Asian Rice Crisis
The credit crunch is rivalled, arguably, by increasing food prices as a cause of economic (and human) concern in 2008.
This article from the BBC looks at some of the implications and you can watch/show videos on the rice crisis here.
read more...»Inter-related markets: Farmland prices
There is an excellent example of the inter-relationships between markets in today’s Independent.
“The price of farmland is rising at its fastest rate for more than 30 years ....Arable land, in particular, has become so profitable that its average price has soared from £4,000 an acre in January last year to £5,500 an acre today.....The increases are being fuelled by the astonishing demand for agricultural holdings at a time when food prices are at an all-time high and when very little farmland is coming up for sale ....The price of wheat and other cereals has more than doubled in 12 months. While that means the cost of food is going up, it has also improved the profitability of arable farming and made it an attractive investment. At the same time, Britain’s agricultural land is attracting interest from abroad.” The rest of the article can be found here
Plenty of microeconomics here - the inelastic supply of farmland coming onto the market; the relationship between returns from financial markets and the demand for other assets including farmland; the impact of rising food prices on the profitability of owning and farming arable land. Will this help to stop the flight from farming in the UK? Or are there dangers in amateur landowners looking to buy up land as a lifestyle choice?
Revision: Recessions
“What’s the difference between a recession and a depression? A recession is when your neighbour loses their job; a depression is when you lose yours.”
read more...»Revision: Console wars
I will be using this table with my A2 microeconomics group as a revision exercise - partly to discuss competition in a contestable market; the factors that determine pricing power and other micro concepts such as elasticities of demand, economies of scale and hardware product cycles. How else could the data be used? Suggestions please! I have made the original word document available for download below.
Console prices
Console_Prices.doc
Goodbye to White Goods?
Cast an eye round your kitchen appliances - how many of them are white? For years I have been teaching about the white goods industries - those that manufacture dishwashers, freezers, washers and driers - students have taken the mick and accused me of teaching a spoof lesson (I try to do this once a term!). Well perhaps they are right for there seems to be a distinct change in the demand for appliances of different colours if the USA household goods market is any guide.
Inferior Goods
Jim blogged today on his Business Studies blog about attempts by Pontins to revamp their Uk holiday camp business. Instinctively I thought that I could use this as an example of an inferior good - a product with a negative income elasticity of demand. What other examples do colleagues use for inferior goods in their teaching? Off the top of my head:
White own label bread
Economy baked beans
Tinned meat
Bus transport
Cigarettes
I am taking the aggregate view here - because income elasticity of demand will vary from person to person depending partially on our own individual preferences.
Anymore examples?
Revision: Commodity Prices and Economic Effects
In recent years we have seen a sharp rise in the prices of many internationally traded commodities such as oil, gas, iron ore, palm oil, rubber, copper and many foodstuffs. This revision note looks at some of the demand and supply-side explanations for this and also covers some macroeconomic consequences for various countries. This five page revision note available in pdf format (below) will also highlight some micro and macro concepts from the AS and A2 specification and offers ideas for scoring more highly using evaluation.
Fashionable changes in preferences
A few weeks ago I blogged about information failure and the demand for plastic bags. This BBC news video clip considers just how powerful fashion statements can be in altering our preferences - there are signs that high street retailers are moving decisively away from the default option of offering a plastic bag to all customers.
King sized rates for UK hotels
Why are British hotels so expensive? And how are British hoteliers using price discrimination to charge different nationalities different prices for the same room? These are other questions are explored in this excellent Independent “Big Question” feature from last week. The online article contains a superb graphic that teachers might want to use in a worksheet. There is a lot of microeconomics in the article by Martin Hickman, consumer affairs correspondent.
“The UK has the most expensive hotels in Europe, according to a new report. Staying a night here cost an average of £106 in 2007, up 12 per cent on the previous year. So why are Britishhotels so expensive? Three factors – tax, costs and supply and demand – according to the British Hospitality Association, the hotel industry’s body.”
The article can be accessed here
The Times reports today that “The leisure group Whitbread has been holding secret talks to merge its Premier Inn budget-hotel business with the rival Travelodge chain in a move that would create a £3 billion hospitality giant.”
Social learning and blockbuster movies
When was the last time you saw a great movie and just wanted to tell your friends about it and perhaps go with them second time around? Or perhaps you have just sat through two hours of unbelieveable tedium (wake up those of you who watched Brokeback Mountain) and cannot wait to fire off a poor review at IMDB!
Why is it that some films with huge marketing budgets can end up being total flops whilst other films with meagre backing from distributors turn out to be box office hits (or perhaps DVD hits when released onto that market?) Part of the answer must lie in the social interactions between movie goers and their friends. The positive or negative feedback that we hear about a film can often play a big part in our own decision about whether or not to go see it. The same is true for hotels, restaurants, plays and other live events. Over at the Undercover Economist blog today, Tim Harford flags up some new research from Enrico Moretti from the Department of Economics at the University of California, Berkeley. His new working paper has the intriguing title “Social Learning and Peer Effects in Consumption: Evidence from Movie Sales” and can be downloaded as a pdf file here
Moretti finds that
“Overall, social learning appears to be an important determinant of sales in the movie industry, accounting for 38% of sales for the typical movie with positive surprise. This implies the existence of a large “social multiplier’’ such that the elasticity of aggregate demand to movie quality is larger than the elasticity of individual demand to movie quality.”
Moretti defines social learning as a situation where consumers in week t update their prior based on feedback from others who have seen the movie in previous weeks. Much depends on whether the perceived quality of the movie is higher or lower than our expectations when we take our seat in the theatre.
Can you add any more films to my list of great films for economists?
