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

http://www.tutor2u.net/blog/index.php/economics/dioxin-contamination-and-illegal-dumping-of-waste/#When:12:45:00Z

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?

Unit 3: Revision presentation for Unemployment

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

http://www.tutor2u.net/economics/presentations/aseconomics/macro/Unemployment/default.html

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

http://www.tutor2u.net/economics/presentations.html

Unit 3: Inflation; changes in the basket of goods

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

http://news.bbc.co.uk/1/hi/business/7300234.stm

a) Why are such changes necessary?

Unit 3: January unemployment figures

The BBC has the latest unemployment figures

http://news.bbc.co.uk/1/hi/business/7304330.stm

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!

http://news.bbc.co.uk/1/hi/business/7302297.stm

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

http://news.bbc.co.uk/player/nol/newsid_7300000/newsid_7303700/7303730.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

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

http://www.tutor2u.net/blog/index.php/economics/comments/calculating-inflation/

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

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

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

http://news.bbc.co.uk/1/hi/uk/7299941.stm

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

http://www.tutor2u.net/blog/index.php/economics/comments/macroeconomics-in-a-nutshell/

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

Unit 1 Changes in the champagne market

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

http://www.guardian.co.uk/business/2008/mar/14/fooddrinks.france

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

http://news.bbc.co.uk/1/hi/business/7296156.stm

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?)

http://news.bbc.co.uk/1/hi/business/7294516.stm

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

http://news.bbc.co.uk/1/hi/uk/7297913.stm

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

http://news.bbc.co.uk/1/hi/business/7299203.stm

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 http://www.independent.co.uk/travel/news-and-advice/the-big-question-why-are-british-hotels-so-expensive-and-do-they-justify-their-high-prices-794925.html)

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 Hotels.com 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"

Unit 2: Taxes as a means of correcting market failure

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

http://news.bbc.co.uk/1/hi/in_depth/629/629/7293011.stm

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

http://news.bbc.co.uk/player/nol/newsid_7290000/newsid_7295800/7295866.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

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

http://news.bbc.co.uk/player/nol/newsid_7290000/newsid_7295800/7295882.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

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)

http://www.tutor2u.net/blog/index.php/economics/comments/revision-focus-export-performance/

a) So what determines the level of imports?

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

http://news.bbc.co.uk/player/nol/newsid_7290000/newsid_7291000/7291082.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

http://news.bbc.co.uk/1/hi/sci/tech/7290467.stm

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?

Unit 1: The price of wheat

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

http://www.tutor2u.net/blog/index.php/economics/the-big-question-carbon-trading/#When:21:02:01Z

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

http://www.tutor2u.net/blog/index.php/economics/the-big-question-carbon-trading/#When:21:02:01Z

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

http://news.bbc.co.uk/player/nol/newsid_7280000/newsid_7282700/7282722.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

http://news.bbc.co.uk/1/hi/uk_politics/7282308.stm

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

http://news.bbc.co.uk/1/hi/uk_politics/7284703.stm

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

http://news.bbc.co.uk/player/nol/newsid_7280000/newsid_7281600/7281647.stm?bw=bb&mp=rm&news=1&bbcws=1

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?

nit 2: Merit and demerit goods

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

http://www.tutor2u.net/blog/index.php/economics/comments/merit-and-de-merit-goods/#extended

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?

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

http://news.bbc.co.uk/1/hi/business/7277664.stm

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

http://news.bbc.co.uk/1/hi/business/7276367.stm

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

http://news.bbc.co.uk/1/hi/health/7278781.stm

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

http://www.tutor2u.net/blog/index.php/economics/comments/minimum-wage-is-increased/#extended

The BBC has more details

http://news.bbc.co.uk/1/hi/business/7279199.stm

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

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.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7260000/newsid_7264500?redirect=7264542.stm&news=1&nbwm=1&nbram=1&bbram=1&bbwm=1&asb=1 >

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

Unit 1: The demand for cider

The BBC reports sales of Magners cider have decreased

http://news.bbc.co.uk/1/hi/business/7270621.stm

a) Which of the determinants of demand has changed?
b) Draw a demand diagram to show the effect of this change

Unit 2: Market failure: Plastic bags and M&S

From the BBC comes this article about M&S charging for plastic bags

http://news.bbc.co.uk/1/hi/uk/7268283.stm

The interview with Stuart Rose can be seen at

http://news.bbc.co.uk/player/nol/newsid_7260000/newsid_7268500/7268509.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

a) What is the market failure with plastic bags?
b) In what way does M&S's action internalise the externality?
c) What evidence is there in the article/interview to suggest that the market failure is likely to be reduced by M&S's action?

Unit 1: The price of wheat at record levels

The BBC reports that the price of wheat has hit an all-time high

http://news.bbc.co.uk/1/hi/business/7264239.stm

a) Using the information in the article, explain what has happened to the demand for wheat
b) Using the information in the article, explain what has happened to the supply of wheat
c) Using a diagram, explain what has happened to the price of wheat

Unit 1: The price of wheat at record levels

The BBC reports that the price of wheat has hit an all-time high in these 2 articles

http://news.bbc.co.uk/1/hi/business/7264239.stm

http://news.bbc.co.uk/1/hi/business/7264653.stm

Using the 2 articles,
a) Explain what has happened to the demand for wheat
b) Explain what has happened to the supply of wheat
c) Using a diagram, explain why the price of wheat has risen

Unit 2: Negative externalities; river pollution

The BBC reports this classic example of a negative externality

http://news.bbc.co.uk/1/hi/world/asia-pacific/7266364.stm

a) Using evidence from the article, explain why this pollution is an example of a negative externality
b) What action could the government take to try and ensure such an episode doesn't happen again?

Unit 2: Alcohol consumption; Market failure through negative externalities and possible solutions

From the tutor2u blog comes this great summary of the econ omic consequences of alcohol consumption

http://www.tutor2u.net/blog/index.php/economics/binge-drinking-taxes/#When:14:21:01Z

a) List the 3 negative externalities identified from excesive alcohol consumption
b) Select 2 of the possible solutions suggested and discuss whether or not they would be more successful in decreasing the negative externalities associated with alcohol consumption than would be an increase in tax on alcohol

Unit 2 Market dominance: Tesco

An interesting graphic from the Guardian. Welcome to Tescoland!

http://image.guardian.co.uk/sys-files/Business/documents/2007/11/01/Graphic_UK_supermarkets.pdf

Unit 1: The price of oil rises

This BBC clip reports that the price of oil has surged to yet another record, closing at just over $100 a barrel in New York.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7250000/newsid_7254200?redirect=7254244.stm&news=1&bbwm=1&bbram=1&nbram=1&nbwm=1&asb=1 >

a) Using a S&D diagram, explain why the clip suggests the price of oil has increased

Unit 1: Rising costs and rising consumer prices

Three stories from the BBC today about firms wishing to raise prices

http://news.bbc.co.uk/1/hi/business/7252144.stm Cadburys

http://news.bbc.co.uk/1/hi/business/7252328.stm Scottish and Newcastle

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7250000/newsid_7252900?redirect=7252911.stm&news=1&bbram=1&bbwm=1&nbwm=1&nbram=1&asb=1 > Australian wine

a) Using a supply and demand diagram, explain why the increased costs of production will lead to an increase in the prices that consumers will have to pay for Cadburys and S&N products
b) Using a supply and demand diagram, explain why the price of Australian wine is rising

Unit 2: Correcting market failure: The Irish plastic bag tax

From tutor2u comes this example of the success of government action to correct a market failure

http://www.tutor2u.net/blog/index.php/economics/comments/irish-plastic-bag-tax/#extended

a) What is the market failure that arises from the use of plastic bags?
b) How does the free market in plastic bags fail?
c) Using a diagram explain how the imposition of a tax on each bag should reduce the market failure
d) How important do you think the public information campaign appears to have been in reducing consumption of plastic bags?

Unit 2 Market failure; the London congestion charge

From tutor2u comes this update on Ken Livingstones latest plan to charge 4x4 drivers a higher congestion charge

http://www.tutor2u.net/blog/index.php/economics/the-london-pollution-charge/#When:21:29:00Z

a) In what way will this alteration to the charging system internalise the externality and make the polluter pay?
b) Suggest reasons why this system may not really internalise the externality

Unit 3: Unemployment figures

From tutor2u comes an article showing the latest unemployment data

http://www.tutor2u.net/blog/index.php/economics/good-job/#When:20:29:01Z

Unit 2: Positive externalities: Fluoride in water

The BBC reports that the government wants areas with high levels of tooth decay to consider fluoridation in water.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7220000/newsid_7227600?redirect=7227615.stm&news=1&nbwm=1&bbram=1&nbram=1&bbwm=1&asb=1 >

a) Define what is meant by a positive extenality
b) Using the definition, explain the likely positive externalities that will arise from fluoride in water

Unit 2: Negative externalities associated with road pollution

The BBC reports that there are calls for a bypass in a town where nitrogen dioxide levels exceed national guidelines.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7230000/newsid_7232900?redirect=7232908.stm&news=1&nbram=1&nbwm=1&bbram=1&bbwm=1 >

a) Explain why this pollution is an example of a negative externality
b) Evaluate the likely success of the bypass as a means of reducing the negative externality

Unit 1: The price of cauliflowers

The BBC reports that the mild winter and early spring has produced an excess of Cauliflower for growers in west Cornwall, which has forced their prices down.


< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7220000/newsid_7220200?redirect=7220235.stm&news=1&bbram=1&nbwm=1&bbwm=1&nbram=1 >

a) Using a supply and demand diagram, explain why the price of cauliflowers has fallen
b) Use the supply curve to explain why some farmers are ploughing the cauloflowers back in to the soil rather than selling them in the market

Unit 2: Negative externalities associated with wind farms

The BBC reports that plans for a wind farm on the Isle of Lewis in Scotland have run into fierce opposition.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7240000/newsid_7240200?redirect=7240238.stm&news=1&bbram=1&nbwm=1&nbram=1&bbwm=1&asb=1 >

a) List private costs and benefits associated with the scheme
b) List external costs and benefits associated with the scheme
c) If, as is suggested the government is minded to reject the project, what would you expect the outcome of a CBA to show?

Unit 2: Government failure: The smoking ban

The BBC eports that the smoking ban has led to a huge increase in cigarette butts piling up on Britain's streets.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7230000/newsid_7236100?redirect=7236187.stm&news=1&nbram=1&bbwm=1&nbwm=1&bbram=1&asb=1 >

a) Why might this be seen as an example of government failure?

Unit 1: The demand for chicken

The BBC reports that supermarket sales of free-range chicken spiked last month after a promotion with TV celebrity chefs.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7240000/newsid_7244200?redirect=7244211.stm&news=1&bbram=1&nbwm=1&nbram=1&bbwm=1&asb=1 >

a) Which determinant of demand has changed
b) Use a diagram to explain what has happened to the demand curve

Unit 3: Inflation rises to 2.2%

This BBC article explains the latest rise in inflation

http://news.bbc.co.uk/1/hi/business/7240435.stm

This clip shows in more detail the contrasting movements of different prices

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7240000/newsid_7240900?redirect=7240905.stm&news=1&nbwm=1&nbram=1&bbwm=1&bbram=1&asb=1 >

This clip shows the Bank of England view of the state of the economy

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7240000/newsid_7243300?redirect=7243347.stm&news=1&nbwm=1&nbram=1&bbram=1&bbwm=1&asb=1 >

a) What measure is used to record inflation in the UK?
b) How can inflation be rising if the prices of clothes, audio visual products and cars are falling?
c) What sort of inflation is the UK experiencing? Explain your answer

Unit 2: Negative externalities: Windfarms

Along with all the usual complaints about windfarms from the BBC comes this unusual externality story

http://news.bbc.co.uk/1/hi/uk/7227967.stm

a) Using the definition of a negative externality, explain why this effect is a negative externality

Unit 3: Supply side policies to reduce unemployment

From Geoff Rileys blog comes this article on supply side policies in action

http://www.tutor2u.net/blog/index.php/economics/comments/back-into-work/#extended

a) From the article and video clip, explain how such supply side policies should reduce unemployment
b) To what extent do you believe supply side policies alone can reduce unemployment?

Unit 3: Rising interest rates and the effect on the Australian economy

From Geoff Riley's blog comes this economics packed summary of the Australian economy and their use of interest rates

http://www.tutor2u.net/blog/index.php/economics/comments/australian-interest-rates/#extended

The BBC also has an article

http://news.bbc.co.uk/1/hi/business/7228153.stm

a) Using an AD/AS diagram, explain the current position of the Australian economy
b) Using an AD/AS diagram, explain the effect on the economy that the monetary authorities hope these interest rates will have
c) What factors will determine whether these interest rate rises will have the desired effect?

Unit 2: Government provision of merit goods; Healthcare in the USA

The BBC reports that healthcare has become a key election issue in the US with nearly 50 million Americans without insurance.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7220000/newsid_7223600?redirect=7223635.stm&news=1&nbwm=1&bbram=1&nbram=1&bbwm=1&asb=1 >

a) Why is healthcare considered to be a merit good?
b) Why is it underconsumed in the free market of the USA?
c) What is the UK government solution to this problem?
d) Assess the success of the alternative approaches of the USA and UK to the provision of health care

Unit 1: The price of coal

The BBC reports the price of coal has risen to an all-time high

http://news.bbc.co.uk/1/hi/business/7225682.stm

a) Using a supply and demand diagram, explain why the price of coal has risen

Unit 2: Costs and benefits associated with opening the Alaskan wilderness to development

The Guardian reports that the US government has announced plans to open more than 3m acres (about 5,000 square miles) of Alaskan wilderness to logging, mining and road building

http://www.guardian.co.uk/environment/2008/jan/29/conservation.environment

As an economist I would hope that the US government conducted a CBA before deciding to open up the region, but I have my doubts

a) List the private costs and benefits and the external costs and benefits of developing the region
b) Given that the decision has been taken to open up the region, what do you think the outcome of such a CBA might be?
c) Why might the government not have followed the outcome of the CBA when coming to this decision?

Unit 2: Negative externalities associated with underage drinking

The BBC reorts that the police are to get new powers to confiscate alcohol from under-18s who drink in public

http://news.bbc.co.uk/1/hi/uk_politics/7224701.stm

a) Why is the government introducing this new legislation?
b) How does the free market result in market failure?
c) To what extent do you believe the new law will reduce the market failure?

Unit 2 : Information failure and government action

The BBC reports that the Health Secretary Alan Johnson is to call this week for fluoride to be added to Britain's water supplies.

http://news.bbc.co.uk/1/hi/health/7224743.stm

a) Why is fluoride underconsumed in the free market?
b) What type of market failure is therefore present?
c) Why is the government proposing this action?
d) To what extent do you think the government legislation is likely to reduce the market failure?

Unit 2: Negative externalities: London's £200 lorry charge

These 2 BBC clips and the report explainthat heavy polluting lorries will be charged £200 to enter London from Monday, as part of a drive to improve the city's air quality.

http://news.bbc.co.uk/player/nol/newsid_7220000/newsid_7222400/7222463.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

http://news.bbc.co.uk/player/nol/newsid_7220000/newsid_7225600/7225647.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

http://news.bbc.co.uk/1/hi/england/london/7225527.stm

a) How does the free market fail where these polluting lorries are concerned?
b) Using a diagram, explain how the £200 charge should reduce the market failure
c) What other actions can the owners take other than paying the £200?
d) How will the authorities back up the legislation?
e) To what extent do you believe the new charge will succeed in reducing the market failure?

This later clip shows how one firm has reacted to the charge

http://news.bbc.co.uk/player/nol/newsid_7220000/newsid_7226600/7226619.stm?bw=bb&mp=rm&news=1&bbcws=1

Unit 2: Market dominance and the Competition Commission: Video games retailers

Geoff Riley's blog has this interesting story of the Competiton Commission allowing a merger between the 2 major video games retail chains

http://www.tutor2u.net/blog/index.php/economics/game-and-game-station-merger/#When:22:59:00Z

a) What possible market failure might arise fron the merger; ie on what grounds could the merger have been blocked?
b)Why was the merger allowed? Do you think the merger is economically sensible?

Unit 2: Demerit goods and sucessful government action: Raising the age you can buy cigarettes

The BBC reorts that nearly 165,000 people in England gave up smoking with the help of the NHS last summer, when lighting up was banned in enclosed public spaces.

http://news.bbc.co.uk/1/hi/health/7214849.stm

a) Why is smoking a demerit good?
b) Why does it represent an example of market failure?
c) How has the government action reduced the market failure?

Unit 2: Market failure and Government action

The BBC reports that the EU has announced tough new targets for all member states to combat climate change within the next decade.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7200000/newsid_7204700?redirect=7204783.stm&news=1&nbwm=1&nbram=1&bbwm=1&bbram=1&asb=1 >

a) Using the handout on pros/cons of different government actions to combat market failure, assess the likely success of the package of measures outlined in the clip; ie legislation and a tradable/pollution permit system. Make sure you relate the theory to the EU actions outlined and don't just repeat the theory

Unit 2: Information failure; food labelling

The BBC reports a new government strategy to tackle obesity in England which will target food labelling.
< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7200000/newsid_7203900?redirect=7203978.stm&news=1&bbwm=1&bbram=1&nbwm=1&nbram=1&asb=1 >

Another article suggests most customers have no idea of the calories involved when they drink a cup of coffee

http://news.bbc.co.uk/1/hi/health/7206801.stm

a) What is the problem for the consumer in the free market shown by these 2 articles?
b) What negative externalities are associated with this market failure?
c) What do you believe that the Government could do to alleviate this failure in the food market?
d) To what extent do you believe the Government can correct the market failure ?

Unit 2: Information failure; childrens toys

The BBC reports that new regulations governing toy safety are due to be unveiled by the European Commission.
< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7200000/newsid_7208300?redirect=7208309.stm&news=1&nbram=1&nbwm=1&bbwm=1&bbram=1&asb=1 >

a) What type of market failure is the toy market?
b) How would the toy market fail if left to the free market?
c) What actions is the EU taking to reduce this market failure?
d) Draw a diagram to show the effect of the EU action on the market

Unit 2: Income inequality in the UK

From Geoff Riley's blog comes this interesting article about the super rich and rising inequality in the UK and the effect of the UK tax system

http://www.tutor2u.net/newsmanager/templates/?a=2826&z=1

a) Does the UK tax system apear to be progressive or not?

Unit 2: Negative externalities associated with cheap road surfaces

The Telegraph has an interesting article about local authorities resurfacing roads cheaply

http://www.telegraph.co.uk/motoring/main.jhtml;jsessionid=4QBBDPHEMP4KVQFIQMGSFFOAVCBQWIV0?xml=/motoring/2008/01/26/mfgrip126.xml

a) Who are the 2 parties involved in the economic transaction?
b) Who are the 3rd parties effected by the negative externalities?
c) What are the negative externalities?
d) How does the market fail?
e) What actions could the local authorities take to reduce the market failure

Unit 2: Allocative efficiency and the retail market

The Telegraph reports changes in the way we buy our shoes

http://www.telegraph.co.uk/money/main.jhtml;jsessionid=MK3YG3WDIVW4ZQFIQMGSFFOAVCBQWIV0?xml=/money/2008/01/26/cnshoes126.xml

a) Allocative efficiency means resources....................Complete the sentence
b) How does what is happening in the shoe market illustrate this concept?

Unit 1: Falling demand for Harley Davidson motorcycles

The Telegraph reports falling demand for HD motorbikes

http://www.telegraph.co.uk/money/main.jhtml;jsessionid=MK3YG3WDIVW4ZQFIQMGSFFOAVCBQWIV0?xml=/money/2008/01/26/cnharley126.xml

a) Using the determinants of demand, explain this fall in sales

Unit 1: The demand for doughnuts

This article from the Times says Dunkin Donuts is expanding in to China

http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article3254214.ece

a) Using the determinants of demand, explain why demand for doughnuts in China may be increasing
b) Show this effect on a demand diagram

Unit 2: Tradable permits: How carbon trading works in the EU

From the Guardian comes a brief summary of the latest EU actions to combat global warming. The top section on tradable permits is especially good

http://www.guardian.co.uk/environment/2008/jan/24/climatechange.carbonemissions

Unit 1: The price of gold

The price of gold has set another record high, reaching $923 an ounce, reports the BBC

http://news.bbc.co.uk/1/hi/business/7209599.stm

a) Using a S&D diagram and the article, explain why the price of gold has risen and looks likely to continue to rise. Make sure you identify which determinants of demand and supply have changed

Unit 2: Cost Benefit Analysis and the Isle of Lewis wind farm project

Plans to build one of Europe's biggest wind farms on the Isle of Lewis are set to be turned down, BBC Scotland reports

http://news.bbc.co.uk/1/hi/scotland/highlands_and_islands/7208991.stm

a) What is the purpose of a CBA?
b) Using the article and your general knowledge, outline 2 private costs, private benefits, external costs and external benefits asociated with the project
c) If the project is to be rejected by the Scottish government, to what extent do you believe the decision to be based on economic factors?

Unit 3: Economic growth in China

The BBC reports that China's growth reaches a 13-year high: The Chinese economy has expanded by 11.4% over the past year, reaching its fastest growth rate in 13 years, officials have announced.

http://news.bbc.co.uk/1/hi/world/asia-pacific/7206174.stm

a) Using an AD/AS diagram, explain the effect on the Chinese economy of this economic growth
b) From the article it would appear that Chinese officials are woried about rising inflation. Explain why this might be occuring and what action the Chinese govt could take to reduce the inflation problem

Unit 2: Income inequality in the UK

The Guardian had a series of articles, including a leader comment, yesterday highlighting the unequal nature of income distribution in the UK:

http://www.guardian.co.uk/leaders/story/0,,2244030,00.html

http://www.guardian.co.uk/business/2008/jan/21/highstreetretailers.retail2
http://www.guardian.co.uk/business/2008/jan/21/highstreetretailers.retail1
http://www.guardian.co.uk/business/2008/jan/21/highstreetretailers.retail4
http://www.guardian.co.uk/business/2008/jan/21/highstreetretailers.retail3

Unit 2: Cost Benefit Analysis and the Severn barrage project

The BBC announces that the Government is to launch a CBA into the Severn barrage project

http://news.bbc.co.uk/1/hi/england/7202413.stm

a) What is the purpose of a CBA?
b) How would this CBA be conducted?
c) What difficulties can you envisage in conducting this CBA?

Unit 3: Monetary policy: How interest rates work

A really brilliant entry in Evan Davis' blog on how changes in interst rates effect the economy

http://www.bbc.co.uk/blogs/thereporters/evandavis/2008/01/how_interest_rates_work.html

Unit 3: Economic growth and policies to counter a recession in the USA

Two video clips from the BBC; the first explaining that the USA is slowing down and may be heading for a recession, the second Bush explaining his policy to try and avoid the recession

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7190000/newsid_7195300?redirect=7195310.stm&news=1&nbram=1&nbwm=1&bbram=1&bbwm=1&asb=1 >

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7190000/newsid_7197400?redirect=7197449.stm&news=1&nbwm=1&bbram=1&nbram=1&bbwm=1&asb=1 >

a) Define what is meant by an economic slowdown
b) What reasons are given for the slowdown? Link these to the components of aggregate demand
c) What type of economic policy is Bush suggesting should be used to revitalise the economy?
d) How would his proposals effect the components of aggregate demand
c) Using an aggregate demand/aggregate supply diagram, explain what is likely to happen to the US economy as a result of this policy
d) Evaluate the likely success of his proposed solution

Unit 1: Price Elasicity od Demand: Hospital car parking charges

An interesting item from the BBC about car parking charges

http://news.bbc.co.uk/1/hi/scotland/glasgow_and_west/7196033.stm

a) Would demand for hospital car parking be likely to be elastic or inelastic? Explain your reasoning
b) What would happen to the hospitals revenue from car parking if they are forced to reduce their charges?

Unit 2: Demerit goods: Sunbeds

The BBC video clip and associated report calls for sunbed restrictions. Scottish ministers have given their backing to raise the age limit for using sunbeds to 18.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7170000/newsid_7173600?redirect=7173622.stm&news=1&nbwm=1&bbwm=1&bbram=1&nbram=1&asb=1 >

http://news.bbc.co.uk/1/hi/health/7360329.stm

a) Explain what is meant by a demerit good
b) To what extent are sunbeds a demerit good?
c) Evaluate the extent to which the proposed ban would be successful in reducing the market failure

Unit 2: Negative externalities: Biofuels

This BBC clip and associated article says the EU is rethinking its biofuel strategy as Europe's environment chief has admitted that the EU's policy on biofuels has had a negative impact.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7180000/newsid_7186500?redirect=7186553.stm&news=1&bbwm=1&nbram=1&nbwm=1&bbram=1&asb=1 >

http://news.bbc.co.uk/1/hi/world/europe/7186380.stm

a) Explain what is meant by a negative externality
b) Identify the negative externalities from the clip and article that are associated with biofuel production and identify the third parties effected by the negative spillover effect?

Unit 3: Supply side policy: Changes to benefits

From the Guardian come these proposals regarding the unemployed who claim benefits

http://www.guardian.co.uk/guardianpolitics/story/0,,2236887,00.html

a) List the proposals
b) Explain why these proposals are supply side policies
c) If implemented, what effect do you believe they would have on the UK macro economy?
d) Draw an AD/AS diagram to show this effect

Unit 1: External economies of scale

From the Guardian comes this article clearly showing an example of an external economy of scale

http://education.guardian.co.uk/egweekly/story/0,,2236597,00.html

a) Explain what is meant by external economy of scale
b) Why does this course represent an external economy of scale to casino firms?

Unit 3: Supply side policy: Cash to encourage the young to train

This Guardian article explains a government "Carrot and Stick" approach to improve the skills of the unemployed young

http://www.guardian.co.uk/society/2008/jan/02/socialexclusion.workandcareers

a) Explain what supply side policies are
b) Explain why the proposed plan could be clasified as a supply side policy
c) Why do you think both the "carrot" and "stick" are needed as part of the policy

Unit 2: Market Failure: Demerit goods and government action: Fast food advertising ban

The BBC reports that a government ban on advertising fast food to under 16's has come in to force

http://news.bbc.co.uk/1/hi/health/7166510.stm

a) Define a demerit good
b) Why is fast food classed as a demerit good?
c) How should the advertising ban reduce the market failure?
c) To what extent do you think the advertising ban will be successful in reducing the market failure?

Unit 1: The price of road haulage

This BBC clip says that the increase in diesel prices is having a significant effect on road haulage firms

http://news.bbc.co.uk/player/nol/newsid_7160000/newsid_7161100/7161145.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

a) Using a S&D diagram, explain the effect on the price of road haulage of the increase in diesel fuel prices for road haulage firms
b) What effect is this fuel price increase likely to have on the competitive position of any single firm

Unit 3: Balance of Payments: The UK's trade deficit is at its highest level since the late 1980s

The UK trade deficit is at its highest level since the late 1980s, official figures have shown according to this BBC clip.
< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7150000/newsid_7155000?redirect=7155040.stm&news=1&bbwm=1&nbram=1&nbwm=1&bbram=1&asb=1 >

a)What does a balance of payments deficit mean?
b)What does the economy need to do to reduce the deficit?
c)How would a decrease in the value of the pound help this process?

Unit 2: Failure of government intervention to overcome the market failure : Minimum wage

This BBC article shows that Government actions to overcome market failure do not always succeed

http://news.bbc.co.uk/1/hi/uk/7157056.stm

a) What is the market failure?
b) What action has the government taken to alleviate the market failure?
c) Why is this action failing?
d) How could the government ensure that its policy was more successful?

Unit 2: Externalities and Government actions to reduce them: Motor manufacturers and CO2 limits

This BBC clip says the EU is proposing fines on car makers who fail to meet targets for cutting emissions of CO2 from new vehicles they produce

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7150000/newsid_7151300?redirect=7151316.stm&news=1&bbwm=1&nbwm=1&bbram=1&nbram=1&asb=1 >

a) What are the negative externalities the EU is trying to reduce with these proposals?
b) What 2 methods of correcting the market failure is the EU proposing to use?
c) To what extent do you think the measures will succeed?

Unit 2: Market dominance and government action: Christmas trees

The Danish government is taking action against Christmas tree growers who appear to be trying to abuse their market position by acting as a cartel

http://news.bbc.co.uk/1/hi/business/7151651.stm

a) In what way does the market fail and why has the Danish government taken this action?

Unit 2: Externalities associated with global warming: Penguins

Climate change and the resulting melting ice caps in Antarctica are affecting the breeding patterns of penguins, according to this BBC video clip
.
< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7130000/newsid_7137800?redirect=7137853.stm&news=1&bbram=1&bbwm=1&nbwm=1&nbram=1&asb=1 >

a) In what way is the efect on the penguins an example of a negative externality?

Unit 2: Alcohol consumption; Market failure through negative externalities

This BBC clip says that drunken violence is costing the NHS in Scotland millions of pounds every year, according to new figures.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7140000/newsid_7148200?redirect=7148288.stm&news=1&bbram=1&bbwm=1&nbram=1&nbwm=1 >

a) Define negative externalities
b) Explain the negative externalities associated with excessive alcohol consumption shown in the clip

Unit 1: The price of corn, food and biofuels

This BBC clip says that increasing demand for biofuels is pushing up food prices.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7140000/newsid_7148100?redirect=7148126.stm&news=1&nbram=1&nbwm=1&bbram=1&bbwm=1&asb=1 >

a) Using a S&D diagram, explain why the price of corn has risen
b) Using a S&D diagram, explain why the prices of products which use corn as an ingredient have risen
c) Using a S&D diagram, explain the effect on the biofuel market of the government giving corn producers a subsidy if corn is grown for biofuels

Unit 1: Changing patterns of demand; internet shopping

This BBC clip suggests that festive shopping habits are changing with many consumers turning to the internet for their Christmas shopping.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7140000/newsid_7148200?redirect=7148239.stm&news=1&nbwm=1&bbwm=1&bbram=1&nbram=1&asb=1 >

a) Which of the factors that effects demand has altered?
b) Using a demand diagram, explain what has happened to the demand for internet shopping

Unit 2: Efficiency and competition: Elecctrolux relocate production to Poland

This Guardian article explains why the Swedish firm Electrolux has decided to relocate production to Poland from the UK

http://www.guardian.co.uk/business/2007/dec/14/manufacturing.ireland

a) State which type of efficiency will be improved by this move
b) Explain why this will be the case and the role of competiton in leading to this improved efficiency
c) What drawbacks does this aticle show there may be to making more efficient use of scarce resources

Unit 3 Unemployment figures at 32 year low

This BBC article reports unemployment as measured by the claimant count at a 32 year low

http://news.bbc.co.uk/1/hi/business/7140069.stm

Unit 2: Negative externalities associated with diesel vehicles

This BBC article highlights a negative externality that results for vehicles which use diesel

http://news.bbc.co.uk/1/hi/health/7129024.stm

a) What is the negative externality?
b) Why is it a negative externality?
c) What options does the government have to try and overcome/reduce the negative externality?

Unit 2: Market dominance and government action: Government fines on supermarkets for price fixing on dairy products

These BBC clip and aticle explains why the major supermarkets, excluding so far Tesco, have been fined a collective £116m

http://news.bbc.co.uk/player/nol/newsid_7130000/newsid_7132100/7132165.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

http://news.bbc.co.uk/1/hi/business/7132108.stm

a) What market structure is the supermarket industry?
b) Why are firms in this industry tempted into collusion?
c) To what extent do you think such fines will limit this sort of illegal behavior?

Unit 2: Negative externalities associated with oil spills

A state of emergency has been declared along South Korea's coastline after the nation's biggest oil spill according to this BBC clip
.
< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7130000/newsid_7135100?redirect=7135117.stm&news=1&nbwm=1&nbram=1&bbram=1&bbwm=1&asb=1 >

a) Define a negative externality
b) Explain the negative externalities which arise from this oil spill

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

From the BBC comes news of fines on 5 firms involved in a price fixing cartel

http://news.bbc.co.uk/1/hi/business/7129480.stm

Unit 2: Negative externalities from river pollution

** River contaminates Greek town **
This BBC clip explains how toxic waste pollution in a river in Greece has been blamed for a high death rate in the town of Oinofyta.
< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7130000/newsid_7130200?redirect=7130228.stm&news=1&nbwm=1&bbram=1&bbwm=1&nbram=1&asb=1 >

a) What is the negative externality in this example?
b) Who are the third parties?
c) What is the spillover effect?
d) What action has the government taken to reduce/eliminate the negative externality?
e) To what extent has the government action been successful?