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I’m sure you know at least a bit about the airport debate. It’s often reported that Britain needs more airport capacity in the South East of England. I’m not going to enter into that fascinating debate here. Instead, I seek to draw attention to the language I have seen used this week by two key players in the argument: Heathrow and Gatwick airport.read more...»
The economic news this week has been dominated by the announcement of a very low rate of inflation. Information from the ONS shows a few more interesting nuggets of data that economics students might like to know.
A reminder, also, that when we start talking quantiles, deciles and indexes, we are now only a few short months away from the arrival of new specifications for the A level and teachers need to start thinking about how they will integrate further quantitative methods into their lessons. If you wish to know more, stock up on a few resources and think about how the A level will change please join us on our latest teacher CPD event in London on the 12th of February looking at how to Master Quantitative Methods (book online from here).read more...»
Two reports published in the last 48 hours provide some really useful background for teaching about policies to address the issues of poverty and inequality in developed economies. The Report of the All-Party Parliamentary Inquiry into Hunger in the United Kingdom was published yesterday, and concluded that because of falling real incomes, delays in paying benefits which people are legitimately entitled to, and sharp rises in fuel bills, many families are "one unexpected bill away from financial crisis".read more...»
Many thanks to Newsnight for providing the material for a lesson about monopsony power - if nothing else, it makes a change from taking Tesco as the model for this topic. On Friday, Newsnight carried a report about Premier Foods, a conglomerate which owns many different grocery brands such as Mr Kipling, Ambrosia, Bisto and Oxo. Their allegation is that Premier Foods has been using its power as a major customer to request payments from its suppliers; if they don't pay up, they are 'delisted' from supplying the company. In other words, monopsony power.read more...»
Julie Walters is the latest actor to claim that opportunities for young actors in the UK are unequal in today's Daily Mirror. There seems to have been a slew of similar claims in recent months from the likes of Ian Mckellen, Judie Dench, Stephen Morrisey and Stephen McGann.
How would economists illustrate this issue?
If you are an A2 Economics student (and depending on which awarding body you sit), you may well have covered Marginal Revenue Product, drawn the 'walking stick' MRP curve and applied such a theory to inequality of opportunity for females or people from a minority ethnic background in the UK. Could the same be applied to acting?read more...»
Every so often I read an article and start to tot up the number of economic concepts being covered in just a few words. This occurred to me again this morning when reading this BBC news article on train fare rises. Train fares are pegged to July's inflation rate and, as inflation is quite low at the moment, this means that the average rise of 2.2% is also relatively low (although regular train users may still feel aggrieved).
Have a read yourself and see how many concepts crop up or give them same exercise to your A2 students. My thoughts are below:read more...»
He's back! Sort of by popular demand! If you're looking for a quickfire activity for your Economics lessons this week then download the latest edition of the Angry Economist. Ask your students to choose one of the 8 policies announced in today's Autumn Statement by George Osborne and our favourite curmudgeonly economist randomly chooses an objective to analyse.
How does the proposed funding for new roads impact on equality for instance? How does the change in Stamp Duty application affect economic growth. A fun and quick way to get your students analyzing first thing in your lesson.
Download the Angry Economist Autumn Statement Edition here.
The often used quote from Keynes (‘in the long run we’re all dead’) is usually invoked to attack the view that if we wait long enough, things will get back to normal (i.e. markets will equilibrate). The problem is, we might be waiting a long time. Action may well be needed to speed things along.
But the widespread view is that it’s always best to be planning for the long term. Conventional wisdom says that firms that focus on the short term are misguided. Yet a recent article has received attention because it argues that a short term world view isn’t always so unwise.read more...»
The Local Government Association (which represents local councils in the UK) have joined the debate about term time holidays for pupils this week. They argue that current rules banning term time holidays or imposing fines on those families who take such breaks do not recognise the complexities of modern families and also prevent poorer families from affording vacations that are invariably dearer during the holiday period.
It struck me whilst reading one of the reports that the suggested policy is to allow head teachers that most quantifiable of options, 'common sense', to make decisions on a case-by-case basis would be the sort of argument that would make me scream if a student wrote it in an assessment answer. Economics students, unlike Local Government officials, need to take a much more analytic approach to this question!read more...»
Reports out over the last couple of days suggest that government spending on free nursery places for 3 year olds since 1998 has not produced any valuable educational or economic outcome. The policy was introduced as part of a series of reforms introduced by Tony Blair when he came to power in 1997. The Blair Government saw it as a method of reducing the differentials between educational attainment of poorer and wealthier sections of society and promoting a speedier return to work for some mothers.
Researchers studying the impact of the policy during the 2002 to 2007 time period, where spending on the policy amounted to more than £7bn found that the education received at age 3 had some impact on attainment at age 5 but any improvements were lost by age 11. The research suggested that the policy had only a minor impact on enabling more women to return to work earlier. Also, there is evidence that 5 out of 6 users of the free place would have gone to a paid-for equivalent at age 3 anyway.
So, does this offer us a good example of government failure in economic and social policy?read more...»
I love a story that really can resonate with students and get them 'irked'. It struck me yesterday that reading about a recent Bristol University research paper that claims that school admission policies lead to greater inequality might strike a chord with some young people.
The study suggests that the common policy in the UK of prioritizing admission places in primary and secondary schools based upon how close a student lives to that school continues a cycle of inequality. The argument is that, wealthier people are more able to afford to move to areas with higher performing schools and so are more inclined to do so. People without that facility have less choice in where to send their children and may have to stick with local schools despite their relative poor performance. So the cycle continues ..... poorer people receive a poorer quality education and are therefore less equipped to get the necessary qualifications to earn higher wages.read more...»
The basic model of behaviour in the Theory of the Firm assumes companies are trying to maximise profits. Strong candidates can identify other motives under the surface too. These make interesting and effective evaluation points when explaining what firms might be up to.read more...»
Here's a couple of quick Crossword activities that you can set in class or as homework from the tutor2u team. They are:
- AS Introductory Economics
- A2 Theory of the Firm
Both come with 15 questions and you can even download the answers if you think you might need some help!read more...»
AVAILABLE TO PRE-ORDER NOW: ESTIMATED PUBLICATION DATE: EARLY DECEMBER 2014
Edexcel UNIT 3 & UNIT 4 Worked Answers is a new printed resource from the tutor2u Economics team which we expect to be available for dispatch from early December 2014.read more...»
AVAILABLE TO PRE-ORDER NOW: ESTIMATED PUBLICATION DATE: EARLY DECEMBER 2014
AQA ECON3 & ECON4 Worked Answersis a new printed resource from the tutor2u Economics team which we expect to be available for dispatch from early December 2014.
Here's a pleasant and short Powerpoint presentation on Perfect Competition that you may wish to include as part of any lesson on the subject. The presentation shows how price, supply and average and marginal revenue shifts as more firms enter the market and the impact that has on profits.
Look out for more diagram testing resources as part of our upcoming Wow Economics CPD events. Regular blog contributor Virang Dal has created a Powerpoint resource called 'Diagram Dissection' that asks students to identify the 'body parts' of a series of 28 economic diagrams.
Here's a short activity in testing student understanding at working out fixed, variable, average and marginal costs and then total, average and marginal revenue. Using a 'Smartwatch' case study as the backdrop the activity asks students to calculate costs and revenues and then work out the profit maximisation and sales maximisation points. Oh yes, and students have to plot a chart as well!
The transport economists amongst you will be giving considerable thought to the question of tackling road traffic congestion. I’ve picked up on two stories here because they take contrasting approaches. The first is to use technology and regulation to tackle the problem – the so-called command and control approach. The other relies on price signals, so might be described as a market led approach.read more...»
We are taking business growth as our first topic for unit 3 this term, and the FT has some excellent resources to introduce the subject, in th form of short Lex video discussions. The three that I have used look at Fyffes attempt to buy Chiquita, which has been 'gatecrashed' by two Brazilian firms, Carillion's bid to buy the much bigger Balfour Beatty, and then to cover demergers, Barclays' sale of their Spanish business.read more...»
Following a similar format to last week's AS 'World of Economics', this free resource available from the download link below is a rapid 10 minute starter for the first class with your returning A2 students.
Entitled 'Whilst you were away', the resource shows a montage of images. Each image also has a question and all relate to news stories from around the world during the months of July and August 2014. The montage remains on screen with a 3 minute timer fading away at the bottom of the screen - ask your students (individually or in small teams) to answer all 9 questions in the 3 minutes available.
Then go through the answers one at a time - there is an individual slide showing the answer to each question plus a supplementary question for each image to stimulate discussion about how the news stories impact on economics. This is a Powerpoint resource so feel free to edit the questions as you see fit.
De-mergers often figure in EdExcel Unit 3 questions e.g. on the structured multiple choice - so this one from mining giant BHP Billiton is a good example to be aware of and to understand the key drivers behind the decision. BHP Billiton plan to sell (divest) non-core assets such as their aluminium, manganese and nickel mines.
As always - focusing on core competencies, streamlining operations to avoid diseconomies of scale lie at the heart of the de-merger process
BHP Billiton is hugely profitable! BHP achieved full-year profits last year of $US13.8bn helped by a 15th straight year of record iron ore production.
More here on the planned demerger from Reuters Business Newsread more...»
This article from the BBC news site is excellent for teachers and students wanting some applied examples of businesses that have succeeded in building through organic growth a durable market presence in the USA and some examples of bigger names / corporations that have failed.What are the key ingredients? How do import tariffs affect a business such as Brompton Bikes?
An almost perfect example of price discrimination is evident in this market revealed on the BBC online news site - read this section carefully!
"Charges vary for some motorists, even if they are picking up the same vehicle from the same location and from the same hire company."
Then read through the article to find clues as to how some vehicle hire businesses have been able to segment the market and discriminate between drivers from different countries inside the EU.
The regulators are onto the issue - expect some action unless vehicle hire businesses adjust their pricing tactics!read more...»
If you are looking for a good recent example of how takeovers can destroy returns for shareholders (of the investing business), then add Morrison’s purchase of Kiddicare to the list!read more...»
P&G has announced that it will look to focus on a much smaller number of consumer brands and cull up to 100 brands from its extensive product portfolio. In a classic example of product portfolio management, P&G wants to focus on those 70-80 key brands that have existing strong market shares and/or fast growth prospects.read more...»
Tata Group, perhaps best known in the UK for its ownership of Jaguar Land Rover (JLR) and Corus, has set out ambitious plans to invest $35bn in capital spending over the next three years as part of its vision for the next 10 years.read more...»
This video report from BBC Global Business looks at the success of a very small scale bakery located in an isolated mountain our region of Spain.read more...»
How much money do you need for an 'adequate' standard of living? This short video from the Joseph Rowntree Foundation considers the levels of income needed to sustain a modest but adequate life-style in the UK in 2014.read more...»
In this blog, Professor Simon Wren-Lewis from Oxford University bemoans the absence of debate over the notion of a maximum wage - with specific reference to the pay of senior executives.read more...»
Does inequality in the output of scientists matter? Inequality is a fashionable topic these days, and evidence for its existence is keenly sought in all sorts of places. John Ioannidis, a health policy researcher at Stanford, and his colleagues have found it in the research outputs of their fellow academics. In a paper published in the prestigious journal PLoS ONE, they searched the entire published scientific literature in academic journals over the period 1996-2011.read more...»
A report out yesterday from the Health and Social Care Information Centre shows a dramatic fall in the consumption by young people (aged 11 to 15) of our favourite demerit goods – alcohol, cigarettes and drugs. The report suggests that over the last decade regular smoking fell from 9% to 3% of 11- to 15-year-olds. Regular alcohol drinking dropped from 25% to 9%. Drug use has halved from 12% to 6% over this 10 year period.
This, of course, is very good news with regards to the relative health of our youth. As an economics teacher the first question I would ask my students is how this downturn has been achieved? What has happened either within the market or with government intervention to shift consumption in this way? It could be argued that this represents the most successful example of government intervention into markets to change behaviour and can be attributed to regulation, restriction of use and good old education! Information failure does not appear to have had an impact and the political will to succeed has been fairly uniform among the major parties in power.
For me, of course, it also offers the opportunity to do the next in my series of numerical activities in preparation for the arrival of the new specifications in 2015!read more...»
This is a super report from BBC Newsnight on the issue of our throwaway society and the externalities of waste. How can the link between consumption and the discarding of unwanted and broken products be weakened? What role can innovation play - for example the rise of modular phones where parts can be replaced when broken. The fundamental problem is that traditional manufacturing business models are based on mass production and sales. How are increasing world commodity prices affecting this model?read more...»
People do care about fairness, social norms and not just about a cold calculation of marginal cost and marginal benefit. In this excellent short interview on BBC World, Joe Gladstone, Behavioural Scientist at the University of Cambridge, discusses the new form of "Pay What You Want" pricing. This means consumers can decide themselves how much they want to pay for a good or service. The catalyst is that several French hotels are experimenting with a pay what you like approach for their guests.read more...»
An important part of the CrossRail project has been decided with the news that the £1.4bn contract to run the new Crossrail service through London from 2018 has been awarded to Hong Kong-based MTR Corporation.read more...»
Today’s announcement that the Competition and Markets Authority (CMA) are recommending that the High Street Banks’ provision of current accounts should be investigated for lack of competition may not surprise many. The case study may be valuable when looking at competition in oligopolistic markets and a report can be found from this link. The BBC take on the story can be found from this link.
I also thought it offered a chance to do some calculations! Given my current theme of bringing the new levels of assessment of numeracy and quantitative methods in the 2015 specifications of A level economics ever increasingly to the attention of our teaching community, where better to do some number work than when looking at market share in the banking industry!read more...»
The UK Financial Conduct Authority has announced direct interventions in the market for payday loans - the high cost short term loans market which has expanded rapidly in recent years led by businesses such as Wonga. The decision is the result of a detailed assessment of the industry which had flagged up a number of market failures.read more...»
Here is a short video featuring Mike Kitson from Cambridge University explaining the role universities play in knowledge exchange with businessesread more...»
According to some sources, Dropbox was the 37th online storage solution to be developed for the web - but despite early failures and late entry it has emerged as the cloud storage product of choice for over 300 million people. The firm is now estimated to be worth about £5.9bn.
This BBC article looks at the background to the story. Article can be found here: http://www.bbc.co.uk/news/business-27579790read more...»
You will probably be aware that assessment in the new AS and A level in Economics (starting in September 2015) will have a much greater emphasis on numeracy and quantitative methods. 20% of marks will be awarded to answers based upon number work and interpretation of graphs, charts and tables.
Whatever your view on the merits of this change, there is no doubt that it brings one of the biggest challenges to teachers of economics since the year 2000. Tutor2u have put together a team of experienced teachers with different awarding body knowledge to create resources and give advice through a series of CPD events during the 2014-2015 academic year.
If you look through any of the specimen papers from the three main awarding bodies you won’t be surprised to see a huge emphasis on calculation of percentages, use of index numbers and the need to understanding fractions and ratios. You can already imagine the increased use of elasticity calculations and having to work out costs and revenues.
Did you know however (depending on your exam board choice) that your students may have to calculate opportunity cost ratios for comparative advantage, dependency ratios, quantity theory of money, terms of trade index, national income multiplier and marginal propensity to consume? Imagine a marginal social cost/benefit diagram with figures included! Have you ever asked students to convert money in real terms? How do you think they will cope with medians and quartiles?
Our team are working on resources and advice to hand out to teachers for our ‘New to A level Economics – Quantitative Methods’ CPD days. Details about times, dates and locations to follow soon.
Here is a short FT background video on the challenges facing established food retailers in the UK. The supermarket is under pressure. They face competition from both hard discounters and upmarket retailers. The FT's Andrea Felsted visits Romford, on the outskirts of London, to examine how supermarkets are adapting to their new retail landscape. The Guardian's articles in changing competition in the food retail sector provide some excellent background pieces - click here to access: http://www.theguardian.com/business/supermarketsread more...»
When the Channel Tunnel opened in May 1994 bosses of many ferry companies were glum. But it was the backers of the channel tunnel who lost a fortune: according to The Economist (the source of the graph above), the train through the tunnel was meant to carry 28m passengers a year by 2010. Ferries were expected to lose foot passengers, cars and lorries. Like many predictions in business, this soon came to seem wrong; now it seems wrong only in the timing. Now it looks like competition in the market may be about to collapse, with ferries coming under increasing pressure.read more...»
Here is your starter for ten. What do the Uber app and David Ricardo have in common? Ricardo, I hear you ask. Scarcely known outside academic economics, he ranks equal with Adam Smith and Keynes as the greatest ever British economist. His classic Principles of Political Economy was published in 1816. He made millions of pounds on the stock market, at a time when a million was a vast amount of money.read more...»
If you’re starting out in transport economics, a good place to begin is by evaluating different modes of transport. One area you’re sure to look at is pollution. Here’s a statement I sometimes use to start the conversation:
Rolls-Royce says the four engines on the A380 are as clean and efficient as any jet engine, and produce “as much power as 3,500 family cars”. A simple calculation shows that the equivalent of more than six cars is needed to fly each passenger.
Take the calculation further: flying a fully laden A380 is, in terms of energy, like a nine-mile queue of traffic on the road below. And that is just one aircraft. In 20 years, Airbus reckons, 1,500 such planes will be in the air. By then, the total number of airliners is expected to have doubled, to 22,000. And whereas cars are used roughly for about an hour or so a day, long-haul jet airliners are on the move for at least 10 hours a day.
I’ve started putting together some more links below:read more...»
Technology always disrupts markets. It provides dynamic efficiency improvements, creates new markets, destroys old ones, and in some cases destroys monopolies and in others, creates new monopolies.read more...»
The supermarket giant Tesco is under increasing pressure! Tesco is Britain’s biggest retailer (it has 29% of the UK groceries market) and the biggest private-sector employer, and it runs about 7,000 stores worldwide. But it is facing significant commercial challenges from discount retailers such as Aldi and Lidl and seems to be squeezed in the middle as other shoppers look for the value proposition in stores such as Waitrose. Their recent trading figures made for sorry reading. For the three months to 24 May 2014, Tesco said like-for-like UK sales including VAT and excluding petrol fell 3.7%.
Is there a case for breaking up Tesco and getting the business to re-focus on what it does best? Two journalists from the Financial Times argue it out in the video below:read more...»
Trams have been experiencing a revival in a number of towns and cities in the past few decades. Edinburgh is the latest city to invest in trams, and hopes they will boost local economy. But do the benefits outweigh costs? Manchester, Sheffield, Blackpool, Nottingham, Newcastle and Croydon have all installed trams / light rail and others are considering investment.
The Edinburgh trams at running (at last) but the jury will remain out for a long time about their net impact on economic activity, traffic congestion and the broader health of Edinburgh and the local environs.read more...»
An important judgement from the newly established Competition and Markets Authority (CMA). They believe that competition is best served by having three major cross-channel service operators - namely EuroTunnel (rail) and two ferry operators.
The CMA has ruled against EuroTunnel being able to cross-subsidise the loss-making MyFerryLink on the Dover to Calais service because in doing so, it is likely to lead to the market exit of a rival provider and ultimately cause higher prices for consumers.read more...»
The fracking debate continues apace, with the announcement by the British Geological Survey that there are over 4 billion barrels of oil in the shale rocks of the South of England. The government has proposed new rules of access to land in order to speed up the exploitation of this oil, with payments of £20,000 being made to those living above the land where fracking takes place.read more...»
I have been greatly enjoying Gerd Gigerenzer's new book on Risk Savvy citizens - here he is discussing some of the key themes in his book at a TED talk in Zurich in the autumn of 2013read more...»
Until the 3rd of June we are making available in streamed format the Unit 3 Business economics revision companion - a superb resource for AQA and ExExcel in particularread more...»