Using the cost-benefit principle in your AS exam
The cost-benefit principle is one of those core ideas that can be brought into so many discussions both in micro and macroeconomics – you should be using it in your papers
read more...»Economies of Scale for Wind Farms
The scale of the new farm project at Eaglesham Moor near Glasgow is stunning but projects of this type inevitably create a huge furore especially for those living in the area. My own personal view is that wind farms as a source of renewable energy are things of beauty - this BBC video provides an aerial view of the Glasgow project and might be a good one to use when teaching about the economics of renewable energy, cost benefit analysis and economies of scale.
The UK Government has a target of providing 15.4% of all electricity supply from renewable sources by 2015. Jim recently blogged about the London Array here
Dell Relocates - Nissan Downsizes
On the day that Nissan opted to cull a quarter of its workforce at the ultra-efficient car plant on Tyne and Wear, the story that caught my eye was across the Irish sea.
Dell’s decision to close its manufacturing capacity in Limerick and transfer production to a low-cost location in Lodz in Poland will come as a severe blow to the Irish economy....
A quite astonishing statistic from this news article today. It claims that Dell’s operation in Ireland accounted for 5% of the country’s GDP. Dell is Ireland’s largest exporter too. So the loss of around 1,900 jobs (add another 3-4,000 on top from suppliers to the factory) will deal a crippling blow to the local economy.
This is a good example of the multiplier effect - where a change in output and jobs in one business or market can have important second-round effects in related supply-chain industries or the local or regional economy. It has been estimated that the knock-on effect could be between one and three jobs lost elsewhere in the region for every one lost at the Dell plant directly.
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Costs of Supply - Organic Farmers Divided
As the recession bites, so sales of organic food have started to slump and with it the premium prices that truly organic farmers can command in the market-place. The tough economic climate seems to be causing a deep divide within the organic farming community about whether the rules on the use of organic feed should be relaxed as a cost saving measure for producers facing an uncertain future.
The article in the Times today entitled “Let us bend the rules, say organic farmers” is a great example of how organic farmers face differences in the conditions of supply compared to producers who rely on conventional mass production methods. According to the article, average organic feed prices are £320 a tonne compared with £160 a tonne for conventional feed.
With hundreds of farmers converting some or all of their production to organic methods in response to the rise in organic products sales over recent years, the Soil Association and the Organic Farmers and Growers are trying to persuade the government to relax the regulations imposed on organic suppliers that allow them to trade under the organic quality mark. But hard core organic producers argue that to do so would dilute the brand reputation and cause confusion (information failure) among consumers.
It is interesting how in a recession there are increased pressures on so many different stakeholders. The depth of the downturn in 2009 will create much suffering among producers - but the very best, the most flexible and the most robust should be able to survive without sacrificing their principles or their standards. Organic produce will always be more expensive than conventional farm output - are we about to see yet another industry lobbying for government support to tide them through difficult times?
Further rise signalled in rail fares
Regulated fares on for UK train services will rise again in the New Year as the government continues to seek a reduction in the subsidy paid by the taxpayer. In a good example of how regulatory agencies can have a direct effect on the cost of living, the price of regulated fares including season tickets will increase by six per cent from the start of 2009.
Regulated fares are based on a set formula which limits increases to 1% above retail price index (RPI) inflation
This BBC article looks at the background to the latest annual rise in the cost of travelling by train. The views of various stakeholders are flagged up – is the government right to squeeze the subsidy on passengers? Will higher fares be used to fund necessary investment in new rolling stock to boost the capacity of the system? Or will they serve only to keep people off rail services who are then prompted to make more use of their cars?
Does Manchester need a congestion charge?
Is the question asked by the Independent in their Big Question this morning. More can be found here. I rarely travel to Manchester save for Tutor2u student workshops and the occasional sporting event. Last time I was there I stayed on the 22nd floor of the Hilton building - an impressive addition to the Manchester skyline and was afforded a great view of the Manchester tram system in action. I wasn’t aware that traffic congestion was that bad in the city centre, although they seem to be digging up half of the main roads. But this will be a superb example to use for teachers wanting an example of cost-benefit analysis and the arguments of different stakeholders.
More here from the BBC news
Revision: Stakeholders
Introducing the concept of stakeholders can add greatly to the quality of your economic evaluation in answers to essay and data response questions. This revision note looks briefly at the stakeholder concept and some of the issues where it might be relevant in AS and A2 economics questions.
Revision note
Revision_Stakeholders.pdf
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