Thursday, July 31, 2008

Unit 1: River pollution: The inadequacy of government action to overcome market failure

This BBC article shows the legislation by itself may not eliminate market failure

a) What is the market failure in the free market?
b) Why do the pollution incidents still occur even though there is legislation which means they should not?

Unit 2: Free trade v Proectionism

A good clip from the BBC highlighting protectionism in action

a) What forms of protectionism are used in the cotton industry?
b) Who loses from this protectionism and in what way do they lose?
c) Who would gain if there was free trade in cotton?
d) Given these advantages of greater globalisation, why do the protectionist measures remain?

Market structures: Oligopoly and the games console market

Geoff Riley has this interesting post about the changing nature of the games console market

Tuesday, July 29, 2008

Unit 1: Government action to overcome market failure: Trans fats in California

An interesting article from the BBC on banning trans fats in California

a) Using a diagram, explain what sort of market failure trans fats represent
b) Why has California taken this action?
c) To what extent do you think the action will reduce the market failure?

Unit 2: Slowing economic growth in the UK

This BBC clip and asociated article show economic growth in the UK slowing video article

a) How is economic growth measured in the UK?
b) Which components of aggregate demand are slowing according to the clip?

Unit 1: Notional, Effective and Price elasticity of demand for air travel

From Geoff Riley's blog comes this graet piece on demand

a) Explain the difference between notional and effective demand for airlines
b) What is the formula for PED?
c) Using the information provided calculate the PED for flights
d) Using the information provided calculate the exact fall in the number of passengers if prices rise by 20%
e) Why is the PED likely to be inelastic?

Thursday, July 24, 2008

Unit 2: Decreasing consumer confidence

The BBC reports falling consumer sales video

a) Why is a fall in consumption important for the UK economy
b) Comment on the likely effect of a fall in consumer confidence and a decrease in consumption on the UK economy

Unit 1: Allocative efficiency in the North American motor indusrty

Geoff Riley has this summary of changes at Ford in the USA

The BBC reports similar changes at General MOtors in the USA

a) Explain how these changes in what is produced represents a move towards greater allocative efficiency in the North American motor market

Unit 1: The effect on price of reducing subsidies

The BBC reports a decrease in the subsidy on petrol in Vietnam

a) Using a S&D diagram, explain why the reduced subsidy will lead to an increase in the price of petrol
b) Will the price rise by most of the reduction in the value of the subsidy, or not? Explain your answer

Unit 1: How S&D explain the price of oil

A really good explanation of the application of S&D to the price of oil from the BBC

a) What demand factors effect the price of oil?
b) What supply factors effect the price of oil?
c) Why does the price of oil change daily when many of these factors do not?

Unit 2: More evidence of alcohol as a demerit good

A great BBC video clip and associated article highlighting continued problems with excessive alcohol consumption in the UK video article

a) Why would alcohol be classed as a demerit good?
b) What actions have been taken so farto reduce the market failure?
c) What actions is the government now threatening?
d) To what extent do you believe the government can reduce the market failure associated with excessive alcohol consumption?

Monday, July 21, 2008

Unit 3: Is the CPI an accurate measure of Inflation?

An interesting article in the Guardian explaining why the CPI may be an accurate measure of inflation despite most people's perception that inflation is higher

Friday, July 18, 2008

Unit 3: Zimbabwe inflation hits 2,200,000% and the central bank issues a Z$100billion note

If you thought the UK inflation rate may be worrying at 3.8%, just think what trying to operate in the Zimbabwe economy must be like

This article from the Guardian explains how ordinary Zimbabwe citizens are dealing with the economic meltdown

And as a response to the falling purchasing power of the Z$, the govt issues a new note with a face value of......Z$100billion! What will it buy? According to this BBC article, a loaf of bread

This small section of a Guardian article shows what hyperinflation does to the purchasing power of money:

The demand for new higher denomination notes, as the value of existing ones plummeted, was reflected in the rapid increase in the numbers of noughts on money printed over the past two years.
In August 2006, the central bank issued a $5 note. A $500,000 note followed a year later. On 2 May 2008, a $500m banknote hit the streets but was swiftly near worthless, and $5bn, $25bn and $50bn notes followed just a fortnight later.

Unit 3: Inflation at 11 year high

These BBC article and Ch4 video clip, explain why CPI is at an 11 year high and the problems the BoE faces in trying to contain its increase article video

Unit 3: The link between economic growth and unemployment

Two tables in this post by Geoff Rilet are really useful inseeing the link between these 2 government objectives

This BBC article explains the latest rise in unemployment

a) Explain the time lagged link between changes in economic growth and the resulting changes in unemployment
b) Explain the latest rise, and recent trend, in unemployment

Sunday, July 13, 2008

Unit 1: Demand for Magners cider

An interesting article from the BBC explaining how demand for cider has changed

a) What reasons does the article suggest for the rise and fall in the demand for Magners cider?

Unit 2: Government legislation to reduce negative externalities: Rubbish in Japan

A great BBC video clip and article about a zero waste town in Japan video article

a) How does the council legislation reduce the negative externalities associated with waste?
b) What benefits are there to the town citizens of this system?
c) Comment on the likely success of such a scheme if it was introduced to your town/village/city

Unit 1: Demand for bullet proof cars in Brazil

An interesting video from the BBC

a) Using demand theory, explain why there has been a rise in the demand for bullet proof cars in Brazil

Friday, July 11, 2008

Unit 3: The effect of an appreciating exchange rate on China

An interesting report from thee BBC on the efect of the rising Yuan

a) Why will an appreciating yuan reduce exports?
b) What will be the effect on imports?
c) What will the effect be on aggregate demand?
d) Using an AD/AS diagram, explain the likely effect on the Chinese economy of this appreciation
e) Comment on why the effects might not be as you suggest

Unit 3: The housing slump and negative multiplier effects

This article from Geoff Riley explains why the decline in the housing market may have far more wide ranging effects on the economy.

Then watch the BBC video clip

a) Explain how the multiplier effect can be applied to this decline in the housing sector and why it will lead to a further unemployment rise in the UK.

Wednesday, July 09, 2008

Unit 3: Carbon trading expands to involve aviation in the EU

A clip from the BBC and two articles from the Guardian about the expansion of the Carbon trading scheme with the inclusion of aviation video

a) Assess the likely success of using tradable permits as a means of reducing aviation CO2 emissions

Unit 3: Is the UK heading for recession?

This BBC clip questions whether the UK is heading for a recession

a) What is a recession?
b) What happens to aggregate demand in a recession?
c) Why does unemployment rise in a recession?
d) What effect does rising unemployment have in the economy?
e) What actions could the government take to break this downward spiral?

Unit 2: Reducing negative externalities associated with rubbish and landfill

This BBC article reports an imaginative scheme to reduce landfill

a) How would this system work to reduce the market failure?
b) What is the difference between this system and taxing people by the amount of rubbish they produce?
c) Evaluate the extent to which either scheme would be likely to succeed

Monday, July 07, 2008

Unit 1: Cross elasticity of demand: The impact of rising petrol prices in India

A great little video clip from the BBC

a) Calculate the XED for gas conversions as petrol prices rise

Unit 3: Fiscal Drag

From Geoff Riley comes this example of fiscall drag in action in the UK economy

Unit 1: A market in disequilibrium: Allotments

From Geoff Rileys blog comes this interesting tale of allotments in the UK

a) Using a S&D diagram, show how the market for allotments is in disequilibrium
b) Which factors have caused the demand for allotments to increase and shift the D curve to the right?
c) Using a S&D diagram, explain the effect on the market of this increased demand

Sunday, July 06, 2008

Unit 3: The multiplier effect of increased Government spending: Aircraft carriers

The BBC reports that the purchase of 2 huge aircraft carriers will result in more money going to 7 firms in different locations around the UK

a) What effect will this purchase by the Government have on aggregate demand?
b) How could the orders to the 7 firms result in multiplier effects in the regions identified on the map?
c) What would determine how large the multiplier effect would be in each region?

Saturday, July 05, 2008

Unit 3: Defining a recession

This Guardian article summarises nicely what a recession is

Unit 3: Falling discretionary income in the UK

An interesting post on Geoff Riley's tutor2u blog about falling discretionary income in the UK

a) Using an AD/AS diagram, explain the likely effect on the UK economy of this fall in discretionary income
b) Why might your predicted effects not actually occur?

This CH4 video shows the effect on companies as consumer incomes fall

Friday, July 04, 2008

Unit 1: Falling disposable incomes and the efect on demandemand

Two stories showing how demand falls as disposable incomes fall

Cars in the UK

a) Why do you think the sales of diesel cars may have increased if the overall demand as down?

Coffee in the USA

Unit 2: The external costs of crime

The BBC reports the external cost of crime

a) Why is this £15bn an external cost?
b) To what extent would you take this to be an acurate figure?

Unit 2: Australia's proposed emissions trading scheme

The BBC reports plans in Australia to start a carbon emissions trading scheme video article

a) How would such a scheme work?
b) What drawbacks would there be to the introduction of such a scheme?
c) Comment on the likely success of this scheme compared to other actions the Australian government could take

Wednesday, July 02, 2008

Unit 1: Rising costs and rising prices: Dry cleaners

This article from the BBC explains the hard times drycleaners in the USA are facing

a) Using a S&D diagram, explain what has happened in the drycleaning market

Unit 2: The effect of the smoking ban in the UK

The BBC reports that many smokers have given up since the smoking ban

a) How has this legislation reduced the market failure?
b) What unintended negative consequences have ther been on the UK economy as a result of the ban? This clip expands on the problems

Unit 1: Cross elasicity of demand: The price of oil and the demand for scooters

Another interesting post from Geoff Riley on XED ad from the BBC on American car sales

a) Define XED
b) Would the XED for scooters/small Honda cars in response to a rise in the price of oil be +ve or -ve?
c) What does this tell you about the relationship?
d) Would the XED for SUV's/pick up trucks in response to a rise in the price of oil be +ve or -ve?
e) What about the XED for the complements for scooters mentioned in the article?

For those of you who would like to follow up on these ideas there is this great article from the Guardian on how American consumer behaviour is changing as the result of soaring petrol prices in the USA