Sunday, March 30, 2008

Unit 3: Balance of Payments: The UK's trade deficit worsens

From Geoff Riley comes this update on the dire state of the uK trade in goods and services

a) What issues does this rising deficit raise for the UK?

Saturday, March 29, 2008

Unit 2: Decreasing consumption of demerit goods; school dinners

This BBC clip and associated article, shows one school using regulation to reduce market failure

a) What is the market failure?
b) How will the regulation reduce the market failure?
c) To what extent do you beleieve this regulation would be successful in reducing the consumption of demerit goods (fast food) if applied nationally?

Unit 3: Aggregate Supply: Polish workers return home

From Geoff Riley comes this article about Polish workers returning home

More on this can be found at this BBC article

a) Using an AD/AS diagram, explain the possible macroeconomic effects on the UK economy if a significant number of the recent eastern european migrants returned home

Unit 3: Revsion; macro data graphs

From Geoff Riley come these 4 powerpoint graphs on

The components of AD,1,Slide 1

Real gdp annual growth over time,2,Slide 2

Real gdp growth over time,2,Slide 2

Data on GDP/Inflation/Unemployment all on one graph,4,Slide 4

Unit 3: Revision on Investment

Another great revision aid from Geoff Riley, this time on INVESTMENT

Friday, March 28, 2008

Unit £: The effect of an appreciating Euro on the UK economy

This BBC clip explains that the rising euro is good news for British exporters but is squeezing those who import European goods.

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a) Explain why UK business who export to the EU win and UK businesses who import from the EU lose when the Euro appreciates
b) Would might some businesses be effected more than others by this appreciation?

Unit 2: Negative externalities from plastics

The BBC has run 3 items on the news at 10 about the negative effects of plastic on the isolated islands of Midway (which is in the middle of the Pacific ocean). It shows that an increase of plastic waste in the Pacific is putting birds and animals on the Midway Islands at risk.

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a) State the negative externality shown in the clip and explain why it is a negative externality

UNit 2: Actions to decrease consumption of demerit goods

This BBC clip explains that crisps, chocolate and sugary drinks are to be removed from vending machines in Welsh NHS hospitals.

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a) Why are such food items regarded as examples of demerit goods?
b) Explain how this action should reduce the market failure
c) To what extent do you believe this action will reduce the market failure?

Unit 3: Exchange rates: Revision article

Another great revision article from Geoff Riley, this time on Exchange rates with lots of useful data showing trends

Unit 1: Revision on prices and Unit 3: AD and AS effects of increasing commodity prices

From Geoff Riley comes this revision paper on commodity prices.
The first half is great on the microeconomic S and D factors that cause prices to rise. Particularly important is the idea of elasticity
The second half looks at the macroeconomic AD and AS effects on the economy as a whole

The whole article has many hyperlinks for you to follow up areas of particular interest

Monday, March 24, 2008

Unit 2: Reducing consumption of cigarettes

This BBC clip and article outlines 2 possible new new restrictions on the sale of cigarettes

a) Explain what type of market failure cigarettes represent
b) What 2 new proposals are suggested in the video clip
c) Taking these and other measures the government has taken recently, use economic theory to evaluate how successful the government is likely to be in reducing cigarette consumption (and so the market failure)

Saturday, March 22, 2008

Unit 2: Externalities: Dioxin contamination and illegal dumping of waste

From the tutor2u blog comes this tale of mafia involvement in waste disposal and the effect on the local commumity. It's summarised at the link, but there atre also hyperlinks to the story in 2 papers and the BBC

a) Explain what the negative externality is and why it is an externality
b) What actions could the Italian government take to reduce the market failure?

Friday, March 21, 2008

Unit 3: Revision presentation for Unemployment

From Geoff Riley at tutor2u comes this excellent revision presentation for unemployment

If you like it, try his other presentations accessible from the tutor2 site at

Thursday, March 20, 2008

Unit 3: Inflation; changes in the basket of goods

From the BBC comes news of the latest changes in the basket of goods

a) Why are such changes necessary?

Wednesday, March 19, 2008

Unit 3: January unemployment figures

The BBC has the latest unemployment figures

Unit 3: January inlation figures

Theis BBC article outlines the latest inflation figures; note the plural! It seems inflation can almost be what you want it to be depending on what you include/exclude!

Unit 3: What should the BoE do with interest rates?

This BBC clip shows the dilemma for the BoE when contemplating what to do with interest rates

a) Why should they raise interest rates? Using a AD/AS diagram, explain what the effects would be on the UK economy
b) Why should they decrease interest rates? Using a AD/AS diagram, explain what the effects would be on the UK economy

Unit 3: How is inflation calculated?

From Geoff Riley comes this excellent revision summary of how inflation is calculated; it has many hyperlinks

a) Calculate your personal inflation rate and compare it to the CPI
b) Explain the discrepancy between the 2 rates

Monday, March 17, 2008

Unit 1: Economies of scale: The new News International printing works

This BBC article gives a good example of economies of scale in action

a) Using examples from he article, explain the types of economies of scale News International will benefit from at the new plant.

Unit 3 Macroeconomic objectives: Iceland in figures

From the tutor2u blog comes this post showing tthe performance of Iceland in relation to the 4 macroeconomic objectives

a) How would you describe the performance of the Icelandic economy over the period shown?

Sunday, March 16, 2008

Unit 1 Changes in the champagne market

The Guardian reports that the area within which champagne grapes can be grown is to be increased

a) How would you describe the supply of land to grow campagne currently?
b) Using a S&D diagram, explain the effect on the market price of champagne that will arise when this new land produces champagne grapes
c) Why might your prediction not actually occur?

Unit 3: Exchange rates: The depreciating dollar

The BBC reports the dollar falling against the euro and yen

a) Using a S&D diagram, explain which factors which influence the demand for, and supply of, dollars have altered to cause this fall

Unit 2: Biofuels; salvation for the motorist or a dead end?

This BBC article backs up the money programme shown last Friday on BBC2 (which I have on video: Anybody know how I can set up a link to the blog for it?)

a) Evaluate the extent to which biofuels in cars can help resolve the negative externalities asociated with motoring
b) How important are actions by governments in generating greater alternative fuel use?

Unit 1: Market dominance: BAA and UK airports

The BBC reports that MP's want to break the stranglehold of BAA on the Uk's major airports, especially in the south-east

a) Why do MP's believe this market dominance is against the public interest?
B) Evaluate the effects on the market of compelling BAA to sell off at least one of the 3 London airports (Heathrow, Gatwick and Stansted)

Unit 1: Market structure: Changes in the airline industry

The BBC reports a takeover in the airline industry

a) Suggest economic reasons for Air France wanting this takeover
b) Suggest reasons why the EU may reject the proposed takeover
c) With reference to market structure models, explain what is happening in the airline industry as a result of such takeovers and mergers

Unit 1: The price of hotel rooms

The tutor2u blog had an article based on this article from the Independent about UK hotel rooms which are now the 5th most expensive in the world

The following is an extract from the article by Martin Hickman, Consumer Affairs Correspondent (The full article can be found at

The UK has the most expensive hotels in Europe, according to a new report. Staying a night here cost an average of £106 in 2007, up 12 per cent on the previous year. In the table of 64 major worldwide destinations, London is the fifth costliest, behind Moscow (£194 a night); New York (£143); Dubai (£125) and Venice (£125).

And London isn't the most expensive in Britain – that dubious distinction goes to the Georgian jewel that is Bath, which, at £117 a night, is £2 more expensive than the capital. Oxford and Aberdeen are also more expensive than the British average at £106. Staying in Edinburgh costs £103 a night. "It's quite interesting that Bath is higher than London but I think that is down to the number of five-star, luxury country house-type properties," said Dan Thomas, news editor of Caterer and Hotelkeeper magazine. "It also attracts quite a few American tourists." But Bath may not stay the most expensive for ever – Oxford and London are fast closing the gap.
So where are thecheapest places tostay in the UK?

The Midlands is the area to head to. Coventry comes out cheapest in the survey, with rooms costing just £57 a night. Nottingham (£66) and Birmingham (£79) were also relatively cheap. Similarly priced are Bournemouth (£77), and Glasgow (£79).

So why are Britishhotels so expensive?
Three factors – tax, costs and supply and demand – according to the British Hospitality Association, the hotel industry's body. At 17.5 per cent, British VAT is, it says, more expensive than tax on accommodation in many Continental countries, such as Italy where it is 10 per cent, the Netherlands (6 per cent) and France (5 per cent), though Germany levies 20 per cent VAT on hotels.

Costs here are higher too, but the biggest factor, says the BHA (and independent experts), is supply and demand. With daily changes in room rates possible, hotel prices are very elastic.

Britain is a very strong draw for tourists and for business people, the sixth most visited nation on earth, behind France, Spain, the US, China, and Italy (with 32 million foreign visits).

A booming economy and a shortage of land also push up prices. So room rates in the crowded, still economically buoyant south of England are high – because hoteliers can charge the rates and still fill the rooms.

According to research by TRI Hospitality Consulting, room occupancy in London in January was 73.4 per cent, the highest of 10 European cities, while chain hotels in Berlin and Budapest could fill only half their accommodation. London is an all-year round destination.

a) Using Supply and Demand analysis, explain why the price of UK hotels is so high
b) Using Supply and Demand analysis, explain the regional variation in hotel prices
c) Explain the significance for hoteliers of the statement "hotel prices are very elastic"

Saturday, March 15, 2008

Unit 2: Taxes as a means of correcting market failure

The BBC has a table showing how road fund licence rates willalter next year

a) To what extent will the new system internalise the externality and make the polluter pay?

Unit 3: The problems of an appreciating currency

The appreciation of the euro is proving to be a big problem for German exporters according to this BBC clip

a) Why is an appreciating euro a problem for German exporters?
b) What options does the firm face as a result of this appreciation?
c) What actions have they taken to remain competitive?
d) To what extent do you believe their strategy will prove to be successful?

Unit 3: The problems of an appreciating currency

Units 2 & 3: The costs and benefits of economic growth; market failure in China

This BBC clip shows some of the negative externalities associated with the rapid economic growth in China

a) What benefits are there to the local community from the economic growth they have experienced in recent years?
b) What are the costs that they have had to suffer?
c) What actions have the government taken to reduce the market failure resulting from the economic growth?

Unit 3: What determines the level of exports?

A good revision page from the tutor2u blog on exports (The first in a series they say so kep your eyes open for them)

a) So what determines the level of imports?

Wednesday, March 12, 2008

Unit 2: Demerit goods; gas guzzlers

This BBC clip and associated article outlines a new method of convincing people to opt for more economical cars

a) What are the 2 conditions for something to be described as a demerit good?
b) To what extent are gas guzzlers demerit goods?
c) How does the market fail with demerit goods
d) How would this proposal reduce the market failure?
e) To what extent do you believe this proposal is likely to be succesful?

Tuesday, March 11, 2008

Unit 1: The price of wheat

A clip from the BBC explains why the price of wheat has risen so sharply

a) Using a S&D diagram, explain why the price of wheat has risen
b) Using a S&D diagram, explain why the price of beef will have to rise

Unit 2 : Carbon trading and market failure

A great post on the tutor2u blog with links to the Independent and a good brief summary of the pros and cons of a tradable permit scheme for carbon trading

Sunday, March 09, 2008

Unit 2: Higher taxes on some alcohol and lower taxes on smoothies

This BBC video clip (and associated article) says the Tories would adjust the alcohol taxes currently levied to reduce binge drinking

a) What type of market failure does binge drinking represent?
b) Whar actions does the government currently take to correct the market failure and how successful do you believe them to be?
c) What drawbacks can you see to the proposed Conservative plans?

The Liberals have a slightly more advanced approach; not only do they want to deter alcohol consumption, they also want to increase consumption of "healthy" drinks by altering the tax system

a) What type of market failure do the Lib's believe smoothies represent
b) If their plans were put into effect, how would there be a more allocatively efficient use of resources?

Unit 2: Recycling to overcome market failure in Wales

This clip from the BBC shows 2 ways to recycle household waste

a) What is the market failure that recycling aims to correct?
b) Why does it appear people don't recycle?
c) What type of action has the government taken to overcome the market failure?
d) Which of the 2 methods is likely to be more successful?

Saturday, March 08, 2008

nit 2: Merit and demerit goods

From the tuto2u blog comes this list of merit/demerit goods compiled by his students

a) Can you explain why each is a merit/demerit good (ie information failure and externality)?
b) Whast others can you add to the lists?

Wednesday, March 05, 2008

Unit 3: Slowing economic growth in Canada

The BBC reorts that growth is slowing in Canada and the government has responded by cutting interest rates

a) What policy has the government used to stimulate demand?
b) Using a diagram, explain how the economy should react to the interest rate cut

Unit 3: Controlling inflation in Australia

The BBC reports Australia's efforts to reduce inflation

a) What sort of inflation is Australia suffering from?
b) What policy is Australia using to combat inflation?
c) Using a diagram, explain how Australian inflation should be reduced
d) What effect is the rise in interst rates likely to have on the exchange rate and Australia's BOP?

Unit 2: Negative externalities associated with concert going

An interesting article from the BBC about hearing loss associated with concerts

a) What are the private costs and benefits of concert going?
b) The free market fails as loud concert music is a demerit good: Explain this statement
c) What actions do yoiu think the government could/should take to reduce the market failure?

Unit 2: An increase in the National Minimum wage

The tutor2u blog has a good article on the latest increase in the NMW and its impact on the market failure of unequal distribution of income

The BBC has more details

a) to what extent might the increase in the NMW redistribute income towards the poor?

Sunday, March 02, 2008

Unit 3: Exchange rates: How exporters can combat a high pound

This clip from the BBC shows how one British export based manufacturing firm has coped over the last few years with with a high valued pound by investing in technology.

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a) What effect does a rising pound have on the price of exports and the quantity sold?
b) What effect does a rising pound have on the price of imports and the quantity sold?
c) How has this firm overcome this problem?
d) What 2 options does the firm now face with the value of the pound falling?
e) What advice would you give this firm on which of the 2 options to follow