MICROECONOMICS TOPICS

Blog entries on key topics and themes for GCSE microeconomics

Petrol prices set to rise

The cost of a barrel of oil has risen from $40 a year ago to $80 now with the price expected to rise even further in the coming months.
These oil tankers are apparently refusing to dock and unload their contents until the price of oil rises!

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Great video on BA and Iberia merger

Following on from my blog yesterday I have found a great video clip on the proposed merger of BA and Iberia. Willie Walsh talks about the synergies that are going to occur due to the merger.

BA and Iberia - economies of scale

The proposed merger of British Airways and Iberia shows types of economies of scale very nicely. Economies of scale occur when a firm grows larger its long run average costs fall. If we remember the mnemonic we used for types of economies of scale - Really, Fun, Mums, Try, Making, Pies, we can then apply this to the merger.

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Toy shortage at Christmas?!

Have toy manufacturers misjudged the amount of sales this Christmas? With the UK still in a recession toy manufacturers could have presumed that Santas budget was much lower this year and therefore produced fewer toys.

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Competition in action - M&S to sell top brand names

Marks and Spencer have recently lost market share in part due to the emergence of Waitrose but also due to shoppers trading down supermarkets due to the recession. Well M&S have decided to fight back.

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Demand and Supply in action - The housing market

The housing market has seen six consecutive months of price increases suggesting an upturn. We have also seen the first annual percentage price rise, 2% on the previous year.

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Price war in the mortgage market?

Competition in most markets is great for the consumer. It can help to drive down prices and improve quality. The market for mortgages is no exception. Nationwide have this week slashed interest rates on their mortgages and are once again offering 95% mortgages.

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Super Starter Sunday - Supply and demand special

This has been a fantastic week to teach supply and demand as there have been so many stories in the news that could be used as examples. This super starter has bought them all together and would work as a great starter where the pupils have to guess the news stories using the pictures or could be used as the basis of a whole supply and demand lesson. I am going to ask my students to draw a supply and demand diagram for each example and show whether there is a shift in supply or demand.

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Demand and Supply in action - Champagne affected by the recession

As a luxury good it is probably unsurprising to hear that the sales of champagne have dropped significantly.

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House prices rising but could it all be about to stop?

House prices have been on the rise for the last five months after a disastrous year of falls. The average price of a house in the UK in September stands at £161,816. This figure is £19 higher than this time last year. If we go back to February this year the average house price had slumped to £147,746.

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Stamps to go up by 3p - Price elasticity of demand

The Royal Mail has decided to increase the price of first class stamps by 3p due to a huge hole in their finances. They are hoping the proposal will rake in an extra £100 million pounds a year. Whether this tactic is successful depends on the price elasticity of demand for the stamp. Consumer Focus believe the new prices would drive away customers meaning demand would be price elastic where as the Royal Mail obviously believe demand is price inelastic as they expect to increase revenue with the price change. Click read more for some questions on PED that would suit both GCSE and A level students.

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Video starter for a lesson on the law of supply

Soon it will be time again to introduce the supply and demand diagram to your Year 10 students. I’ve always noticed pupils find the law of demand (as the price of a good or service increases, demand falls), much easier than law of supply (as the price of a good or service increases, supply will increase). This video from the BBC shows that oil producers have less incentive to extract new reserves when the price of oil is lower. It would be a great starter for the first lesson on supply.

Demand and Supply in action - cocoa shortage to affect price of chocolate

For those chocolate-lovers out there like me this item may send shivers down your spine! We are currently seeing the biggest shortage of cocoa for 40 years.

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Demand and supply in action - fall in demand for apples

Consumption of apples has fallen by 3.2% in the last year, despite Government guidelines stating we need to have our five a day.

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Demand and Supply in Action - Second hand car prices rise

We would normally expect the value of our cars to fall (depreciate) over time. This year though the reverse is happening. Due to a shortage in supply the price of second hand cars have risen.

 

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Mozzarella from India?

The BBC has a great short video about Indian farmers starting to produce buffalo mozzarella. India apparently have thousands of water buffalo and so are able to produce this type of cheese at a fairly low cost and may possibly be a rival to Italian producers. This video is fantastic as it can cover a variety of topics. It would make a nice little case study for factors of production. Other issues covered are globalisation, international competitiveness and factor endowment to name a few.

T-mobile and Orange set to merge

The new OCR GCSE specification goes into more depth in the topic of business growth; students will learn about how businesses grow. The news today that T-mobile and Orange are set to merge is a great real world example for students to gain a greater understanding of this topic.

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Would you have your hair cut in a layby?

‘Ben the Barber’ has set up in a lay by on the A6 near Luton. Having been a hairdresser in a conventional shop he found the overheads getting larger and larger and was struggling to cope. As this video shows he bought a mobile shop and eventually his business has grown.

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Cash for gold

If, like me, you found yourself watching far too much daytime TV over the holidays, you may have noticed advert after advert imploring you to send your unwanted gold (even teeth!) to a company in return for cash. Interest in companies like this has soared during the recession as people struggle to cope. H. Samuel has just entered the market, hoping their recognised brand name will entice customers. Can any of your pupils think of other industries which will do well during a recession?

Return of the £5 note to cash machines

How many times have you gone to the cash machine and really wanted just a fiver rather than a tenner? Well as banks are trying to help their recession hit customers they are going to be bringing back the £5 note to cash machines.

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Can our shopping basket tell us the recession is nearing the end?

In a blog earlier this week I asked the question, what constitutes a green shoot? Perhaps we can add to the list baked bean sales. Apparently in a recession we buy more baked beans.

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Are we ready for Wimbledon?

As the start of Wimbledon approaches not only will we be thinking of watching great tennis but also eating strawberries and cream (complementary goods).

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Xbox Project Natal – Competition revision

The 2009 OCR case study is likely to have a number of questions on competition. I noticed Microsoft’s new fully hands free control system in the news and thought it was a fantastic example of using innovation to compete. Press read more for two BBC videos of the new system and GCSE style questions on competition for revision.

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