Wednesday, November 28, 2007

Unit 1: Price increases, elasticity and the rail industry

Rail fare increases above inflation were announced today

a0 Why have rail companies imposed these fare increases?
b) What does this tell you about the PED for these rail services?
c) To what extent do you believe these increases are warrented?

Unit 2: Market dominance and government action: EU fines on glass manufacturers

The EU has levied multi-million Euro fines on 4 glass manufacturers found to have colluded

a) To what extent do you think fines such as these restrict market dominance behaviour such as collusion?

Unit 1: Oligopoly and collusion

The EU has levied multi-million Euro fines on 4 firms guilty of collusion in the flat glas market

a) Why would you consider this market to be an oligopoly?
b) Why do you think the producers colluded to the detriment of consumers?

Unit 2: Negative externalities associated with global warming

Scientists in Brazil say global warming is responsible for the destruction of a small coastal town according to this BBC clip.

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a) Why is the villager's suffering an example of the market failing due tonegative externalities?

Unit 2: Negative externalities associated with the 3 gorges dam

Residents living on the banks of the River Yangtze in China fear their homes will be destroyed due to damage caused by the Three Gorges Dam. according to this BBC clip

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a) Explain, using information from the clip, what sort of market failure the villagers are experiencing
b) What actions can the government undertake to overcome this market failure?

Unit 2: Advantages and disadvantages of a National Minimum Wage (NMW)

This entry on the tutor2u blog summarises the pro/anti arguments well

Saturday, November 24, 2007

Unit 1: The price of beer

The Guardian reports the price of a pint could soar by up to 60%

a) Using a diagram, explain why a rise in the price of beer is likely

Thursday, November 22, 2007

Unit 1: The demand for beer

This is a great summary from Geoff Riley at tutor2u about the changing pattern of demand for beer in the UK

Sunday, November 18, 2007

Unit 1: Rising air fuel costs and rising passenger fares

This Guardian articl says fares for passengers will rise as te cost of fuel for airlines continues to rise

a) Using a S&D digram, explain why passenger fares have risen

Unit 1: Changes in the market for Starbucks coffee

From the Guardian comes this article explaining how the factors that effect demand for, and supply of Starbucks coffee have changed

In the article it says

Starbucks has been hit by a combination of rising raw material costs, which has forced it to raise prices and a drop in consumer confidence as a result of the sub-prime mortgage crisis, which has made its expensive coffee a little less alluring. The company increased prices over the summer but pricing pressures are continuing - milk prices, for instance, have increased more than 60% since the start of the year.
Starbucks also faces increasing competition from fast food companies such as McDonald's who are moving into the hot beverages market as their core burgers 'n' fries offerings come under increasing attack from pressure groups who accuse them of being unhealthy.

a) Identify the demand factor(s) that have changed and state if the demand curve has shifted to the right or left
b) Identify the supply factor(s) that have changed and state if the supply curve has shifted to the right or left
c) Using a diagram and your answers to a and b, explain the fall in Starbucks sales
d) What has Starbucks done to win back their customers and increase demand?
e) Discuss the extent to which you believe their stratagy will be successful

Saturday, November 17, 2007

Unit 1: Disequilibrium and Substitutes in the games console market

This year's must-have Christmas gift, the Nintendo Wii console, is in short supply across the UK according to this BBC clip and associated article
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a) Using economic language, how would you describe the supply of the Nintendo Wii?
b) Using a diagram, explain how the market for the Wii is in a disequilibrium
c) What has begun to happen to restore equilibrium in the market?

The likely winner resulting from this shortage is Sony according to this BBC article

d) Why have Sony sales increased?
e) Using your knowldge of the video games market, dicuss the extent to which the Wii, PS3 and Xbox 360 are substitute products

Wednesday, November 14, 2007

Unit 3: Interest rates; a dilemma-should they rise or fall?

Rising petrol prices pushed the UK inflation rate to 2.1% in October but house prices and consumer confidence appear to be falling according to this BBC clip and article.
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a) What is the argument for raising interest rates?
b) What is the argument for reducing interest rates?

Unit 2: Alcohol consumption; how the market fails and posible solutions

Doctors are warning that increasing numbers of young people are developing alcohol-related disease according to this clip and article from the BBC.
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a) What sort of market failure does excess alcohol consumption represent?
b) Using a diagram, explain how the market fails
c) What suggested policies to reduce the market failure are suggested?
d) Discuss the extent to which the the suggested solutions could succeed

Saturday, November 10, 2007

Unit 3: Balance of Payments: Worst ever trade in goods figures

This BBC article describes the worst ever goods trade figures

a) Why might this trade in goods defecit have worsened?
b) Why might the UK international financial position not be as bad as this figure indicates?

Unit 2: Alcohol consumption; Market failure and taxation

The drinks industry is opposing measures designed to reduce binge drinking such as higher alcohol taxes stating they do not believe they will be successful according to this BBC clip and article:
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a) How does the alcohol market fail?
b) What are the two proposed measures?
c) Using a diagram in each case, explain how each of the two proposals would reduce the market failure?
d) Discuss the extent to which either or both of the proposals is likely to be successful in reducing the market failure

Thursday, November 08, 2007

Unit 2: Negative externalities associated with palm oil cultivation

From the BBC comes this frightening report from Greenpeace

a) Why would the global warming resulting from this cultivation be an example of a negative externality?
b) What actions could the international community take to reduce this negative externality?
c) To what extent do you think such policies would succeed?

Unit 1: Cross elasticity of demand, substitutes and demand for bus services

This Guardian article shows the effect of rising fuel prices for motorists on demand for bus services

a) Define Cross elasticity of demand
b) What is the relationship between rising fuel prices and the demand for bus services?
c) What other factors does the article suggest are leading to an increase in demand for bus service
d) Using a S&D diagram explain the effect on the bus service market of these changes

Tuesday, November 06, 2007

Draft Unit 3: Exchange rates: The effect of the rising value of the £

** Brits shop in US as dollar dips **
British shoppers are flocking to the US to take advantage of the best exchange rate against the dollar since 1981.
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** New York tourist boost **
The weak US dollar is attracting high-spending foreign tourists and prompting a boost to the city's economy.
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Unit 3: Supply side policy; the school leaving age

The government has announced plans to increase the school leaving age in England to 18

a) Explain what is meant by supply side policies
b) What does the government hope to achieve by raising the schoolleaving age?

Friday, November 02, 2007

Unit 1: The rise in the price of pizza

These 2 articles from the BBC and the Guardian explain the recent rise in the price of pizzas. Domino's says the price of pizzas looks set to rise after "unprecedented" increases in the cost of cheese and flour ingredients,,2203878,00.html

Unit 1: Elasticity of supply

From Geoff Riley's blog comes this illustrating the inelastic nature of supply for 2 products

a) In each case explain why supply is inelastic