Lesson Worksheet - Cross Price Elasticity of Demand
A lesson worksheet / test on cross price elasticity of demand is available here. The test has a mixture of short answer questions and multiple choice questions on cross price elasticity of demand. An answer key document is also available
Test
Cross_Price_Elasticity.pdf
Answer key
Cross_Price_Elasticity_Key.pdf
Lesson Worksheet - Income Elasticity of Demand
This lesson worksheet / quiz provides multiple choice, short answer and fill in the blank questions on income elasticity of demand
The quiz can be downloaded here (in pdf format) along with a quiz with answers included
Quiz
Income_Elasticity_Demand.pdf
Quiz with answers
Income_Elasticity_Demand_Key.pdf
Germany speeds ahead
After a terrible 2009 in which real GDP dropped by 4.9%, the German economy has posted the biggest increase in her quarterly GDP since West was unified with the East. German gross domestic product expanded by 2.2 per cent rate in the second quarter compared with the previous three months. German industry is riding on the back of a rebound in demand in the global economy (her manufacturing businesses are closely tied to swings in the world economic cycle) allied to the competitive boost of the recent depreciation of the euro against the US dollar.
Steve Evans reports on the surging German economy
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Behavioural economics and competition policy
Here is a link to a recent research report from the Office of Fair Trading. It provides a very readable introduction to what behavioural economics is and then asks whether this emerging area of economic thinking can have useful applications in the shaping and handling of competition policy. Great for teachers who want to introduce some behavioural aspects into their teaching of competition policy issues in the UK and in other countries.
81 million young workers unemployed in 2009
The global financial and economic crisis has spurred a record increase in youth unemployment according to a new report from the International Labour Organisation.
This deeply important structural issue for the UK and many other labour markets is not confined to developed nations. In developing / emerging economies where 90 per cent of young people live, youth are more vulnerable to underemployment and absolute poverty. The ILO reports that 152 million young people, or about 28 percent of all the young workers in the world, worked in 2009 but remained in extreme poverty in households surviving on less than US$1.25 per person per day in 2008.
More here from the Guardian and here is a link to the ILO report on the problems of youth unemployment in the global economy. And a report on long-term youth unemployment in the UK from the Telegraph.
Lesson Worksheet - Market demand and supply
This lesson worksheet / quiz provides multiple choice, short answer and fill in the blank questions covering market demand and supply and changes in market equilibrium prices?
The quiz can be downloaded here (in pdf format) along with a quiz with answers included
Quiz with answers
Market_Demand_Supply_Key.pdf
King on the economy
The Guardian offers a good summary of the main issues arising from Mervyn King’s recent Inflation Report. There is a great little animation in the middle of this article to show how each month the Bank’s projected growth figures have always proven to be a little too optimistic and how they have deteriorated over the past couple of years.
read more...»Typical 2689% APR…Eh??
When a friend’s Facebook status mentioned a website offering loans for a TV at 2689% APR, I was intrigued. It sounds astronomically high, doesn’t it? – The answer, as always in Economics, is that “...well it depends…”
Firstly, APR stands for annual percentage rate and is the interest payable on the amount borrowed and other charges expressed as an annual rate of charge.
Secondly, the website in question is called Wonga.com - “Wonga provides small and super-flexible loans around the clock. We’re here to help solve urgent and short term cash flow problems.
Wonga’s business model is based on lending money (maximum £400) for short durations (maximum 30 days).
read more...»Falling in love with a fish
Chef Dan Barber argues for a radically different approach to food quality and sustainability with this impassioned and inspirational talk at TED - his love story revolves around a revolutionary farming method in Spain. Superb as part of any course on the economics of farming and fishing and approaches to the erosion of ecological capital. He argues that intensive agri-businesses that are reliant on capital and chemicals have never produced good food.
Choppy times ahead
“Looking ahead, the UK economy is facing a major rebalancing away from private and public consumption and towards net exports. Achieving that rebalancing, while confronting these headwinds, is likely to mean a choppy recovery.” (Mervyn King on prospects for the UK economy over the next couple of years).
Details here of the Bank of England’s latest inflation forecasts.
But as Chris Giles pointed out in an article in the Financial Times earlier on this week:
“Despite having hundreds of economists working in the Bank, and the most sophisticated suite of economic models in the UK, the monetary policy committee’s forecasts since 1997 have achieved no better outcome than if the committee had simply predicted the average level for inflation and growth over the 13-year period”
Hat tip to Michael Owen for spotting this excellent FT analysis. FT audit casts doubt on Bank’s forecasts
Reasons to fear a jobless recovery
Will the UK labour market be able to generate enough new jobs to sustain the recovery? There are plenty of doubts surfacing at the moment and we might be finding ourselves on the cusp or yet another surge in structural unemployment. Here are some reasons why - despite our much vaunted flexible labour market - a jobless recovery is on the cards.
read more...»Fiscal Austerity - Businesses in the Firing Line
The Guardian has this timely article offering plenty of examples of firms whose revenues & profits will be affected by public sector cuts in the months (and years) ahead. What the article does not really consider are the opportunities for businesses during this time of fiscal austerity. Firms who can supply goods and services to public sector organisations more efficiently - open source software businesses spring to mind - can tap into the need for great value for money in delivering public services. And the wider context is the threat to individuals and corporates from a higher tax burden and higher long term interest rates unless the fiscal deficit is brought under control. Once in a generation a nation needs to take a cold hard look at state spending and this time has arrived.
Presentation - Wheat Prices in 2010
Here is a new streamed revision presentation that covers key changes in global wheat prices during 2010 and their economic impact. Surging wheat prices impact on producers and consumers of many different goods and services. The market is a great case study in the causes of price volatility and the inter-connected nature of markets.
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Lesson Worksheet - Scarcity and Choice
Here is an mcq-based worksheet on the basics of scarcity and choice.
Download lesson worksheet on scarcity and choice
How much does an Economist get paid?
A brief follow up to Richard’s recent blog post on economics as a career option
So how much does an economist get paid? I have often fielded this question from students expressing an interest in sacrificing themselves for the benefit of the economics profession! The latest annual survey from the Society of Business Economists provides some evidence!
read more...»Clones
As a row over milk and meat from cloned sources erupts, it does provide for a good discussion on the importance of full information and information failures in free markets.
Car smuggling
A good (although extreme) example of what happens when the authorities put strict controls on the supply of a good in a free market: there is a surge in the black market and illegal methods of obtaining the goods - in this case, luxury cars being smuggled in underground tunnels in Gaza.
Drug rationing - the role of NICE
The National Institute for Clinical Excellence (NICE) was created in 1999 and given the task of making decisions about which types of drugs ought to be made available through the National Health Service. One of their main aims is to ensure a standardised level of medical care throughout the country and minimise the risk of postcode prescriptions - where healthcare seems to be determined by where someone lives rather than their clinical need.
read more...»Groceries adjucator checks in
The BBC business news site reports on the set up of a new body to police supermarket code of practice for suppliers - catchily called the Groceries Code Adjudicator that will sit within the Office of Fair Trading (OFT).
For many years there has been a long running saga about the buying power (monopsony power) of the major supermarkets when purchasing from farmers. Dairy producers have complained that the supermarkets have squeezed prices to such an extent that they can no longer make money - many have left the industry. The supermarkets respond that many of the complaints come from lobby groups that have no day-to-day experience of the farming/retail relationship. They claim it is simply not in their own interest for commercial relationships with the farmers to threaten the economic viability of the farming industry. The long running row over whether supermarkets abuse their dominant relationship with some farmers and food suppliers will rumble on.
Jim Paice - UK farming minister argues that “The new adjudicator will help to strike the right balance between farmers and food producers getting a fair deal, and supermarkets ensuring their customers can get the high-quality British food they want at a price they can afford.” Critics argue that an adjucator is not needed and it will become another costly quango and a cause of government failure.
EC on IBM
The European Commission has launched two competition inquiries to study whether IBM has abused its dominant position in mainframe computers. The study will examine whether IBM has put obstacles in place that prevent competitors from operating freely. The other inquiry, launched by the Commission itself, will look at IBM’s relations with maintenance suppliers.
Cluster bombs
Here is a good example of evidence that “prisoners’ dilemmas” can be resolved through cooperation/collusion, as a global cluster bomb ban comes into force this week.
The Convention on Cluster Munitions bans the stockpiling, use and transfer of virtually all existing cluster bombs, and also provides for the clearing up of unexploded munitions. It has been adopted by 108 states, of which 38 have ratified it.
Although 22 out of the 28 countries in NATO have joined, many of the world’s major military powers - including the US, Russia and China - are not signatories to the treaty, showing the major problem that still exists in this version of the prisoners’ dilemma… that is the incentive to “cheat” or “not cooperate” is always very strong…
Consumer sentiment weakens as double dip looms
Swings in consumer confidence have often provided reliable evidence of short term turning points in economic activity. And there are growing fears of a double-dip recession for the UK with a raft of household surveys suggesting a weakening of sentiment about prospects for the economy.
read more...»Cocoa Economics
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...»Economics of Gambling
Earlier this month, the Economist did an in-depth special report on gambling with lots of good ideas for discussion:
- is gambling chance or luck?
- game theory and poker - can it be solved?
- The effect of the recession on casinos: When the chips are down
- growth of Asia’s gambling
- Government policy and the Internet - the effects on the gambling industry.
Contestability of banking sector
A good case study for when discussing contestability:
Britain’s first new High Street retail bank in more than 100 years opened for business today - Metro Bank.
The company’s launch was accompanied with an array of gimmicks to attract maximum publicity, such as the offer of biscuits for customers’ dogs and free breakfasts for clients.
Their “USP” includes: promises to open seven days a week and provide credit and debit cards within 15 minutes of application, and customer service and quirkiness to differentiate themselves.
Little sign yet of a Yuan appreciation
Back in June the Chinese authorities announced that they were prepared to allow a managed withdrawal of the pegged currency against the US dollar. There has been longstanding pressure from US law-makers that an undervaleud Yuan has given China an artificial competitive advantage in international markets. And that the huge rise in her current account surplus is indicative of an exchange rate that is some distance from a long-run equilibrium level.
read more...»Pressure for higher minimum wages in Bangladesh
This BBC news video looks at demands for better pay among the three million or more workers (the majority of whom are women) who work in garment factories in Bangladesh. The country has over 4,000 textile factories and has become one of the world’s biggest exporters of clothing. But for many the jobs available offer long hours and very low pay of around $25 dollars a week - the trade unions are lobbying for average wages three times this figure. Will it threaten the competitive advantage of Bangladeshi producers looking to hold onto contracts from many western buyers?
The video is a good resource to use when teaching aspects of labour markets and globalisation in developing countries
Where next for the UK economy?
The Independent newspaper yesterday carried a pessimistic interview with the Chief Economist of the Bank of England (Spencer Dale) in which he commented on the risk of a “triple whammy” for the British economy - namely a dubious combination of anemic growth, rising inflation and much higher unemployment. The interview is available here. According to the piece “The economy, said Mr Dale, would not return to normal “for an awfully long time”.
Tough times ahead for sure but perhaps there are also grounds for optimism not least for manufacturing industries able to export their products to economies that are emerging from the downturn. And the latest (albeit provisional) data for UK GDP shows an economy much stronger than many people expected. The UK economy grew by 1.1% in the three months from April through to June - close to double the growth rate that was expected by the markets.
I have updated my keynote presentation on recent macroeconomic developments for the UK economy. This seventy-five slide presentation covers many of the main macro indicators and focuses on some of the risks and opportunities for Britain into the next crucial stage of the cycle.
read more...»Broker spends $520m in a drunken stupor and moves the global oil price
Not an example you would find in a standard textbook - but a fun one to use nonetheless!
Healthy Options - Which Menu Works Best
A second summer hat tip to Michael Owen for picking this article from the Independent with Jamie Oliver defending his approach to make changes to the choices available to students when taking school meals. Oliver was responding to criticisms from Health Minister Andrew Landsley. The inspiration behind the Fifteen Foundation cites inadequate funding available to train school catering staff properly.
