Unit 2: Market dominance; BAA and airport operation

This BBC clip says that the CC are to investigate market dominance in the airports of the UK owned by BAA

http://news.bbc.co.uk/1/hi/business/7361447.stm

The Guardian article also has an article on this

http://www.guardian.co.uk/business/2008/apr/22/baa.competitioncommission

a) How does the free market fail?
b) Why is it argued that BAA is neithe rproductively nor allocatively efficient?
c) What actions could be taken if the final CC report finds BAA "guilty"

Unit 1: Increasing costs of production and the supply of flour

This BBC clip shows the impact on supply of an increase in raw material prices

http://news.bbc.co.uk/1/hi/business/7361412.stm

a) Using a diagram, explain how the increasing price of wheat leads to an increase in the price of flour
b) Do you think the supply of wheat is elastic or inelastic? Explain tour answer

Units 2&3: Labour market failure and supply side solutions

This revision guide from tutor2u is aimed at A2 students but has some really good stuff on policies to overcome immobility that can also be used as supply side policies for unit 3

http://www.tutor2u.net/blog/files/Revision_Labour_Market_Failure.pdf

Unit 3: The problems of measuring inflation

This BBC clip illustrates the difficulty in coming up with a single % figure for inflation

http://news.bbc.co.uk/1/hi/uk/7359651.stm

a) Why, if essential household expenditure is rising at over 5% (according to the clip), is official inflation only 2.5%?

Unit 3: Excessive growth and inflation in China

This Guardian article shows the difficulty in simultaneously meeting different macroeconomic objectives

http://www.guardian.co.uk/business/2008/apr/17/economics.china

a) What do you think is the cause of the inflation?
b) Which sort of inflation is China therefore suffering?
c) What actions could the Chinese govt take to reduce the inflation?
d) What problems would this cause in China?

Unit 2: The use of subsidies to encourage the take-up of solar panels

A fairly long article from the Guardian environment section on how Germany has encouraged the use of solar panels so that now 15% of their power comes from this source. If you are interested in renewable energy, it's a fascinating article

http://www.guardian.co.uk/environment/2008/apr/16/renewableenergy.windpower

Unit 2: Market failure; Newsnight video on rubbish and possible solutions

The BBC as part of a newsnight series has this clip on food waste

http://news.bbc.co.uk/1/hi/programmes/newsnight/7349716.stm

a) What sort of market failure does waste in the dustbin represent?
b) Which of the 4 possible solutions (taxation, legislation, tradable permits, subsidies) does the clip suggest the government are currently using?
c) Using diagrams, explain how successful government actions reduces the market failure

Unit 2: Market dominance; collusion in the construction industry

The Office of Fair Trading (OFT) has accused 112 construction companies of rigging bids for contracts according to this BBC article.

http://news.bbc.co.uk/1/hi/sci/tech/7351766.stm

a) How is the free market failing according to the OFT?
b) What actions can the OFT take to reduce the market failure?
c) To what extent do you believe the OFT can be successful in combatting/deterring acts such as collusion and price fixing?

Unit 2: Market failure:Biofuels; the defence

The President of Brazil (one of the world's largest producers of biofuels) responds to recent critsisms of the move to biofuels in this BBC article

http://news.bbc.co.uk/1/hi/sci/tech/7351766.stm

Unit 3: the costs and benefits of economic growth in China

This BBC clip highlights the costs and benefits of China's economic growth

http://news.bbc.co.uk/1/hi/sci/tech/7347631.stm

a) What are the costs and benefits of economic growth highlighted in the clip?

Unit 3: Hyperinflation in Zimbabwe

The latest figures show Zimbabwe's inflation rate up to 165000%!!!! What does this actually mean? Well, prices double in a little under 3 weeks!

This tutor2u blog entry puts this figure in context
http://www.tutor2u.net/blog/index.php/economics/comments/zimbabwe-descends-into-hyperinflation/#extended

and the bBC also covers the story
http://news.bbc.co.uk/1/hi/business/7351086.stm

Unit 3: Unemployment at 37 year low

The BBC reports that UK registered unemployment is at the lowest level since 1971

http://news.bbc.co.uk/1/hi/business/7350042.stm

a) Why is there a difference between the 2 measures of unemployment quoted?

Unit 2: Information failure: Calorie counts on restaurant menus

Authorities in New York have put forward plans requiring restaurant chains to declare the calories of every item on their menus according to this BBC clip

http://news.bbc.co.uk/player/nol/newsid_7340000/newsid_7347700/7347728.stm?bw=bb&mp=wm&asb=1&news=1&bbcws=1

a) What sort of action to correct market failure are the authorities taking?
b) What is the market failure they are tring to correct?
c) To what extent do you believe the action will succeed in reducing the market failure?

Unit 2: Inequality in incomes

From tutor2u comes this revision aid; it's a little too detailed for AS but the section near the end on government policies is really good

http://www.tutor2u.net/blog/files/Revision_Income_Inequality.pdf

Unit 2: Information failure: How much wine do you drink?

This BBC article and asociated clip shows how consumers often have an inaccurate idea of how much alcohol they are consuming due to different size measures in different bars

http://news.bbc.co.uk/1/hi/health/7343737.stm
http://news.bbc.co.uk/1/hi/health/7343932.stm

a) How does the free market fail with wine consumption according to the clip/article?
b) In what other way does the market fail in the longer term?
c) What actions could the government take to reduce the market failures

Unit 3: Monetary policy, hot money and exchange rates

This BBC article clearly shows the importance of hot money flows in determining the exchange rate

http://news.bbc.co.uk/1/hi/business/7340272.stm

a) Using a S&D diagram, explain how the actions of speculators as a result of the decrease in interest rates leads to a fall in the exchange rate
b) What is the likely effect on imports, exports and the balance of trade in goods and services?

Unit 3: Monetary policy; the effect of decreasing interest rates on the economy

This BBC clip shows the effect of a cut in interest rates on aggregate demand

http://news.bbc.co.uk/player/nol/newsid_7340000/newsid_7340700/7340759.stm?bw=bb&mp=wm&asb=1&news=1&bbcws=1

a) What conflicting objectives did the BoE face in deciding whether to change rates?
b) Why did they decrease rates?
c) Using an AD/AS diagram, explain the likely effect on consumption and investment (and therefore AD) and the macreoeconomic objectives
d) What offsetting effect is likely to diminish this expected effect
e) What effect will the interest rate cut have on the exchange rate and so trade in goods and services?

Unit 2: Information failure: Food additives

This BBC clip explains that certain food additives are to be removed

http://news.bbc.co.uk/1/hi/health/7341481.stm

a) Explain the type of market failure represented by these food additives
b) Use a diagram to explain how the free market fails
c) What solutions are suggested? How successful do you think the voluntary ban would be? What benefits would come from a Europe wide ban?

Unit 2: Negative externalities asociated with economic growth: Plastic

This BBC clip shows the impact of rubbish, in this case plastic, on the environment

http://news.bbc.co.uk/1/hi/sci/tech/7339737.stm

a) Why is this plastic waste an example of the market failing as a good with negative externalities?
b) What actions has/could the govt take to reduce the market failure?

Unit 2: Revision on progressive and regressive taxes

Another revision post from Geoff Riley at tutor2u. This one goes beyond what you need for AS, but has a lot of useful stuff

http://www.tutor2u.net/blog/files/Revision_Progressive_Regressive_Taxation.pdf

Unit 3: Revision notes for cost push and demand pull inflation

An excellent, truely comprehensive revision of inflaton from Geoff riley at tutor2u. Use it!!!!!

http://www.tutor2u.net/blog/files/Revision_Causes_of_Inflation.pdf

Unit 3: Sources of cost push inflation

This chart from tutor2u shows the rising cost of imported raw materials and food into the UK

http://www.tutor2u.net/blog/files/Chart_of_the_Day_(Import_Prices).ppt#257,2,Slide 2

a) How might the depreciation of the £ have led to these rises?
b) Using an AD/AS diagram, explain how these rises may lead to cost push inflation
c) Assuming no change in AD, explain the consequences for the UK economy of a rise in inflation interms of the other macroeconomic objectives

Unit 3: Fiscal policy in Spain

Todays Guardian carries this great example of expansionary fiscal policy in action

http://www.guardian.co.uk/world/2008/apr/08/spain1

a) Explain why this is an example of expansionary fiscal policy
b) Using an AD/AS diagram, explain the expected effects on the Spanish economy of this fiscal policy
c) Suggest reasons why the effects on the economy might not turn out as planned

Unit 2: Tradable permits: Latest developments in carbon trading in the EU

This Guardian article highlights the difficulties in introducing a carbon trading system

http://www.guardian.co.uk/business/2008/apr/02/greenbusiness.carbonemissions

a) Explaining your reasoning, to what extent is the trading system currently reducing the market failure?
b) Explaining your reasoning, to what extent do you believe the trading system will be successful in reducing the market failure in the future?

Unit 3: Supply side policy: Deregulation of transatlantic air routes

This BBC video explains the new deal between the US and Europe aiming to open up air travel between the two continents.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7320000/newsid_7321100?redirect=7321163.stm&news=1&nbwm=1&bbwm=1&bbram=1&nbram=1&asb=1 >

a) Why would this action be regarded as a supply side policy?
b) Using a diagram, explain the potential effects on the European and American economies of this action

Unit 3: The effects of changing exchange rates

Britons travelling to Europe face soaring costs as the euro continues to strengthen against the pound according to this BBC clip. Travelling to other countries may be more beneficial

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7330000/newsid_7331500?redirect=7331546.stm&news=1&nbwm=1&bbram=1&bbwm=1&nbram=1&asb=1 >

a) Explain the effect of the rising/falling pound on patterns of UK destinations overseas
b) What does this tell you about the demand for these destinations?
c) What effect would these changes in the value of the pound have on the trade in services for the UK?

Unit 2: Subsidies to increase demand for merit goods

This BBC clip outlines some of the problems with using subsidies to decrease market failure

http://news.bbc.co.uk/player/nol/newsid_7330000/newsid_7332000/7332074.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

a) Explain how the free market for solar panels fails
b) Using a S&D diagram, explain how the use of subsidies should reduce the market failure
c) What problems are there with using subsidies to reduce market failure and how does this example illustrate some of those problems

Unit 2: Information failure and de/merit goods

A few stories which show the degree of information failure we as consumers face:

Ever wondered why you don't do as well in College on a Monday?
http://news.bbc.co.uk/1/hi/health/7328863.stm

Should women who wish to get pregnant be vets?
http://news.bbc.co.uk/1/hi/health/7326459.stm

Should you drink coffee or not?
http://news.bbc.co.uk/1/hi/health/7326839.stm

a) To what extent do you believe such reports reduce market failure?

nit 3: Revision on aggregate supply and supply side policies

From Geoff Riley comes this revision on aggregate supply and supply side policies. It goes a bit beyond what I normally teach for AS, but should prove useful

http://www.tutor2u.net/blog/files/Revision_Supply_Side_Policies.pdf

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

http://news.bbc.co.uk/1/hi/health/7317389.stm

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

Unit 2: Decreasing consumption of demerit goods; school dinners

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

http://news.bbc.co.uk/player/nol/newsid_7310000/newsid_7317900/7317923.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

http://news.bbc.co.uk/1/hi/health/7317389.stm

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

http://www.tutor2u.net/blog/index.php/economics/comments/uk-migrant-flows-starting-to-reverse/

More on this can be found at this BBC article

http://news.bbc.co.uk/1/hi/magazine/7316261.stm

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
http://www.tutor2u.net/blog/files/Aggregate_Demand_UK.ppt#256,1,Slide 1

Real gdp annual growth over time
http://www.tutor2u.net/blog/files/Aggregate_Demand_UK.ppt#257,2,Slide 2

Real gdp growth over time
http://www.tutor2u.net/blog/files/Aggregate_Demand_UK.ppt#257,2,Slide 2

Data on GDP/Inflation/Unemployment all on one graph
http://www.tutor2u.net/blog/files/Aggregate_Demand_UK.ppt#259,4,Slide 4

Unit 3: Revision on Investment

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

http://www.tutor2u.net/blog/files/Revision_Investment.pdf

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.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7310000/newsid_7315900?redirect=7315980.stm&news=1&nbram=1&nbwm=1&bbwm=1&bbram=1&asb=1 >

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.


< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7310000/newsid_7314800?redirect=7314857.stm&news=1&nbwm=1&nbram=1&bbwm=1&bbram=1&asb=1 >

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.

< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_7310000/newsid_7312900?redirect=7312910.stm&news=1&nbwm=1&bbram=1&nbram=1&bbwm=1 >

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

http://www.tutor2u.net/blog/files/Revision_Focus_Exchange_Rates_AS.pdf

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

http://www.tutor2u.net/blog/files/Revision_Commodity_Prices.pdf

Unit 2: Reducing consumption of cigarettes

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

http://news.bbc.co.uk/player/nol/newsid_7310000/newsid_7310800/7310893.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

http://news.bbc.co.uk/1/hi/uk_politics/7310884.stm

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)

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?