AS Micro

Revision: Stocks and Prices

Many AS microeconomics questions revolve around the volatility of soft commodities such as coffee, crude oil, rubber and tea and harder commodities such as iron ore, copper, tin and platinum. It is important to be aware of the important link between stocks and changes in market prices, especially in an age when commodities have become a new asset class with much more speculative activity than before.  Stocks are also important in many other sectors of the economy – for example the property market and the market for carbon permits.

Revision note
Revision_Stocks_Prices.pdf

Powerpoint charts
Stocks_and_Prices.ppt

Revision: Income Inequality

In this revision note we recap some of the causes of income inequality in the economy and look at what has happened to income inequality / relative poverty in Great Britain in recent years. Aimed at AS and A2 students.

Revision note:
Revision_Income_Inequality.pdf

Information Failure: Solariums

I dont usually listen to Women’s Hour, but during a lazy morning just before the start of our summer term, I latched onto a really interesting discussion about the dangers inherent in using sun beds and other solarium machines - not least from younger people whose skin is not yet mature enough to cope with intensive sun-showering. I was alerted to this issue last week with this article on the BBC news website about a 13-year-old boy who suffered severe burn blisters to his face after visiting a tanning salon three times in just one day. We can expect teenagers not to understand fully the dangers of AV tanning treatments but the problem is more widespread than that. Indeed, earlier on this month, Cancer Research released a report warning of the risks - this BBC news video might be a good resource to use if you are teaching the topic of information failure in a market. Should the industry be left to regulate itself or is there a case for government intervention e.g. enforcing a minimum age of 18 or 21 for using sun bed machines? The discussion might be broadened into looking at why people are willing to pay for such services and the availability of substitutes.

Bio-fuel curse and cure

Today marks the introduction of the new EU Renewable Transport Fuel Obligation and there has been a huge amount of coverage about the economic and environmental impact of the switch towards biofuel production.

Firework free-rider

The son of an Indian billionaire held a wedding celebration near to my living quarters last weekend - the marquee itself must have cost upwards of £100,000 to hire - they are still dismantling it nearly a week on from the event. It was clearly a very exclusive event judging from the security in force on the night itself. But a very expensive fireworks display to round off the evening offered a classic example of a free-rider. For some the pyrotechnics were great fun, for others, unaware of the event and with animals disturbed by the size and scope of the display, there was little they could do to reject the effects and no way that appropriate compensation could be paid.

Competition or informal price fixing?

Sainsbury’s is completely awash at the moment with price check stickers on hundreds of branded grocery items from rice to sauces, from pizzas to soups. On the surface a sign that the supermarkets are competing with each other to keep down the prices of basic items at a time when household budgets are being stretched (the big marketing push at Sainsburys at the moment is the idea that you can feed a family for a fiver). 

Battle of the energy drinks

I popped into my local Sainsbury’s this morning for the groceries and I came across a staggering price differential between Red Bull - 250ml individual cans on sale for 88p or a pack of 4 for £3.29 - and Sainsbury’s own-brand caffeinated drink Blue Bolt which has been on sale for some time at just 26 pence for a 250ml can - less than one third of the price of a can of Red Bull.

Chart of the Day: China’s imports of primary goods

We often read about the size of the ‘China effect’ on the demand for and prices of primary commodities traded around the world. This over-simplification ignores the impact that other emerging market economies are having on the consumption of primary products – indeed a much greater proportion of global economic growth is being provided by the resource-intensive emerging economies. Added together, the emerging economies account for 23% of global GDP whereas the US accounts for around 29%.

Revision: Console wars

I will be using this table with my A2 microeconomics group as a revision exercise - partly to discuss competition in a contestable market; the factors that determine pricing power and other micro concepts such as elasticities of demand, economies of scale and hardware product cycles. How else could the data be used? Suggestions please! I have made the original word document available for download below.

Console prices
Console_Prices.doc

Interest rates, exchange rates and annual holidays

As expected, the Monetary Policy Committee of the Bank of England has cut the base rate by 0.25% today.