http://www.tutor2u.net/blog/index.php/economics/ en tutor2u.net Copyright 2012 2012-02-12T07:41:03+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-can-the-uk-computer-games-industry-grow http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-can-the-uk-computer-games-industry-grow#When:22:17:37Z Britain is one of the world’s biggest exporters of creative products - from live TV shows and music to books, arts, architecture and films the economy has built up an enviable global reputation for excellence and a growing trade surplus to aid our balance of payments. Computer games falls squarely into this category but, according to TIGA - the trade association representing the UK’s games industry - unless there is renewed government support, the future of this sector is at risk. TIGA claims that the British games industry is suffering a significant ‘brain drain’ as talented programmers and artists leave the country to work abroad. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Economic Growth, Economics of Technology, GCSE Economics, Government Intervention, Subsidies, Macroeconomic Policies, Supply-side policies, Market Failure, Factor Immobility, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, UK Economy, Regional Economics, Unemployment, 2012-01-24T22:17:37+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-the-economics-of-solar-subsidies http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-the-economics-of-solar-subsidies#When:22:15:53Z This blog provides a link to a new prezi presentation on the economics of solar subsidies - I have been using it as part of my teaching on aspects of environmental economics for Unit 3 AQA but it might also be useful for unit 1 market failure. I have kept theoretical diagrams out of it and plan to build up relevant analytical concepts such as economies of scale, consumer subsidies, economic and social welfare, government failure et al on a normal whiteboard rather than embed them into the Prezi. I hope it is useful. Follow the tags at the bottom of the blog entry for more recent articles on solar subsidies such as feed-in-tariffs and other environmental economic resources. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, A2 Micro, AS Micro, Cost Benefit Analysis, Environmental Economics, European Economy, Government Intervention, Subsidies, Market Failure, Merit & De-Merit Goods, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Teaching of Economics, UK Economy, 2012-01-18T22:15:53+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit1-micro-processed-meat-and-cancer-risk-information-failure http://www.tutor2u.net/blog/index.php/economics/comments/unit1-micro-processed-meat-and-cancer-risk-information-failure#When:21:55:28Z I do my level best to avoid the processed meat aisles in the supermarkets - or at least the lower end of what is on offer (I remember once the 5pence sausage that was a guaranteed 2 per cent pork!). But perhaps excessive consumption of processed meats - much of which finds a way into the traditional Full-English might be doing people much more harm than good? Follow this BBC news report for more details. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Cost Benefit Analysis, GCSE Economics, Health Economics, Market Failure, Information Failure, Merit & De-Merit Goods, Market Equilibrium and Price, Nature of Demand, 2012-01-17T21:55:28+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-futures-not-so-bright-for-oranges http://www.tutor2u.net/blog/index.php/economics/comments/the-futures-not-so-bright-for-oranges#When:17:03:32Z This week, the price of orange juice concentrate on the global market hit a record high, reaching $2.12 (£1.38) a pound (0.45kg). AS Micro, Market Equilibrium and Price, Elasticity of Demand, Nature of Demand, Nature of Supply, Price Mechanism in Action, 2012-01-13T17:03:32+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-biomass-subsidies-and-timber-prices http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-biomass-subsidies-and-timber-prices#When:20:55:09Z 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. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Commodities Markets, Cost Benefit Analysis, Environmental Economics, Government Intervention, Government Failure, Market Failure, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Inter-related Markets, Teaching of Economics, 2011-12-30T20:55:09+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-sub-normal-profits-bp-leaves-the-solar-industry http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-sub-normal-profits-bp-leaves-the-solar-industry#When:09:32:16Z British Petroleum has decided to exit the solar energy energy industry claiming that the business has become unprofitable because of excess supply and falling prices. In 2011 a number of solar firms have gone out of business including California’s Solyndra and Germany’s Solon. BP will focus instead on investing in other renewable energy sectors including wind power and biofuels. Whilst the decision by BP to exit the industry appears significant, infact total global investment in solar power continues to rise. MidAmerican Energy Holdings owned by Warren Buffett have agreed to purchase a $2 billion solar project under development in California and a 49 percent stake in a $1.8 billion plant in Arizona. Google Inc. and KKR & Co have announced a joint venture to pump money in four California solar power plants with total capacity of 88 megawatts. The powerful search engine business uses a huge anount of energy every year and has committed itself to large scale investment in renewable energy supplies to help power their server farms.   AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Cost Benefit Analysis, Environmental Economics, Government Intervention, Subsidies, Market Failure, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, 2011-12-21T09:32:16+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-patent-wars-a-touchy-subject-for-apple http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-patent-wars-a-touchy-subject-for-apple#When:17:24:57Z This excellent news piece from Ben Cohen at Channel 4 looks at the increasingly aggressive patent war being fought by the manufacturers of the world’s leading mobile phone and tablet devices - the most profitable products in the digital economy. “Where once the giants (Google and Apple) competed on features, they now compete on patents.” The news feature looks in particular at the intellectual property surrounding the slide-screen technology used by millions to unlock a device. Apple claims the IP to this but a video tracked back to twenty years ago suggests that developers were already thinking of something remarkably similar long before the iPhone came into existence. Can the makers of Android defend legal claims from Apple that their IP has been infringed? And who will end up paying for the enormous legal fees and possible extra licencing costs?   AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, Oligopoly, Economic Growth, Economics of Technology, European Economy, Single Market, Government Intervention, Regulation, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-12-16T17:24:57+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-empty-housing-and-economic-efficiency http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-empty-housing-and-economic-efficiency#When:11:08:50Z Channel 4 recently focused on the causes and effects of the hundreds of thousands of empty homes in the United Kingdom. Why is it given persistent shortages of affordable housing that perhaps a million homes lie empty and unused whilst an estimated two million families are in severe housing needs. New housebuilding has collapsed and in Britain we are building 100,000 fewer new houses every year than we need just to keep up with the changing mix of households and demographic change. An interesting exercise is to show students some of the Channel 4 Campaign videos and then get them to put together policy ideas as to how to reduce the volume of empty homes and reduce the length of housing waiting lists. Links to some of the Channel 4 videos can be accessed below: AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, GCSE Economics, Housing Economics, Government Intervention, Regulation, Subsidies, Introductory Economics, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Standard of Living, Teaching of Economics, UK Economy, Regional Economics, London Economy, 2011-12-15T11:08:50+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-tacit-collusion-in-the-supermarket http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-tacit-collusion-in-the-supermarket#When:23:39:44Z What do students make of the current price match / big price drop schemes offered by many of the leading food retailers in the UK? On the surface the brand price match scheme shown in the picture below looks like a good deal for consumers in this time of financial hardship and distress. But what it this ‘parallel pricing’ serves merely as a form of tacit collusion with prices on a range of products actually higher than they might be without the facade of price comparisons and discount voucher compensation? AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Oligopoly, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-11-27T23:39:44+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-brand-loyalty-in-mobile-phones http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-brand-loyalty-in-mobile-phones#When:09:33:20Z Brand loyalty is hugely important in all kinds of industries and markets. The costs of acquiring a new customer vastly outweigh the expense of selling more to existing buyers and most of the mobile phone suppliers in this oligopolistic industry focus an enormous effort in building brand identity and brand loyalty to reduce the rate of customer churn (people who switch brands). AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-11-27T09:33:20+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/government-plans-to-boost-the-housing-market http://www.tutor2u.net/blog/index.php/economics/comments/government-plans-to-boost-the-housing-market#When:11:55:04Z The Government has announced today a scheme to help first time buyers on to the property ladder. It has been reported widely in the press with mixed reactions. The BBC article outlines the main proposals (here is the link to The Daily Telegraph). It is interesting from a political point of view that this government should chose to intervene in this market, though perhaps we should not be too surprised as it was the Conservatives that brought in the ‘Right to Buy’ legislation in 1980. AS and A2 Specifications, AS Micro, Housing Economics, Government Intervention, Government Failure, Regulation, Market Failure, Information Failure, Market Equilibrium and Price, Elasticity of Demand, Elasticity of Supply, Nature of Demand, Nature of Supply, Price Mechanism in Action, 2011-11-21T11:55:04+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/pasty-prices-something-to-chew-over http://www.tutor2u.net/blog/index.php/economics/comments/pasty-prices-something-to-chew-over#When:13:53:49Z I am trying to get my head around this example of pasty prices that I encountered at Waterloo Station on Tuesday night. The vendor is selling a large pasty for £3.90 and “The Big One” for £4.00 - a difference of just ten pence? Why not charge more? Or at least cut the price of the large pasty to something like £3.30 to encourage people to pay the £4.00 option? Am I missing something here? I asked the guy running the concession “what is the difference between the large pasty and the big one?” His cogent reply put me right “The big one is bigger!” I bought the large pasty because as far as I can see, there is no difference in size. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-11-19T13:53:49+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-asymmetric-information-buying-a-used-car http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-asymmetric-information-buying-a-used-car#When:10:17:29Z An autumnal hat tip to Kevin Hinde at Durham Business School for spotting a new report from the Office of Fair Trading which finds that the market for second-hand, used cars remains the biggest source of complaints from customers. Nationally over 56,000 people have complained to the OFT-managed Consumer Direct in the year to date with 70 per cent of the complaints relating to faults with the cars and over 13 per cent about misleading claims or omissions by the seller. The used car market is a classic example of asymmetric information and the risks of consumer welfare being damaged by fraudulent selling and sub-standard service. The OFT have released a short film on customer rights that might be a good teaching resource to use when covering this topic. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Government Intervention, Market Failure, Information Failure, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, Transport Economics, 2011-11-14T10:17:29+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-luxury-goods-in-action http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-luxury-goods-in-action#When:14:02:45Z Have you got £40,000 or £50,000 to spare on a Christmas present? A hat tip to Freddie Drapkin for spotting these examples of products perfectly suited to status races and ostentatious consumption! Glass pool table (£39,000) £45,000 -  luxury table football table World’s largest jigzaw puzzle (£200) And for the lazy tea drinkers among you - try this! AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Elasticity of Demand, Nature of Demand, Teaching of Economics, 2011-11-06T14:02:45+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-time-of-use-pricing-for-energy http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-time-of-use-pricing-for-energy#When:23:28:48Z When is electricity demand highest in the UK? The answer comes at the end of the blog! The UK government is committed to the rolling out of smart energy meters between now and the end of 2020. Millions of homes will have smart meters installed which track how much electricity you use and when you use it - the installation cost is approximately £350 per unit although this may come down with the utilisation of economies of scale. Smart meters will give consumers and the utility businesses minute-by-minute information about energy consumption and this could fast-forward the launch of time of use pricing tariffs for us all in the years ahead. It will mark a move away from flat-rate tariffs towards fully-fledged peak and off-peak pricing. At the moment around one in ten households are on Economy 7 tariffs which offers lower prices for electricity used during off-peaking times in the late evenings and early mornings. Economy 7 seems to have been around for as long as CEEFAX and if you understand that you are giving your age away! AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Cost Benefit Analysis, Economic Growth, Economics of Technology, Environmental Economics, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-11-02T23:28:48+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-google-maps-to-charge-for-usage http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-google-maps-to-charge-for-usage#When:15:55:09Z Google has announced that heavy users of the Google maps application will now be charged - it will be interesting to see if this move from a zero price targeted at websites that make extensive use of the Google Maps coding will affect demand for the program. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Business Economics, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-10-31T15:55:09+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-examples-of-price-discrimination-in-action http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-examples-of-price-discrimination-in-action#When:13:41:47Z I tweeted earlier on today asking economics teaching colleagues what examples they like to use when teaching the topic of price discrimination under conditions of monopoly / imperfect competition. Thank you to everyone who contributed! AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Monopolistic Competition, Monopoly, Oligopoly, Price Discrimination, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2011-10-31T13:41:47+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-price-discrimination-in-the-e-book-market http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-price-discrimination-in-the-e-book-market#When:09:51:07Z Seth Godin’s Domino Project is an attempt to re-fashion the way in which e-books are published, sold and priced. This blog is particularly interesting for teachers and students who consider different forms of price discrimination. It proposes (at least) three different price tiers: $1.99 ebooks - a clearing price for the majority of e-books $5 ebooks. This is the price for bestsellers, hot titles and academic titles required by courses $10 - $20 ebooks. This is the price you will pay to get the book first, to get it fast, to get it before everyone else Read paying for first What do you think? How do you see e-book pricing tactics evolving as the market grows? The UK Office of Fair Trading is currently investigating the market for e-books in the UK amid allegations of price fixing / collusion by several leading publishers. You can access the OFT investigation using this link. Further reading: Guardian (August 2011): Apple and major publishers face lawsuit over ebook ‘price fixing’ Telegraph: EU raids publishers in ebook price-fixing probe By way of background - new research has found that the average e-book price of front-list e-books across the world was €10.50 net of taxes. The average price of UK frontlist e-books was €10.80, €1.50 more than equivalent US titles, but less than those in Germany, Spain and France. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Behavioural Economics, Game Theory, Business Economics, Monopoly, Oligopoly, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-10-31T09:51:07+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-is-the-sun-dipping-on-solar-subsidies http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-is-the-sun-dipping-on-solar-subsidies#When:18:35:34Z To promote the expansion of renewable energy sources, many governments have introduced subsidies for consumers who install solar panels. In April 2010, the Labour government introduced generous feed-in tariffs to encourage households to install solar photovoltaic systems. Anyone spending £13,000 up front to fit a system to their home was paid 41.3p per kilowatt hour (kWh) generated – enough to earn them a typical annual income of £900 a year in payments, on top of a £140-a-year saving in reduced electricity bills. The big six energy companies are required by law to pay householders who generate their own energy. It looks like the days of generous subsidies for solar panels are coming to an end and there is a rush on to install them before the feed-in-tariff system is changed. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Cost Benefit Analysis, Environmental Economics, GCSE Economics, Government Intervention, Subsidies, Market Failure, Externalities, Manufacturing Industry, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, 2011-10-27T18:35:34+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/university-fees-and-elasticity http://www.tutor2u.net/blog/index.php/economics/comments/university-fees-and-elasticity#When:10:12:19Z When teaching price elasticity of demand, here is a good article on the BBC today on the effect of higher university fees on demand for higher education. Good for discussion of how PED will differ with respect to different types of consumer and for different types of universities, as well as the cross price elasticity of demand with foreign universities. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, A2 Micro, AS Micro, Labour Market, Market Equilibrium and Price, Elasticity of Demand, Nature of Demand, Teaching of Economics, UK Economy, 2011-10-24T10:12:19+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tescos-behaving-badly http://www.tutor2u.net/blog/index.php/economics/comments/tescos-behaving-badly#When:21:23:59Z On paper, it sounds like a totally reasonable price strategy from the market leader in an oligopolistic market - after announcing their worst sales figures in nearly 20 years, Tesco’s came out with a price cut promotion “The Big Price Drop”.  The supermarket – which has pledged to spend £500 million on the high-profile promotion – has promised customers that it would reduce the price of 3,000 essential products across its stores. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Oligopoly, Price Discrimination, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-10-17T21:23:59+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/hard-choice-in-kenya http://www.tutor2u.net/blog/index.php/economics/comments/hard-choice-in-kenya#When:09:24:46Z This short video report from Will Ross for the BBC from the island of Lamu, considers a number of economic concepts. AS and A2 Specifications, AQA Economics Unit 1, AS Macro, AS Micro, Balance of Payments, Emerging Economies, African Economy, Cost Benefit Analysis, Cycles and Shocks, Government Intervention, International Trade, Market Equilibrium and Price, Nature of Demand, 2011-10-10T09:24:46+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-teacher-update-on-new-regulations http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-teacher-update-on-new-regulations#When:07:25:52Z The end of September has brought a raft of new or changed regulations affecting different markets. Here is a summary of some of them for students and teachers wanting to keep up to date: AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Business Economics, Government Intervention, Minimum Prices, Regulation, Macroeconomic Policies, Monetary Policy, Market Failure, De-Merit Goods, Externalities, Merit & De-Merit Goods, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, 2011-10-01T07:25:52+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-amazon-launches-the-kindle-fire http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-amazon-launches-the-kindle-fire#When:06:01:45Z In the increasingly competitive and contestable market for tablet devices, leading online retailer Amazon has launched the Kindle Fire.   AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Economies of Scale, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, 2011-10-01T06:01:45+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-exercise-on-equilibrium-market-prices http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-exercise-on-equilibrium-market-prices#When:19:17:00Z I have produced a classroom exercise on changing conditions of supply and demand and how they might affect equilibrium prices. This is available to download as a pdf file using the link below. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Teaching of Economics, 2011-09-27T19:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-exercise-on-market-demand http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-exercise-on-market-demand#When:19:33:00Z I have attached in this blog a quick exercise on the determinants of market demand. There are twenty examples and students are asked to identify whether there is a movement or a shift in the demand curve and in which direction. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-09-25T19:33:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-the-price-of-football http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-the-price-of-football#When:11:18:00Z The BBC’s new Price of Football survey offers an excellent opportunity to use wide differences in the cost of attending football matches across the length and breadth of the UK. A summer hat tip to Ben White (newly installed Head of Economics and Business at St Peter’s School in York) for flagging up this resource on the BBC web site - it is ideal stimulus material for generating a discussion on different pricing tactics, price elasticity of demand and income inelasticity of demand in the soccer industry. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Business Economics, Price Discrimination, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2011-08-02T11:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-cotton-prices-and-the-retail-price-of-clothing http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-cotton-prices-and-the-retail-price-of-clothing#When:10:51:00Z How does the world price of raw cotton affect the cost of buying new clothing on the high street and in the supermarkets? The answer is that the price of natural fibres is a key raw material into manufacturing garments and home furnishings. If prices rise, this increases the costs of production causing an inward shift of supply for clothing and furnishings at a given market price. The world price of cotton has been rising steeply in recent times. As our chart below shows, raw cotton prices are well down from their peak in the spring of 2011, but the index is still more than twice the level of two years ago. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Business Economics, Manufacturing Industry, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Price Volatility, 2011-07-13T10:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-economics-of-volatile-corn-prices http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-economics-of-volatile-corn-prices#When:08:52:01Z Corn is a soft commodity along with the likes of coffee, tea and rubber. Referred to as “yellow gold”, corn is used in products ranging from cereals, snack foods, salad dressings, soft drink sweeteners, chewing gum and peanut butter. Little wonder that shifts in the world price of corn can have a noticeable effect on the prices that we may for many popular foods and drinks. The world’s appetite for corn is strong. In recent months there has been a surge in the global price of corn, indeed at the end of June 2011, corn prices were up 74 per cent on a year earlier. Super-high prices affect the price of feed for livestock farmers and eventually lead to more expensive foodstuffs for consumers, including millions of people in the world’s poorest countries exposed to persistent and life-shortening food poverty. Robert Zoellick, President of the World Bank has said that high and volatile food prices are “the single gravest threat” facing developing countries at the current time. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Agriculture, Emerging Economies, China Economy, Government Intervention, Buffer Stocks, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Price Volatility, 2011-07-12T08:52:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-oligopsony-dairy-losses-drive-farmers-from-the-fields http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-oligopsony-dairy-losses-drive-farmers-from-the-fields#When:21:43:00Z Hats off to the herd! Milk production in the UK is expanding yet many dairy farmers have or are likely to leave the industry over the next five years unless raw milk production becomes more economically viable. Can the stakeholders in the sector reach fresh agreement on sustainable contracts for the near 40 million litres of milk produced every day? AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Agriculture, Business Economics, Economies of Scale, Oligopoly, European Economy, EU Farming and Fishing, Government Intervention, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Teaching of Economics, UK Economy, Regional Economics, 2011-07-10T21:43:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-firstbuy-affordability-and-effective-demand-in-property http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-firstbuy-affordability-and-effective-demand-in-property#When:20:51:00Z For hundreds of thousands of first-time buyers, getting a solid foothold on the housing ladder has been tough in recent years. Falling prices and lower mortgage interest rates ought to have improved affordability for would-be purchases of a new house or flat but the barrier of having to save up a deposit in order to qualify for a mortgage has become higher causing many to be frozen out of the market. The number of people renting private accommodation in England has increased by 55% in the past six years as first-time buyers struggle to make purchases. Economists use a term known as effective demand to describe demand that is backed up by a willingness and ability to buy. There are few better case studies in low effective demand than the difficulties facing first time buyers in the UK property market. A new government scheme is designed to offer relief. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Housing Economics, Government Intervention, Subsidies, Market Equilibrium and Price, Nature of Demand, 2011-07-10T20:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-high-price-of-petrol-drains-demand http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-high-price-of-petrol-drains-demand#When:20:24:00Z New figures from the Automobile Association (AA) show that motorists in Britain are buying less fuel in response to record highs for petrol and diesel prices. They bought one billion fewer litres of petrol and diesel in the first three months of 2011 compared with the pre-credit crunch January to March 2008 period. It seems that high prices have incentivised drivers to cut back on their driving to save money and the pressure to economise has been raised by higher levels of VAT and a fall in real wages. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, GCSE Economics, Market Equilibrium and Price, Nature of Demand, Transport Economics, 2011-07-09T20:24:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-us-ramps-up-cigarette-warnings http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-us-ramps-up-cigarette-warnings#When:08:12:00Z This Washington Post article reports on a decision by the FDA in the United States to significantly ramp up the mandatory health warnings on cigarette packets. Starting next year, cigarette cartons, packs and advertising will feature graphic warnings, replacing the discreet admonitions that cigarette manufacturers have been required to offer since 1966. This follows a similar move by the Australian government a few months back. When will the UK government finally get the message? AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Government Intervention, Health Economics, Market Failure, Externalities, Information Failure, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-06-22T08:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-examples-of-price-discrimination http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-examples-of-price-discrimination#When:08:22:00Z Price discrimination occurs when a business charges a different price to different groups of consumers for the same good or service, for reasons not associated with costs. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, Price Discrimination, Market Equilibrium and Price, Nature of Demand, 2011-05-19T08:22:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/whats-really-behind-the-oil-price-rise http://www.tutor2u.net/blog/index.php/economics/comments/whats-really-behind-the-oil-price-rise#When:09:43:00Z The price of oil continues to rise ($114.61 per barrel) and there a number of reasons put forward why this is so, none perhaps more pertinent than the reason explained in this WSJ article. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Emerging Economies, Commodities Markets, Oil and Gas, Market Equilibrium and Price, Nature of Demand, Price Volatility, 2011-05-10T09:43:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-extended-house-price-deflation http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-extended-house-price-deflation#When:18:59:00Z A pessimistic forecast for the UK economy produced by the National Institute for Economic and Social Research (NIESR) suggests that the UK housing market is set to remain in the doldrums for some time to come. The NIESR has predicted a 4.5 per cent average fall in house prices in real terms this year, with further falls averaging 1.5 per cent for the following five years. The background to this forecast of house price deflation is that mortgage finance remains hard to come by (there has been a steep fall in the average mortgage loan to house price deal on offer). And mortgage interest rates are set to rise from their current low levels.  Weak demand is thus the main driver of falling prices. The NIESR argues that “(housing) supply constraints were less important than is often argued since supply just about kept pace with household formation.” AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Aggregate Demand, Housing Economics, Macroeconomic Policies, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, UK Economy, 2011-05-05T18:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/smartphones-and-creative-destruction http://www.tutor2u.net/blog/index.php/economics/comments/smartphones-and-creative-destruction#When:07:23:00Z Is the multi-function and ubiquitous smartphone one of the best examples of creative destruction. This article “10 Things Killed by the Smartphone” points to a clutch of devices and products whose demand has been affected by the mass volumes of data-heavy smartphones that now dominate the market. MP3 Players Nintendo 3DS and Sony PSP Point-and-Shoot Cameras Personal Video Players Voice Recorders Portable GPS Navigation Devices Personal Digital Assistant (PDA) Wristwatch iPod Nano Paper Maps Telephone Directory Assistance AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2011-04-16T07:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/key-as-micro-terms-prices http://www.tutor2u.net/blog/index.php/economics/comments/key-as-micro-terms-prices#When:19:14:01Z 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 presentations AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Price Volatility, Inter-related Markets, 2011-04-15T19:14:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-the-volatile-price-of-crude-oil http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-the-volatile-price-of-crude-oil#When:20:21:00Z Few commodity prices are watched as closely as the international price of crude oil. Brent crude is currently trading at over $122 a barrel - the highest price for over two years. Our Timetric chart is constantly updated and will always show the latest price. We have included below links to many of our recent blogs on the economics of oil prices and some of their micro and macro economic effects. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Commodities Markets, Oil and Gas, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Price Volatility, Teaching of Economics, Transport Economics, 2011-04-09T20:21:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-prices-for-new-and-second-hand-cars http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-prices-for-new-and-second-hand-cars#When:20:07:00Z The prices of new and second-hand cars as measured by the consumer price index have changed in absolute and real terms in recent years as the chart below shows AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Price Volatility, Transport Economics, UK Economy, 2011-04-09T20:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/information-failures-tesco-and-second-hand-cars http://www.tutor2u.net/blog/index.php/economics/comments/information-failures-tesco-and-second-hand-cars#When:13:03:00Z An updated article here on Tesco’s entry into the used car market Supermarket giant Tesco has announced plans to launch its own used motors website teaming up with one of the UK’s biggest ex-fleet car provider – Motability which is said to have access to 560,000 cars per year, with about 200,000 popular makes such as Ford and ­Vauxhall coming onto the market at the end of their lease life - sold through a network of 5,000 registered car dealerships. Industry analysts believe that Tesco will sell cars online and to overcome some of the asymmetric information issues in the market it will offer customers warranties, insurance and breakdown cover, as well as part exchange on vehicles. Finance for car purchases could be arranged through Tesco’s own personal finance business. Tommy Seagull writes here on the information failure issues connected to the second hand car market AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Government Intervention, Regulation, Market Failure, Information Failure, Market Equilibrium and Price, Nature of Demand, 2011-04-03T13:03:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-revision-banana-prices http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-revision-banana-prices#When:17:51:00Z This revision note covers supply and demand factors that help to determine the world and domestic retail price of bananas. Despite rising world prices, the UK retail price of bananas has actually fallen in recent years. Can students explain why? What effect does intense competition within the UK food retail sector have on the prices we pay? AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Agriculture, Emerging Economies, Commodities Markets, GCSE Economics, Market Equilibrium and Price, Elasticity of Demand, Elasticity of Supply, Nature of Demand, Nature of Supply, Price Mechanism in Action, Price Volatility, 2011-04-01T17:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/timetric-internet-browser-market-shares http://www.tutor2u.net/blog/index.php/economics/comments/timetric-internet-browser-market-shares#When:00:02:00Z Timetric update the latest figures for market share in the web browser market - they are shown in the chart below. Internet Explorer continues the long slow slide as rival browsers become more popular and web users reveal their preferences! AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Business Economics, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, Digital Learning, 2011-03-12T00:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/wildcard-wednesday-1-justice-the-lecture-series http://www.tutor2u.net/blog/index.php/economics/comments/wildcard-wednesday-1-justice-the-lecture-series#When:19:18:00Z This cracking series of half-hour lectures on BBC3 by Michael Sander, a professor at Harvard University, is drawn from his Philosophy of Justice undergraduate lecture series, but is, for the most part, really accessible. Whilst students who may be considering combined politics, philosophy and economics degrees may be most likely to find the subject matter engaging, there is plenty in there for able economists, especially lecture 3 on utilitarianism and preferences, lecture 5 on whether it is just to tax the rich to help the poor and lecture 7 on the extent to which people should be free to choose their place in society. Market Equilibrium and Price, Nature of Demand, Teaching of Economics, Wildcard Wednesday, UCAS and Oxbridge Advice, 2011-03-09T19:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/apply-vertical-integration-and-ipad-pricing http://www.tutor2u.net/blog/index.php/economics/comments/apply-vertical-integration-and-ipad-pricing#When:08:41:00Z A half term hat tip to Henry Wingfield for spotting this super article in Wired magazine. It discusses how Apple is able to keep the iPad at the $500 price point and looks at how the company is vertically integrated and the importance of its retail stores. Have a read here. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Economies of Scale, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, 2011-02-21T08:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-worlds-largest-yachts http://www.tutor2u.net/blog/index.php/economics/comments/the-worlds-largest-yachts#When:18:16:00Z Here is a slideshow showcasing (?) some of the world’s largest and most expensive yachts in 2010. It might be good for an image or two when teaching conspicuous consumption and the waste of status races and the arguments for a consumption tax. I would quite like to see a similar slideshow of the world’s largest and most expensive barbecues! AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-02-17T18:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/pcs-and-smartphones-competitive-demand http://www.tutor2u.net/blog/index.php/economics/comments/pcs-and-smartphones-competitive-demand#When:23:44:01Z PC usage is falling and both the volume of users and daily data usage on smart phones continues to surge. The PC is under competitive threat from many angles - smart phones, tablets and ultra-light but feature heavy laptops. This Business Insider Chart might prompt some discussion from students Market Equilibrium and Price, Nature of Demand, 2011-02-15T23:44:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/dynamic-efficiency-in-the-condom-market http://www.tutor2u.net/blog/index.php/economics/comments/dynamic-efficiency-in-the-condom-market#When:17:56:01Z Designed by and designed for women, L. is among the first woman-run condom enterprise that sells all natural male condoms for women. Inspired by work in Africa where nine out of 10 African countries goes without condom supplies for more than two months here is an interesting example of an attempt to break into the dominant monopoly of the major condom manufacturers such as Durex. AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Business Economics, Monopoly, Market Equilibrium and Price, Nature of Demand, 2011-02-15T17:56:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-solar-power-government-subsidies http://www.tutor2u.net/blog/index.php/economics/comments/economics-solar-power-government-subsidies#When:00:02:00Z A timely and relevant video here on the economics of the government feed-in-tariffs (or subsidies) for companies and individuals putting up solar panels on their roofs. Solar power is an industry booming with over 10,000 installations in the first six months since housing associations were given subsidies to install solar panels in many of their properties. The video looks at the costs of installment of a system and the electricity it generates and how much extra electricity is generated into the national grid. How important will solar power be in promoting energy independence? Peak solar output from the UK does not correspond with peak demand for electricity (from 5pm to 7pm on a winter’s evening). How many of the solar panels are made in the UK? Who really benefits from feed-in-tariffs? Rather like the CAP are the major commercial benefits skewed to large businesses willing to put up big-scale solar installations in empty fields? AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Cost Benefit Analysis, Environmental Economics, Government Intervention, Subsidies, Market Failure, Externalities, Manufacturing Industry, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, 2011-02-09T00:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/high-taxes-stimulate-rise-in-smuggling-of-cigarettes http://www.tutor2u.net/blog/index.php/economics/comments/high-taxes-stimulate-rise-in-smuggling-of-cigarettes#When:21:08:00Z One of the unintended consequences of the steep rise in the real price of cigarettes in the UK is the strong incentive to bring contraband cigarettes into the UK from elsewhere in the EU single market. This Guardian article reports on the expected rise in smuggling as cigarette duties reach fresh highs in 2011. The average price of a pack of 20 cigarettes reached £6.29 in the UK last summer, compared with £2.80 in Spain and £1.57 in Poland. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, European Economy, Single Market, Government Intervention, Indirect Taxes, Market Failure, Externalities, Merit & De-Merit Goods, Market Equilibrium and Price, Nature of Demand, 2011-02-06T21:08:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/wto-finds-boeing-guilty-of-using-illegal-subsidies http://www.tutor2u.net/blog/index.php/economics/comments/wto-finds-boeing-guilty-of-using-illegal-subsidies#When:08:23:00Z This is one of the longest running disputes in trade history. Europe and the US have been fighting for more than six years over each other’s subsidies for large passenger aircraft in the duopolistic battle between Boeing and Airbus. Now the World Trade Organisation has found that Boeing received at least $5bn (£3.1bn) in illegal subsidies and was only able to launch its 787 Dreamliner with such support. Airbus has als been found to be in breach of receiving illegal state aid. Reuters provides useful background here. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Business Economics, Oligopoly, European Economy, Single Market, Global Economy, Government Intervention, Subsidies, OECD Economies, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, Transport Economics, 2011-02-01T08:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tesco-time-to-start-a-price-war http://www.tutor2u.net/blog/index.php/economics/comments/tesco-time-to-start-a-price-war#When:17:40:00Z Here is some pure gold dust for students of competition and strategy in the food retailing industry! A leading analyst (Dave McCarthy at Evolution Securities) has written a lengthy research document building the case for Tesco to launch an aggressive price war - permanently cutting prices on hundreds of different items. Much of the case for the price discounting is reproduced in this Guardian article and key arguments are that Tesco is better able to withstand the hit on group profits from doing it, and that lowering the returns from the sector will help to bring an end to the land grab and building programme that ultimately may not be in anyone’s interests. Has Tesco lost its way recently? Sainsbury’s was the best performing supermarket over the Christmas period. Its like-for-like sales were up by 3.6%. I have stopped shopping at Tesco partly because the retail experience is so dire (the mega store in Slough is just about the most soulless place on the planet) and also because Sainsbury’s and Waitrose have significantly raised their game in keeping products available on the shelves and in extending their value range. The Waitrose “Essentials” range has been a big success. A new CEO provides a window of opportunity for a change of direction at Tesco and this analyst believes that Tesco needs to exploit first mover advantage before the rivals become too strong to absorb future price wars. Read: Analyst advises Tesco to launch a price war to damage the competition AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Competitive Markets, GCSE Economics, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, 2011-01-19T17:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/consumer-surplus-from-the-web http://www.tutor2u.net/blog/index.php/economics/comments/consumer-surplus-from-the-web#When:23:16:00Z A hat tip to Tim Mercer from Ashcombe School for spotting this resource - an interesting article from this month’s McKinsey quarterly looking at the consumer surplus that currently exists in the world of ‘free’ on the Internet and how companies might seek to ‘monetize’. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2011-01-18T23:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-how-might-rising-food-prices-affect-food-retailers-and-manufac http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-how-might-rising-food-prices-affect-food-retailers-and-manufac#When:13:09:00Z Food retailers are service sector businesses selling food products to consumers. The leading retailers in the UK are Tesco, Sainsbury’s, Asda (Walmart) and the Co-Op/Somerfield. Although the food retail industry in the UK is dominated by a handful of national chains, there are many others including thousands of small-scale retailers. And discount retailers that have done well in recent years including Aldi and Lidl. Food manufacturers process foodstuffs into new products and they rely on buying raw materials from wholesalers. Good examples to use might be Nestle, Heinz and Sara Lee. The larger retailers manufacture some of their own-label foods although they may choose to out-source this to another manufacturer. And likewise, some food manufacturers have their own chain of retail stores or outlets - for example Gregg’s the Baker or Domino’s Pizza. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Business Economics, Commodities Markets, GCSE Economics, Manufacturing Industry, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Volatility, Teaching of Economics, UK Economy, 2011-01-16T13:09:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a-motorbiking-triumph http://www.tutor2u.net/blog/index.php/economics/comments/a-motorbiking-triumph#When:21:56:00Z Here is a product from over here that is doing really well over there! It is always positive to read of success stories from the UK manufacturing sector. This article from the Guardian highlights the success of the iconic motor bike bran Triumph in ousting the likes of Honda and Yamaha to rise to the summit of the market share rankings for new bikes sold in the UK. And sales are strong in the United States where Triumph is competing with Harley-Davidson. Students who read through the article ought to be able to glean two or three factors that lie behind Triumph building a competitive advantage in the market. Can they then come up with other ingredients in the mix that apparently makes Triumph competitive in price and non-price terms? More good background here: Triumph rides high as UK bestseller takes on Harley-Davidson (Guardian) Motorcycle Sales Not All Bad News says Motor Cycle Industry Association AS and A2 Specifications, AQA Economics Unit 1, AS Micro, Business Economics, Manufacturing Industry, Market Equilibrium and Price, Nature of Demand, Transport Economics, UK Economy, 2011-01-13T21:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/hear-the-one-about-the-250000-fish http://www.tutor2u.net/blog/index.php/economics/comments/hear-the-one-about-the-250000-fish#When:16:38:00Z I was browsing some back copies of the Guardian today, and came across a good example of markets in action. Last week a tuna fish fetched over 32 million yen at an auction in Tokyo. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, OCR A2 Economics Unit F585, AS Macro, Government Intervention, Regulation, Market Failure, Market Equilibrium and Price, Elasticity of Supply, Nature of Demand, Nature of Supply, Price Mechanism in Action, 2011-01-11T16:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-what-economic-factors-affect-the-demand-for-new-cars http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-what-economic-factors-affect-the-demand-for-new-cars#When:09:31:00Z The motor industry is one of the sectors whose fortunes seems to permeate nearly every part of the economy. Most of us know someone who works in the motor trade and changes in demand and production have sizeable effects not just on the industry itself but on many supply-chain businesses and economic activity in areas where car production is concentrated. In 2010 just over two million new cars were registered in the UK - a rise of 1.8% on the 2009 figure. The biggest single course of rising demand came from the fleet market which rose by over 10% in 2010, but demand for and spending on privately bought cars slipped following the end of the Car Scrappage Incentive Scheme. Crucially for the year ahead, the new car market is forecast to decline by 5% in 2011 to 1.93 million units - according to the Society of Motor Manufacturers and Traders “difficult market conditions continue.” So what are the main factors that affect the market demand for new cars? AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Business Economics, GCSE Economics, Manufacturing Industry, Market Equilibrium and Price, Nature of Demand, Transport Economics, UK Economy, Regional Economics, 2011-01-09T09:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/firefox-overtakes-ie-in-the-eu-browser-market http://www.tutor2u.net/blog/index.php/economics/comments/firefox-overtakes-ie-in-the-eu-browser-market#When:09:23:00Z The Telegraph reports here that Mozilla’s Firefox has overtaken Internet Explorer as the preferred browser for internet users in Europe. And Google’s Chrome is fast gaining a strong foothold in this intensely competitive market. The market share data suggests an oligopoly but we know that despite the dominance of a small number of web browsers, the reality is that competition is fierce and millions of web users have their own quite strong preferences! Source: StatCounter Global Stats - Browser Market Share Lots to think about here in terms of economic efficiency - not least dynamic efficiency and innovation in the market. And also the impact of competition policy in action .... as the article says at the end “Since early 2010, Microsoft has offered millions of European customers that use its Windows software the option of using 12 different internet browsers. This followed an agreement in December 2009, when European Union regulators accepted Microsoft’s pledge to give consumers better access to rival browsers, ending a long antit-trust dispute.” A hat tip to Ian Goff for spotting the article. If you want to keep an eye on what is happening to market share on a daily basis this is the link to the StatCounter site   AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Oligopoly, Economic Growth, Economics of Technology, European Economy, Single Market, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-01-05T09:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/pricing-tricks-and-behavioural-economics http://www.tutor2u.net/blog/index.php/economics/comments/pricing-tricks-and-behavioural-economics#When:08:58:00Z Martin Hickman’s Consuming Issues column in the Independent this weekend has a piece on some of the tactics used by retailers to take commercial advantage of many of our behavioural biases. These pricing tactics include: AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Behavioural Economics, Business Economics, Monopoly, Price Discrimination, Government Intervention, Market Failure, Information Failure, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2010-12-12T08:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/movie-rental-on-a-usb-stick http://www.tutor2u.net/blog/index.php/economics/comments/movie-rental-on-a-usb-stick#When:07:39:00Z Reading this piece gave me flashbacks to the mid 1980s when I would trek in excited fashion to my local petrol station who did a brisk trade in renting out VCR tapes to customers wanting to watch a move over the weekend. A generation later and the movie rental industry has gone through several transformations. Content has migrated online and high street movie rental businesses are thin on the ground for good reason! Here is a new kid on the block attempting to challenge movie streaming businesses and the likes of Love Film. A US business Flix on Stix Kiosks allow you to download movies onto a USB 3.0 stick loaded with proprietary anti-piracy software. You choose how many movies or games to download and the rental period - the files are self deleting. It is an interesting business model that cuts out the cost of returning DVDs through the mail or in person. And rented movies can presumably be played on any device you choose within the rental period. Dynamic efficiency in action? More information here  How long before this business model arrives in the UK? AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2010-12-11T07:39:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/on-the-first-day-of-christmas http://www.tutor2u.net/blog/index.php/economics/comments/on-the-first-day-of-christmas#When:00:21:00Z There are lots of aspects of economics in this little story from the Independent on Wednesday 1st December. The final section of the report into the effects of the early snow falls is about Christmas tree shortages, and links to this BBC story about Nordmann fir trees, and the two together contain several references to the A level syllabus: AS and A2 Specifications, AQA Economics Unit 1, AS Micro, Business Economics, Competitive Markets, European Economy, EU Farming and Fishing, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Quirky Trivia, 2010-12-03T00:21:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/orange-ipads-and-the-lock-in-effect http://www.tutor2u.net/blog/index.php/economics/comments/orange-ipads-and-the-lock-in-effect#When:18:10:00Z A really good example of pricing and contract lock-ins here from the BBC’s Rory Cellan Jones who tweeted this afternoon that Orange sells iPads at £199. Then £27 per month for 2 years . So total cost=£847. Compared with £769 for full-price ipad +£10per month pay as you go. A super pricing example to use when looking at oligopolistic markets AS and A2 Specifications, AQA Economics Unit 3, Business Economics, Oligopoly, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2010-11-29T18:10:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/growth-and-strategy-at-dominos-pizza http://www.tutor2u.net/blog/index.php/economics/comments/growth-and-strategy-at-dominos-pizza#When:13:30:00Z Despite or perhaps because of difficult economic times, the pizza delivery company Dominos UK & Ireland has enjoyed rapid growth over the last couple of years.  The company, which owns the Master Franchise to the Domino’s brand in the UK and Ireland, now operates through over 130 franchisees with an average of 4.5 stores each. And their long-term strategy contains the target of rolling out at least one new Dominos store per week in each of the next ten years, growing the business into a billion pound brand in the UK – almost double the current size. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Management Issues, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, 2010-11-27T13:30:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/boriss-bikes-gearing-up-for-success http://www.tutor2u.net/blog/index.php/economics/comments/boriss-bikes-gearing-up-for-success#When:22:13:01Z Over one million bike rides have been taken using the new bicycle hire system introduced by Boris Johnson and Transport for London (supported by Barclays). Perhaps this is a good example of how getting the pricing right and other related incentives and disincentives provides the right choice architecture for a successful scheme and a change in commuter behaviour?  Membership of the scheme is affordable (£45 per year + £3 for each key) and journeys under thirty minutes are free at any time. There are stiff penalties for late and non-return of the bikes as well as for damaged bikes. The network of docking stations is substantial and TFL appear to becoming more proficient in getting round London and re-balancing supply with demand for bikes at key times during the day. I was chatting to a couple of students at the LSE the other day who make daily use of the bikes to and from lectures. To judge from the heavy demand for bikes at the Waterloo and South Bank docking stations as I have been walking past in recent weeks, there is already firm evidence that the scheme has bedded in well. The number of stolen bikes is far lower than in Paris and the volume of bike rides taken is set to grow strongly as new docking stations are opened and the stock of bikes grows. There is still plenty to do - many users complain of logistics problems that leave docking stations empty and also the limited choice of gears - but the early signs are promising indeed. The Guardian writes in praise of the scheme here.   AS and A2 Specifications, AQA Economics Unit 1, Market Equilibrium and Price, Nature of Demand, Transport Economics, 2010-10-30T22:13:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/demand-for-chilean-wine http://www.tutor2u.net/blog/index.php/economics/comments/demand-for-chilean-wine#When:10:17:00Z Is it the result of a move down the demand curve or a shift in the conditions of demand? Either way sales of Chilean wine in the UK have jumped sharply higher in recent days. Several supermarkets have reported a big hike in sales as the world’s watched the life-affirming rescue of the 33 miners from deep underground.  The rise in demand hint at one aspect of behavioural economics - namely the impact on demand that emotional impulses can have as well as the heightened saliency of the issue in people’s minds when they go shopping. The wave of goodwill towards Chile for the rescue may extend to a wider range of their consumer exports! The increase in demand reflects both a change in consumer preferences (perhaps short term only) and also some clever marketing and pricing by supermarkets. Many chose to introduce 25% discounts last week and emailed their customers with the news. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Nature of Demand, 2010-10-17T10:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/lifting-the-cap-on-tuition-fees-a-question-of-price-elasticity http://www.tutor2u.net/blog/index.php/economics/comments/lifting-the-cap-on-tuition-fees-a-question-of-price-elasticity#When:05:56:00Z The latest review of university funding has recommended that the cap on tuition fees be lifted giving universities more freedom to raise annual tuition costs well above the current level of £3,290 a year. To what extent will a rise in the private cost of studying for a degree lead to a substantial fall in market demand from UK-based students? This BBC news feature makes for interesting reading and links in well to the concept of price elasticity of demand - the responsiveness of demand to a change in the market price. There is little doubt that the cost of taking a university education will rise substantially in the years ahead and this raises hugely important questions about the impact on demand and the effect on students from poorer backgrounds who might be priced out of a degree. It seems that Business Secretary Vince Cable has already come out against introducing a Graduate Tax - one of the main alternatives to raising tuition fees. The issue is debated here in this discussion on the Radio 4 Today programme.  There is more background on the university funding issue here. Further articles on the economics of a graduate tax can be found here. University course fee increases ‘could deter students’ (BBC news) AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Cost Benefit Analysis, Government Intervention, Maximum Prices, Market Failure, Merit & De-Merit Goods, Market Equilibrium and Price, Elasticity of Demand, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2010-10-11T05:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/next-generation-laptops-an-inferior-good http://www.tutor2u.net/blog/index.php/economics/comments/next-generation-laptops-an-inferior-good#When:12:02:00Z Rory Cellan-Jones, the BBC’s Technology Correspondent, does a pretty spectacular demolition job on an attempt by clothing retailer Next to break into the fast-growing market for tablet devices. A very funny piece to camera that manages to highlight when cheap truly means awful! A lovely clip to show when discussing the nature of inferior products in a given market space. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Economic Growth, Economics of Technology, Market Equilibrium and Price, Elasticity of Demand, Nature of Demand, 2010-10-06T12:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/substitute-goods-scarcity-the-recession-toshibas-oled-tvs http://www.tutor2u.net/blog/index.php/economics/comments/substitute-goods-scarcity-the-recession-toshibas-oled-tvs#When:16:02:00Z According to Reuters (article here), Toshiba have frozen their plan for mass production of next-generation OLED TV panels, citing cost pressures from the recession and an increase in demand for the existing, competing LCD panels. A nice little case study for teaching substitute goods, opportunity cost or the impact of the recession on what is clearly a luxury good. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2010-10-04T16:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/income-elasticity-of-demand-londons-luxury-hotels http://www.tutor2u.net/blog/index.php/economics/comments/income-elasticity-of-demand-londons-luxury-hotels#When:14:33:00Z The BBC’s Joe Lynam (who tweets here) considers the prospects for a new and recently renovated cluster of luxury hotels due to open in London in the coming months. Some hotel industry insiders feel that London risks creating too much room capacity in the capital but others point to the fact that room occupancy rates have by and large avoided the worst effects of the recession. Sneak a view of one of the two £10,000 per night suites at the Savoy! AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Business Economics, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, UK Economy, Regional Economics, 2010-09-26T14:33:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-social-cost-of-dementia http://www.tutor2u.net/blog/index.php/economics/comments/the-social-cost-of-dementia#When:18:09:00Z If dementia were a country it would be the world’s 18th largest economy - this is the estimated annual cost of coping with dementia according to a new World Alzheimer Report available here and reported here on the BBC news web site. The analysis highlights some of the economic and social consequences of the illness which itself is becoming more prevalent as average life expectancy rises year on year. Lost earnings incurred by people taking time off work to care for a loved one accounts for the bulk of dementia’s costs - and naturally this figure is much higher in richer nations than in countries with lower to middle incomes. The report says that after age 65, the likelihood of developing dementia roughly doubles every five years.Alzheimer’s Disease International estimated that there are 35.6 million people living with dementia worldwide in 2010, increasing to 65.7 million by 2030 and 115.4 million by 2050. Nearly two-thirds live in low and middle income countries. My AS Economics students are researching an assignment on the economics of health care - there is a supporting presentation here - and I am hoping that they will consider some of the steep costs of providing care for the elderly as part of their answer. It is a growing burden on the economy and one who global size is now considerable. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Health Economics, Market Failure, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2010-09-21T18:09:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/smartphones-and-apps-complementary-demand http://www.tutor2u.net/blog/index.php/economics/comments/smartphones-and-apps-complementary-demand#When:16:42:00Z Smartphones and Apps - a good example of two products in joint demand - and this BBC news video from India looks at the commercial opportunities for online apps retailers as market demand surges in emerging markets. I will be using this short video when teaching complementary demand. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Emerging Economies, Indian economy, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2010-09-13T16:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/toll-roads-not-the-solution-for-congestion http://www.tutor2u.net/blog/index.php/economics/comments/toll-roads-not-the-solution-for-congestion#When:11:54:00Z According to a report out today, the UK’s only private motorway toll, the M6 Toll, has not significantly cut congestion. Video clip here and article here. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Transport Economics, 2010-08-31T11:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-effective-demand-for-after-school-activities http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-effective-demand-for-after-school-activities#When:06:42:01Z Demand is simply the desire to have or own a good or service, and the amount that individuals, companies or governments are able or willing to buy. But for demand to be effective it must be backed up by genuine purchasing power. consumers must have sufficient income to be able to afford to purchase something. This news article from BBC news focuses on the charges made for parents looking for after-school clubs for their children. A poll for Save the Children finds that many parents are struggling to meet the cost of such activities, many of which are thought to have long-lasting benefits for the children concerned.   AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Nature of Demand, 2010-08-29T06:42:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/potash-a-battle-for-grey-dust-that-has-become-gold-dust http://www.tutor2u.net/blog/index.php/economics/comments/potash-a-battle-for-grey-dust-that-has-become-gold-dust#When:14:53:00Z The market for a particularly lucrative gray dust has been thrust into the spotlight this summer with news of a $38.5bn (£25bn) hostile takeover bid from Australian mining giant BHP Billiton for Potash Corp of Saskatchewan in Canada a business coined by some as the “Saudi Arabia of Potash”! AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Agriculture, Emerging Economies, Development Economics, China Economy, Indian economy, Commodities Markets, Environmental Economics, GCSE Economics, Global Economy, Market Equilibrium and Price, Elasticity of Demand, Nature of Demand, Nature of Supply, Price Mechanism in Action, Price Volatility, Teaching of Economics, 2010-08-26T14:53:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/typical-apr http://www.tutor2u.net/blog/index.php/economics/comments/typical-apr#When:23:24:00Z 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). AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Monopoly, Financial Markets, Market Failure, Information Failure, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, Credit Crunch, 2010-08-11T23:24:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/drug-rationing-the-role-of-nice http://www.tutor2u.net/blog/index.php/economics/comments/drug-rationing-the-role-of-nice#When:13:33:00Z 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. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Health Economics, Market Equilibrium and Price, Nature of Demand, 2010-08-04T13:33:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/broker-spends-520m-in-a-drunken-stupor-and-moves-the-global-oil-price http://www.tutor2u.net/blog/index.php/economics/comments/broker-spends-520m-in-a-drunken-stupor-and-moves-the-global-oil-price#When:07:38:00Z Not an example you would find in a standard textbook - but a fun one to use nonetheless! AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Commodities Markets, Oil and Gas, Market Equilibrium and Price, Nature of Demand, Price Volatility, Teaching of Economics, 2010-07-03T07:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-times-pay-wall http://www.tutor2u.net/blog/index.php/economics/comments/the-times-pay-wall#When:06:20:00Z The Times and Sunday Times today launches their pay wall for users of their online edition. News International know that they will lose a substantial amount of traffic by introducing a subscription system for their news and comment pages. The background to the decision can be found here. I have an online subscription to the Financial Times and have also paid for the Wall Street Journal online edition in the past. But there is no way I will pay for the regular edition of the Times, there simply isn’t enough genuine value added and I suspect thousands of others will think the same. From a blogging viewpoint I will no longer link to any articles from the Times web site. There are few things more annoying for blog readers than to be redirected to a pay-wall site where an interesting story is blocked by annoying registration pages. Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2010-07-02T06:20:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-economics-revision-stocks-and-prices http://www.tutor2u.net/blog/index.php/economics/comments/as-economics-revision-stocks-and-prices#When:22:16:00Z In many AQA AS microeconomics exams, the focus of the stimulus materials is on a market or inter-related markets where prices have changed and which raise interesting questions about the causes of price volatility and arguments for and against some form of intervention. One aspect for students to consider is the relationship between stocks of a product and the direction of changes in market prices. Stocks (also known as inventories) are products ready for sale but not yet purchased. They might include finished output 9such as new cars) or inventories of components, work in progress and raw materials. Movements in inventories can trigger price changes. In our two examples we focus on the market for copper and for crude oil. In both cases look to see how prices move when there is a noticeable reduction in stock levels, perhaps reflecting a rise in market demand set against an inelastic short-run supply. When stocks are low, prices are bidded up not least in commodities markets where speculators look to make speculative purchases when they feel that the balance of power in a market is tilting in favour of the seller (i.e there is excess demand and stocks are declining). A market where inventories are high is one where, ceteris paribus, there is downward pressure on equilibrium prices. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Commodities Markets, Government Intervention, Buffer Stocks, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Price Volatility, 2010-05-22T22:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-economics-revision-changing-market-prices-for-cars http://www.tutor2u.net/blog/index.php/economics/comments/as-economics-revision-changing-market-prices-for-cars#When:12:57:00Z This chart provides some price information from the markets for new and used vehicles in the UK. I am using it as practice for my students in describing economic data - one of the skills that is tested on their Unit 1 micro paper. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Business Economics, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Price Volatility, Teaching of Economics, Transport Economics, 2010-05-22T12:57:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-efficiency-and-price-intervention-in-markets http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-efficiency-and-price-intervention-in-markets#When:19:04:00Z In 2007 the European Union Competition Commission introduced maximum prices for the roaming charges made by mobile phone service providers. These are the rates charged by one operator to another to enable its customers to make calls while visiting another country. Evaluate the view that a policy of price capping for European Union mobile phone operators will lead to an improvement in consumer and producer welfare (25 marks) AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, Oligopoly, Price Discrimination, Competition Policy, European Economy, Single Market, Government Intervention, Government Failure, Maximum Prices, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, 2010-05-21T19:04:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-irrationality-of-shaving http://www.tutor2u.net/blog/index.php/economics/comments/the-irrationality-of-shaving#When:19:39:00Z Despite the efforts of UK businesses such as King of Shaves, millions of people still spend too much money on their razor blades and they tend to hang onto their handles and blades for longer than they should!  Behavioural economist Dan Ariely decides on a change of approach as his birthday approaches…..and the same goes for squash balls. Behavioural Economics, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2010-05-02T19:39:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/footprint http://www.tutor2u.net/blog/index.php/economics/comments/footprint#When:20:36:00Z The issue of water scarcity and the scale of our increasing demands on water supplies is in the news today. In this BBC news video Richard Black looks at the amount of water used in making goods imported to the UK. And a hat tip to Mark Seccombe for finding this vivid and superb supporting graphic from Visual Economics Another great graphic here concerning water stress AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Emerging Economies, Development Economics, Economic Growth, Environmental Economics, Market Equilibrium and Price, Nature of Demand, Standard of Living, Teaching of Economics, 2010-04-19T20:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/recession-hits-sales-of-organic-food http://www.tutor2u.net/blog/index.php/economics/comments/recession-hits-sales-of-organic-food#When:08:26:00Z Demand for organic produce was strong when I visited a local market in Cambridge yesterday but overall, sales of organic foods in the UK slumped by more than 12% in 2009 as cost-conscious consumers cut back on their purchases of premium-priced organic fruit, vegetables and meats. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Nature of Demand, 2010-04-12T08:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ofcom-bares-its-teeth http://www.tutor2u.net/blog/index.php/economics/comments/ofcom-bares-its-teeth#When:07:58:00Z The telecoms regulator OFCOM has had a busy pre-Easter week with two notable competition policy decisions that will impact directly on consumers 1/ Ofcom orders BSkyB to make a 23.4% cut in the (wholesale) price of Sky Sports 1 and 2 to rivals such as Virgin Media and BT. Little surprise that Sky has responded that it will challenge the ruling. 2/ Ofcom orders mobile phone companies to cut the cost of termination charges - levied when people phone different networks from 4.5p to 0.5p by 2015. Mobile termination rates are the wholesale charges that operators make to connect calls to each others’ networks. These are two excellent examples to use in any essay on price capping in markets where there is monopolistic power. But will consumers reap the benefits in the long term? Or is the cap on Sky’s prices for live sport and movies merely a hidden subsidy for couch potatoes? A2 Micro, Business Economics, Competitive Markets, Oligopoly, Competition Policy, Government Intervention, Regulation, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2010-04-01T07:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/end-of-the-road-for-the-car-scrappage-scheme http://www.tutor2u.net/blog/index.php/economics/comments/end-of-the-road-for-the-car-scrappage-scheme#When:18:48:00Z Today marks the end of the UK government’s car scrappage scheme. The scheme offered drivers of cars at least 10 years old £2,000 off the price of a new vehicle with half of the money is paid by the government and half by the carmaker in question. Over the course of the scheme is estimated that the scrappage initiative has been responsible for about a fifth of all new UK car registrations.  And there seems little doubt that the consumer subsidy has provided a shot in the arm for a car industry affected badly by the global financial crisis and subsequent recession. Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders is quoted as saying that it had provided a “much-needed stimulus for the UK motor industry”. A2 Micro, AS Micro, Business Economics, Cycles and Shocks, Aggregate Demand, Consumer Spending, Government Intervention, Subsidies, Macroeconomic Policies, Manufacturing Industry, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, OCR F585 Economics, Transport Economics, UK Economy, Credit Crunch, 2010-03-31T18:48:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/mobile-roaming-charges-and-information-failure http://www.tutor2u.net/blog/index.php/economics/comments/mobile-roaming-charges-and-information-failure#When:17:07:01Z From July 2010 the EU is introducing price caps on the roaming charges facing users of mobile / smart phones but beyond the boundaries of the EU in countries such as Turkey, New Zealand and the United States there are dangers that smart phone users might face horrendously expensive bills - a 10 minute video downloaded with five music tracks could cost £200! A simple email with an attachment could cost £8. Is there any way that price caps could be extended? Or are users simply suffering from information failure by not understanding how to disable the roaming facility? This BBC video provides a timely reminder of the risks. A2 Micro, AS Micro, Business Economics, Oligopoly, Government Intervention, Maximum Prices, Market Failure, Information Failure, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2010-03-22T17:07:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-bitter-taste-of-buying-a-lemon http://www.tutor2u.net/blog/index.php/economics/comments/the-bitter-taste-of-buying-a-lemon#When:15:31:01Z One in five of the 3.6 million people buying a secondhand car from a dealer each year experienced a problem according to a new report from the Office of Fair Trading. The report is fresh evidence of the asymmetric information associated with the used car market. Mo’s recent superb blog on information failure is a must-read on this topic! Consumers who end up purchasing a lemon spend an estimated £425 each, or £85 million per year in total, fixing unresolved faults that are the dealer’s obligation to correct. More here from the OFT: Second hand car dealers must comply with law or face action, OFT states A2 Micro, AS Micro, Market Failure, Information Failure, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2010-03-22T15:31:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/free-health-care-and-government-failure http://www.tutor2u.net/blog/index.php/economics/comments/free-health-care-and-government-failure#When:09:26:00Z A hat tip to my colleague Tom Allen for spotting this great example in a recent Times article of the untintended consequences of providing the bulk of NHS care free at the point of need. Tom writes: There was also an excellent article in the Times about the government of providing health care at zero price.  “20% of visits to GPs are for coughs and common colds. This costs the NHS £2bn a year, without making any difference to people’s health.The NHS has become a victim of demand-led culture…. £10 per visit should be enough to deter people with sniffles.” Here is the rest of the article: Of course demand for GPs is too high — a visit costs zero   A2 Micro, AS Micro, Cost Benefit Analysis, Government Intervention, Government Failure, Health Economics, Market Failure, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2010-03-21T09:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-mutual-gains-from-bartering http://www.tutor2u.net/blog/index.php/economics/comments/the-mutual-gains-from-bartering#When:07:41:00Z A Spring Hat Tip to Louise Gilbert for spotting this terrific example of local bartering - a pub is allowing customers to barter for beer and meals. And the Publican makes a strong case for the mutually beneficial gains from bartering if appropriate terms of trade can be agreed: “I love bartering, it’s a lot more interesting than dealing with money. In these hard times everybody benefits, and it brings the locals together.” More here: Two pints of beer? That will cost you a sack of potatoes if you barter A2 Micro, AS Micro, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2010-03-19T07:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/sizzling-sausages-in-a-recession http://www.tutor2u.net/blog/index.php/economics/comments/sizzling-sausages-in-a-recession#When:22:48:00Z Devro, based at Moodiesburn in North Lanarkshire, reported pre-tax profits up 76% in 2009 to £26.9m. Devro is one of the world’s leading sausage skin makers.   Market Equilibrium and Price, Nature of Demand, 2010-02-16T22:48:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/supermarkets-accused-of-price-gouging http://www.tutor2u.net/blog/index.php/economics/comments/supermarkets-accused-of-price-gouging#When:11:52:00Z The Guardian today carries a story about alleged price gouging by the supermarkets. Tesco and Asda refute the charge but they are said to have lifted the prices of a number of necessary purchases for many household goods in the lead up to Christmas. “Both supermarkets, according to Bridgeman, would be able to use their sales data or information from loyalty cards to identify those purchases customers feel they have to make at Christmas and then target these categories for some steep rises “to extract maximum profit” from shoppers who have neither the time nor capacity to go elsewhere. So household cleaning goods, shaving products, toiletries, lightbulbs, batteries, pickles, sauces, herbs and spices typically consumed at Christmas, favourite seasonal drinks, hangover and indigestion pills, and must-have family presents were all categories seeing dramatic hikes on some lines” Price gouging involves charging more for consumers whose demand is price insensitive, in other words the price elasticity of demand is low. This would allow the retailers to achieve a higher profit margin on their sales as they extract consumer surplus and turn it into extra producer surplus. The accusation is a strong one more so because many thousands of families on lower incomes may have suffered price hikes at a time when budgets are already under enormous pressure from the effects of the recession and rising utility and energy bills. More here: How supermarkets can cut ‘thousands of prices’ but your bills may go up A2 Micro, AS Micro, Business Economics, Monopoly, Market Equilibrium and Price, Elasticity of Demand, Nature of Demand, Teaching of Economics, 2010-02-13T11:52:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/labour-peer-attacks-free-care-for-the-elderly http://www.tutor2u.net/blog/index.php/economics/comments/labour-peer-attacks-free-care-for-the-elderly#When:22:02:00Z This is a really interesting comment piece by the Labour Peer and Economist David Lipsey who attacks the government’s plans for free care for the elderly. It builds the case that offering free care will generate a number of unintended consequences and risks leading to government failure. It could be a useful article to include when teaching health care and government intervention. “Every now and again governments pass laws that make you think they must have lost their marbles. Think of the Poll Tax and Dangerous Dogs Bill. But these errors by past administrations pale into insignificance beside the grotesque folly of the Personal Care at Home Bill, which is being debated in the House of Lords….....You don’t need to be much of an economist to know that if you reduce the price of something to zero, the quantity demanded will rise. As Adass also points out, the effect of free care will be that large numbers of people who are at present managing with the support of friends and relatives will start claiming for paid-for support…..” More here AS Micro, Cost Benefit Analysis, Government Intervention, Government Failure, Subsidies, Health Economics, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2010-02-03T22:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/apples-revenues http://www.tutor2u.net/blog/index.php/economics/comments/apples-revenues#When:06:44:00Z A stunning and clear illustration here of the surge in Apple revenues and the component parts. An entire ico-system has developed around the Apple suite of products. In the final quarter of 2009: Revenues $15.7Bn Profit $3.3Bn 3m Macs sold 9m iPhones 21m iPods And now the iPad .... kindling for the Kindle. A2 Micro, AS Micro, Business Economics, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, 2010-01-28T06:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/contestable-markets-google-launches-the-nexus-one http://www.tutor2u.net/blog/index.php/economics/comments/contestable-markets-google-launches-the-nexus-one#When:09:42:00Z Google has launched the Nexus One a “super phone” designed to challenge the established dominance of smartphones such as the iPhone, Blackberry and Palm Pre. For £330 buyers anxious to own a Nexus One without locking themselves into a lengthy contract with one of the major mobile phone operators can have a phone delivered that can run on any network.  A2 Micro, AS Micro, Business Economics, Economies of Scale, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, 2010-01-06T09:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/complementary-demand-for-virtual-goods http://www.tutor2u.net/blog/index.php/economics/comments/complementary-demand-for-virtual-goods#When:16:20:00Z Many millions of people enjoy playing online games and for social game developers a hugely important source of revenue is from the sale of virtual goods. The trading of virtual goods within games is a global industry worth over $10 billion a year. Here is a good example of complementary demand in markets - regular gamers are happy to purchase seeds, tractors and coins using real money to help them get ahead in their favourite game. This BBC news feature argues that virtual goods are one of the hottest trends in technology and are fuelling huge growth in the social gaming sector.  There is a fascinating lecture at the RSA early next month - Fun Inc.: Why games are the 21st century’s most serious business - details are here. Tom Chatfield’s new book is available here from Amazon. AS Micro, Business Economics, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2009-12-30T16:20:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/taxing-time-for-pubs http://www.tutor2u.net/blog/index.php/economics/comments/taxing-time-for-pubs#When:10:38:00Z Planned increases in beer duty are likely to accelerate the pace of pub closures and lost jobs as we head into 2010. This is a good two minute BBC news video on the implications for smaller independent pubs of the recent hike in beer duty. AS Micro, Government Intervention, Indirect Taxes, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, 2009-11-27T10:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/toy-story http://www.tutor2u.net/blog/index.php/economics/comments/toy-story#When:20:24:00Z The Go Go Hamster is set to be one of the top toys this Christmas. But this, and other toys in high demand, might be subject to a shortage of supply. Retailers had their fingers burned last year as demand for toys fell by 12% and many were left with excess supply after the Christmas period. Many toy retailers make over 50% of their sales in November-December, but the early stages of global recession reduced demand for toys in 2008, shifting the demand curve to the left so that, in order to clear excess stocks, retailers had to reduce prices. In a textbook example of cobweb theory, many have ordered fewer toys this year thus reducing supply, but in fact the early signs on both sides of the Atlantic and across Europe is that demand is, at least partly, restored, so there is now a risk of excess demand. Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Recession Watch, Credit Crunch, 2009-11-11T20:24:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/caffeinated-stimulus-to-demand http://www.tutor2u.net/blog/index.php/economics/comments/caffeinated-stimulus-to-demand#When:10:03:00Z Coffee shops seem - by and large - to be surviving the recession and, in many cases thriving. The number of independent coffee stores has grown by more than 7% in the last year. Across the country hundreds of new stores have opened. This doesn’t make coffee an inferior good - whose demand rises as real income falls. Instead there are stronger forces at work, for example the rise of the nomadic entrepreneur who prefers to work away from expensive offices. Hugh Pym provides an overview of the strength of retail coffee demand in this piece from BBC news. London has the highest concentration of coffee stores in the UK followed by Edinburgh. Not every brand is enjoying the same performance. Costa Coffe which has 974 stores in the UK has reported like-for-like sales growth yesterday of 2.5 per cent in the six months to the end of August. Caffè Nero, which has almost 400 UK outlets, is believed to be trading at a similar level to Costa, although Starbucks has like-for-like sales down by an estimated 4.5 per cent to 5 per cent in recent months. Brand fatigue in action. A2 Micro, AS Micro, Business Economics, Competitive Markets, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, 2009-11-06T10:03:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/soaring-cocoa-prices-as-supply-fails-to-keep-pace-with-demand http://www.tutor2u.net/blog/index.php/economics/comments/soaring-cocoa-prices-as-supply-fails-to-keep-pace-with-demand#When:08:45:00Z There is an excellent article in the Times today about the surge in the world price of cocoa. Cocoa prices have hit a 30-year high as poor weather threatens to drive the price of chocolate up again for Western consumers. Cocoa has reached $3,412 a tonne in New York as concerns deepened about demand outstripping supply for the first time since 1968. This is a really good article to use to consolidate students’ understanding of how shifts in supply and demand can lead to price volatility. And also the importance of price elasticity of demand and supply in shaping price changes. “The surge in price also indicates that cocoa is increasingly being used for financial investment rather than merely sold to industry” * What factors are limiting cocoa supply? * Why is demand from western economies rising - even though many are still in recession? * Will cocoa farmersd necessarily gain from higher world prices? AS Micro, Emerging Economies, Development Economics, Commodities Markets, GCSE Economics, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Price Volatility, 2009-10-25T08:45:00+00:00