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A document containing the key diagrams and terms for Unit 1 Micro is streamed below.
For more revision support for AS Micro, visit our dedicated AS Micro blog channel. We also have a free AS Micro revision class on our sister site Zondle and a wide collection of revision notes for AS Micro here on the tutor2u website.read more...»
Here are twelve more questions covering markets and market failure - test your understanding with this zondle-powered quiz!read more...»
The cost of renting property in many parts of the UK continues to rise - would rent controls make any difference? Here is an updated Unit 1 economics revision presentation.read more...»
Here is a revision presentation on the economics of producer and consumer subsidies as forms of government intervention in markets. There are a number of up to date examples highlighted together with an evaluation of the benefits and costs of subsidy payments. This is designed as a revision aid for unit 1 students taking their microeconomics papers.read more...»
Here is an updated revision presentation covering price volatility in commodity markets and the economics of buffer stock "price stabilisation" schemes. designed for unit 1 micro courseread more...»
Workers in Peru say they are suffering because of competition from cheaper imports. Chinese imports are stifling what was one of the largest clothing manufacturers in South America and a free trade agreement could make matters worse. A short video clip on this issue/read more...»
The emergence of a competitor product can often send shock-waves through markets of established products where profits have been more or less guaranteed for decades. Will e-cigarettes have a similar effect on the tobacco industry? And is this an emerging industry in need of greater government regulation and taxation?read more...»
Here are some streamed revision presentations for unit 1 microeconomicsread more...»
This revision quiz provides more MCQs to test understanding of markets in action.read more...»
Here is a revision presentation from our November 2012 AS Micro Revision Workshop programme covering aspects of the price mechanism, price volatility and inter-relationships between different markets. The presentation can be downloaded.read more...»
The Rijksmuseum in Amsterdam has reopened its doors to the public after a 10 year closure for rebuilding. It's most famous exhibit is "Nachten Watchen" or "The Night Watch" by Rembrandt. This short clip Onze helden zijn terug! celebrates the rejuvenation of The Museum. read more...»
Here is another film to add to our collection of films with an economic dimension. Promised Land from Oscar-nominated director Gus Van Sant stars Matt Damon and is an anti-corporate thriller that centers on the controversial natural gas process of fracking.read more...»
An updated glossary of key terms for the Unit 1 Economics paperread more...»
An A-Z glossary for the Unit 1 Micro courseread more...»
I am a Kindle user.
There, I’ve said it. As the founder member of the Kindle-owners self-help group (KOSH), I’m inviting all fellow addicts to come out and admit likewise – until you admit it to yourself no-one will be able to help you. Until we act collectively, no-one will be able to stop those Amazon dealers from peddling their wares.read more...»
Christmas is coming. Retailers are beginning to push their offers hard. The first page of a search on Google for ‘Christmas Toys 2012’ is full of sites announcing the ones which will be ‘hot’ or ‘top’. In total, there are over 75 million results available to be perused.
Last year it was Mishling Tree Monsters, Doggie Doo, and the like which proved the most popular. Readers of a certain age will recall such stupendous commercial triumphs as Teletubbies, Buzz Lightyear and Teenage Mutant Ninja Turtles.
Fond though these memories might be, the runaway successes bring tears as well as joy. Every year, the cult toys of the year become hard, or even impossible, to acquire as the great day approaches.read more...»
This news video from the Economist looks at the impact of the severe drought affecting commercial corn farmers in the United States this year, the drought that plagues most of America has left acres of little more than dry, burnt stalks. July 2012 was hottest US month since records began and the latest forecast is the smallest corn yields for over six years. How will this affect market supply and corn prices in the United States? Which industries rely on corn as a key raw material? How will consumers in the UK be affected?
Remember that the United States is the world’s largest exporter of corn, soybeans and wheat. Ethanol production accounts for about 40 percent of the U.S. corn crop.
More reading here: CNN news: The global impact of the U.S. droughtread more...»
Here is a slide share presentation on the price mechanism in action focused in students taking their AS microeconomics papers.read more...»
If you are a fan of laminate flooring, wood panelled walls or neat wood-based fencing for the garden, the chances are that you will be paying higher prices in the years ahead. Despite the Britain offering a temperate climate for a plentiful supply of wood and a well organised system of land registry and plantation management, the UK market price of different types of timber has shot up over the last two years.read more...»
Here is a selection of this week’s TV (and a bit of radio) that seems to have some good economics content and might provide a welcome, yet useful, break from revision.
Sunday 15th May: BBC4 8pm, ‘The Secret Life of the National Grid’ - could be worth a look in terms of economies of scale, network externalities, economic growth and the importance of infrastructure
Sunday 15th May: Radio 4 8pm, ‘The Bankers and the Bottom Billion’ - possibly some useful bits in terms of development economics
Monday 16th May: BBC1 8.30pm, ‘Panorama’ - this week’s investigative documentary looks at the illegal trade in waste electronic products following the introduction of regulations governing how we can dispose of such things - probably very good in terms of analysing a type of government failure
Monday 16th May: BBC1 9pm, ‘The Street That Cut Everything’ - looks rather entertaining as well as providing a bit of an insight into topics such as government spending on public goods and goods that generate positive externalities
Monday 16th May: BBC4 9pm, ‘The Golden Age of Canals’ - whilst at first glance this may not seem too appealing, I suspect there are some interesting nuggets in terms of networks and infrastructure spending, as well as a look at why canals fell into obsolence due to the invention of the combustion engine (some creative destruction here!)
Tuesday 17th May: BBC3 9pm, ‘Secrets of the Superbrands: Technology’ - a good look at how monopolies put up strategic barriers to entry in terms of branding and smart use of technology to achieve consumer loyalty
Thursday 19th May: ITV1 7.30pm, ‘The True Cost of a Car’ - a look at the impact on motorists of rising fuel prices and insurance premiums, which will bring in cross-elasticity of demand in a roundabout way
Thursday 19th May: Radio 4, 8pm, ‘The Report’ - a closer look at the operation of supermarkets and why there is opposition to their expansion (useful for looking at the impact of rising market power)
Friday 20th May: BBC2 7pm, ‘Wind Farm Wars’ - probably very useful for those sitting AS Unit 1 this summer in terms of negative and positive externalities of production, and the ins and outs of cost-benefit analysis
Hopefully there’s some light relief in there for everyone! All of the BBC programmes will be available on iPlayer for several days after they’ve been broadcast.
The price mechanism figures heavily in the AS micro syllabus. Below we have provided definitions of some key terms and also link to recent blog items and revision presentationsread more...»
Global food prices have risen on average by more than 135% over the last 5 years. While the price of food has been highly volatile, with a spike during 2008, there is clearly a trend pattern of a long term rise. This can be attributed to various root causes, both demand and supply side in nature.read more...»
China (which produces about 97 percent of the global supply of rare earth metals) has announced that it plans to restrict exports of rare earths by 10% for 2011 and it is also increasing export taxes for some rare earth elements to 25 percent in 2011.
These moves raise fears that shortages of rare earths will drive prices higher and make many hi-tech consumer goods more expensive.read more...»
Here is a revision presentation on market forces and resource allocation, which should be particularly useful for AS economists preparing for their AS microeconomics paper.
Mistletoe and Cider - not one of Cliff’s lesser know Christmas songs, but the topic of an interesting news story that I will be using to teach interrelated markets.read more...»
Will a collapse in global cocoa production bring an end to chocolate as an affordable treat and giver of blood sugar? This article from the Independent today was timely as I am teaching price volatility in commodity markets in my AS micro class as a prelude to discussions abour price intervention strategies such as maximum prices / buffer stock schemes etc. I have attached my class homework as a word file in case it is of use to colleagues.
Cocoa Economics (AS micro)
Here is a highly relevant section from a new report from Commodities Now
“World food prices have been trending higher as emerging markets have increased their share of global food demand due to rising populations and incomes. Food products are having to compete for finite resources such as water, land and fertiliser inputs and are increasingly being used for alternative applications such as bio-fuels. As an example, ethanol now accounts for approximately one-third of annual corn output in the US, up from 5% a decade ago.”
The Chinese seem to be getting the blame for a lot these days, so it comes as no surprise to read this headlineread more...»
The global cocoa market is a focus of much attention at the moment. Global prices are close to record highs and are likely to stay strong for some time to come. Just two weeks ago we learnt of the single largest cocoa trade in 14 years with a hedge fund manager purchasing 240,000 tonnes of cocoa beans (seven per cent of the entire world’s supply) valued at £650m ($992m) and sufficient to make five billion chocolate bars!
High prices are the result of surging market demand and limits to available supply. Jürgen Steinemann, chief executive of Barry Callebaut, a chocolatier supplying many of the world’s top foods groups, is reported as saying that: “At this moment, cocoa is a scarce material: demand has been rising, supply has been stable, so prices have gone up.”
Market demand for cocoa is coming from the developed world and emerging markets - rising per capita incomes are fuelling higher demand for chocolate-based products. Chocolate consumption in India, China and demand has been increasing by 15-20% annually and this is expected to continue.
On the supply side there are signs that production is being hit by poor weather conditions, underinvestment in cocoa plantations and a shift of production away from cocoa towards lucrative products such as rubber. Destructive diseases, such as black pod disease have plagued cocoa yields in Africa for the past 15 years.
According to a report in the Scottish newspaper the Herald, “Ivorian cocoa trees, planted more than 25 years ago, have already passed their peak of productivity and, without new planting, production in the country is likely to drop every year, tightening the global market as demand rebounds.”read more...»
This blog provides some updated links on the minimum wage - a government intervention in the labour market.read more...»
The forces of supply and demand in the global oil market feature frequently in economics exams. So here is a revision update on what has happened to the world oil market in the last 12 months. It was a year when crude oil prices recovered quite strongly from their lows at the start of 2009. As we head into 2010, the price of a barrel of crude is rising above $80 and strong economic growth in emerging market countries together with the lagged effects of reduced investment in oil exploration and drilling may take prices closer to $100 in the year ahead.
The price of tea on the global market has surged to a fifteen year high. Supply and demand factors are both at work as this short streamed presentation shows
There are over 1,500 different types of tea so discussing what is happening to the ‘world price’ has its limitations! But this is an interesting market to explore for AS students covering as it does
*Market demand and supply factors
*The impact of price volatility
*Do tea producers actually gain from rising market prices
*Price and income elasticity of demand for tea
*Fair Trade and tea pricing policies
*The impact of changing tea prices on demand for and supply of related products
*The significance of world tea prices for macroeconomic performance of major tea exporting nations
Once students have the core supply and demand analysis, this is a topic that we can return to later on in the course and also in revision
In time for the start of term, there is lots of legislation coming into force this week. There’s the third rise in petrol duty in nine months, starting today, with the return of VAT to 17.5% at the end of year to come – is this the price of going green, or the price of a budget deficit?read more...»
BA has announced some terrible financial figures. Having made a profit in excess of £900m last year, BA this week reported a loss before tax of £401m for the year to 31 March, after seeing its results hit by a weak pound and higher fuel costs. The airline spent more than £3bn on fuel in the last year - it has hit by being fully hedged at an oil price well above $100 a barrel. The falling pound is also a headache for BA executives as the oil it buys is priced in dollars.
A cyclical hat tip to Chris Freeman for spotting this excellent article in the New York Times which looks at the rising demand for vitamin pills and other health products as recession bites. “Sales of vitamins and nutritional supplements, which have grown consistently for years, have surged in recent months, rising as the stock market has fallen. People are clearly cutting back on many items, from bread and milk to designer jeans and flat-screen televisions, but they are stocking up on pills that they think can spare them expensive doctor visits.”
Lots of interesting economics here:
1/ The power of emotion in driving demand - are sales of fish oil tablets linked to how many times people read stories about the growing incidence of early dementia?
2/ Utility and price - is the utility that people say they get from nutritional tablets linked to the price they pay? Some behavioural economists have pointed to studies about the impact on perceived benefit that consumers report when they are told the price of a product - including placebos!
3/ Sales of vitamins are up but sales of pain-killers are down - what might this say about consumer preferences?
4/ Cross price elasticity of demand - the price of health care goes up - causing some consumers to look for supplements to reduce the risk of needing health treatments later on in life
Its not often that television cameras make it into an A Level Economics classroom. But I just spotted this clip from the BBC which features some contributions from Economics students who are getting to grips with the implications of increasing unemployment in the Uttoxeter area. A great clip too for highlighting the knock-on effects on demand when several important employers decide to shed jobs.
Wagon Automotive is a car parts business that supplies a cluster of the biggest volume car manufacturers in the UK. With sales of new cars slumping by over a third, the fall in demand for vehicles inevitably has a negative impact on the demand for component parts - economists call this the derived demand effect. The slump in demand allied to problems in agreeing a fresh line of finance from the banks is likely to cause Wagon Automotive to go into administration this week with the prospect of hundreds of job losses. Expect many more examples of supply-chain demand and employment effects to hit the headlines in the coming months.
Pirelli is a global name in vehicle tyres - a brand which ought to be able to ride out the storm engulfing the world of vehicle manufacturing. But as this BBC video shows, a downturn in the market demand for new cars is having an immediate effect right the way through the supply chain of the industry and Pirelli is having to take strong action.
Pirelli’s plant in Carlisle in Cumbria is slashing the hours available to their permanent workforce in response to a slump in orders for new tyres. Although most jobs look to be safe, the cutback in hours will hit the pay-packets of hundreds of workers in a region where per capita GDP is persistently below the national average. And this decline in real take home pay will affect retail businesses and the local housing market. The short video clip is a good example of derived demand and also the inter-relationships between markets - it is also a sign of a tyre company keen not to lose its grip.
If there is any honey left for tea, the chances are that it will be much more expensive in the days and weeks to come.
There are many causes including the impact of pesticides used in industrial farming, the longer-term impact of climate change, fungal infections, parasites and a shift genetically modified crops. But there is no denying a potentially calamitous decline in the size of the UK and European bee population.
This BBC report claims that the British bee-keeping fraternity are warning that there could be no domestically-produced honey left on supermarket shelves by Christmas. A mite infestation that has killed off a quarter of the UK’s honey bees this year and bee-keepers have been lobbying government for financial help to prevent the problems becoming a rout of the bee population. As market supply falls, the price of honey increases. But the effects are much broader than this. Bees pollinate many of the plants and vegetation which we then go on to consume so we can expect higher prices for our morning coffee or orange juice and also milk. Here we have a graphic example of inter-related markets.
A blog on the Guardian web site makes this point forcibly:
“Some 250,000 species of flowering plants depend on bees for pollination. Many of these are crucial to world agriculture. Bees increase the yields of around 90 crops, such as apples, blueberries and cucumbers by up to 30%, so many fruits and vegetables would become scarce and prohibitively expensive.”
One immediate response has come from the European Union which has agreed to set up recovery zones for bee hives - namely patches of farmland planted with pollen and nectar-rich plants. The fear is that this is too little too late, and the wider externalities from the demise of the bee population will prove to be very expensive for all of us.
Leander McCormick-Goodhart writes about an industry under pressure
The steel industry is the new victim of the financial crisis. Arcelor (the world’s largest steel producer) is planning to cut its output for the fourth quarter by over 30%. The crippling of the steel industry is explained simply through the consideration of supply and demand in the complex interconnected markets.read more...»
Here is a good example of how fluctuating demand in one industry has an effect on sales and profits in another.
Akzo Nobel, the world’s largest paint maker, which bought the Dulux paint manufacturer when it took over ICI last year in a deal worth £8 billion, has announced a sharp fall in profits to €367 million. They plan to make 3,500 workers redundant including many workers in the UK. Business is being affected by the international slump in residential and commercial property construction which has led to a fall in market demand for decorative paints. Paint is a product where much of the volume of sales is derived from demand for the uses for paint. So a slump in the building industry - with many housing projects being mothballed - will impact on sales.
And profits are being squeezed by a rise in the costs of raw materials used in manufacturing paint.
The Dutch business has a world-wide reputation for producing high quality protective paints and other coverings used in home and industrial applications. Just recently they won a sizeable contract from McDonalds which involves supplying a range of paint products for the re-imaging of hundreds of its Purely Simple style restaurants.
Over twenty airlines have gone bust since the price of aviation fuel started to climb and the turbulence in the global aviation market is likely to lead to a fall in demand for new aircraft according to a report in today’s Times.