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-3-micro-video-resources-on-carbon-taxation http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-video-resources-on-carbon-taxation#When:08:49:45Z The crucial issue of how best to tackle climate change and make significant progress towards a low-carbon economy is one that gives students tremendous opportunities to hone their analysis and evaluation skills. A few weeks ago the Australian government was successful in getting through the Senate proposals for a new carbon tax and in this blog we link to some excellent video reports on the background to this decision. AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Cost Benefit Analysis, Environmental Economics, Government Intervention, Indirect Taxes, Market Failure, Externalities, Information Failure, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2012-02-05T08:49:45+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/petrol-tax-and-the-downward-sloping-demand-curve http://www.tutor2u.net/blog/index.php/economics/comments/petrol-tax-and-the-downward-sloping-demand-curve#When:22:03:05Z Nearly every country has a tax on petrol, although the amount varies widely. And given that the landed price of petrol is quite similar (see the graph below), it can be seen what effect the tax has on quantity demanded. The results are very much in line what economic theory would predict and there are also clear implications for countries that want to reduce petrol consumption. Government Intervention, Indirect Taxes, Macroeconomic Policies, Fiscal Policy, Market Failure, Externalities, Market Equilibrium and Price, Elasticity of Demand, Price Mechanism in Action, 2012-01-17T22:03:05+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit1-micro-can-a-minimum-wage-create-jobs http://www.tutor2u.net/blog/index.php/economics/comments/unit1-micro-can-a-minimum-wage-create-jobs#When:00:02:34Z Tim Harford has a piece in his regular column in the Financial Times which discusses some of the issues surrounding the minimum wage and whether a legal pay floor can actually create jobs. Here is the link AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Government Intervention, Minimum Prices, Labour Market, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, Unemployment, 2012-01-17T00:02:34+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-worlds-largest-solar-plant-opens http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-worlds-largest-solar-plant-opens#When:03:51:50Z This autumn the world’s biggest solar plant power station opened in Spain. Comprising 600,000 parabolic mirrors, the Andasol 3 CSP plant is the size of 70 soccer fields and has 88km of piping. The economies of scale are huge and if solar power is going to work and be viable anywhere it is probably here or in North Africa. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Cost Benefit Analysis, Economic Growth, Economics of Technology, Environmental Economics, Government Intervention, Subsidies, Market Failure, Externalities, Market Equilibrium and Price, Price Mechanism in Action, 2012-01-16T03:51:50+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-3-micro-prezi-on-environmental-economics http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-prezi-on-environmental-economics#When:07:09:51Z This term I am teaching some environmental economics to my A2 groups. The link below provides access to a Prezi on aspects of environmental issues such as the Tragedy of the Commons and the economics of waste and pollution. I will be updating and extending the Prezi as I develop the lessons. I hope that it is useful. I will try to include as many examples as I can on European and Global issues to do with environmental issues - the beauty of a Prezi of course is the flexibility of ordering course materials and the chance to embed lots of vivid You Tube clips and images into the resource. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Emerging Economies, Development Economics, Environmental Economics, Global Economy, Government Intervention, Market Failure, Externalities, Public Goods, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2012-01-11T07:09:51+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-prezi-on-the-economics-of-negative-externalities http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-prezi-on-the-economics-of-negative-externalities#When:01:42:13Z This blog provides a link to a constantly updated revision Prezi on negative externalities and market failure - designed for students taking AS Microeconomics Unit 1 and those studying externalities for the IB Diploma. The Prezi contains lots of short news videos on examples of externalities. Click on the link below to access the Prezi. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Environmental Economics, Government Intervention, Government Failure, Indirect Taxes, Regulation, Market Failure, Externalities, Information Failure, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2012-01-03T01:42:13+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/european-economics-resources-on-the-cap http://www.tutor2u.net/blog/index.php/economics/comments/european-economics-resources-on-the-cap#When:19:47:30Z This blog entry will provide a regularly updated set of links to resources to the European Union’s Common Agricultural Policy and attempts to reform this contentious and complex system of farm support. Check below for suggested links AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Micro, AS Micro, Agriculture, Emerging Economies, Commodities Markets, European Economy, EU Farming and Fishing, Government Intervention, Buffer Stocks, Government Failure, OECD Economies, French Economy, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, UK Economy, Regional Economics, 2011-12-28T19:47:30+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-the-uk-housing-market-in-2011 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-the-uk-housing-market-in-2011#When:14:44:39Z This blog provides a chart-based overview of developments in the UK housing market in 2011. The housing industry has a big effect on macroeconomic variables such as output, employment and investment. Has there been a marked recovery in property prices, new housing starts and mortgage lending? AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Housing Economics, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, UK Economy, Regional Economics, London Economy, Recession Watch, 2011-12-26T14:44:39+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-50-years-since-the-end-of-the-max-wage-in-football http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-50-years-since-the-end-of-the-max-wage-in-football#When:13:51:22Z Around this time of my micro course my students look at maximum prices (price ceilings) in different markets. There are still plenty of contemporary examples to consider, for example salary caps for executives, caps on the cost of mobile phone texts and roaming charges, rent ceilings etc. But here is a resource that will be of special interest to football-loving economists, namely the 50th anniversary of the ending of the maximum wage in football. The Independent has this nifty set of graphics looking at landmarks in wages of top footballers over the years. Click on: The maximum wage and football’s money trail AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Government Intervention, Maximum Prices, Labour Market, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-11-23T13:51:22+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/unit-1-micro-has-the-time-come-for-a-tobin-tax http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-has-the-time-come-for-a-tobin-tax#When:15:22:26Z This week I am setting my AS micro students a question on proposals for a Tobin Tax - partly because it is hugely topical and also as a way of developing their evaluation skills on paper and coming to a reasoned final conclusion. Here are some of the links to suggested reading and some video shorts on this topic: AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 2, EdExcel Economics Unit 1, EdExcel Economics Unit 2, AS Macro, AS Micro, European Economy, The Euro, Financial Markets, Global Economy, Government Intervention, Indirect Taxes, OECD Economies, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-11-06T15:22:26+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-1-micro-economists-attack-food-price-speculation http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-economists-attack-food-price-speculation#When:08:36:54Z Food prices are now rising by up to 10% a year in Britain and Europe and a new forecast from the United Nations predicts that prices can be expected to rise at least 40% in the next decade. Whilst conventional theories of changes in supply and demand conditions can be used to explain some of the increase in food prices, many economists are concerned that speculation by hedge funds and other investors has amplified the natural volatility of prices driving food prices away from fair values and contributing to a huge rise in global food poverty and hunger. These days, cocoa, fruit juices, sugar, staples, meat and coffee are all now global commodities, along with oil, gold and metals. Is this the moment to legislate to limit the scope for speculative activity in food markets? The video below provides an excellent introduction to speculation in food markets - it features Neil Kellard, Professor in Finance at the University of Essex AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, OCR A2 Economics Unit F585, AS Micro, Agriculture, Balance of Payments, Emerging Economies, Development Economics, Commodities Markets, Economic Growth, Financial Markets, Government Intervention, Buffer Stocks, Poverty and Inequality, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Teaching of Economics, 2011-10-24T08:36:54+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-contestable-markets-lucozade-takes-on-coca-cola http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-contestable-markets-lucozade-takes-on-coca-cola#When:19:24:11Z A sparkling hat tip to Pete Davies for spotting this one. 1.7 billion litres of cola drank were drunk globally in 2010 & now Lucozade (owned by GlaxoSmithKline) wants a slice of the action!  with the launch of Lucozade Energy Cola. They already have a well-established position in the energy drinks market. Can they overcome possible consumer resistance to this product and brand extension? Marketing Week reports something revealing about their point of sale strategy. Lucozade Energy Cola has already reached retailers ahead of the launch apparently with written guidelines for shopkeeprs asking for it to be stocked in the “energy drink section on the chiller”, but placed “next to the coke selection where possible.! Maybe the new product will find a way into the secret stashes of this Manchester schoolboy entrepreneur? AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-10-10T19:24:11+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-on-youtube http://www.tutor2u.net/blog/index.php/economics/comments/economics-on-youtube#When:19:49:09Z A useful clip for AS micro: barter economies. Or, alternatively, for A2 micro: perfect price discrimination. Watch it here AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, OCR A2 Economics Unit F585, A2 Micro, AS Micro, Business Economics, Price Discrimination, Introductory Economics, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, Economics at the Movies, Fun Friday, 2011-10-09T19:49:09+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-producing-coffee-kenya-in-pictures http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-producing-coffee-kenya-in-pictures#When:10:06:27Z If you are teaching the economics of commodity prices and coffee in particular - this resource - will appeal strongly to your visual learners! The Guardian Pictures web site has a quite stunning set of photos of Kenyan coffee producers - growers who are hoping that rising world prices will bring respite after years of difficulty including volatile crop yields, poverty prices and incomes and a long term decline in investment. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, Agriculture, Balance of Payments, Emerging Economies, African Economy, Global Economy, Credit Crunch, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Teaching of Economics, 2011-10-04T10:06:27+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-the-supply-and-demand-rap http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-the-supply-and-demand-rap#When:16:15:00Z An Indian Summer hat tip to John owen for finding and flagging up this super student-produced rap exploring the idea of equilibrium price! A great one to show to the Year 12s as they delve into price theory! Click on the link below AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-09-28T16:15:00+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/some-more-creative-economics-props http://www.tutor2u.net/blog/index.php/economics/comments/some-more-creative-economics-props#When:20:28:00Z Geoff’s post about being ‘dangerously creative’ got me thinking about exactly what props I’ve got lying around my classroom, so I thought I’d share them with the rest of you… Commodities Markets, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-09-07T20:28:00+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/as-micro-fears-over-a-century-of-hunger http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-fears-over-a-century-of-hunger#When:08:19:00Z Nigel Cassidy reports in this video from BBC news on fears that the world faces “a century of hunger” if the international community cannot agree on new rules regarding food prices. Food security is a hugely important global economic, political and social issue and one of the best resources for keeping up to speed on this is the Guardian’s dedicated page of articles. Here is the link. Check the links at the bottom of the blog for past articles on this topic. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 4, EdExcel Economics Unit 1, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Micro, Agriculture, Emerging Economies, Development Economics, Commodities Markets, Cycles and Shocks, Economic Growth, European Economy, EU Farming and Fishing, Global Economy, Government Intervention, Buffer Stocks, International Trade, Poverty and Inequality, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Standard of Living, Teaching of Economics, 2011-06-22T08:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/chinese-inward-investment-in-the-london-property-market http://www.tutor2u.net/blog/index.php/economics/comments/chinese-inward-investment-in-the-london-property-market#When:08:40:01Z In mainland China, authorities have put restrictions on property speculators to dampen the market, while in Hong Kong prices have risen by 70% in less than two years. But the 25% depreciation of sterling over the last two years makes the London property market a real draw for property investors from China. Sky News reports that one in three of buyers of new properties in London come from China and Hong Kong, mainly in the £400,000 - £1mn bracket, either seeking accommodation for their children studying in London or simply an investment. If - or when - the sterling/dollar exchange rate recovers, their return will be enhanced by the increased return they could get when they take their money out of the UK market again. A2 Macro, AS Macro, Emerging Economies, China Economy, Exchange Rates, Housing Economics, Poverty and Inequality, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, UK Economy, Regional Economics, London Economy, 2011-06-12T08:40:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/electric-cars-government-failure http://www.tutor2u.net/blog/index.php/economics/comments/electric-cars-government-failure#When:12:37:01Z There was a great in-depth look at activity in the car market in the Sunday Times yesterday with regards to electric powered vehicles. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, OCR AS Economics Unit F581, AS Micro, Business Economics, Competitive Markets, Government Intervention, Government Failure, Regulation, Subsidies, Market Failure, Externalities, Merit & De-Merit Goods, Market Equilibrium and Price, Price Mechanism in Action, Transport Economics, 2011-05-16T12:37:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-commodity-prices http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-commodity-prices#When:19:46:00Z The economics of volatile commodity prices are a staple feature of many AS micro papers - it gives you a chance to apply your understanding of supply and demand factors and the importance of elasticities of demand and supply in explaining price movements. And also understand some of the consequences of volatile price and output movements for different stakeholders - including consumers, producers and the government. This BBC news article takes a look at the likely direction of world commodity prices and embraces a number of different markets that have appeared on exam papers in the past - so a useful exercise to test your revision is to read through and see how much you get first time. I have put a revision presentation on price volatility in markets on my web site - available here (it does the job for a really good AS micro answer) AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Emerging Economies, Government Intervention, Buffer Stocks, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, 2011-05-05T19:46:00+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/as-micro-rising-global-food-prices http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-rising-global-food-prices#When:13:17:00Z This Euro News video report (8 mins) looks at the background to the rise in global food prices and the economic impact. I have linked below to related blog posts on the issue of the economics of food price inflation (also known as agflation)     AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Emerging Economies, Commodities Markets, Global Economy, Government Intervention, Buffer Stocks, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Teaching of Economics, UK Economy, 2011-05-02T13:17:00+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/nudge-more-like-a-shove-for-aussie-smokers http://www.tutor2u.net/blog/index.php/economics/comments/nudge-more-like-a-shove-for-aussie-smokers#When:18:59:00Z Here is an example of a government prepared to make tough decisions on the marketing of a de-merit good - a strong alternative to the default option of simply raising the duty (tax) on consumption in real terms. The Australian government has introduced what it thinks are the strongest laws controlling the sale and display of cigarettes in the world - it will be fascinating to see how this impacts on consumption among different age groups. Logos are banned, a large area of each packet must show cancerous tumours and the health effects of tobacco. And they are taking nudge to a new level by insisting that the colour of each packet is one that in surveys, smokers have found to be least attractive. The Sydney Morning Herald reports that smoking kills 15,000 Australians a year and costs the community about $31.5 billion annually. Over the last twenty years the smoking rate in Australia has halved but the government now wants to reduce it still further to 10%. The move is being contested by the multinational cigarette manufacturers who claim that the proposed restrictions infringe international trademark and intellectual property laws. Read: Australian anti-smoking laws to be ‘toughest in world’ See also The Independent: Australia’s cigarette war over shocking pack rules and David Prosser: When will big tobacco decide to give up? AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Government Intervention, Regulation, Market Failure, De-Merit Goods, Externalities, Merit & De-Merit Goods, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-04-12T18:59:00+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/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/opec-oil-revenues-set-to-surge-above-1-trillion-in-2011 http://www.tutor2u.net/blog/index.php/economics/comments/opec-oil-revenues-set-to-surge-above-1-trillion-in-2011#When:17:49:01Z A combination of higher prices and higher oil production means that Opec’s oil revenues may exceed $1 trillion in 2011 for the first time. The International Energy Agency has published some new data on Opec production - the revenue forecast includes exports of natural gas liquids and is not adjusted for the effects of inflation. But if you are a Finance Minister of an oil exporting country the price of crude trading at $115 is welcome news especially given the stimulus spending that some countries have introduced as a response to social and political unrest. On some estimates, Saudi Arabia (the world’s largest oil producer and exporter) needs oil to be priced at $83 for its national budget to balance. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 4, A2 Macro, AS Micro, Commodities Markets, Oil and Gas, Market Equilibrium and Price, Price Mechanism in Action, 2011-03-30T17:49:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/timetric-mortgage-lending-and-mortgage-rates http://www.tutor2u.net/blog/index.php/economics/comments/timetric-mortgage-lending-and-mortgage-rates#When:14:56:00Z Want to purchase a property? Chances are that you will need a mortgage to finance the deal and you will also need to find someone prepared to lend you the money. The fallout from the credit crunch continues to haunt the UK mortgage market with monthly loans to property-buyers stuck at very low levels. The average mortgage interest rate on a standard variable rate loan is low but most mortgage lenders have cut the % loan to housing valuation ratio meaning that buyers must find a hefty deposit to clinch the deal. Our Timetric chart (below) is always updated so you can keep up to speed with what is happening to mortgage lending and the cost of home loans in the UK property market. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 2, AS Macro, AS Micro, Housing Economics, Market Equilibrium and Price, Price Mechanism in Action, UK Economy, 2011-03-14T14:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/timetric-price-convergence-within-the-eu http://www.tutor2u.net/blog/index.php/economics/comments/timetric-price-convergence-within-the-eu#When:09:10:00Z Has the growth and development of the European Union single market and the Euro accelerated a process of price convergence within the EU? Price convergence means that the gap in prices for the same good or service has come down and in theory, having one currency and an open market ought to bring down the extent of price variations. Our Timetric chart below tracks what has been happening to the price convergence indicator. A fall in the measure indicates a coming-together of average prices. AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Business Economics, Monopoly, Price Discrimination, European Economy, Single Market, Market Equilibrium and Price, Price Mechanism in Action, Standard of Living, UK Economy, 2011-03-13T09:10:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-cost-of-credit-mining-the-card-charges http://www.tutor2u.net/blog/index.php/economics/comments/the-cost-of-credit-mining-the-card-charges#When:17:45:00Z Our good friends at Timetric are producing some superb stuff with economic data and here is another example. Policy interest rates are at historically low levels but the cost of borrowing for businesses and unsecured loans for personal customers continues to edge higher and is a vast multiple of the policy rate. This blog from Timetric offers timely background on the rising cost of credit. And it provides a connection to information failures in the consumer credit market. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, A2 Macro, AS Macro, Global Economy, Credit Crunch, Macroeconomic Policies, Monetary Policy, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-03-01T17:45:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/carbon-nation http://www.tutor2u.net/blog/index.php/economics/comments/carbon-nation#When:17:25:00Z A hat tip to extreme economist / geographer Felix Tracey for flagging up a new film on low carbon emissions Carbon Nation that is due for release in the USA soon and hopefully will make its way to the UK soon. Director Peter Byck introduces us to a stirring cross-section of pioneers, researchers and innovators committed to helping the world reduce its carbon footprint. 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, Market Failure, Externalities, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-03-01T17:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/information-failures-the-bazaar http://www.tutor2u.net/blog/index.php/economics/comments/information-failures-the-bazaar#When:14:39:01Z Teeming with thousands of visitors, a bazaar appears to provide a rich seam of material for students of the market mechanism. Ercole Durini di Monza writes about them and the potential for information gaps as buyers and sellers look eachother in the eye. A bazaar is a permanent marketplace where a countless diversity of goods and services are sold (as well as exchanged), with the prices usually being quite low to achieve a high enough demand for a particular product and therefore generate profit. The bazaar first began in Iran, before becoming ubiquitous across much of the Middle East and North Africa. The bazaar is a paragon of a market-place where information gaps are present, as in almost every transaction made in the bazaar, the consumer will haggle with the owner of the shop armed with insufficient information vis-à-vis a product. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Failure, Information Failure, Market Equilibrium and Price, Price Mechanism in Action, 2011-02-27T14:39:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/intense-focus-on-cutting-emissions-is-dumb-argues-lomborg http://www.tutor2u.net/blog/index.php/economics/comments/intense-focus-on-cutting-emissions-is-dumb-argues-lomborg#When:23:30:00Z —————————————————————————————— Follow Geoff Riley and tutor2u on Twitter—————————————————————————————— The quality and range of the free lectures at the LSE is hard to beat and half term has given me the chance to pop into several this week. I attended a public seminar on climate change at the London School of Economics last night where the principal speaker was the Skepical Environmentalist Bjorn Lomborg - adjunct professor at the Copenhagen Business School. Once this guy gets going he is difficult to hold back! A relentless delivery was tough to stay with after a busy day in London. I have heard Bjorn Lomborg before and didn’t learn too much that was fresh but it was useful once more to draw a contrarian view on the intense policy focus on cutting C02 emissions as the centre-piece of environmental policy. His new film “Cool It” is released in the UK next month (March 2011) and will no doubt stoke fresh media interest.   AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Emerging Economies, Cost Benefit Analysis, Environmental Economics, European Economy, Government Intervention, Market Failure, Externalities, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-02-16T23:30:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-should-the-cap-be-scrapped http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-should-the-cap-be-scrapped#When:09:12:00Z The Common Agricultural Policy is a system of farm support that was set up by the EU to assist the agricultural sectors of its member states. The CAP accounts for nearly half of the EU’s budget, at approximately £48bn, and combines direct subsidy payments and price support schemes. Economic welfare is concerned with levels of human well-being, and can be achieved through an efficient allocation of resources, thereby maximising consumer and producer surplus. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 4, EdExcel Economics Unit 4, Economics Q&A, Q&A - Market Failure, Q&A - Markets, A2 Macro, AS Micro, Agriculture, European Economy, EU Farming and Fishing, Government Intervention, Government Failure, Market Equilibrium and Price, Price Mechanism in Action, 2011-02-14T09:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/us-pay-day-loan-firms-set-for-rapid-expansion-in-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/us-pay-day-loan-firms-set-for-rapid-expansion-in-the-uk#When:20:42:01Z The financialisation of the British economy continues apace. This article in the Guardian reports that US pay day loan businesses (regulated loan sharks to you and me) are planning a rapid and sizeable entry into the UK consumer credit market. In part this might be because in the UK there is little or no effective regulation on what they can charge. Cash-strapped families often denied credit by high street banks are vulnerable to the heavy marketing of these businesses - students will know of one of them Wonga the shirt sponsor for Blackpool FC. The typical pay day loan is around £75 to £750, which is deposited in their bank account in as little as 15 minutes, to be repaid in around two to four weeks but with interest rates that can easily reach 30% a month or higher. The pay day loan market might be a good case study for students wanting to understand more about the demand for credit and discussions about whether there should be a maximum price or cap on the interest rates that can be charged. AS and A2 Specifications, AQA Economics Unit 1, AS Micro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Global Economy, Credit Crunch, Government Intervention, Maximum Prices, Macroeconomic Policies, Monetary Policy, Market Equilibrium and Price, Price Mechanism in Action, 2011-02-13T20:42:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/carbon-taxes-the-best-hope-for-a-low-carbon-future-in-europe http://www.tutor2u.net/blog/index.php/economics/comments/carbon-taxes-the-best-hope-for-a-low-carbon-future-in-europe#When:10:03:00Z With EU carbon emissions market has closed since the middle of January after hackers stole €30m of permits the economics of a EU wide carbon tax has been given fresh prominence in recent weeks. Charles Hart evaluates the arguments for and against a tax on emissions in this super applied micro essay. After the essay there are some links to recent blog posts and other resources on carbon trading and carbon taxation. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, Economics Q&A, Q&A - Market Failure, A2 Micro, AS Micro, Business Economics, Environmental Economics, European Economy, Single Market, Global Economy, Government Intervention, Indirect Taxes, Market Failure, Externalities, Information Failure, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, UK Economy, 2011-02-03T10:03:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/how-much-do-i-earn http://www.tutor2u.net/blog/index.php/economics/comments/how-much-do-i-earn#When:20:05:01Z Many colleagues are teaching labour market economics around this time of year! Accessing up to date information on mean and median salaries for different occupations can open up all kinds of interesting discussions and starter activities. We did one of these at the TeachECON events last autumn involving a starter called How Much Do I Earn? AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Labour Market, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-02-01T20:05:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/5-fresh-links-reforming-the-eu-common-agricultural-policy http://www.tutor2u.net/blog/index.php/economics/comments/5-fresh-links-reforming-the-eu-common-agricultural-policy#When:12:09:01Z The economic, environmental and social issues arising from farm support in developed and developing countries often figure in final year teaching for A2 economics. We are looking at this at the moment as part of our teaching of the economics of the EU. Here are five fresh links on the vexed question of how best to reform the Common Agricultural Policy of the EU - including two recent videos from BBC news. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Agriculture, Emerging Economies, Development Economics, Commodities Markets, European Economy, EU Farming and Fishing, Government Intervention, Buffer Stocks, Government Failure, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, UK Economy, Regional Economics, 2011-01-25T12:09:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/changes-in-real-prices http://www.tutor2u.net/blog/index.php/economics/comments/changes-in-real-prices#When:22:40:00Z This is a graphic I use each year when looking at changes over time in indices of consumer prices for different goods and services. Using data drawn from the published Retail Price Index since 1988 (the base year) I print this chart out and explore in classroom discussion some of the economic factors behind the divergence in prices for rail fares, cigarettes, household repair services, clothing and electrical items. We discuss the impact of changes in indirect taxes, unit labour costs, economies of scale, trade and globalization effects and the intensity of competition among other factors. Eagle-eyed students spot the upturn in clothing prices and link it to the rising world price of cotton. Others notice the strong seasonality in clothing prices and the annual hike in rail fares! I have copied the latest chart into a PowerPoint file for colleagues who might want to use it Real_Prices.pptx AS and A2 Specifications, AQA Economics Unit 2, AS Macro, GCSE Economics, Inflation and Deflation, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, UK Economy, 2011-01-24T22:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/shorting-the-market-the-vultures-target-hmv http://www.tutor2u.net/blog/index.php/economics/comments/shorting-the-market-the-vultures-target-hmv#When:09:41:01Z A few weeks back we focused on the problems facing UK retailer HMV. Weak sales and a difficult financial position have made the business a target for hedge funds who decide to short the stock anticipating a further fall in the company’s share price. This Guardian article looks at the stocks on the UK FTSE that lead the list of shares being targeted by the short-sellers. Short selling is a strategy used by investors who expect the price of a stock to fall. It involves selling shares by borrowing them from another institution and then betting that they can buy them back at a lower price and profit from the difference. Short selling became a high profile and controversial tactic during the global financial crisis when many fragile banks were the targets of the stock market vultures and some were forced to accept nationalisation and emergency financial support. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Business Economics, Financial Markets, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Teaching of Economics, 2011-01-23T09:41:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-can-economics-provide-answers-to-the-crisis-of-collapsing-stoc http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-can-economics-provide-answers-to-the-crisis-of-collapsing-stoc#When:19:01:00Z The UK is one of many countries that now face a dilemma when it comes to fish stocks and their sustainability. In the UK we now consume over 385,000 tons of fish per year whilst on a global scale only 10% of large fish stocks that existed in the 1950s are still present today; this include both cod and tuna. Stock depletion has become a larger issue because of the increases in fishing technology – especially in long-line fishing which is the main technique used in Japan. As a result many of the once inaccessible fish reserves have become economically viable to fish as boats are more fuel efficient and require less labour. In a fully functioning market the decline in supply of the product would cause an increase in price and act as a disincentive for consumers to purchase the product meaning that the industry would reach a sustainable equilibrium. In this case however there has been a deep market failure resulting from the tragedy of the commons. The sea, and its fish, is a common resource either on a global scale or on a national scale within a country’s own territorial waters. There are very few established property rights over the sea meaning that rational economic agents have an incentive to plunder the seas resources causing the falling fish stock levels. AS and A2 Specifications, AQA Economics Unit 3, Economics Q&A, Q&A - Market Failure, Q&A - Markets, A2 Micro, Cost Benefit Analysis, Environmental Economics, European Economy, EU Farming and Fishing, Global Economy, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-01-19T19:01:00+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/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-benefits-costs-food-prices http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-benefits-costs-food-prices#When:18:08:00Z A sustained rise in the global prices of foodstuffs is called agflation. As our chart below shows, the Economist’s index of global food prices has shown high volatility in recent years, there have been two sizeable and steep increases in food prices and a downturn in the wake of the 2009 global recession. And now the United Nations Index of Food Prices has now risen back above levels last seen in 2008 at a record high. A period of rising food prices affects both the demand and supply-side of an economy. And the impact will depend on many factors including: (i) The patterns of trade for one or more countries e.g. whether a country is a net exporter or importer of food (ii) The importance of food production and exports in economic activity e.g. the share of value added contributed by farming, food processing and other food-related industries (iii) Average incomes for a given country / region and the percentage of incomes that must be spent on food to ensure a modest but adequate lifestyle (iv) Possible effects of rising food prices on variables such as inflation, interest rates and the exchange rate AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 4, A2 Macro, AS Micro, Agriculture, Emerging Economies, Cycles and Shocks, European Economy, EU Farming and Fishing, Global Economy, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Standard of Living, Teaching of Economics, 2011-01-04T18:08:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/china-limits-rare-earth-exports http://www.tutor2u.net/blog/index.php/economics/comments/china-limits-rare-earth-exports#When:10:55:00Z China (which produces about 97 percent of the global supply of rare earth metals) has announced that it plans to restrict exports of rare earths by 10% for 2011 and it is also increasing export taxes for some rare earth elements to 25 percent in 2011. These moves raise fears that shortages of rare earths will drive prices higher and make many hi-tech consumer goods more expensive. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 4, A2 Macro, AS Micro, Emerging Economies, China Economy, Commodities Markets, Economic Growth, Environmental Economics, Global Economy, Market Equilibrium and Price, Price Mechanism in Action, Inter-related Markets, 2010-12-30T10:55:00+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/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/as-micro-revision-market-forces-and-resource-allocation http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-revision-market-forces-and-resource-allocation#When:16:25:00Z Here is a revision presentation on market forces and resource allocation, which should be particularly useful for AS economists preparing for their AS microeconomics paper. Revision presentation on Market Forces and Resource Allocation AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, OCR AS Economics Unit F581, AS Micro, Government Intervention, Market Failure, Market Equilibrium and Price, Price Mechanism in Action, Inter-related Markets, 2010-12-02T16:25:00+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/watch-out-for-the-7-chocolate-bar http://www.tutor2u.net/blog/index.php/economics/comments/watch-out-for-the-7-chocolate-bar#When:19:01:01Z Will a collapse in global cocoa production bring an end to chocolate as an affordable treat and giver of blood sugar? This article from the Independent today was timely as I am teaching price volatility in commodity markets in my AS micro class as a prelude to discussions abour price intervention strategies such as maximum prices / buffer stock schemes etc. I have attached my class homework as a word file in case it is of use to colleagues. Cocoa Economics (AS micro) Cocoa_Economics.docx Here is a highly relevant section from a new report from Commodities Now “World food prices have been trending higher as emerging markets have increased their share of global food demand due to rising populations and incomes. Food products are having to compete for finite resources such as water, land and fertiliser inputs and are increasingly being used for alternative applications such as bio-fuels. As an example, ethanol now accounts for approximately one-third of annual corn output in the US, up from 5% a decade ago.” More here and some links to useful news articles. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Agriculture, Emerging Economies, Commodities Markets, Government Intervention, Buffer Stocks, Maximum Prices, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Inter-related Markets, Teaching of Economics, 2010-11-09T19:01:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/successors-to-roosevelt-and-kruger-marine-parks-of-the-sea http://www.tutor2u.net/blog/index.php/economics/comments/successors-to-roosevelt-and-kruger-marine-parks-of-the-sea#When:00:01:01Z Charles Clover, author of The End of the Line - the inspiration behind the award-winning documentary film of the same name, was on splendid form in a talk to the school Geography Society tonight. After showing an abridged version of the powerful film he led a discussion on issues raised by the End of the Line. What is clear is the immediacy of the global fishing crisis. One way or another this will be resolved in our life time and the consequences of measures designed to protect and rebuild fish stocks and aqua-diversity will impact on billions of people around the world. Accoding to Clover, the EU continues to be a black hole when it comes to successfully managing fish resources - if ever there is an example of government failure this is it. To save the Blue Fin tuna we need to set aside 20% of the Mediterranean and in some areas of the North Sea, replenishing haddock and cod stocks will require upwards of 50% of fishing grounds to be closed and the process of large-scale decommissioning of fishing capacity must continue. There is a stark paradox that fishing fleets can now make more money by fishing less because we are already way beyond the point of maximum sustainable yields. The “economic effort” required to catch one single fish in the North Sea has risen by 97 per cent over the last hundred years. Investment in marine reserves offers much hope for the future and British money is leading the way in this. Charles Clover is President of the newly established Blue Marine Foundation and they have already had a major success. The Marine Protected Area (MPA) around the British-owned Chagos Islands will cover some quarter of a million square miles of sea around the archipelago in the Indian Ocean and include a “no-take” reserve banning commercial fishing. It appears to have been secured with a major investment from the Bertarelli Foundation. 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, Environmental Economics, European Economy, EU Farming and Fishing, Government Intervention, Government Failure, Market Failure, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2010-11-09T00:01:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-at-the-movies-the-yeo-valley-rap http://www.tutor2u.net/blog/index.php/economics/comments/economics-at-the-movies-the-yeo-valley-rap#When:19:41:00Z This new rap produced on behalf of Yeo Valley foods in Somerset is cool, fun and has gone viral! The brief was to get across the healthy nutritional qualities of Yeo Valley products to a younger generation and this old timer thinks that they have done a great job! Quite apart from using it as a useful ‘bridge’ in a lesson I have brought it out when teaching elasticity of supply (the time it takes to switch from non-organic to organic farming when responding to changing market demand). And also barriers to entry in A2 micro - organic produce requires a licence/accreditation from the Soil Association. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Agriculture, Business Economics, Market Equilibrium and Price, Elasticity of Supply, Price Mechanism in Action, Teaching of Economics, 2010-11-05T19:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-market-for-potash http://www.tutor2u.net/blog/index.php/economics/comments/the-market-for-potash#When:14:44:00Z This is a superb BBC news report on the rising demand for and prices of potash. Potash is shorthand for potassium carbonate - a potassium compound often used in agriculture and industry. Potash is the third major plant and crop nutrient after nitrogen and phosphate and the vast majority of the annual global supply is used as a soil fertilizer.  It is a product with virtually no close substitute making the demand insensitive to the ruling market price - the price elasticity of demand for potash is very low and high prices make the product hugely profitable to supply AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Agriculture, Emerging Economies, China Economy, Russia Economy, Market Equilibrium and Price, Elasticity of Demand, Elasticity of Supply, Price Mechanism in Action, Price Volatility, Teaching of Economics, 2010-10-30T14:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/price-mechanism-in-action-student-car-insurance http://www.tutor2u.net/blog/index.php/economics/comments/price-mechanism-in-action-student-car-insurance#When:20:50:00Z Here’s a great example of the price mechanism in action - on a topic that should be highly relevant to many A Level Economists.  As our accompanying chart shows, the cost of buying car insurance(as measured by the retail price index) has risen by a staggering 40% in the last year, with even bigger increases being registered for young drivers wishing to insure their own car or be added to their parent’s policy.  This BBC video shows one such customer whose pride and joy (a Ford Fiesta) cost him just £700, but whose annual insurance premium is over £2,000.  Suppliers are raising their prices and (in some cases) withdrawing from the market altogether for this “risky” group of customers.  A great way for a lesson to combine supply and demand curves with some citizenship advice too One aspect of the rising cost of car insurance is an increase in the number of uninsured drivers on the roads - higher premiums have made insurance unaffordable for many and some choose to take the risk of failing to insure their car. But accidents involving uninsured drivers has the follow-on effect of increasing the premiums that law-abiding motorists end up paying - a negative externality. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, OCR AS Economics Unit F581, AS Micro, Market Equilibrium and Price, Elasticity of Demand, Price Mechanism in Action, 2010-10-16T20:50:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/beware-the-return-of-the-gazunderer http://www.tutor2u.net/blog/index.php/economics/comments/beware-the-return-of-the-gazunderer#When:06:47:00Z The fragility of the UK housing market becomes more apparent with each passing day. And anecdotal evidence of the balance of power shifting towards buyers and away from sellers comes with news of the return of the gazunderer! AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Housing Economics, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2010-10-16T06:47:00+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/lets-hear-it-for-the-girls http://www.tutor2u.net/blog/index.php/economics/comments/lets-hear-it-for-the-girls#When:16:40:00Z My better half and I recently popped along to the cinema to see ‘Made in Dagenham’. The film is set in the late 1960s and depicts the true story of the 200 female machinists and their fight for fair pay at the Ford plant in Dagenham, Essex in the late 1960s. The film is an archetypal feel-good piece of social history, and packed with interesting Economics. Teaching to the syllabus alas does not always afford us the luxury of discussing relatively recent Economic history – this is a real shame. An appreciation of these events I feel can really help to bring several topics alive. Encourage your students to go and see the film – it’s all there: 1/ Monopsony – In the late 1960s Ford employed 55,000 people in Dagenham – 54,800 of them were men 2/ Trade Unions and the Supply Side – wage negotiation and industrial action 3/ Legislation – The dispute was a catalyst for what became the 1970 Equal Pay Act: something that still provokes controversy; today – 40 years later – pay disparity still remains an issue (always extra fun to discuss this in an all boys’ school!) Cinemas are also of course excellent places in and of themselves as regards turning the restless mind to Economics issues. This particular establishment provides sofas for customers to lounge upon, and one is able to order items from the menu via a handy waiter/waitress service. This of course has several ramifications re the business model the firm operates. I marvelled at the application of cross price elasticity as I took in the outrageous prices on the menu! My thoughts turned to price discrimination as I pondered the ticket price! I glanced round approvingly at the civilised audience, gathered together in part via the power of the price mechanism! I can’t finish without mentioning the fact that the soundtrack during an advert for a well known brand of Corn Flakes was provided by one of my favourite bands … Primal Scream, a Scottish alternative rock group. I almost choked on my Sauvignon Blanc as I vacillated between thoughts of ‘sell out!’ and the use of multiple revenue streams to maximise the value of a well-known product. I have to tell you – the irrationality of the fan won the day …. Oh Bobby, how could you?   Business Economics, Management Issues, Price Discrimination, Demography, Economic History, Government Intervention, Regulation, Labour Market, Poverty and Inequality, Market Equilibrium and Price, Elasticity of Demand, Price Mechanism in Action, 2010-10-07T16:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/are-the-chinese-to-blame-for-rising-wine-prices http://www.tutor2u.net/blog/index.php/economics/comments/are-the-chinese-to-blame-for-rising-wine-prices#When:17:00:00Z The Chinese seem to be getting the blame for a lot these days, so it comes as no surprise to read this headline AS and A2 Specifications, AQA Economics Unit 1, A2 Micro, AS Micro, Emerging Economies, China Economy, Market Equilibrium and Price, Price Mechanism in Action, Inter-related Markets, 2010-09-20T17:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/samsungs-galaxy-tab http://www.tutor2u.net/blog/index.php/economics/comments/samsungs-galaxy-tab#When:08:07:00Z Joseph Schumpeter would be proud. The creative side of his destruction is still going strong - Samsung have released a “tab” to rival Apple’s iPad - but is it any good or is it just wasteful expenditure recreating the same? On “paper” it seems better with more capabilities than the iPad… but brand loyalty can be a big attractor… See the video clip comparison 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, Competitive Markets, Monopoly, Oligopoly, Economic Growth, Economics of Technology, GCSE Economics, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2010-09-03T08:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/min-alcohol-price http://www.tutor2u.net/blog/index.php/economics/comments/min-alcohol-price#When:08:02:00Z Here is a good 5-minute discussion here of the 45p a unit minimum alcohol price proposed in Scotland. It offers a good application of some of the main AS micro topics - since it is targeting consumers for whom alcohol is a problem, the highly price inelastic demand for alcohol will probably mean the 45p minimum price is not a huge disincentive. Paradoxically, since minimum prices only work if the free market equilibrium price is currenly below the minimum price, what it may actually cause is a shift towards higher strength alcohols that are already above the 45p a unit! There’s the law of unintended consequences for you! 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, Indirect Taxes, Minimum Prices, Health Economics, Market Failure, De-Merit Goods, Information Failure, Market Equilibrium and Price, Elasticity of Demand, Price Mechanism in Action, 2010-09-03T08:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/greece-smoking-ban http://www.tutor2u.net/blog/index.php/economics/comments/greece-smoking-ban#When:07:55:00Z A new law has come into force this week in Greece banning smoking in enclosed public spaces and tobacco advertising. It is estimated that more than 40% of Greek adults smoke - well above the EU’s average of 29% - which is perhaps why at a time of fiscal austerity, it is surprising/impressive that the Greek government have pursued this policy. Cigarettes bring in a significant amount of tax revenue (either via indirect or corporation taxes) which will be lost. But then maybe it will save a lot more money via its health bill. (or maybe they are just hoping people will flaunt the rules and collect fines!). Having said this, this latest attempt to stop smokers, is its 4th attempt in a decade - following a tobacco ban in public places on July 1 of this year too. The demand for habit-forming goods is too inelastic to go away overnight… AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, European Economy, Single Market, Government Intervention, Indirect Taxes, Minimum Prices, Health Economics, Market Failure, De-Merit Goods, Externalities, Information Failure, OECD Economies, Greece Economy, Market Equilibrium and Price, Nature of Supply, Price Mechanism in Action, Teaching of Economics, 2010-09-03T07:55:00+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/housing-market-and-negative-equity http://www.tutor2u.net/blog/index.php/economics/comments/housing-market-and-negative-equity#When:11:49:00Z Home owners who bought at the tail-end of the property boom face another four years of negative equity before they recover what they paid, new figures reveal today. David Orr, chief executive of the National Housing Federation, said: “Even though price rises look sluggish for the next few years, affordability is not improving for many low-to-middle income households as banks continue to restrict their mortgage lending and house prices remain historically expensive in relation to salaries. There’s a very real risk that an entire generation will be locked out of the housing market for the foreseeable future and people will increasingly look to buy or rent an affordable home instead.” AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, A2 Macro, AS Macro, Housing Economics, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, UK Economy, 2010-08-31T11:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/searching-for-the-right-price-for-water http://www.tutor2u.net/blog/index.php/economics/comments/searching-for-the-right-price-for-water#When:16:18:00Z This OECD video available on You Tube argues the case for putting a price on water. 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, Environmental Economics, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2010-08-30T16:18:00+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/presentation-wheat-prices-in-2010 http://www.tutor2u.net/blog/index.php/economics/comments/presentation-wheat-prices-in-2010#When:21:19:00Z Here is a new streamed revision presentation that covers key changes in global wheat prices during 2010 and their economic impact. Surging wheat prices impact on producers and consumers of many different goods and services. The market is a great case study in the causes of price volatility and the inter-connected nature of markets.   AS and A2 Specifications, AQA Economics Unit 4, Economics Presentations, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, Commodities Markets, Market Equilibrium and Price, Nature of Supply, Price Mechanism in Action, Price Volatility, 2010-08-08T21:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ethiopias-electronic-market-place http://www.tutor2u.net/blog/index.php/economics/comments/ethiopias-electronic-market-place#When:16:55:01Z Coffee is a lifeline for twelve million farmers in Ethopia who are vulnerable to volatile world prices and the monopsony power of the major coffee roasting businesses. But this heart-warming report from Jonathan Dimbleby finds that a new electronic trading system is providing a superb market place for the setting of prices - connected instantaneously to the world commodities market. Prices agreed on the Ethiopian trading floor are transmitted round the world and the farmer is guaranteed payment within 24 hours. Since the exchange was launched over $400m has been traded without a single dollar of default. Farmers are getting the price that is agreed on the open-outcry market platform. Technology as a support to the problems of real people - outstanding. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Emerging Economies, Development Economics, Commodities Markets, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Teaching of Economics, 2010-06-06T16:55:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/diagio-opposes-minimum-alcohol-price http://www.tutor2u.net/blog/index.php/economics/comments/diagio-opposes-minimum-alcohol-price#When:21:41:00Z This is a useful video resource to have up your sleeve when teaching minimum alcohol prices and the view taken by one of the stakeholders - the drinks manufacturers themselves. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Government Intervention, Minimum Prices, Market Failure, De-Merit Goods, Externalities, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2010-05-26T21:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/is-the-uk-coal-industry-turning-a-corner http://www.tutor2u.net/blog/index.php/economics/comments/is-the-uk-coal-industry-turning-a-corner#When:21:09:00Z These are fascinating times for the UK coal industry. Over several decades, production of coal from an industry that once employed hundreds of thousands was in steep decline. The nadir appeared to be the early 1990s when an accelerated pit closure programme was introduced as the UK turned decisively towards gas a major energy source. The result was the end for deep-mine activity for thousands of miners, high levels of structural unemployment and major economic and social problems for local communities. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Emerging Economies, China Economy, Commodities Markets, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, UK Economy, Regional Economics, 2010-05-24T21:09:00+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/supply-and-demand-of-nuts http://www.tutor2u.net/blog/index.php/economics/comments/supply-and-demand-of-nuts#When:09:17:00Z A good article in the Telegraph on supply and demand factors affecting the price of nuts. AS Micro, Government Intervention, Market Equilibrium and Price, Elasticity of Demand, Elasticity of Supply, Price Mechanism in Action, 2010-05-04T09:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/profiteering-from-icelandic-volcano http://www.tutor2u.net/blog/index.php/economics/comments/profiteering-from-icelandic-volcano#When:17:51:00Z The Times features a very interesting article about the reaction or the percieved reaction of travel companies offering substitute forms of travel in the UK. Is the customer being ripped off? Is this price discrimination at work in the market? Travel companies have denied profiteering from the volcanic dust cloud as stranded holidaymakers face paying premium fares to get home after the Easter break. Channel ferry firms and Eurostar trains were fully booked this weekend as the Eyjafjallajökull volcano continued to pump ash into the atmosphere and aircraft were grounded across Northern Europe. Market Equilibrium and Price, Elasticity of Demand, Elasticity of Supply, Price Mechanism in Action, 2010-04-17T17:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/excess-supply-in-a-market-rents-fall-in-dohas-property-market http://www.tutor2u.net/blog/index.php/economics/comments/excess-supply-in-a-market-rents-fall-in-dohas-property-market#When:17:13:00Z In Doha despite doubit digit economic growth rates, rents for properties are falling steeply because of too much new building leading to excess capacity - too much supply relative to the level of demand. Part of the problem has been a reversal of migrant labour as previous investments in the oil industry came to an end. Here is a classic example of excess supply in a market leading to a fall in market prices. AS Micro, Market Equilibrium and Price, Price Mechanism in Action, 2010-04-05T17:13:00+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/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/the-economics-of-cloud-computing-and-e-waste http://www.tutor2u.net/blog/index.php/economics/comments/the-economics-of-cloud-computing-and-e-waste#When:10:38:00Z Here is a thorough and well written explanation of some of the likely economic effects of the rapid expansion of on-demand cloud computing services. Most of the major players (Google, Amazon, Microsoft et al) are investing huge amounts in building up their server infrastructure to cope with the likely demand for cloud-based computing services. The article explores some of the positive externalities that might result from a move to the cloud and also possible effects on market structures as IT entry barriers for small to medium sized businesses are reduced. “One of the main obstacles to entry in new markets is represented by the high up-front costs of entry, often associated with physical and IT capital spending. Cloud computing allows potential entrants to save in the fixed costs associated with hardware and software adoption” More here For an alternative perspective, the Independent yesterday carried a feature on the externalities of e-waste - a good example to use of some of the external costs of the super-charged growth of IT services. “The United Nations Environment Programme (UNEP) estimated that, worldwide, between 20 and 50 million tonnes of electrical and electronic goods which had come to the end of their lives were being thrown away every year. The latest UNEP report now estimates the annual total at 40 billion tonnes, with America in the lead, producing 3m tonnes domestically every year, followed by China with 2.3m tonnes.” More here A2 Micro, AS Micro, Emerging Economies, Business Economics, Economic Growth, Economics of Technology, Environmental Economics, Market Failure, Externalities, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2010-02-25T10:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/new-house-of-commons-research-report-on-carbon-trading http://www.tutor2u.net/blog/index.php/economics/comments/new-house-of-commons-research-report-on-carbon-trading#When:12:34:00Z Published at the end of January 2010 I came across this excellent report whilst researching an updated presentation on carbon trading and carbon taxes. The hmtl version of the report from the House of Commons Environmental Audit Commission can be found here. The role of carbon markets in preventing dangerous climage change Here are some additional links to useful recent news articles and resources on carbon trading and carbon pricing: A2 Micro, AS Micro, Emerging Economies, Development Economics, Commodities Markets, Environmental Economics, European Economy, Global Economy, Government Intervention, Market Failure, Externalities, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2010-02-21T12:34:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/metal-prices-on-the-rise-again http://www.tutor2u.net/blog/index.php/economics/comments/metal-prices-on-the-rise-again#When:08:14:00Z What do the following businesses have in common? Anglo American Antofagasta BHP Billiton Eurasian Natural Resources Fresnillo Kazakhmys Lonmin Randgold Rio Tinto Vedanta Xstrata A2 Macro, AS Micro, Emerging Economies, Development Economics, Commodities Markets, Cycles and Shocks, Aggregate Supply, Global Economy, International Trade, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Teaching of Economics, UK Economy, 2010-02-16T08:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a-new-market-for-bonds http://www.tutor2u.net/blog/index.php/economics/comments/a-new-market-for-bonds#When:23:32:00Z A few weeks ago we waved on the issue of bonds and we think the corporate and sovereign bond markets could be the source of the big macroeconomic news stories during 2010. An interesting new development is the launch of Britain’s first retail bond market by the London Stock Exchange - an attempt to develop a wider base of investors prepared to put their money into bonds and perhaps (by offering an alternative to floating shares on the stock market) open up the supply of credit for smaller businesses. According to Reuters, “Bonds are deemed safer than other forms of securities such as equities because interest payments are fixed and investors get their money back unless the company goes bust. But prior to maturity bonds’ value can vary and move inversely to their yield.” Just under fifty government and corporate bonds have been made available for trading as this new trading platform takes its first tentative steps. Here is a beginner’s guide to bonds from the Radio 4 Today programme. In a related story figures show that Individuals in the UK own just 10% of the shares traded on the London Stock Exchange, down from 13% in 2006 and far lower than the 54% they owned in 1963. More here A2 Macro, AS Macro, Business Economics, Financial Markets, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, UK Economy, 2010-02-02T23:32:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/focus-on-the-national-minimum-wage http://www.tutor2u.net/blog/index.php/economics/comments/focus-on-the-national-minimum-wage#When:20:30:00Z This blog provides some updated links on the minimum wage - a government intervention in the labour market. A2 Micro, AS Micro, Business Economics, Government Intervention, Minimum Prices, Labour Market, Macroeconomic Policies, Supply-side policies, Market Equilibrium and Price, Price Mechanism in Action, Inter-related Markets, Standard of Living, Teaching of Economics, UK Economy, Unemployment, 2010-01-24T20:30:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/find-a-stock-market-game-that-works http://www.tutor2u.net/blog/index.php/economics/comments/find-a-stock-market-game-that-works#When:10:38:00Z For some time I have been searching for a real time stock market trading game that works, one where 99% of the hard-graft is done by the software rather than teachers having to input every change. And also one that is intuitive to the students and which gives them a full array of trading options. VSE Marketwatch has provided a neat solution and within a week of a launch, 152 teams of Year 10 and Year 11 students are trading away in our 2010 stock market competition. AS Macro, Business Economics, Financial Markets, GCSE Economics, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2010-01-24T10:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/bangernomics-and-assymmetric-information http://www.tutor2u.net/blog/index.php/economics/comments/bangernomics-and-assymmetric-information#When:17:17:00Z Another item from the Today programme relating to information was about MOT failure rates for cars and small vans, which have been published for the first time following a Freedom of Information (FoI) request by the BBC. Martin Rosenbaum, the BBC’s Freedom of Information expert, and James Ruppert, special correspondent for Autocar magazine and author of ‘Bangernomics’ discussed the data reluctantly published by the Vehicle and Operator Services Agency (VOSA). The agency had previously resisted publishing the data, saying it might be misleading – and I should think that it is likely to have an effect on the second-hand values of those models appearing at the top and bottom of the list. It may go some way toward balancing out asymmetric information in the market for second-hand vehicles, where the seller has more information than the buyer, thus distorting the price that they might arrive at between them for the vehicle. AS Micro, Business Economics, Market Failure, Information Failure, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2010-01-13T17:17:00+00:00