Over 700 students potentially, with nearly 500 live.

Session Goals

• Focus on Application: Importance of applying knowledge to different questions.
• Exam Focus: Emphasizing context over data; awareness of policies and businesses.
• Structure: Multiple-choice questions, application spinners, note-taking suggestions.

Multiple Choice Questions (MCQs)

1. State-Owned Business in the UK: [Answer: Channel 4]
2. UK Low-Cost Gym Chain: [Answer: Pure Gym]
3. Ofgem-Regulated Market: [Answer: Octopus Energy]
4. Sectors with Government Subsidies: [Answer: Renewable Energy]
5. Minimum Price Legislation in Scotland: [Answer: Alcohol]

Application Spinner Topics

State-Owned Businesses

• Examples: Network Rail, British Business Bank, Scot Rail
• Considerations: Impact on dynamic efficiency, consumer welfare, and fairness.

Recently Privatized Businesses

• Examples: Royal Mail, Lloyd's Bank, Northern Rock
• Analysis: Efficiency depends on competition and market structure.

Price Capping

• Examples: Energy Price Cap, Rail Fares, BT Openreach
• Considerations: Role of regulator as surrogate competitor.

Market Structures Discussion

• Duopoly/Near Duopoly: Visa vs. Mastercard, EV Charging (Shell Recharge vs. BP Pulse)
• Contestable Markets: Low-cost airlines, coffee shops, parcel couriers.

Industry Case Studies

• Broadband: BT Openreach's quasi-natural monopoly, social tariffs for low-income families.
• Fast Fashion: Primark's economies of scale, globalization impact.
• Low-Cost Gyms: Price and non-price competition strategies.

Government Interventions

Indirect Taxes

• VAT, Excise Duties, Sugar Tax
• Trade-off: Revenue vs. behavioral change

Subsidies

• Renewable energy, help-to-buy schemes, insulation grants
• Evaluation: Targeting and elasticity impact

Maximum and Minimum Prices

• Maximum Prices: Rent controls, energy price guarantees
• Minimum Prices: Alcohol unit pricing in Scotland, minimum wage

Environment and Net Zero Goals

• Policies: Emission trading, subsidies for renewables, carbon offsetting

Exam Advice and Strategies

• Golden Rules: Use data, utilize extracts, include application in essays.
• Policy Mix: Effectiveness, equity, and potential for government failure.

Conclusion

• Session Recap: Highlighted the importance of application and context.
• Future Plans: Upcoming sessions on macroeconomics, world economy, and synoptic papers.
• Student Engagement: Encouraged continued practice and collaboration.