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UK carbon taxes in a mess

Wednesday, April 02, 2014

Climate change is back in the news, and continues to stir up heat, but not much light. It’s proving fantastically difficult to come up with consistent and efficient policies to reduce CO2 emissions.

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How Coal Shortages Might Impact Indian Growth

Wednesday, March 19, 2014

The development of India, or its non-development relative to China, is an interesting topic, and one that Bob Hindle has already been blogged about in relation to its tax system.

However, there are other aspects of the Indian economy that will also impede its ability to grow, notably its lack (or should that be 'lakh'?) of coal.

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UK economy: Tidal Lagoons

Friday, February 07, 2014

Cost benefit analysis, economies of scale, energy economics, regional development, economic growth, competitiveness ... there is a veritable a tidal wave of applied economics in this article from the Guardian on plans for Tidal Lagoon Power.

Energy companies charge cash-paying customers more - market failure and Government intervention

Tuesday, February 04, 2014

If you attended the recent tutor2u revision conferences for up-coming micro-economic exams (look out for the macro workshops and combined micro and macro to come in March) you will have seen how fuel-pricing was used as an example of market failure, government intervention strategies and government failure.  

Fortunately, the energy market is a gift that keeps giving to us in the economics world (every cloud has a silver lining) as a report out today (see this link for the BBC version of the story) indicates that Parliament is about to intervene to try and stop the energy companies charging more to customers who pay by cash rather than by direct debit (£114 per year, according to the report).

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Costing the world’s problems with Bjorn Lomborg

Saturday, February 01, 2014

A great introduction to some global or development economics, looking at the world’s biggest problems, as measured by their cost to the world’s economy. There’s commentary and a good stimulus video. It will add a dimension to your introduction to global challenges, even if you’re already familiar with the basic Copenhagen Consensus idea: prioritise the world’s problems from biggest to smallest. That approach should lead to a more efficient response, given that resources – and political will – are limited.

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Capitalism: an engine for progress

Wednesday, January 22, 2014

It's the time of year when many commentators are going back to basics and asking if our dominant economic model - free market capitalism - is a force for good in the world.

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Fog and filthy air

Wednesday, January 08, 2014

Here's another weather blog.  It's cold and atmospheric conditions are right for exceptionally severe local air pollution; smoke, micro particulates and sulphur dioxide combine into a greasy 'smog'.  The health impact is severe. People start talking about a 'killer fog' and even an 'environmental disaster'.  Thousands die over the next few days and weeks, many more face serious long term consequences.

Where am I describing?

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Unit 4 Macro: Vertical Farming - Growing Food without Soil and Water

Monday, December 30, 2013

This is a really interesting short video from the World Bank on how a Kenyan entrepreneur is using the concept of vertical farming to grow food and fodder using 80% less water. In the classroom, show the video and get the students to find ten ways in which this innovation can have a development impact - there is so much in this clip!

A Kenyan entrepreneur has adapted Hydroponics, a technique that allows to grow plants without soil, to African climate. The technique that traditionally needs an energy intensive climate control, now allows to grow plants in simple sheds without the use of electricity

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London’s Super Sewer

Friday, December 13, 2013

With London’s Victorian sewage system struggling to cope, the 25km Thames Tideway tunnel is intended to boost capacity. But the £4.2bn Super Sewer project has run into considerable and vocal opposition. London's main sewers are over 150 years old and built for a city for 2.5 million people. The population of London is now over 8 million and when heavy rainfall arrives, there are frequent and sizeable discharges of raw sewage into the river Thames. 39 million tonnes of untreated sewage flushes into the Thames in a typical year - that’s enough to fill the Royal Albert Hall 450 times. The sewage discharges puts the UK in breach of the EU Urban Wastewater Treatment Directive.

Critics of Thames Water argue that they have under spent on sewage system maintenance over the years despite recording persistently high profits. Thames Water announced £150 million profits in 2012.

Residents around the 21 proposed construction sites have protested about the externalities connected to the project. Other opponents argue that the money would be better spent on cheaper sustainable urban drainage techniques.

Future generations will benefit but today's water users will pay most of the construction cost with higher water bills imminent for a number of years to come. The Thames Water proposes adding £70 to £80 a year indefinitely to the average bill of Londoners to fund the 16-mile sewer from Acton in west London to Abbey Mills in east London. But a report by Bloomberg New Energy Finance calculates that the tunnel could be built for between £30 and £35 per household per year

Guardian: London super sewer 'should be scrapped in favour of cheaper projects'

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Unit 1 Micro: Mexico’s Water Farms

Wednesday, November 20, 2013

"The market will define our future" - the words of an organic farmer growing produce in Mexico City's water farms and which - according to this excellent video report from the Financial Times - have the potential to feed huge numbers of people living in the metropolis. Careful husbandry of the canals and surrounding farm land creates the opportunity for farmers to complete between seven and nine harvests a year, an interesting link to the concept of price elasticity of supply. The video reinforces the importance of human capital - detailed, specific knowledge of the growing conditions and calendar of crops that is handed down from one generation to another.

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The Circular Economy

Sunday, November 03, 2013

The FT video clip below provides a short interview with Dame Ellen MacArthur - the former ocean yachtswoman - and her idea of building a circular economy - this idea might be a fruitful area for student exploration when studying environmental economics. To quote from the web site:L

"The linear ‘take, make, dispose’ model relies on large quantities of easily accessible resources and energy, and as such is increasingly unfit for the reality in which it operates. Working towards efficiency—a reduction of resources and fossil energy consumed per unit of manufacturing output—will not alter the finite nature of their stocks but can only delay the inevitable. A change of the entire operating system seems necessary"

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Paul Ormerod: Energy and Emissions: Taxation or Technology?

Thursday, October 24, 2013

Energy prices are in the news. The recent actions of some of the energy companies can plausibly be described as provocative, no matter how well founded their decisions might be. They run the risk of provoking the ire of both the Opposition and the Government.

One interesting aspect of the debate is that it has become even clearer that decisions taken by Ed Miliband himself in the Brown government are partly to blame for our high energy bills. The plethora of green taxes and subsidies has become very expensive for consumers.

But how effective have such policies been? Not very much, seems to be the answer.

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How Ronald Coase would have tackled the UK Nuclear energy problem

Monday, October 21, 2013

UK nuclear energy is painfully burdened by regulation. Energy prices are at an all time high, so much so that politicians are desperately trying to find policy solutions to utilise this dissatisfaction for votes. There are widespread complaints that energy companies' profits are too large. The Prime Minister encourages us to look for a cheaper energy deal. Surely there could not be any clearer signals from the market and society that now is the time for suppliers to enter the energy market. But unfortunately this is not the case; a detriment to us all.

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Hinkley China Power.

A huge reminder about the shifts in economic power arrived with the news about the development of Hinkley C nuclear power station.

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Unit 1 Micro: Air pollution leading cause of cancer

Sunday, October 20, 2013

Air pollution is widely regarded as a negative externality arising from consumption and production. New research from the World Health Organisation finds that exposure to air pollution increases the risk of cancer - this 2 minute news report looks at their findings. You can find extensive revision notes on externalities and market failure by clicking this link.

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Unit 3 Micro: Price Leadership in the Gas Oligopoly

Saturday, October 19, 2013

The market for retail gas supplies is mired in controversy and threats of direct government intervention to freeze prices should a new Labour government be elected in 2015. This week we have seen a classic example of the type of price leadership we expect to see in an oligopoly.


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Unit 4 Macro: Minerals and Development - Overcoming Resource Curses

Sunday, October 13, 2013

On the World Bank twitter account, President Jim Kim is quoted as saying that "Properly managed, new minerals wealth could transform Africa’s development." Back in June 2013, a new report from the African Progress Panel looked at this important issue and set out an agenda for maximising Africa’s natural resource wealth and using it to improve well-being.

My own students have been researching the economics of natural resources and whether they can be a blessing and/or a curse to countries seeking sustained growth and development. I just wanted to share one or two of these essays with you because I was delighted with the depth of the independent research on show and the quality of evaluation in their arguments.

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Natural Resource Curse - Updated Presentation

Tuesday, October 08, 2013

Here is an updated presentation on aspects of the natural resource trap or natural resource curse issue facing low (and also high) income countries

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Unit 1 Micro: Scarcity and Abundance

Wednesday, September 25, 2013

AS economics student Ed Hardy offers his interpretation of this question: “Within a few years the common problems we associate with scarcity will be a thing of the past.” Do you agree?

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Conflict: Growth vrs the Environment

Monday, September 23, 2013

As soon as students encounter the idea of GDP they are guided towards thinking about the possible drawbacks to growth, especially for the environment.

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Factors of Production: it’s not just ‘Land’

Wednesday, September 18, 2013

'Factors of Production' is a bit of a mouthful, but it's a better term to use than 'resources' when describing the ingredients needed to produce goods and services. I realised that when my students were finding the word 'resources' quite misleading at the start of their Economics course.

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Nobel-winning Economist Ronald Coase dies at 102

Tuesday, September 03, 2013

One of the greatest economists of the last 100 years has died at the ripe old age of 102. This blog entry will feature an updated listing of obituaries and other resources on Coase's work. Coase was awarded the 1991 Nobel in economics “for his discovery and clarification of the significance of transaction costs and property rights for the institutional structure and functioning of the economy." His final book, 'How China Became Capitalist,' was published last year, when he was 101.

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Unit 1 Micro: Factors of Production at Work in Mining

Sunday, August 25, 2013

Here is a great example of factors of production at work in the mining industry. The BBC's Linda Yueh has been on a tour of Mount Whaleback - an iron ore mine in the Pilbara region of Western Australia. The mining is taking place on an epic scale and the commodities industries have been a major source of economic growth for Australia in recent years.

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Technology: the limitless resource

Monday, August 12, 2013

Environmentalists say we must change our behaviour to save the planet and pass on something to our children. They often pick symbolic targets designed to raise our awareness, even where they make an insignificant impact on the problem. The behaviour they favour is less materialistic, in that we are supposed to moderate our wants and live simpler, slower lives. Although many environmentalists ally with the Left against 'materialistic capitalism,' their prescription is profoundly conservative, disdaining the pace and complexity of the modern world.

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The burden imposed by the UK’s “green” energy policy

Friday, August 09, 2013

Green was traditionally the colour of money, but with UK and EU energy policy, it is increasingly the colour of cost.

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The future is shale!

Wednesday, August 07, 2013

The UK Energy and Climate Change Committee has stated that shale gas will not be a "game changer" in the future of UK energy, but they are wrong; it will be. The recent British Geological Survey report pointed to 1,300 trillion cubic feet of reserves, twice previous estimates. A recent study by the Institute of Directors found that the shale gas industry could generate 74,000 jobs and could supply up to half the country’s gas needs by 2030. Furthermore it could also trigger an investment boom worth £3.7 billion a year. Given the location of most of the reserves, it could also be hugely beneficial in reducing the north-south economic divide.

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Unit 4 Macro: Climate Change in Africa Will Hit the Poor the Hardest

Monday, August 05, 2013

A new World Bank report says rising temperatures in the next few decades will cause food shortages and increased poverty in Africa. This short video provides some background on some of the key sustainability challenges facing the continent.

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Unit 1 Micro: Externalities - Air Pollution and Life Expectancy in China

Thursday, July 11, 2013

If this research is accurate the results are truly shocking. Coal related air pollutants have been shown to reduce lifespans in China by over five years, according to a new study conducted by researchers at Massachusetts Institute of Technology and three other universities.

It is a compelling example of the human consequences of the externalities created by intense air pollution in one of the world's fastest-growing countries. Almost half of the world's coal is burnt in China - rapid development in the north of the country has increased the incidence of strokes and lung cancer, in part connected to the distribution of free coal for burning in millions of homes.

The Chinese government has announced plans for a new carbon emissions trading scheme as part of a strategy to lower pollution and achieve more sustainable development. It has ordered firms in heavy-polluting industries to cut emissions by 30% by 2017

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RES Short: Why Are There Cities

Thursday, June 20, 2013

Another RES short video from Bob Denham at Econ Films. The size and location of cities follows a clear pattern -- you just need to look at them from far enough away. Wen-Tai Hsu of the National University of Singapore shows this with the help of economics. This research received the Austin Robinson Memorial Prize at the Royal Economic Society annual conference in April 2013. Some important themes mentioned here for students of economic geography.

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Unit 1 Micro: Occupational Mobility from Mines to ..... Mines

Wednesday, June 12, 2013


Miners made redundant from Maltby Colliery in Yorkshire many of whom with decades of experience faced years on the unemployment register when the mine closed earlier in 2013. But some have been thrown a lifeline with the rising demand for miners in the UK potash industry.

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Environmental Economics: Carbon Prices for Next 1000 Years

Friday, June 07, 2013

The pricing of carbon emissions needs to be sensitive to both long-run climate outcomes and short-term concerns about the macroeconomy. Research by Reyer Gerlagh and Matti Liski reconciles these two timeframes and comes up with optimal prices of between €20 and €130 per ton of carbon dioxide.

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Unit 4 Macro: Planet Friendly Economic Growth Rates

Thursday, June 06, 2013

A new analysis of the allocation of carbon emissions between developed and emerging economies

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Unit 1 Micro: By-Products from Sewage in Dubai

Tuesday, June 04, 2013

The rapid growth and development of economic activity in Dubai has put enormous pressure on the water and sewage infrastructure available in the Emirate. Six years ago there was only one sewage works open there but big investment in new plant has increased the capacity and reduced externalities from a sewage system working at full tilt. As this short BBC video shows, there have been some profitable by-products from investment and innovation in state of the art sewage treatment plants.

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Unit 3 Micro: Carbon Trading and Business Economics

Saturday, June 01, 2013

This streamed revision presentation looks at the economic impact of carbon trading schemes and effects on business costs and profits. It also focuses on an evaluation question for an exam on the effectiveness of carbon trading as a way of cutting emissions.

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Unit 1 Micro: Carbon Trading Scheme In Crisis

Tuesday, April 16, 2013

The European Union's carbon emissions trading scheme is under huge pressure at the moment and there are many who believe that the market-based system of carbon pricing has effectively collapsed. 

  1. There is a fundamental over-supply of carbon permits in the market - on some estimates, an excess of supply of over 840 million permits (one permit = one tonne of CO2)
  2. This has caused a sharp fall in the market price of carbon to below Euro 5 per tonne
  3. At such low prices there is an incentive to use coal rather than cleaner natural gas for electricity generation 
  4. Latest figures show that greenhouse gas output in Europe fell in 2012 by 1.4% - but this is largely the result of very weak economic growth in the EU
Carbon trading is an important intervention at a European level but the system appears to be flawed and there are very powerful vested interests in the debate - for example the interests of Polish coal mining companies, airlines, producers of renewable energies. What are the alternatives to carbon trading? One is a carbon tax.

(Source: The Economist) - click here

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Unit 4 Macro: From Domestic Product to Domestic Progress

Thursday, April 11, 2013

A newly constructed Social Progress Index has been unveiled for the first time with the hope that over time, it might become as widely quoted and recognised as the Global Competitiveness Index as a benchmark of progress made by individual countries in achieving sustainable, balanced and inclusive growth and development. In the 2013 rankings, Sweden comes first and the United Kingdom is second.

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Economics at the Movies - Promised Land

Sunday, April 07, 2013

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. 

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Unit 4 Macro: Brain Gain with Scientific Advances in Africa

Friday, April 05, 2013

What if Africa were to become the hub for global science? This is a deeply optimistic piece which stresses the low base of higher education opportunities in Africa at the moment but which reveals the potential of cross country collaboration and the gains that will come from reversing the brain drain. A great example to use when discussing human capital and long-term development. More on the Square Kilometre Array

Unit 4 Macro: Doughnut Economics

Sunday, March 17, 2013

Oxfam senior researcher and former co-author of the UN's annual Human Development Report Kate Raworth visits the RSA in London to explain 'doughnut economics' -- the bold new theory that is sweeping the development world. A really clear seventeen minute video covering some of the key environment challenges that threaten sustainable growth and a call to make central to the debate the protection of natural capital and social capital.

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Unit 4 Macro: Green Growth - Commercializing Innovation

Thursday, February 21, 2013

Bringing innovations to the market is crucial for countries wanting to focus on green industries as a source of economic growth. This blog will provide a number of short news videos on innovation in environmental products.

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Plastic bags - merit goods?

Sunday, February 17, 2013

In many countries, governments have regulated the use of plastic bags with some countries banning them and others imposing a tax on their use. From an economic point of view, the reasons for a tax seem pretty clear - spillover costs including pollution on land and at sea, the lack of biodegradable materials being a major problem.

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The Costs of Growth - Dirty Air Returns to Delhi

Friday, February 01, 2013

Government and business in India's capital are struggling to cope with the environmental consequences of the city's economic growth. The dirty air has returned to Delhi, making it once again one of the most polluted cities in the world.

In this short video, the FT's Victor Mallet examines the cost to human health.

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Unit 4 Macro: Land Grabs and Development

Friday, January 18, 2013

Land Grabs have become an important and controversial issue in development economics in recent years.

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Unit 4 Macro: The Rise of Resource Nationalism

Thursday, December 20, 2012

In many countries, resource nationalism has become more frequent in recent years, indeed it has been one of the key stories in 2012 as several countries have introduced new resource taxes, natural resource licence reviews and expropriation of assets from private sector companies. This Financial Times news video looks at the trends including resource nationalism within countries as provinces and regions look to exert great control on the revenues from oil, gas and mining projects.

See also: Economist: Foreigners beware - oil and mining in Indonesia

Resource insecurity: New report from Chatham House

Interactive resource: New political economy of natural resources

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The Nutella Tax - a tax on negative externalities

Tuesday, November 13, 2012

Those of you who felt angry or let down by the recent proposals for a  Pasty Tax, or those that have been imposed on static caravans or toasties (turning the mighty Subway in to a new lobbying organisation) in the UK should spare a thought for the poor French citizens who are potentially about to have a new surcharge placed upon Nutella - that famous hazelnut and chocolate spread.

Unlike the previously mentioned British taxes, which were imposed or proposed to generate revenue or close apparent loopholes, this tax has been put forward for market failure reasons.  The tax, of course, is not directly on the brand but upon one of its main ingredients - palm oil.  The proposed increase by the French government is nearly 300%.  The French are arguing that palm oil is a product with negative externalities - poor for the health of its consumers and a large burden on the health system.  There is also a claim that the high production of palm oil in South East Asia has resulted in large-scale deforestation.

Read a short article on the issue at the Huffington Post.  The cost of your morning crepe in Brittany may be about to increase!

Unit 1 Micro: Tragedy of the Commons and Market Failure

Tuesday, November 06, 2012

The “tragedy of the commons” is a metaphor used to illustrate the potential conflict between individual self-interests of producers and consumers and the common or public good.

In the original version of the term, the example is used of a stock of common grazing land used by all livestock farmers in a small village. Each farmer keeps adding more livestock to graze on the Commons, because the marginal cost of doing so is zero. But because the commonly own resource is then over-used or over-exploited, the result is a depletion of the soil and a fall in the value of the resource for all users. The resource may become irretrievably damaged.

The cause of any tragedy of the commons is that when individuals use a public good, they do not bear the entire social cost of their actions. If each seeks to maximize individual benefit, he ignores the external costs borne by others.

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Unit 4 Macro: Perspectives on Natural Resource Curses

Saturday, October 13, 2012

My A2 students have been researching and writing about the economics of natural resource curses - some of their perspectives are provided below.

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Unit 2 Macro Building on the Green Belt in a Drive for Growth

Thursday, September 27, 2012

Former Labour Deputy Prime Minister John Prescott was once (perhaps) quoted as saying: "The Green Belt is one of Labour's greatest achievements, and we intend to build on it!". Danny Boyle's dramatic and wonderful London 2012 Olympic opening ceremony "Isle's of Beauty" began with an unforgettable rural landscape which was soon to be transformed by an altogether harsher industrial landscape during the pandemonium. 

For many years we have regarded our greenbelt protected land as a bulwark against urban sprawl and over-rapid commercial and industrial development. But this is about to change with a change in planning laws and regulations that will make it easier to turn farmland into business parks and new housing?

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Unit 4 Macro: Agri-Chemicals and Infant Mortality in India

Tuesday, September 25, 2012

Using agrichemicals is directly correlated to infant mortality in India.  This is the central finding of research presented by Nidhiya Menon (Associate Professor of Economics, Brandeis University) at the International Growth Centre’s Growth Week 2012.

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Unit 4 Macro: Mining and the Natural Resource Curse

Monday, September 24, 2012

Mining should not be subject to special fiscal treatment, argues research presented by Robert Conrad (Associate Professor of Public Policy and Economics, Duke University) at the International Growth Centre’s Growth Week 2012.

read more...»

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