Real life examples(entire micro and macro)

Topics Real life examples

Price elasticity Price inelasticity of demand: Apple products: iPhones,
iPads, while being very expensive, they are still in
demand because of their uniqueness. These products
are highly inelastic. Although there are many
substitutes for the iPhone, which are less expensive,
people prefer iPhones because of their uniqueness
and there are other smartphones, but there is nothing
which matches the iPhone.
The tech giant from Cupertino has, over the past year
or so, perfected the art of pushing up the price points
of its latest phones, but without any significant impact
on demand.
Apple shows the world it can push up price and still
ensure demand | The Financial Express

Price elasticity of demand: Pepsi and Coke are soft

drinks in the same elastic market of soft drinks.
Increase in price of either will result in decrease in
consumption.
If the price of Coke increases by 1%, we can expect a
1.74% decrease in the amount of Coke sold. Coke is an
elastic good. If the price of Pepsi increases by 1%, we
can expect a 1.55% decrease in the amount of Pepsi
sold. Pepsi is an elastic good. 
305Lecture-7.pdf (wsu.edu)

Price elasticity of supply: Photovoltaic solar power has

a high elasticity of supply, because building new solar
panels is cheap and fast. As the price of solar energy
fluctuates, the amount of solar panel produced
changes rapidly. Technically this is actually a “fixed
capital” cost, but it’s so modular that you can install as
little or as much solar power capacity as you like,
which makes it behave a lot more like a variable cost
than a fixed cost. As a result, a 1% increase in the price
paid for solar power increases the amount supplied by
a whopping 2.7%, a supply elasticity of 2.7.
Elasticity and the Law of Supply | Human Economics
(patrickjuli.us)

Price inelasticity of supply: Nuclear fission has a very

low elasticity of supply, because building a nuclear
reactor is extremely expensive and requires highly
advanced expertise. Building a nuclear power plant
costs upward of $35 billion. Once a reactor is built, the
cost of generating more power is relatively
trivial; three-fourths of the cost a nuclear power
plant will ever pay is paid simply to build it (or to pay
back the debt incurred by doing so). Even if the price
 of uranium plummets or the price of oil skyrockets, it
would take a long time before more nuclear power
plants would be built in response.
Elasticity and the Law of Supply | Human Economics
(patrickjuli.us)
tax GST is a tax imposed on all goods and services sold
domestically for consumption. GST is a multi-stage tax
system which is comprehensive in nature and applied
on the sale of goods and services. The main aim of this
taxation system is to curb the cascading effect of other
Indirect taxes and it is applicable throughout India.
What is GST? - Goods and Services Tax in India
(bankbazaar.com)
subsidy The power subsidies indicate that the government
charges farmers a cheap rate for the electricity they
receive. Farmers primarily use electricity for irrigation
purposes. It's the difference between the cost of
producing and distributing energy to farmers and the
price paid to them.

The State Electricity Boards (SEBs) may generate their

own power or buy it from companies like NTPC and
NHPC. The power subsidy "incentivizes farmers to
invest in pumping sets, bore-wells, tube wells, and
other irrigation systems."

List of Agricultural Subsidies Given to Farmers By

Government of India (krishijagran.com)
Price mechanism the Government of India recently passed an order to
decontrol the prices of diesel and remove it from the
jurisdiction of the government. Now the prices will be
determined by the demand from consumers and
supply from the oil companies.
What is Price Mechanism? Definition of Price
Mechanism, Price Mechanism Meaning - The
Economic Times (indiatimes.com)
Income elasticity Income elasticity of demand: Porsche sports car. As
income increases, people can spend a higher % of
their income on the car
Examples of elasticity - Economics Help
Cross elasticity An example of a complementary product is an eBook
reader such as Kindle. If the price of a Kindle drops,
the consumption of eBooks and audiobooks will
increase because more consumers can afford the
reader.
Command economy The most famous contemporary example of a
command economy was that of the former Soviet
Union, which operated under a communist system.
Market Economy vs. Command Economy: What's the
Difference? (investopedia.com)
Market economy For example, although the United States allows
 companies to set prices and workers to negotiate
wages, the government establishes parameters such
as minimum wages and antitrust laws that must be
followed.
What Are Some Examples of Free Market Economies?
(investopedia.com)
Mixed economy Although China leans more towards the socialist side,
it does have elements of a market-based system. Since
the death of its leader Mao Zedong in 1976, the nation
turned towards a more market-based approach to
revive its struggling economy. A number of market
reforms followed, allowing citizens to start businesses,
foreign direct investment, and its eventual
incorporation into the World Trade Organization
(WTO). 
Mixed Economy Definition | 4 Examples, Pros, Cons -
BoyceWire
Price ceiling In 2012, after Hurricane Sandy hit the Northeast
United States, New York and New Jersey set price
ceilings on basic goods such as bottled water and
gasoline. Doing so prevented price gouging and
allowed people to afford these essentials during a
difficult time.
Types of Price Ceilings (With Examples) | Indeed.com
Price floor In 2018, Scotland became the first country in the
world to set a price floor on alcoholic beverages. The
minimum price was set at 50 pence (70 cents) per unit
of alcohol, targeting cheap, but strong alcoholic
beverages. The aim was to reduce the consumption of
cheap but highly toxic alcoholic beverages and thereby
limit the side effects.
Price Floor Definition | 5 Effects and 4 Examples |
BoyceWire
Merit good recall the obligatory nature of certain vaccinations,
certain medical examinations, a minimum education,
or certain forms of assistance.
Merit Goods - an overview | ScienceDirect Topics
Demerit good Smoking – People underestimate health costs or risks
of getting addicted. Smoking brands include Marlboro
Drinking – Health costs to drinkers. Costs to society
include more expenditure on health care and policing.
Alcohol producers include Johnny Walker
Taking drugs – Health costs to drug users – people
underestimate risks of getting addicted. External costs
of more crime. An example of a drug is cocaine.
Merit and Demerit Goods - Economics Help
sustainability The average energy-efficient bulb uses less than $1.50
of electricity per year and will last at least a decade. If
every U.S. home switched just one light fixture to
energy-efficient bulbs, we could reduce our
greenhouse gas emissions by 9 billion pounds.
6 Examples of Real-Life Sustainability | Budget
 Dumpster
Public good A public good that is not actually provided for by
private or public organisations. Air is a natural
element, although clean air is free from pollution and
is non-excludable.
Public Goods Definition (Characteristics and 4
Examples) - BoyceWire
Economies of scale Warehouse stores such as Costco and Sam's Club buy
huge quantities of goods in order to receive low bulk
prices.Large shipping companies use supertankers to
transport their goods.Water companies and oil
pipelines have invested in expensive networks of pipes
and systems in order to bring resources to large
numbers of customers.

Economies of Scale Examples & Types | What are

Economies of Scale? - Video & Lesson Transcript |
Study.com
Diseconomies of scale When a firm grows, it often takes on sizeable levels of
debt. For example, Apple had over $98 billion in debt
in 2020. With such levels of debt, there are also
interest payments that need to be made – another
cost that can impact final costs if investments do not
create sufficient productivity gains.
Diseconomies of Scale Definition | 8 Types and 5
Examples | BoyceWire
PCM Carrots, potatoes, and grain are all generic, with many
farmers producing them. As the product is
homogenous, it is easy to buy some land and farm it.
Additionally, it is also easy to leave the market too. So
the market has key signs of perfect competition.
Perfect Competition Definition (5 Characteristics, 3
Examples) - BoyceWire
Carnegie Steel Company created by Andrew Carnegie
monopoly (now U.S. Steel). From the late 19th century to the
early time of the 20th century, Carnegie Steel
Company maintained singular control over the supply
of steel over the market. Carnegie Steel Company
during the period of monopoly was effectively setting
the price for the steel nationally without the free
market competition. 
Monopoly Examples | Top 6 Real Life Examples Of
Monopoly (educba.com)
monopolistic Starbucks of the USA, called the king of all coffee
chains, has a presence in over 65 countries globally,
and Costa Coffee, the best coffee chain in Europe,
comes second in world rank after Starbucks.The two
globally reputed coffee chains both sell a similar
product, ‘coffee,’ but the coffee is not the same at
both the outlets. A Difference is created by the quality
of coffee, customer service or hospitality, and prices.
Both the coffee houses are healthy, competing to
 serve better products and services. However, coffee is
not just served by Starbucks or Costa, but there are
various big global coffee chains other than these two
like Dunkin Donuts, McDonald’s or McCafe, etc

Monopolistic Competition Examples (Top 3 Real Life

Examples) (wallstreetmojo.com)
oligopoly In the United States during the mid- to late-1800s, a
boom of railroad construction took place, including
establishing the transcontinental railroad that
stretched from the East Coast to California. Railroads,
being both capital and labor-intensive, presented high
barriers to entry and legal status as a sort of public
utility. Four of the five transcontinental railroads were
built with assistance from the federal government
through land grants, receiving millions of acres of
public lands from Congress.1  This allowed for an
oligopoly, especially as smaller competitors were
acquired. For instance, in 1901, nine locomotive
manufacturing companies combined in a merger to
form the American Locomotive Company (ALCO).

The Most Notable Oligopolies in the US

(investopedia.com)
Injections and leakages Leakage:  the leakage that financial institutions
provide in the economy is the option for households
to save their money. This is a leakage because the
saved money can not be spent in the economy and
thus is an idle asset that means not all output will be
purchased.
Circular flow of income - Wikipedia
Injection: An example of a tax collected by the
government as a leakage is income tax and an
injection into the economy can be when the
government redistributes this income in the form
of welfare payments, that is a form of government
spending back into the economy.
Circular flow of income - Wikipedia
Cyclical unemployment The first cyclical unemployment occurred in the US
back in 2000. The US entered a technical recession,
registering two-quarters of negative economic growth,
driven by the dotcom crash. The recession was rather
mild, with unemployment increasing in the
subsequent years. The recovery was almost non-
existent, as unemployment never reached the same
levels it did in 2000. At least before the world was
rocked by the financial crisis in 2008.
Cyclical Unemployment (Causes, Effects, Examples) -
BoyceWire
Structural unemployment The UK, like many other Western economies, have
seen the number of jobs in coal mining fall
dramatically in the past 100 years. From employing
 over 1 million miners in the 1920s, there are now
fewer than 5,000. Coal miners are a group of workers
susceptible to structural unemployment. As manual
workers, they may have no formal qualifications and
may have strong attachments to their mining town.
However, when the mines close it can be difficult to
find new jobs.
However, although structural unemployment has been
a major problem in former mining towns, there are
also signs of new industries and jobs being created in
regions such as south Wales and south Yorkshire

Structural unemployment - Economics Help

Frictional unemployment To estimate the unemployment rate, the U.S. Bureau

of Labor Statistics (BLS) uses data on the employment
status of the U.S. population from a monthly survey of
approximately 60,000 households. A person must
have no job and must actively be seeking a job to be
considered unemployed. If they are not actively
searching for a job, they are not considered part of the
labor force and are not counted in the unemployment
rate
What Is Frictional Unemployment? (thebalance.com)
inflation In the period following World War I, Germany
suffered severe economic and political shocks,
resulting in large part from the terms of the Treaty of
Versailles that ended the war. The treaty required
payment of reparations by the Germans through
the Bank for International Settlements for the
damage caused by the war to the victorious countries.
The terms of these reparation payments made it
practically impossible for Germany to meet the
obligations, and indeed, the country failed to make
the payments.1

Prohibited from making payments in their own

currency, the Germans had no choice but to trade it
for an acceptable "hard currency" at unfavorable
rates. As they printed more currency to make up the
difference, the rates worsened, and hyperinflation
quickly took hold. At its height, hyperinflation in
Weimar Germany reached rates of more than
30,000% per month, causing prices to double every
few days.2 Some historic photos depict Germans
burning cash to keep warm because it was less
expensive than using the cash to buy wood

What are some historic examples of hyperinflation?

(investopedia.com)
disinflation Between 2011 and 2015, there is a fall in the UK
 inflation rate from 5% to 0%.  This is a period of
disinflation. It was caused byA fall in the costs of
production – falling commodity prices. A slight
appreciation in exchange rate making imports cheaper
(compared to past depreciation). Weak economic
growth – stagnant real wages.

Disinflation - definition and meaning - Economics Help

deflation
America's Great Depression, starting in 1929 and
continuing into the 1930s, is arguably the best-known
example of real-world deflation. A significant drop in
demand, supply, and prices led to the collapse of
companies across the country, and even the collapse
of banks themselves. The events of the Great
Depression echoed across the globe and took a toll on
the markets in other countries as well. It took until
1942 for the country to recover.  

What Is Deflation, and Is It Really Bad? | PointCard

Economic growth The Taiwanese had an income of $1,400 in 1950. All

countries directly below Taiwan – Malta, Bolivia, Sierra
Leone, and the Democratic Republic of Congo for
example – were similarly poor in 1950. By 2016 GDP
per capita in Taiwan had increased to $42,300. The
Taiwanese are now among the richest people in the
world, 30-times richer than they were in 1950.
Which countries achieved economic growth? And why
does it matter? - Our World in Data
Economic development 2019 had been a good year for poverty reduction and
before the pandemic absolute poverty worldwide was
projected to fall consistently over the next few years.
However, as Table 1, shows there is now likely to be a
large increase compared to the pre-Covid projections.
There will also be an increase in relative poverty
corresponding to a less equal distribution of income as
the lowest income groups will be the most affected by
the pandemic. The World Bank estimates that the Gini
coefficient in developing countries could increase by
as much as 6% as a result of the pandemic. India in
particular is expected to be among the countries most
affected having a large number of vulnerable people
combined with a projected negative growth rate of
11%.
 Development - real world examples for IB Economics
students — Peak Study Resources (peakib.com)
equality The United States Declaration of Independence, for
example, contains in its preamble the following
statement: 'We hold these truths to be self-evident,
that all men are created equal…' This statement
suggests that, in the eyes of those who wrote the
document, every citizen of the newly formed United
States was to be treated the same as every other
citizen around them. This means that, theoretically,
they all should have had equal access to employment,
equal opportunities to purchase and own land, equal
treatment in society, and so on.
Equality: Definition, Types & Examples - Video &
Lesson Transcript | Study.com
equity the Americans with Disabilities Act (ADA) was written
so that people with disabilities are ensured equal
access to public places. For example, it means that
public restrooms need to have ramps so that people in
wheelchairs can enter.
Equity vs Equality and How They Are Different
(uopeople.edu)
Direct tax Corporate Tax: Under the Indian Income Tax Act,
1961, both Indian as well as foreign organizations are
liable to pay taxes to the government. The corporate
tax is levied on the net profit of domestic firms. Also,
foreign corporations whose profits appear or are
deemed to emerge through their operations in India
are also liable to pay taxes to the Government of
India. The income of a company, be it in the form of
dividends, interest and royalties, is also taxable.At
present, companies having gross turnover up to
Rs.250 crore are liable to pay corporate tax at 25% of
the net profit while companies with a gross turnover
of more than Rs.250 crore are liable to pay the
corporate tax at 30%.

Direct Tax : Types of Direct Taxes in India -

Paisabazaar.com
Indirect tax This tax is levied by entities for rendering services like
consulting, legal, and other such services. This tax is
collected from the service recipients and paid to the
Central Government. From 1st June 2016,service tax
was 14% with Swacch Bharat Cess (0.5%) and Krishi
Kalyan Cess (0.5%) bringing up the applicable rate to
15%. Small service providers with an income of less
than INR 10 lakh per annum are exempted from
 paying this tax.
Indirect Tax in India - HDFC Life
poverty More than 3 billion people live on less than $2.50 a
day and an estimated 1.3 billion live in extreme
poverty, making do with $1.25 or less daily. The good
news is that in 2010, only 18% of the world’s
population was living way below the poverty line as
compared to 36% in 1990. It’s a small victory, but the
progress is slow. Sub-Saharan Africa accounts for 1/3
of the world’s poorest people, another 1/3 comes
from India and then China, contributing 13% to the
global poverty statistics.
Poverty in the World Today (theworldcounts.com)

Fiscal policy The Obama administration used expansionary policy

with the Economic Stimulus Act.9  The American
Recovery and Reinvestment Act cut taxes,
extended unemployment benefits, and funded public
works projects.1 0  The law, which was enacted in 2009,
was meant to stimulate the weakening economy,
costing $787 billion in tax cuts and government
spending.1 1  All this occurred while tax receipts
dropped, thanks to the 2008 financial crisis.
Expansionary Fiscal Policy: Definition, Examples
(thebalance.com)
Monetary policy

The Great Recession of 2007-2009 is a prime example

of an expansionary monetary policy used to curb an

economy in free fall. For most of 2007, the fed funds

rate was fairly stable at 5.25%. When troubling signs in

the housing market first started to appear, the Fed

reduced the rate to 4.75% in September 2007. Once

the housing market collapsed, and the recession

began in December 2007, the rate decreased to

4.25%. The Fed also lessened the gap between the

discount rate and the fed funds rate, and extended the

period for discount-rate loans.

 How the Federal Reserve uses expansionary monetary

policy to stimulate growth during an economic

downturn | Business Insider India

Supply side policies President Ronald Reagan put supply-side economics

into practice in the 1980s. He used it to combat
stagflation. That's a rare combination of stagnant
economic growth and high inflation. For this reason,
supply-side economics is also called Reaganomics
Reagan cut the top marginal income tax rate from 70%
to 28%. He reduced the top corporate tax rate from
48% to 34%. That helped boost the economy out of
the worst recession (at that time) since the Great
Depression. Reagan also increased defense spending
at the same time. He doubled the national debt while
he was in office. According to Keynesians, that also
boosted economic growth by putting more money into
the economy, creating jobs, and increasing demand.
As a result, he was the third greatest contributor to
the U.S. debt ranked by president. He increased the
debt by 186%.

Supply-side Economics: Definition, Does It Work,

Examples (thebalance.com)

Business cycle The business cycle since the year 2000 is a classic
example. The expansion of activity happened between
2000 and 2007 was followed by the great recession
from 2007 to 2009.It started with the easy access to
bank loans and mortgages. Since new homebuyers
could easily afford loans, they purchased them. More
and more homebuyers kept purchasing homes
resulting in an increase in demand for homes. 

What is a Business Cycle? - Definition | Meaning |

Example (myaccountingcourse.com)
Abuse of monopoly power The US Federal Trade Commission and 46 states have
brought antitrust cases against Facebook, accusing the
company of using its social media dominance to crush
competition and calling for penalties that could
include a forced break-up. The FTC accused Facebook
of conducting a “years-long course of anti-competitive
conduct”, which included strategically buying up rivals
that threatened its monopoly power and cutting off
services to squeeze rival developers. In particular, the
FTC highlighted the social media company’s
acquisitions of Instagram and WhatsApp in 2012 and
2014, respectively, as designed to neutralise
competition.
US sues Facebook for ‘years-long’ abuse of monopoly
power | Financial Times (ft.com)