Wasted money on cures. Forgot how to fix myself. They say that time is free. Then why is it so precious? Oh, I'll save meories in my head like polo ro on wall. They remind you to look ahead. Time is running [Music] out. Time is running out. [Music] Lately I've lost my track my track. I've sailed the deepest seas deep hoping I find something to bring back better times. Oh, I'll save me in my head. Like polar o they remind you to look ahead. Time is running out. Time is running out. Time is running out. Time is running out. Time is running out. Time is running out. Time is running. Time is running [Music] out. Time is running [Music] out. What if my best days are over? They can't be over. [Music] They can't be over now. Time is running out. What if my best days are over? You got me [Music] over. Time is running out. Time is running [Music] out. Okay. Hi there. Welcome. It's Sunday afternoon. Uh thank you for taking a break from watching the mighty Bournemouth play Manchester United or maybe anticipating the mighty Liverpool chancing Tom Hawksman football. We've created this space on the Sunday afternoon for what we're calling the application hour. It may not take an hour. It might take a bit less than that. But the idea is to pack in as much application for the micro paper as we possibly can. And to do that, we've got all sorts of short activities, some questions, uh designed to uh give you a lot of information, a lot of ideas, a lot of exam technique advice as well, in particular, how to make that application sing for you in different types of questions. There's thousands of students potentially going to be watching this, nearly 500 live with us already. So, if you're subscribed to the channel, please feel free to contribute to the uh to the chat window. Now, we we're we're doing a transcript of this so that people can go back and we're going to time stamp it because it's going to be a slightly longer session. So, the gap between the live stream and our presentation is probably going to be an extra five or 10 seconds. So, we may go a little more slowly as we go through the answers if that's okay with you. Next week, since I finished this session, I'm packing my bags. I've already had a very expensive haircut as you can see and we're heading down to London for the last week of grade booster. We have two days at Vue Stratford. That's screen five I think bottom left there which is where we're going to be and then we head across the central line to view white city where we have two days one day for each at XL and AQA and we're super super excited. It's our last week of grade booster. The team are getting back together again and if you are coming please say hello and make yourself known to us. It's always great to meet people face to face. So the idea behind this session uh is to is to really focus on application. So um and the point I want to make is that many of these micro topics, micro issues that we have chosen, I've deliberately chosen them because I think they've got a good exam focus if that makes sense. It's not the actual data that matters. So don't worry about putting down lots of facts and figures. That's not what the examiners expect. Okay. In the data response question, yes, you must use the charts, the tables, the extracts, you must use them. Uh whereas in essays, the exam is really looking for context. Now, context is awareness, good examples of policies, businesses. Uh that's what we're looking for. If you want to put data in, fine, but don't worry too much about that. Let's start with multiple choice. I think we got five multiple choice questions for you. Just as a quick warm up, post your answers in the chat window, please. Here's question one. Uh, which of the following is a stateowned business in the UK? Which of the following is a stateowned business? And our options are Tesco, Channel 4, BT Group, and Virgin Money. Keep in mind, of course, we're answering this in 2025. Answers flying through from JT Galaxy, from Ben Gumol, one two of our great contributors, from Lena, from Arrol. Quite a few people saying A. Couple of people saying C. Uh I don't think Tesco is a stateowned business or perhaps something's happened in the last couple of weeks. Correct answer is indeed. Uh B. Channel 4. Have the touries won the election in July 24. They were planning to privatize Channel 4, but they didn't. Question number two, which of the following is a UK lowcost gym chain? So there we have four. Nfield, Bannon, Pure Gym, and David Lloyd Club. So all four recognized. Matthew says C used to be state owned. Indeed it was. It was uh bailed out and then sold off. So which of those are low cost? Nfield Benton's pure gym. David Lloyd and James Mure again one of our top contributors. An outstanding by the way. an outstanding sportsman. I think he won the sportsman of the year award at his school just recently. Um he goes for C. Let's double check and see if James is right. Uh Pure Gym. And James says, "Big up Pure Gym, which either means he's either a member or a shareholder or both." Question number three, which of these companies operate in a market where OffGem regulates maximum prices? Is it octopus tennis water or male or network? Start again Jeff. Network rail. Which of those is an industry where offg regulates maximum prices? What do we think? Most people saying A. Let's double check. The answer is A. Yeah. Octopus of gem stands for the office of general energy markets. T's water is off what? Royal mail is off tell and network rail is the office of rail regulation. Question number four. Which of the following sectors has been a major recipient of government subsidies in recent years? Banking, fast fashion, professional football, renewable energy. What do we think? Which of the following sectors has been a major recipient of subsidy in recent years? Any thoughts coming through? Uh a couple people a couple of people thinking a with banking a bailout by the way is effectively a form of subsidy but most people including George and Ella and JT and Zoe saying D. Let's double check. Yeah, renewables renewables have been largely sub. Now here's a key evaluation point. To what extent can renewable energy, solar panels and so on, uh can they move away from subsidy? Can they become commercially viable post subsidy? Until the end start of this year, there was only one major solar panel a solar energy business in the UK that was subsidy free. Uh and that we're trying to get to that tipping point where the industry is sufficiently scaled to be able to move away from subsidy. Last multiple choice. Which industry is most associated with minimum price legislation in Scotland? Now we have well over 700 people now live with us. Welcome if you're if you're new to the channel. Uh first of all, thank you for getting to us. Subscribe to the channel and then contribute brilliantly to the chat window. We're going to have some amazing application contributions um this afternoon. And most of you going straight in. Here's the answer. It is indeed alcohol. Okay, come back to that shortly. Right, so the idea here if if you haven't been with us before, we set a whole series of interesting questions. We've chosen some industries, some markets, some policies which we think the examiners might be interested in. Okay, here's our application spinner uh over to you. There's no there's no time on this. Let's spin the wheel. So uh a lot of people by the way last time they said we had our revision notes with us or iPad or whatever it is and we were taking notes throughout the session. So can you give me some applied UK examples? We've already mentioned channel 4 of stateowned businesses. What do we think? Those of you locking in to our session today, can you give me some examples please in 2025 of stateowned businesses? just in case this topic comes up. And a lot of people think it's likely. Alex goes for the BBC. Y as in says the NHS. A lot of people saying the NHS. Well, the NHS has a business aspect to it. Channel 4 from Caitlyn BBC. Um Zoe says British Gas. It's not stateowned. Will Spence, the Railway Network. Yeah, Will's correct. Uh and one or two is coming in there. Oh, Fanish has come out with a really good answer which we'll come to in a second. Caitlyn says LNR. Great answer. Here are my answers coming through on the screen. I've gone for apart from channel 4 network rail. Now again the rail industry has been asked in the past by some some exam boards but not recently interestingly by EDXL. So network rail is they run the infrastructure they run the the lines the safety systems most of the stations. One definitely to add to that is the British Business Bank created by Rachel Reeves in her October 24 budget. So they're trying to create a new bank with about um uh3 billion pounds of initial funding designed to support small and mediumsiz businesses. Oh, by the way, yeah, Joe Harris says Skunthorp steel put that up on the screen. That is Joe that is absolutely brilliant and I am going to add that to my notes myself. That's a great example. Skin thought and really topical. Joe, you might have hit on something there. The whole the whole issue of whether you should keep open steel plants in in a wake of uh global economic developments. Fantastic. And Scot Rail. Now, this is my favorite example. Uh Scot Rail was nationalized just three years ago, April 2022. The Scottish government took away the Abelio uh franchise. SP says, "Is this live stream recorded?" Yes, all recorded and you can download the presentation afterwards after I've added in Joe's superb point about skuntop steel. So I've gone for network rail um British Business Bank and Scot Rail. Now some examp lots of interesting issues. The whole issue of whether state ownership might be a a way of addressing cost of living pressures. A huge debate obviously in the water industry about this whole issue of of who should pay for investment in much needed infrastructure over short-term profits and and dividend buybacks, share buybacks. The most important thing when you're evaluating this issue, first of all, if you change ownership, does it affect dynamic efficiency? Will public ownership drive innovation or hold it back? From a consumer welfare point of view, are public services improved and more affordable uh in particular in things like fairs and pricing? Will outcomes over time be fair across society? My my key point here is that you should judge the case for nationalization on a case-byase basis. You can make generic points, but actually what the examiners really want you to do is to think in slightly more nuanced way. Um so I I think for example the arguments for nationalizing uh train operating companies are subtly different from the arguments for and against nationalizing for example telecoms or the Royal Mail or T's water. Do think about the industry uh specifically. Okay let's move on back to our application wheel. Uh spin the wheel. So hopefully you got some ideas there for your notes. Can you please give me some examples of recently privatized businesses? And again, recent examples tend to be in the minds of examiners. They like to choose fairly topical issues. That's one of the joys of doing economics. You you always get a benefit as a student from being up to speed with with the news. So, what do we think? Um, privatized businesses. Ah, right. Answer is flying through lots of you, including Melenna, Zach. Uh, Zach's talking about the water industry. Yes, it was 30 odd years ago. Um, yeah, Finn and Jack all talking about Royal Mail, Madlin as well, and James Longley. James mentioning BT. Well, BT was privatized in 1984. Uh, I was there. bought some shares. Uh Jeremy says, "Nando." Well, sadly, it hasn't been privatized. It's already a privatized business in that sense. It was never stateowned. So, we're looking for industries that move from state to private. Okay. Oh, wow. Okay. Castle Water. That is really interesting. So Castle Water is a private company that competes supplying business water services in certain parts of the country and it's starting to crack the sort of regional water um monopoly. Here are my answers coming up. Yeah, Royal Mail was actually privatized 10 years ago or 12 12 years ago. Um so it's now been a privatized company PLC for some time. I I recently sold my shares in the world mail. wasn't happy with their performance and sold the shares. Lloyd's Bank bailed out in a financial crisis, fully privatized a decade later. And Northern Lock again bailed out, nationalized in 2008, finally sold to Virgin Money in 2011, and Virgin Money has now been bought by somebody else. Okay, come back to that later. Okay, let's uh move on. Yeah, Northern Rock uh was did collapse. So, it was bailed out nationalized. Now, here's a really important exam point. Ownership state versus private is not everything. Okay? Uh please don't fall for the trap of saying that private firms are are always more efficient than state firms. They're not. Okay? What really matters is that efficiency and innovation depends on contestability and competition, not ownership per se. You can have a domestic monopoly but both public or private. Uh but if it faces competition then it's it's in effectively in a contestable market. So broadband services for example face competition from new challenges. So my ar my point in the exam analyze the market structure the competition and the incentives. Don't become too fixated with ownership. Ultimately, the issue of state versus private ownership is an issue of political economy and some of you will be going going on to study that at university. As Yuan says, Northern Lock was a bank that got cooked in the financial crisis. Now, interestingly, Euan cooked could well appear in the mark scheme. He got bailed out. Try it in your answer. Okay, let's crack on. Spin that wheel one more time. See what we can come up with. So can you give me some supp applied examples of oh industries where there is price capping? I think with all of these if we're looking for just a couple of examples for your notes that would be absolutely fantastic. So uh Sam says I love political what I'm doing. Brilliant. I mean doing economics and politics at university is nearly always great fun. Fantastic. Uh PC says, "Jeff, my teacher hasn't done privatization on nationalization. Am I cooked?" You need to revise both. Okay. So, some examples, please, of uh Pamping. Yes. Coming through. Zoe on the water industry. Anna says energy. Lots of people saying energy and water. Uh Beer comes in with a really good one, rent controls. Sophia talks about train fairs. Max Gibbson says rent controls as well. Here are my answers. Thank you for the answers. They're flying through. Keep an eye on the chat window. We have some amazing students, some phenomenal students in our in our group today. I've gone for three. Now, again, just to bring you up to date. So, the energy price cap set a a cap per kilowatt of energy used. It wasn't a cap on bills, by the way. A lot of students said this this caps bills. Now, if I'm I live on my own at the moment. If I have a small bill, relatively small bill. If you've got a family of 10 people, your bill is not capped. Okay? It's based on the units of energy used. And that was capped. Now, the energy price cap is now gone. It was continued until um October 2024. It's now gone. It's not to say it can't come back again, but bills are set to fall in July because the markets are returning to something close to normality. Um some great Oh, by the way, keep an eye on the chat window. Some brilliant answers coming through on on price controls. Rail fairs about 40% of rail fares are regulated. So most railfares aren't um off peak returns are regulated. They can go up each year. Uh and the increase is capped at inflation in July plus 1%. So let's say inflation in July is 3%. Then on average rail fares can go up by 4%. and telecommunications BT open reach is regulated. I'll mention that. Jeff, can you please explain what RPI minus X and RPI plus K is? Well, these are different formula. So RPI is inflation reach. So let's go to the rail fars. If it's RPI plus 1%, you can increase your on average your your fairs by 4% or 1% above inflation. RPI minus X is where you have to reduce your fars in real terms. RPI plus K was used in the water industry and the K was the investment requirements of the industry. So consumers are having to pay a bit more each year for investment in infrastructure. Good stuff. Let's move on. Yeah, BTOP. I think this is worth adding to your notes. So this is I I just have a feeling that broadband and uh interweb all that kind of stuff you know it's really really interesting stuff there have been questions on video streaming on broadband internet services from exam boards in particular just wanted to show this chart this was July last year so I was looking at the kind of size of because occasionally you go into a town and the town is just full of these um road works where people are laying down full fiber cables mostly it's BT openage So BT open reach is is like the network rail of full fiber broadband and it dominates as you can see it's bigger than all the other firms in the entire industry. City fiber is a potential competitor tends to use lay down fiber bullband in cities. Dogs media has a business some lovely businesses giga clear truly fibbu but it's a good example think of a natural monopoly where the fixed costs are really high it really only makes sense for one firm to dominate the industry now BT open reach is regulated so if you have version media or if you have sky or talk they pay BT to use the networks says where is Vodafone Well, Vodafone uh is a service provider rather than a a broadband network provider. Okay. Nvelia says, "What's quazone natural monopoly?" It's basically an industry where one firm probably dominates as you can see. But City Fiber's there and Virgin Media has its own broadband network installations, Community Fiber. So, it's not a pure monopoly, but it's a kind of quaire natural monopoly. Quaar means quite close. Okay. Anna says when you say quaazar natural monopoly does that mean bey possesses some of the characteristics but isn't fully Anna I couldn't have put that better myself. That's exactly what I mean. So thank you for think thank you for making that point. Michelle says natural n national rail is a natural monopoly. I think that's probably right. Yes. You don't want two sets of train lines. You don't want wasteful duplication. So uh yes I think that's right. Network rail is is a good example of a natural monopoly. Okay. Now, exam go some industries in the UK, rail, energy are subject to price capping because they are essentially natural monopolies. The phrase to use in the exam is that the regulator is acting like a surrogate competitor. Okay? They're taking the place of a competitor. However, when a market's contestable, it's less easy to justify price regulation, price capping. And I think a good example is broadband. So uh BT open reach is regulated the access charges they can charge Sky and Virgin Media are controlled but there's no uh price regulation of the retail side of from a consumer point of view because Offcon thinks there's enough competition. Okay. Ferry says what's your prediction for section BK series? Well I don't make predictions. It's very I find it really hard to predict especially things about the future. But I think in this session what you're going to see is me choosing some topics that I think if I was an examiner I'd be asking questions on that's okay. Moving on. Oh yeah sorry I just wanted to show you this. So this these are the think about where you get your broadband internet from if you have it. These are the leading service providers last year. BT close to a working monopoly. Sky then Virtual Media E Talk Vodafone and then Plusnet the the three businesses in green I've highlighted there uh BT E and Plusnet because they are part of the same business. It's now BT group. So BT merged with E about 10 years ago. It also owns Plusnet. So in theory you could say that BT owns about 35% of broadband internet. Okay, moving on. Uh, another really important aspect is just becoming familiar with data. Okay, so here we are. This is this is the broadband market. It's essentially an oligopoly essentially. Uh, but I would argue it's a contestable oligopoly. BT and E did merge together. Now, when you get given this information, have a quick look at the the uh table here. Uh, you've got three providers listed. BT, Sky, and Virgin Media. It won't give you all the providers and they've got two packages from each and you can see that price depends in part on speed of downloads. Uh contract length is pretty similar. Uh but notice there how the prices are clustered pretty close together. And the reason for the the examiner is choosing this kind of table uh is for you to draw from the table and make some inferences. So, it could often be the case that uh these companies tend to set similar prices in part because they're similar scale businesses, but also uh one student was saying to me the other day, can I bring a bit of game theory in here? Can I bring a bit of kink demand curve analysis? Uh a bit of price stickiness at around 2830 pounds per month. There is price competition, but often the leading players cluster their prices at certain levels. Now uh JT comes in if we can bring up JT's comment. Social tariff is a price for people who are on benefits or something. That is what I've heard. JT correct. I I I really want to make this point and hopefully this is a lot of students have never heard of social towers. I think this is some of the big news in town. Have a look at the green bits there at the bottom of the table. They've only chosen BT and Sky. uh both BT and Sky offer a social tariff. Now this shield has gone right third degree price discrimination where for 36 megabytes or 61 you get a much cheaper price. Let's move on to the next slide in fact. So social tariffs really really important in my opinion especially in the context of living costs. This is where a company provides cheaper prices for families on low incomes uh especially people who are on universal credit and means tested benefit. Now you have to provide the service provider with a national insurance number and proof that you're on benefits but you can get cheaper broadband and you can get cheaper water bills uh and you can get uh cheaper energy bills. A lot of the utility providers are now using this social tariffs. Uh now social tariffs are voluntary. They're not yet government mandates. This is companies doing this. There's good commercial reasons why they do it. It's a bit like businesses paying the living rather than the minimum wage. But social tariffs if you haven't already added a note absolutely fantastic application if you ever get a question on welfare benefits and costs of monopoly oligopoly I think I mean now who knows if this question comes up but if you get a question on price discrimination social tariffs are a great example to use Zach says is this an example of price discrimination it is yeah anonymous says guys I'm still learning content am I cooked no you you continue to learn content all the way through to the exam. Okay. Could the government subsidize this? Beer says they don't have to because these are highly profitable companies. Beer and they can make money even by charging £15 a month if the marginal cost is lower than that. Now that line at the bottom there, judge a monopoly by outcomes rather than textbook theory. That is a line of pure evaluation gold dust. Moving on. Uh let's try one more spinner. So we've had three one more. Oh. Oh. Okay. Yes. Now can everybody think of good examples for your revision notes of recent mergers? What can we think here? Is the king demand curve on the edXL syllabus? Uh no it's not. Uh can you use it? Yes, you can. Would you be penalized if you don't use it? No. So recent mergers. What can we think of? What are people saying? Uh okay. Okay. Some mergers of medical schools, Orange and T-Mobile, Vodafone and three, Disney and Fox, Microsoft and Activision, Asda and Sainsbury's Block says Ted. Absolutely right, Ted. Well done. Uh three and Vodafone, Craft and Hinds. Okay, really good stuff. Yeah, Marvel and Disney, British Airways and Emirates. Don't think that's been a merger. That might be a commercial joint venture. Okay. Argos and sainsburries. That's a joint venture, I think. Although I think that's probably going to boot and Walgreens says Ace O2 and Virgin Media. Fantastic. Wow. Brilliant. Here, here are my three. I've gone for the Nationwide Building Society, which is Britain's biggest building society, and they acquired Virgin Money in 2024. Now, the reason for choosing that is a it was last year, and the exam was set last year. It's also a really good one for financial economics, a building society buying a bank. Uh, Aviva acquired Direct Line and that's quite important because again that's a merger, horizontal merger between two of the big car insurance companies. Car insurance is a great topic. And Barrett Homes acquired Redro Homes. And now we're thinking what why is that important? Well, let's move on to the next slide. So in in 2024, Barrett, biggest house builder in the UK, as you can see, uh 5.5 billion pound business, they bought Red and uh and as you can see, that's both in green there. So they've merged to create a business that's worth over 7.5 billion in revenue each year. Uh there was an investigation by the CMA. Now I I think this is here's a line for your exams. Macroeconomics has micro foundations. macroeconomics as micro foundations. Can big mergers in the house in the building industry help to increase the quantity of new house building which in turn can help improve affordability mobility of labor. So do we need is one of the potential benefits of that merger getting more UK construction companies to to grow to scale and therefore increase the elastic supply of new housing. uh human says uh in response to Alfie's point, it shows your breadth of knowledge and differentiates yourself as you're basically flexing to the examiner that you know out out of the spec. I think the whole point of today's session everybody is just to give you some more examples for your notes. Uh I mean I mark thousands of answers every year. The students that put in a little bit of application always repeat always do better. They use the extracts and they have that little bit of knowledge bit of wider context which they bring to play stuff. Uh Kimari says Jeff is the game theory important when understanding Olopy. Yes. And if you are doing ED XL for example you need to have a game theory example you can bring in. Let's move on. I think we have one more. Oh yeah. Okay. So let's quickly think market structure. It's conscious of time here. We'll crack on. We'll thank you for your answers by the way. The answers are unbelievably good. Can you give me some examples not of oligopoly but duopoly or near duopoly? The deer says can we talk about mergers that aren't as recent? Of course you can. Of course you can. Anything anything is relevant. Not 30 40 years ago but certainly in the last 10 15 years is all good. So duopoly please. Duopoly. Somebody's saying what's a game theory example? Well, uh, work. There's lots of videos on the YouTube channel on game theory which will be taking you through some examples. Maddie says Coca-Cola and Pepsi. Yes, Boeing and Airbus from Sam. Uh, Apple and Samsung comes through quite a bit. That's good. Mastercard and Visa from Hania. Brilliant example that. Thank you, Han. Yeah. Uh, Real Madrid and Barcelona La Liga. Yes. Uh, Dan says, "Tut and PMT." You're very kind. Here are my answers. Conscious of time here. I've gone for Visa and Mastercard. Really important payment networks. There might be a financial economics aspect to that. How about EV charging? Shell recharge and BP pulse amongst the two. Again, thinking topical issues here and in post and Amazon parcel lockers. Now, I'm not expecting you to have studied EV charging and parcel lockers, but these are industries that examiners like to choose. Let's move on. Um, let's look at EV charging. So, here's some data. Again, just become familiar with data. Okay. And you can get chat GPT to create these little case studies for you and practice reading charts and tables. So, that's the number of charging point networks at the end of last year. Shell recharges ahead of the game. Podpoint, you probably come across some of these connected curb in towns and cities. And I asked chat GPT to double check the prices as of last week. And again, you can see the costs per kilowatt hour depends in part on peak off peak pricing. Nice bit of uh price discrimination there. Uh the speed of charge, all that kind of stuff. So there's a nice really nice little case study about about the market for EV charging. uh most duopolies are essentially igopies with two dominant firms. Okay, so don't worry about making a distinction between the two. This is often a blur distinction. Let's move on. I think this is perhaps one of the most important slides in my presentation. Okay. You can have a contestable igopoly. What do I mean by that? You have a few dominant firms, perhaps even two dominant firms, but they are competing with each other and often that is intense price and non-pric competition and in many ways uh each of the two big firms are operating at scale or three firms. So you get the benefits of economies of scale and you get the price competition between them. Now there could be some collusion but it's often not the case. Uh I think the the combination of scale and competition uh as well as the threat from challenger brands help to keep prices low. So you can almost make a case for saying that a truly contestable igopoly hits the sweet spot when it comes to economic efficiency and welfare. Okay. Will we ever get asked a question on duopoly or can we just bring it into our answers for more depth? Both. Both. Brilliant. Let's move on. So, one more thing. A couple more. Oh, yeah. A couple more uh application spinners. Let's go for this one. So, we've done Chuopoly. Let's go for contestable markets, please. Comes up all the time, obviously. Daily response essays. What are your favorite examples, please, of contestable markets? You'll need to calculate concentration ratios. What's coming through here? Sporting far says, "Could you also say a strong independent regulator is necessary to stop collusion when you have a few big firms?" Yes, the quality of regulation in the long run makes a big difference. Danny, what percentage of market share in Jopoly? Probably the top two firms have more than 60% or 70% of the market. So, people saying uh contestable markets, hairdressing, coffee shops, nail bars, supermarkets. Uh yeah, Tik Tok football shirt providers. Uh yeah, uh one or two others coming through, burger vans, independent retailers, independent cafes, barbers. A lot of people saying barbers for some reason. That's often a bit of a fringe topic on exams. Social media advertising, craft beers from Ben Ben all there. I'll drink to that. Street food vendors, really good examples. challenges in the banking industry. Fantastic. Let's go through my examples. Parcel coers, lowcost airlines, coffee shops and cafes, lowc cost gyms. Talk about that in a second. And clothe retailing. Now, make sure that you have revised at least one, possibly two contestable markets. So, you have some real situations. Okay. I've always says, how are you supposed to know about applications to questions when there's so many possible questions? Well, the whole point is if you get if it's data response, then you use the data provided. If it's an essay, you bring in the context you're interested in and revise. That's called exam preparation. Ashton says, "See what you did there with the fringe example, Jeff?" That's what I do, Ashton. Okay. I mean, people laughed when I said I wanted to be a comedian. They're not laughing now. Uh, let's look at a couple of examples. Career services. Again, the popular examiners like this kind of data because you can do a concentration ratio. Chris says there's contestable market perfect competition. No, it's no difference. Okay. Particularly they sell differentiated products. So, Royal Mo, Amazon driving forward there. DHL and DPD, UPS, some big businesses. All of those businesses are really, really big, but they compete with each other. Okay, next slide. Uh, oh yeah, coffee shop. Interestingly, look at the rise of Gregs. Cost of coffee, the number of units in the UK, pretty stable. Cost of coffee, of course, bought by uh Coca-Cola. Starbucks still growing. I think a lot of those are the drive-thrus and also those little Starbucks and petrol stations and things, but Gregs is absolutely flying. As my friend Graeme says, they're on a roll. And Gregs is now a big business. Next slide. actually uh gives you a feel for that. They took a bit of a hit in 202021 as you can see with the pandemic. But look at that. They are on course for making 200 million pounds of uh profit which is a lot of money. Uh okay. Really good stuff. Some great and contributions in chat. Let's let's look at a question here on Gregs I think. Oh yeah. Okay. So let's put a minute on the clock. Can you give me two government policies that might have a direct impact on the profitability of Gregs? Over to you. One of the big success stories at UK retailing in the last 20 years. They are I think a super business. Here the application is thinking about policy. You've got several to go through with you, but can you think of two policies? And the key here everybody is to make your application as specific as possible. Okay. Examiners really like that little extra detail. So there's a brilliant answer. Increase the national minimum wage, especially considering the demographics of Craig's employees. Absolutely like younger demographic VAT exception on hot pasties thought pieces. Okay. Yes. So other hot other foods if it's hot you get charged VAT. If it's warm you don't Bengal increase VA on fatty food says Greg's food is terribly unhealthy. They haven't yet brought in a fat tax b um um who knows they might do. Finn talks about Finn over the indirect tax on sugar. Uh really good stuff. Wow. The the team economics over 700 of you with in the live stream. You are superb at these examples. So if you're watching not just me but watch the live stream. Here's Sophia's me uh uh answer. Government increase national minimum wage increase cost especially if labor is a high proportion of total costs and if it is wage elasticity demand inelastic. JT talks about VAT tax on excess fat or sugarville products. Yep, good. That could be an intervention. Lo X12 talks about youth work visas with the EU. Really interesting linking of the labor market there. Absolutely fantastic answers. A lot of you talking about minimum wage. Quite a few of you talking about corporation tax. I want to make a point about that now actually. So here's my answers coming up. So minimum wage and national insurance because both of which have gone up this year. Link that please to variable costs, business rates. So this is like a local authority tax on business properties. So whereas minimum wage affects variable costs, business rates really affects fixed costs, veh and hot food, things like health regulations and also things like sustainability. So in 2022, of course, they had the plastic packaging tax. So you think about your sandwiches and your what have you. Uh if you are um if you don't have more than 30% of your plastic packaging recycled then you subject to quite a hefty tax. Now I point I made at the point there at the bottom if UK government raises corporation tax. Gregs it doesn't affect Gregs's pre-ax profit but they will keep less of their pre-tax profit as post tax profit. So they'll have less money to invest or pay dividends. But again, uh, good application, really good application from you because you're linking it specifically to Gregs. Okay. Amy says, "The national min wage, can we bring up Amy's answer? Uh, national min wage rise may not have such a significant effect as as labor, but Greg could be subsided by technology such as selfch checkout services and order machines." Now, Gregs are certainly triing that in many of their stores, as are lots of others, including places like Leyon and uh and uh other places. Uh Matthew says, "Gregs probably use transfer pricing anyway." Well, of course, Gregs is uh based in the Northeast, and if they, you know, sending money back to the Northeast, that's fine by me. Let's move on. I wanted to look at Oh, low costs. So I think you know things like the fast consumer food sector mailales is a good economics question. How about lowcost gyms? Now last year we asked a question on hotels. How about lowc cost gyms? Look at the growth of lowcost gym membership in the UK. Big rise there particularly in the last 10 years. Obviously a bit of a dip during the pandemic that that these things happen. Uh this is based on data I have. There's one or two years missing there. You can see where they didn't publish the data in 2020 and 2021. Uh Pure Gym is the biggest nearly two million members. It makes a profit of just under 100 million a year. It's got gyms in 400 locations and I guess quite a few of you in the live stream today will be members of Pure Gym. Okay. So here's my question for you. Can you give me examples application of price and non-pric competition used by a business such as Pure Gym? Have a go please. [Music] Again, we're trying to find specific applications. So, the more detail, the better. Now, you don't have to know stuff, but Poly's got exactly the right approach there. offering the first month free is a form of prize competition and that's specific to the gym industry. The bean board no joining fees. So business students will know this as industry specific application and it's really really good for economics as well. So Isaac goes there for um no access fees. James comes in with no joining fee, cheap prices for first three months to encourage joining. Yeah, that's good application James. Uh Ben clearly goes to Pure Gym because he understands they've got flavored water machines and 25 opening times. This is really good application. Ted Scott says thirdderee price discussion by having cheaper membership for younger consumers. Yeah, really good. Uh you could also add the cheaper membership for older consumers. Of course, people who you know like to go to the gym because it's a day out. Yeah, Snuffy 1X talks about the app to improve quality. Yeah, really good real-time information on how busy the gym is, availability of spin classes and what have you and uh you know really really good use very innovative app. Pure gym by the way is based in Leeds and Gregs of course is based in Newcastle. So Leads and Newcastle are the two finest cities in the UK driving UK business success. Some great examples. I've gone for price competition obviously uh low low the whole idea isn't it of low cost business models low monthly membership no long-term contracts now link that to a concept here uh sunk costs consumers can have sunk costs if you if you put in the 12 month rolling contract for your smartphone for your broadband or for your gym membership that is a big sunk cost if you choose to switch as I found to my cost last year when I switched my uh my smartphone and things like 24/7 I Ben mentioned that mobile app innovations lots of locations I think certain memberships you can go to any gym can't you in the UK and uh bundling things like loyalty perks discounts on fitness gear now key example show both price and non-pric strategies for full analysis marks especially if the question comes up okay moving on let's look at fast fashion I think this is a be a brilliant exam topic Primark, uh, one of the world's leading lowcost, high volume fashion producers. It's actually owned, it's an Irish company. It's owned by Associated British Foods, which makes the majority of ready meals in the UK. 450 stores worldwide. Uh, huge business, nearly 10 billion revenue last year. And interestingly, if you get a question on globalization for paper two, Primark has factories in over 400 places in China, then Bangladesh, India, and Turkey. That is almost like a a chart showing comparative advantage. Uh here's my question for you. Can you give me two specific examples please of internal economies of scale achieved by Primark? Over to you. [Music] So again the purpose of this session avoid generic answers try to make it specific and it goes for self-service checkouts technical comments of scale really good so it's the type and the example Anna dovetailes really nicely there. Yeah, Lyanna goes for bulk buying of apparel t-shirts and cotton. Really good. Yeah, superb. Sophia technical specialized capital make clothes financial bulk buying fabrics. That's really good. Financial actually Sophia, I probably use that as a kind of it's a marketing economy of scale or is it financial? With financial, I tend to focus on the the ra the cost of raising debt or equity. Uh but don't worry too much. As long as it's linked to Primal, that's really good. Lots of answers coming through. Lots of management ones coming through. Uh purchasing e-commerce of scale. Superb. Here are my two answers or three. Purchasing things like bulb buying of of materials. Link it pleased to monopoly. A lot of these businesses have monopoly power. Access to cheaper interest rates expansion. Technicon is the I think the Birmingham Primark is the biggest clothing store in Europe. I think it is there might be one bigger in Barcelona and also the fact they uh they have such huge geographical diversification that's a riskbearing economy but some great answers coming through for talking about risk bearing by selling not just clothes but also home stuff I think Primark did a joint venture or commercial venture with Gregs actually last year some really good stuff well done almost done on the market structures and we'll do some bit of work on intervention in our time together can you Please give uh so we've got six businesses here. An example of monopoly power for Amazon the everything store. How does Amazon use exploit take advantage of monopsy power? Euan helpfully monopy is one buyer monopoly is one seller. Thank you for that. So monopoly is a dominant buyer. Monopoly is a dominant seller. So can you give me please a specific example of Amazon's monopoly power? It's a great business to have as part of your application. Okay. So yep quite a few some of you using labor markets which is fine in terms of you know the wages paid to people working in warehouses and and Amazon drivers. Matty Peters has a lovely example that Amazon has large monopoly power over authors and their books, publishing companies. Yeah. So, this is monopoly rather than pure scale economies. Fair monkey nappies. I'm sure that happened and they shut down baby stores. That's one for me to uh to research after this session. Yeah. So, a lot of people talking about that purchasing power. Really good. They can buy packaging at low prices. Really? That's a really good example. The economy of scale of bulk buying packaging. Uh really good. Yep. I've gone for they can demand lower prices, better terms, and exclusive deals from manufacturers, wholesalers, and distributors. And they can uh and they can dictate the fees, the commissions, and other terms to third party sellers. We have an Amazon store if you want to if you want to get some revision materials delivered tomorrow. We have an Amazon store which does pretty well, but we're a relatively small player compared to some of the big publishers. And of course, if you're a big publisher, you've got more power via Amazon. So, Amazon will charge a higher fee to smaller third party sellers than it does to bigger um distributors. And that is monopoly power at large. But Amazon, here's the key point. It has monopoly both in product and in labor markets. Right. Fantastic. just to round off the market structures and then we have 10 minutes on interventions. Uh can we move on to the I think it's codec cracker. Yeah, here are two code crackers. Now this is for student of the day. Can anybody get this right? Our production team will be looking at the answer. See you get the first correct answer. Can you rank these businesses in terms of their market share in the UK grocery sector, highest to lowest as of April the 15th? That's the data I got. So, here we go. Can you say shameless plug? No, no, no plug intended. So, Zach says EDCAB. So, that's what we're looking for. Okay. So, can you rank these businesses in terms of their market share? And I know what the answer is. I think yep. And we do have some correct answers. Now, it's up to the production team to work it out, but we do have some correct answers. Here it comes on the screen. It is D E C A B. You know, I don't know if Jim and the team can work out, but lots of people. Ethan, um, definitely Ethan Coverdale got it. Was he the first? Who knows? Let me sir. Yeah, D E Cab. Matty Peters according to our AI algorithm won that one. Well done, Matty. Let's try one more then. This is harder one. So, now everybody's taking on Matty on this one. Can you rank these UK gas supply businesses by their market share, highest to lowest in March 2025? So, those are five leading gas suppliers. I know the answer. Let's see if we can find it. As soon as we have it, it will appear the screen. Whoever's cracks the code. I think we have it. I think we have it. Let's crack the code. It is D C EBA. Now again, we'll double check, but we think we have a winner there. Brilliant if he did it. Octopus. Great for your notes. Well done, James. Octopus was a business that did not exist 10 years ago. It's now just overtaken British Gas. It's bigger than Elon over EDF, British Gas. It is now the biggest supplier of gas in the UK, but doesn't produce any gas. It buys it in the wholesale market. Okay, let's crack on. We've got a few minutes left. I just wanted to look at interventions. So, we've done a lot of work on Marcus market structure. Hope you found that useful. Let's quickly look at interventions. Minute clock, please. examples of one indirect tax in the UK that's specific and one that's advalone. Over to you [Music] Yeah, Milo's coming there with that very specific tax there. The vape tax that's not due in Milo until next year. The ban on disposable vapes kicks in in six weeks time. But really good example. Thank you for that. Uh cream egg Scottish alcohol dating 65p per liter. Not quite right. Okay, come on to that. It's 65p per unit. Per unit. Okay, here are my answers. Look, you need to be revising taxes for the exam clearly. VAT, yes. Excise duties, sugar tax, VAT is obvious specific is advalum. So to air passenger duty, insurance premium tax 12% is an advalum tax. The ones I'd be looking at there in particular would be things like the plastic packaging tax and insurance tax. So, uh there's lots of taxes for you to revise there. Don't forget, by the way, you can download this presentation and the PowerPoint that goes with it straight after the the live stream. Let's move on to subsidies. Oh, before we do that, yeah, key point uh with with taxation uh is that little trade-off between revenue generation and behavioral change. So uh some taxes aim to change behavior. The sugar tax great example. Others focus more on raising revenue. Now the key evaluation point is how how is the tax revenue used. So if the revenue is hypothecated in theory the sugar tax goes to fund primary school sports then it's more supported. But again the other aspect is who pays the tax. So the extent to which indirect taxes are regressive. The plastic packaging tax came in in 2022. So it's that's for products using less than 30% not 305 30% recycled. Now of course the government could keep the tax the same level but it increase the percentage recycling requirement and that would force firms to shift over time to more recycling. Okay. Uh subsidies I think next. Yes please. One minute on the clock. Some examples please of government subsidies in the UK. Again, try to make them as specific, sorry, applied as possible and as up to date as possible. Some great answers coming through from electric cars to apprenticeships to loft insulation. Wow, some great answers coming through. Well done. Yeah, well done. Keeping on the uh live stream everybody. Allesia's point there, the UK's environmental land management scheme, an outstanding bit of application, Allesia, I'm going to add that to my own notes. I think that's what replaced the European Union cap because we left the EU. So, the UK government now funding farmers who manage husband environmental resources. Otto talks about enterprise zones, business rate discounts. Yeah, a business rate discount is an effective subsidy. So, that would be uh that would be used. Archie Miller talks about insulation subsidies. Zakira talks about eat out to help out. A famous one. Luke Moretti talks about boiler upgrade schemes. Team economics, you are smashing this. Here are my answers coming up on the screen. I've gone for renewable energy subsidizing. Oh yeah. Contracts for difference is the idea that um uh renewable energy providers if they have surplus energy they can um send it back to the grid. Okay. So it's surplus energy can be fed back as like a feeding t into the grid. Help to buy housing plug-in grants for electric vehicles which came to an end three years ago. Uh a lot of people talk about the subsidies for bus transport that would be a really good question. So capping fairs at two pounds plus pro had to subsidize it and also things like the boiler upgrade scheme grants towards installing lowcarbon heating systems like heat pumps and also home insulation. Really good I think just moving on to the next slide. Um yeah when you get a question on subsidies again it's this popular question you often evaluating the benefits against the costs. Most subsidies are targeted at producers, but some things like the payments for energy bills are targeted at consumers. The key here is the elasticity. If demand is price inelastic, the subsidy doesn't boost consumption very much. Uh but if something's very price elastic, you get a big increase in consumption, but you spend a lot on the subsidy. Temporary subsidies tend to have a mixed record because people just not not aware of them. And Elelliana says, "Wasn't the help to buy scheme removed?" Yes, although it's just been brought in in a in a slightly different um format. Great stuff. Moving on quickly because we might be going a little bit further. Hopefully stay with us. Maximum prices, please. Over to you a minute. Examples of maximum price interventions. Couple of people saying what about child care? Yes. Well, taxfree childare is effectively subsidized. So that would count as a as a good example sub and you would use the phrase subsidized or tax-free childare. So, Alex coming in there with rent controls and Harry energy price caps. Thank you. Yeah, really good stuff. University fees. Great answer there from Ephemeral Wisdom. Payday loans. Yeah, capping that. Student accommodation rent in Scotland. Superb. Here are my answers. So, oops. What we done there, Jim? Can you go back to the U PowerPoint, please? Just give our production team a few seconds to reset. Yeah. So, some examples there. Uh there we are. I've gone for housing. Sorry about that. Uh rent controls. Yeah, I think this is a really key one. So please make sure you have revised rent controls. We'll come back to that in a second because it has been a policy in Scotland. If we take HJ's comment off, please that' be great. Uh prescription charges of course are capped. Energy price guarantee and the cap on tuition fees. Now let's focus on rent caps in Scotland. The Scottish government bought in a cap on rent. Initially it was a cap. uh they couldn't increase and then they allowed them to rise by 3%. So in real terms uh that was a price cap. Now that may or may not have an effect but it's now been abandoned. Uh let's move on to the next question. Can we get and this is really important to evaluation. Can we have two policies other than rent controls that might improve housing affordability in cities in the long term? So revised rent controls Scotland is a good applied example probably not in place for long enough to have a significant effect. It was initially a kind of policy response to the cost of living crisis. The Scottish government thought look we've got to keep the cost of renting under control. So they capped any increase and then the next year they said rents could only rise by 3%. So what what could given that rent controls are probably not a long-term solution, what else can we do to make housing more affordable? Lots of great answers coming through. It's good. Yeah. And of course, you got the options here. You can tax, you can subsidize, or you can change the regulations surrounding housing. As the answer says there, build on brownfield sites to increase housing supply, deregulate the green belt. Superb. Yeah. Here are my here are my thoughts. So things like direct funding to build social housing usually through housing associations and that might involve selling unused public land. Uh the Labour politic committed to reforming the planning system so uh to speed up new house constructions first home schemes discounts on on new homes. tax incentives for brownfield. So offering tax relief to cover the cost of uh remediation of things like contaminated land or buildings on brownfield sites and crucially government financial support to stimulate modular housing. So encouraging new businesses who can build sustainable, affordable, cheaper housing using modular construction methods. Now here's the point. Uh, all of those are essentially supply side policies, but some of them are fiscal supply side policies, some of them regulation supply side policies. Okay, I've always says, "Jeff, will you be in Stratford on Tuesday?" I will be in Stratford on Tuesday. Looking forward to it. Really am. Come and say hello. Okay, let's crack on. Almost there. Minimum prices, please. Over to you. Let's see what the the collective can come up with. Margin utilities. Do policies like help to buy actually make housing more affordable or are they just pushing up prices in the long run? Great evaluation. Just driving demand up ultimately doesn't make housing more affordable. [Music] Some good examples coming through from minimum prices for farmers. Uh the Scottish alcohol one which we'll look at in a second. Minimum wage of course is a is a a relevant price. Fair trade from Antonio. Great answer. Here are my answers coming on the screen. So, I've gone for obviously the alcohol one. Um the and again be aware of the of the situation. In Scotland, uh they brought in a minimum price in 2018, 50p per unit, not per liter. Uh so more expensive sort of more alcoholic drinks with greater percentage alcohol get taxed more. It's going up or has gone up to 65p per liter per unit. So in 2024 labor market obviously minimum wage we're all revising that. Some people suggesting uh that um there should be a proposed minimum price on energy drinks to reduce youth consumption. Now this is really interesting the extent to which the government might follow the kind of Scottish approach and bring in a kind of minimum retail price for Red Bull uh relentless monster etal just very quickly I want to just quickly go through the diagram this this is a key one if you're with AQA you would use negative externalities of consumption where social benefit lies below private benefit but if you're with EDXL and I'm just going to focus on that you uh assuming that you think alcohol is a demonic good. The social cost lies above the private cost. The private optimum is price P1. Then the next slide shows where we would like to be. The social optimum where we price the externalities in. And in theory, a minimum unit price that gets you to point B should help to internalize the externalities. So that's the diagram that you would draw. However, it depends on the elasticity of demand. I've drawn the demand curve there as fairly elastic. The next slide shows what happens if demand is price inelastic. D2 marginal private benefit curve is price insensitive and the same minimum price only takes you from Q1 that should be to Q3 but point to point D. So, this minimum price really isn't very effective. That will be a great diagram to use to make the point that minimum prices don't always work in the way that they're intended. Whereas uh a tax on these drinks would generate revenue and a minimum price does not generate revenue in itself. Okay, almost there. Um let's just quickly finally our last example look at environmental economics. Big topic. UK has legally binding targets to achieve net zero by 2050. Uh and significant progress has been made but those that's the emissions have come down a lot but a lot of industry is still obviously emitting a lot of carbon. Okay. So uh just quickly can we think of specific policies please to bring down CO2 emissions and accelerate the progress towards net zero? Over to you for our last question today. So the UK government has clearly stated legal legal legally bound commitments to achieve net zero. The question is how do we get there? We will be doing application sessions and evaluation sessions for papers one, two, and three. We'll do an evaluation paper uh um video probably next week after the grade boosters. So, how do we achieve a great stuff there? Congestion charges, emissions trading. Yep. Now, there's a reason I'm asking this question at the end, a specific reason. Okay. To make a really key evaluation point. As always, as you'd expect, our group is amazingly well informed. Your application, by the way, today has been incredible. I've added I've added three extra points to my notes as a result of what you've come up with. I've gone for market based schemes, emissions trading, obviously taxes on petrol and diesel, subsidies, boiler grid schemes, home insulation, uh contracts for difference, which is where you pay people to invest in solar panels and things, wind turbines, and they feed that back into the grid. obviously regulatory approaches, public investment and also things like carbon offsetting. So funding to uh boost aforestation. Somebody saying, "Haven't carbon prices come down?" Well, let's have a look. In fact, this is the chart. I think I put in the chart showing carbon pricing. Yes, UK carbon prices, if you go back just two years ago, they were nearly £100 per ton. Partly because of a mild winter, partly because of an overallocation of permits, the price of carbon has come down to 3035 per ton, which is way below the social cost of carbon. That's a stable price which is important but is it a high enough price for carbon? Absolutely good. Moving on. Uh just very quickly policy mix. We say a lot about this at grade booster. By the way, if you get any question on intervention, okay, uh most market failures are multiple market failures. They often need demand and supply side interventions. One policy on the is rarely enough. Ask yourself the following questions with any one intervention. Is it effective? Does it meet its aims? Who wins? Who loses? What are the equity effects? Are resources allocated in a more efficient way? Are there better alternatives perhaps in the long term? And are there the what are the risks of intervention? Could intervention cause government failure? Really important. Always weigh up the pros, the cons, the risks, the uncertainties with each policy. Don't just describe them. Economics is all about uncertainty and often about lots of moving parts. Okay, Jeff's golden rules I think to finish with. Um, three really important rules. First of all, if there's data in charts and tables, and there will be, there must be data in your answer. And I'm I'm about to start two months of basically marking full time. When I see an answer that doesn't have any data in it from a data response question, you know, I get really upset. But when I see an answer that makes good use of data, both contextual and also from the extracts, it has a huge effect. So please, if there's data in charts and tables, put some data in your answer. Second, second one, use each extract at least once across the different questions. So let's say you're doing AQA or Ed Excel, whatever it is, you've got four extracts, three extracts, and two charts on a table. just tick off when you've used it. Each little bit, each piece of the jigsaw is there for a reason. So, use each extract or chart or table at least once, not in every question, but across the questions. And most importantly, if you're writing an essay, uh you sometimes get a stem, don't you? Uh the 25 mark daily response essays are easy. You know, AQA um daily response, but if you have a stem, you have to put in your own context. Include at least one piece of application in each main paragraph, both for analysis and evaluation. That has a huge effect on the levels of response. Okay. All I can say is wow. Thank you. If you stayed with us and something like 600 people are still with us 75 minutes on I hope you found the session useful. We we're going to try and do this again. Well, we are going to do it again with macro and we'll do a special session on the world economy, the UK economy uh head of papers two and paper three. We'll do some synoptic work as well. So, we're away next week on Grey Booster. We're really looking forward to our week in London. The week after daily live streams, we're back. We're back on it, okay? as we head towards paper one and then once paper one's out the way we go to macro and then we'll do some paper three work over half term but then you'll be in the exam season you'll be really into it keep working hard keep being smart work together the best thing you can do is to try pass questions under time conditions or parts of questions that's the biggest thing you can do but find like-minded people who are prepared to work hard with each other bit like our group today and we'll be absolutely fine. Now, there will be a recording of this session timestamped available about 5 minutes after we finish or download the presentation for you. Make it available on the blog and on the on the YouTube site. Uh if you enjoyed the session, found it useful, consider giving us a like. That helps the algorithm. But most importantly for me, thank you for giving up so much for your time on a Sunday afternoon. Um we don't take your presence for granted. We really do appreciate it. As always, stay happy, stay healthy, stay curious, and see you sometime soon.