An interesting clip from the BBC on competition in the tablet computer market
http://www.bbc.co.uk/news/technology-11665362
a) Explain why all of these products would not have the same PED value
b) Which would have the most inelasic demand? Why?
c) Would the income elasticity of demand for these products be positive or negative? Why?
d) How could you use the concept of cross ED in this market?
Monday 8 November 2010
Sunday 7 November 2010
Unit 1: Increasing airport tax
Look at the table in this Ch4 article
http://www.channel4.com/news/ba-boss-airport-tax-will-damage-uk-economy
a) Suggest 2 reasons why the government has increased these taxes
b) Using the concept of PED, explain why there is such a difference in the increases
http://www.channel4.com/news/ba-boss-airport-tax-will-damage-uk-economy
a) Suggest 2 reasons why the government has increased these taxes
b) Using the concept of PED, explain why there is such a difference in the increases
Saturday 30 October 2010
Shrews need to think more flexibly!
http://news.bbc.co.uk/sport1/hi/football/teams/s/shrewsbury/9139736.stm
Assuming the role of the FA adviser, alay the fears of Shrewsbury that they will automatically worse of with cheaper prices for these tickets.
Assuming the role of the FA adviser, alay the fears of Shrewsbury that they will automatically worse of with cheaper prices for these tickets.
Saturday 23 October 2010
Developing Evaluation Skills
• When the question requests causes, consequences or remedies, candidates should attempt to identify the most important ones and justify the reasons for the choice.
• Add evaluation points to revision notes
• Read comment articles to see how professions create and maintain arguments
• Watch how issues and topics can fit together.
• Use the conditional and definite form appropriately.
• Consider the impact of the issue on welfare and how this is distributed
Phrases you might use:
However; hence; nevertheless; although; with the benefit of hindsight; in the short run/long run; it depends on the PED/YED/XED
• Add evaluation points to revision notes
• Read comment articles to see how professions create and maintain arguments
• Watch how issues and topics can fit together.
• Use the conditional and definite form appropriately.
• Consider the impact of the issue on welfare and how this is distributed
Phrases you might use:
However; hence; nevertheless; although; with the benefit of hindsight; in the short run/long run; it depends on the PED/YED/XED
Information failure in 3 markets
3 stories from the BBC that may indicate information failure for consumers
http://www.bbc.co.uk/news/health-10986625 chocolate
http://www.bbc.co.uk/news/health-10986617 beer for women
http://www.bbc.co.uk/news/health-10987937 sunbed use
a) What is the market failure that results from information failure?
b) How would an economically rational consumer change their behaviour if theyrecived this information?
c) What problem would a consumer face when deciding how to behave with this additional information?
http://www.bbc.co.uk/news/health-10986625 chocolate
http://www.bbc.co.uk/news/health-10986617 beer for women
http://www.bbc.co.uk/news/health-10987937 sunbed use
a) What is the market failure that results from information failure?
b) How would an economically rational consumer change their behaviour if theyrecived this information?
c) What problem would a consumer face when deciding how to behave with this additional information?
Tradable permits and EU CO2 emissions
This BBC clip outlines opposition to the EU carbon trading scheme
http://news.bbc.co.uk/1/hi/world/europe/7772603.stm
a) Outline how the EU tradable permit scheme works
b) What is the main reason German heavy industry opposes the scheme?
http://news.bbc.co.uk/1/hi/world/europe/7772603.stm
a) Outline how the EU tradable permit scheme works
b) What is the main reason German heavy industry opposes the scheme?
Market failure:Tradable permits or taxation?
This tutor2u presentation looks at the arguments for tradable permits or carbon taxes. A really good revision aid
http://www.tutor2u.net/economics/presentations/Europe-Carbon-Emissions-Trading.ppt#256,1,Carbon
http://www.tutor2u.net/economics/presentations/Europe-Carbon-Emissions-Trading.ppt#256,1,Carbon
Government intervention revision article
From tutor2u comes this good revision guide on how govt's intervene when markets fail and some points to consider when evaluating the success of such policies
http://www.tutor2u.net/blog/files/Revision_Government_Intervention.pdf
http://www.tutor2u.net/blog/files/Revision_Government_Intervention.pdf
British holidays; are they inferior goods?
From A Question of Economics comes this article about rising demand for UK holidays in 2009
http://aquestionofeconomics.blogspot.com/2009/02/british-tourism-bucks-trend.html
Are self-catering holidays in the UK and the other holidays referred to in the article examples of inferior goods? Think about the income elasticity of demand for such holidays.
http://aquestionofeconomics.blogspot.com/2009/02/british-tourism-bucks-trend.html
Are self-catering holidays in the UK and the other holidays referred to in the article examples of inferior goods? Think about the income elasticity of demand for such holidays.
Air travel: A normal good?
http://news.bbc.co.uk/1/hi/business/7945721.stm
a) What evidence is ther to suggest air travel is a normal good
b) If this is the case, would the income elasticity of demand for air travel be +ve or -ve? Explain your answer
c) The following passage lists has many statistics: What use would they be for firms planning their stratagy to deal with the downturn in passenger numbers?
UK airports handled 235 million passengers in total last year, the CAA found. The 1.9 per cent decline is only the the fourth annual decrease in passenger numbers since the end of the Second World War, the authority said.
CAA figures revealed London's airports, including Heathrow, Gatwick, Stansted, Luton and London City, saw an overall annual fall of 2%. Stansted was particularly badly hit, with 1.4 million fewer passengers in 2008 - a 6.0% decline on 2007.
Manchester, the biggest regional airport, also saw passenger numbers fall by 3.8%.
However, not all airports were hit by a decline in travellers. London City airport saw a rise of a 12%, Luton showed a 2.6% increase and Birmingham's numbers rose by 4.8%.
Rail competition
The CAA also revealed charter airline numbers were down 9.3% on 2007, while scheduled airlines were down 0.8%. There was also a fall in the overall number of passengers taking domestic flights - down 4.8% to 25 million.
The authority said this was partly due to increasing numbers of people opting to take the train.
a) What evidence is ther to suggest air travel is a normal good
b) If this is the case, would the income elasticity of demand for air travel be +ve or -ve? Explain your answer
c) The following passage lists has many statistics: What use would they be for firms planning their stratagy to deal with the downturn in passenger numbers?
UK airports handled 235 million passengers in total last year, the CAA found. The 1.9 per cent decline is only the the fourth annual decrease in passenger numbers since the end of the Second World War, the authority said.
CAA figures revealed London's airports, including Heathrow, Gatwick, Stansted, Luton and London City, saw an overall annual fall of 2%. Stansted was particularly badly hit, with 1.4 million fewer passengers in 2008 - a 6.0% decline on 2007.
Manchester, the biggest regional airport, also saw passenger numbers fall by 3.8%.
However, not all airports were hit by a decline in travellers. London City airport saw a rise of a 12%, Luton showed a 2.6% increase and Birmingham's numbers rose by 4.8%.
Rail competition
The CAA also revealed charter airline numbers were down 9.3% on 2007, while scheduled airlines were down 0.8%. There was also a fall in the overall number of passengers taking domestic flights - down 4.8% to 25 million.
The authority said this was partly due to increasing numbers of people opting to take the train.
Porsche: A superior good?
The BBC reports rapidly declining Porsche sales
Porsche has been hit hard by the global recession. Porsche has seen its nine-month unit sales slump by more than a quarter after demand for its cars was hit by the worldwide recession.
Global sales at the German carmaker declined 28% to 53,635 vehicles between August 2008 and the end of April, compared with a year earlier.
Given the world recession has seen average incomes fall by no more than 5%,
a) Calculate the income elasticity of demand for Porsche cars and then explain why they might be considered a superior good
b) Explain 3 possible reasons why demand for Porshe cars (other than falling incomes) may hasve fallen
c) Using a S&D diagram, explain why this may be a good time to buy a Porsche (assuming you are still in a well paid job and can afford to buy one)
Porsche has been hit hard by the global recession. Porsche has seen its nine-month unit sales slump by more than a quarter after demand for its cars was hit by the worldwide recession.
Global sales at the German carmaker declined 28% to 53,635 vehicles between August 2008 and the end of April, compared with a year earlier.
Given the world recession has seen average incomes fall by no more than 5%,
a) Calculate the income elasticity of demand for Porsche cars and then explain why they might be considered a superior good
b) Explain 3 possible reasons why demand for Porshe cars (other than falling incomes) may hasve fallen
c) Using a S&D diagram, explain why this may be a good time to buy a Porsche (assuming you are still in a well paid job and can afford to buy one)
The price elasicity of demand for postage stamps
This BBC article is a good example of price elasicity of demand in action
http://news.bbc.co.uk/1/hi/business/8283362.stm
a) Define price elasicity of demand
b) Using the information in the article, calculate the PED for first and second class stamps
c) What do the 2 numbers you have calculated tell you about the demand for the 2 products?
d) Why is demand for these 2 products as you have described? (Hint: Look at the factors that influence PED)
e) What advice would you give Royal mail about their pricing structure as a result of your calculations?
http://news.bbc.co.uk/1/hi/business/8283362.stm
a) Define price elasicity of demand
b) Using the information in the article, calculate the PED for first and second class stamps
c) What do the 2 numbers you have calculated tell you about the demand for the 2 products?
d) Why is demand for these 2 products as you have described? (Hint: Look at the factors that influence PED)
e) What advice would you give Royal mail about their pricing structure as a result of your calculations?
The price of sugar
An article from the Guardian with lots of S&D economics in it
http://www.guardian.co.uk/business/2009/oct/06/sugar-prices-soar-new-oil
a) Explain the 2 factors that have lead to a decrease in the supply of raw sugar
b) Explain what has happened to the demand for sugar
c) Using your answers to a) and b) and a diagram, explain what has happened to the sugar market
d) Define price elasticity of supply
e) Given the 2 statements below, discuss whether the price elasticity of supply will be elastic or inelastic
"The sugar available now is dependent upon the sugar planted last year": "Stockpiles of sugar are available"
f) Define price elasticity of demand
g) Do you believe the price elasticity of demand for sugar to be elastic or inelastic? Explain your reasoning
http://www.guardian.co.uk/business/2009/oct/06/sugar-prices-soar-new-oil
a) Explain the 2 factors that have lead to a decrease in the supply of raw sugar
b) Explain what has happened to the demand for sugar
c) Using your answers to a) and b) and a diagram, explain what has happened to the sugar market
d) Define price elasticity of supply
e) Given the 2 statements below, discuss whether the price elasticity of supply will be elastic or inelastic
"The sugar available now is dependent upon the sugar planted last year": "Stockpiles of sugar are available"
f) Define price elasticity of demand
g) Do you believe the price elasticity of demand for sugar to be elastic or inelastic? Explain your reasoning
Income elasticity of demand for coffee
A really interesting video clip from the BBC
http://news.bbc.co.uk/1/hi/business/8334993.stm
a) Explain what income elasticity of demand measures and state the formula
b) Given what is said in the video, would it be true to say that coffee bought on the high street is an inferior good?
http://news.bbc.co.uk/1/hi/business/8334993.stm
a) Explain what income elasticity of demand measures and state the formula
b) Given what is said in the video, would it be true to say that coffee bought on the high street is an inferior good?
Drawbacks of using indirect taxes to reduce market failure: Pub beer
http://news.bbc.co.uk/1/hi/business/8373230.stm
a) What does this seem to indicate about the price elasticity of demand for pub beer?
b) Discuss whether pub closures would indicate the government has been successful in decreasing the negative externalities associated with alcohol consumption
a) What does this seem to indicate about the price elasticity of demand for pub beer?
b) Discuss whether pub closures would indicate the government has been successful in decreasing the negative externalities associated with alcohol consumption
PED in action: Who else but Ryanair!
The BBC reports a new pricing strategy from Ryanair
http://news.bbc.co.uk/1/hi/northern_ireland/8605600.stm
Use your knowledge of PED, to comment on whether you agree with the Ryanair statement that the purpose of the increase is to "incentivise all of its passengers to travel light" during the peak summer months.
http://news.bbc.co.uk/1/hi/northern_ireland/8605600.stm
Use your knowledge of PED, to comment on whether you agree with the Ryanair statement that the purpose of the increase is to "incentivise all of its passengers to travel light" during the peak summer months.
PED in action: Who else but Ryanair!
The BBC reports a new pricing strategy from Ryanair
http://news.bbc.co.uk/1/hi/northern_ireland/8605600.stm
Use your knowledge of PED, to comment on whether you agree with the Ryanair statement that the purpose of the increase is to "incentivise all of its passengers to travel light" during the peak summer months.
http://news.bbc.co.uk/1/hi/northern_ireland/8605600.stm
Use your knowledge of PED, to comment on whether you agree with the Ryanair statement that the purpose of the increase is to "incentivise all of its passengers to travel light" during the peak summer months.
How to reduce market failure? Indirect (carbon) taxes, or tradable permits (cap and trade)
A good summary of both from economics help
http://www.economicshelp.org/blog/economics/carbon-tax-pros-and-cons/ tax
http://www.economicshelp.org/blog/economics/carbon-trading-schemes/ tradable permits
http://www.economicshelp.org/blog/economics/carbon-tax-pros-and-cons/ tax
http://www.economicshelp.org/blog/economics/carbon-trading-schemes/ tradable permits
Ways of reducing the negative externalities associated with excessive alcohol consumption
This BBC clip explains how the tide has turned away fron deregulation in the market, to a more restrictive use of legislation
http://www.bbc.co.uk/news/uk-10785218
Question: Take each proposal and discuss its likely success in reducing the negative externalities associated with excessive alcohol consumption
http://www.bbc.co.uk/news/uk-10785218
Question: Take each proposal and discuss its likely success in reducing the negative externalities associated with excessive alcohol consumption
How Sandwell is tackling street litter
A nice clip from the BBC highlighting one approach to reducing street litter
http://www.bbc.co.uk/news/uk-11009694
a) Why is street litter an example of a negative externality?
b) What approach is Sandwell council using to reduce the negative externality?
c) What other approaches could they use?
d) Discuss how effective the zero tolerance policy will be for the council
http://www.bbc.co.uk/news/uk-11009694
a) Why is street litter an example of a negative externality?
b) What approach is Sandwell council using to reduce the negative externality?
c) What other approaches could they use?
d) Discuss how effective the zero tolerance policy will be for the council
Spains tough anti-tobacco laws
This BBC clip reports that Spain is set to restrict smoking
http://www.bbc.co.uk/news/world-europe-11593698
a) Explain, using economic terms, why Spain is enforcing these restrictions.
b) Explain using a diagram, how the restrictions should reduce the market failure
c) Discuss the extent to which the policy is likely to succeed.
http://www.bbc.co.uk/news/world-europe-11593698
a) Explain, using economic terms, why Spain is enforcing these restrictions.
b) Explain using a diagram, how the restrictions should reduce the market failure
c) Discuss the extent to which the policy is likely to succeed.
Fashion - what goes around comes around
http://www.tutor2u.net/blog/index.php/economics/comments/economics-at-the-movies-hudsucker-proxy-and-consumer-demand/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+economics_news+%28tutor2u+Economics+Blog%29#When:19:33:00Z
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