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/is-it-still-appropriate-to-use-the-term-black-market http://www.tutor2u.net/blog/index.php/economics/comments/is-it-still-appropriate-to-use-the-term-black-market#When:07:42:10Z I am in the process of updating my Tutor2u Q&A’s for 2013 editions due out in the summer next year. One of areas I am tightening up on is the distinction between the official, shadow informal and underground economies and the unintended consequence of high levels of indirect taxation in creating – now what term would you now use? Economics Q&A, Q&A - Markets, Teaching of Economics, 2011-12-11T07:42:10+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/economics-qa-what-factors-help-to-explain-rising-food-prices http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-what-factors-help-to-explain-rising-food-prices#When:09:08:00Z Global food prices have risen on average by more than 135% over the last 5 years. While the price of food has been highly volatile, with a spike during 2008, there is clearly a trend pattern of a long term rise. This can be attributed to various root causes, both demand and supply side in nature. AS and A2 Specifications, AQA Economics Unit 4, Economics Q&A, Q&A - Markets, A2 Macro, AS Micro, Agriculture, Emerging Economies, Commodities Markets, Cycles and Shocks, Global Economy, Market Equilibrium and Price, Price Volatility, Inter-related Markets, 2011-02-14T09:08:00+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/qa-what-is-hedging http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-hedging#When:21:05:00Z Hedging is the process of protecting oneself against risk. Economics Q&A, Q&A - Markets, A2 Micro, AS Micro, Business Economics, 2009-06-01T21:05:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-how-the-pff-might-be-used-in-assessing-a-countrys-economic-performance http://www.tutor2u.net/blog/index.php/economics/comments/qa-how-the-pff-might-be-used-in-assessing-a-countrys-economic-performance#When:17:33:00Z A production possibility frontier (PPF) is a boundary which shows the combinations of two or more goods and services that can be produced whilst using all available factor resources efficiently. Economics Q&A, Q&A - Markets, Introductory Economics, 2009-05-02T17:33:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-do-cartels-often-collapse http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-do-cartels-often-collapse#When:09:36:00Z Recent business history both here in the UK and in international markets is littered with examples of cartel-behaviour by businesses that seem to have come unstuck. Just type price-fixing into Google news and see what comes up! Even on the day I am writing this blog answer, the FT reports that three cargo airlines have agreed to pay fines totalling $214m for their roles in a global conspiracy to fix prices for air freight. Bloomberg reports that a former sales executive at Hitachi Displays Ltd. has been charged with participating in a global conspiracy to fix prices for liquid crystal displays sold to Dell Inc. And in Ireland, a former director of a Dublin car company has been given a 15-month suspended prison sentence and fined €160,000 after pleading guilty to charges of price-fixing. Economics Q&A, Q&A - Market Failure, Q&A - Markets, A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, Competition Policy, Government Intervention, Market Failure, Market Equilibrium and Price, Price Mechanism in Action, 2009-04-14T09:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-scrappage-subsidy-and-will-it-work-in-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-scrappage-subsidy-and-will-it-work-in-the-uk#When:18:33:00Z A scrappage subsidy is a “pay-to-scrap” scheme where a government offers a financial incentive to car buyers if they scrap a car that has reached a specified age and in its place they are offered a payment towards the cost of a new vehicle. Germany and France both offer scrappage subsidies to consumers and there is a growing number of voices from inside the UK business community and motor vehicle industry clamouring for one to be launched in the UK. The Retail Motor Industry Federation and the Society of Motor Manufacturers and Traders (SMMT) are at the head of the queue lobbying for a scrappage scheme to be introduced as soon as possible. Economics Q&A, Q&A - Market Failure, Q&A - Markets, AS Macro, AS Micro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Government Intervention, Subsidies, Manufacturing Industry, Market Equilibrium and Price, Nature of Demand, Transport Economics, UK Economy, 2009-04-07T18:33:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-which-indirect-taxes-give-the-government-to-most-revenue http://www.tutor2u.net/blog/index.php/economics/comments/qa-which-indirect-taxes-give-the-government-to-most-revenue#When:14:07:00Z Which indirect taxes give the government to most revenue? For the UK government value added tax provides the biggest source of revenue. In November 2008, VAT was cut from 17.5% to 15% on a temporary basis in a move by the government designed to stimulate consumer spending – the decision was said to be worth around £12 billion of lost tax revenue for the UK Treasury. There are many other indirect taxes and our chart below highlights six of them. As you can see the flow of tax revenue from indirect taxes on tobacco provides a very important source of money for the UK government. Together these six indirect taxes add nearly £20 billion annually into the government’s coffers. In a recession where consumer spending is falling and where there is a chance of a period of persistent price deflation, the UK government will see a fall in revenue from indirect taxes. More revision notes on indirect taxes can be found here Economics Q&A, Q&A - Market Failure, Q&A - Markets, AS Micro, Government Intervention, Indirect Taxes, Market Equilibrium and Price, Nature of Supply, Fiscal Policy, 2009-04-05T14:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-positive-sum-game http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-positive-sum-game#When:13:23:00Z A positive sum game refers to the outcome of a decision or a policy or a negotiation involving at least one agent. And in this outcome a positive sum game occurs when no one wins at someone else’s expense - indeed the sum of positives and negatives (wins and losses) is positive. A good example of this are the mutually beneficial gains from trade in goods and services between nations. If businesses or (more generally) countries can find a terms of trade in which both parties benefit then specialisation and trade can lead to an overall improvement in the economic welfare of both countries. Many environmental campaigners believe that countries should do more to recognise the benefits of cooperation in designing policies and incentives to mitigate the impact of climate change. Surely there are positive sum games from agreement on strategies to lower C02 emissions for example by promoting innovation and the diffusion of technological change? At a micro economic level positive sum games might be discussed in the context of negotiations between employees and employers or businesses in an oligopoly recognising their mutual interdependence and agreeing to cooperate in ways such as joint research projects (legal under EU competition law). Joint ventures are good examples of businesses understanding the power of collabborrative ventures. A good recent example of this is the joint venture agreed by O2 and Vodafone to build and share new network sites together. They will share the masts, antennas, cabinets and power supply, as well as consolidate their existing G and 3G masts. Economics Q&A, Q&A - Macro, Q&A - Market Failure, Q&A - Markets, 2009-04-04T13:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-in-what-type-of-market-does-the-ipod-operate-in http://www.tutor2u.net/blog/index.php/economics/comments/qa-in-what-type-of-market-does-the-ipod-operate-in#When:15:10:00Z Q&A: iPod and Market Structure: In what type of market does the iPod operate in? In this answer I will assume that we are discussing the market for personal digital audio and video media players. Keep in mind that music can be downloaded (legally and illegally) in numerous ways such as the iPod, smart phones and standard laptops. Economics Q&A, Q&A - Markets, A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, GCSE Economics, Market Equilibrium and Price, Nature of Demand, 2009-02-22T15:10:00+00:00