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Thursday, 18 January 2018

Contestable Markets - The Parcels Industry

Check out this in depth look at a potential contestable market. The UK parcels industry. Really useful when analysing and evaluating questions on contestability.

Wednesday, 17 January 2018

Inflation - everything you need to know (all year groups)

This post has all you need to know about inflation. Enjoy!

What is inflation?

 

 How do we measure inflation?

 

Changing the basket of goods

 

Causes of inflation

 

...and even worse, deflation...

 

Consequences of deflation - winners & losers

 

Tuesday, 16 January 2018

Sugar Tax - Government intervention analysed

Monday, 15 January 2018

Inflation and the basket of goods - New Zealand

New Zealand has added craft beer to the basket of goods it monitors to measure inflation, reflecting changing tastes and consumer spending in the South Pacific nation.
“New Zealand used to be called a country of rugby, racing and beer but spending patterns are changing,” Jason Attewell, senior manager at Statistics New Zealand in Wellington, said Friday. “Kiwis are increasingly keen on craft beer, body massages at beauty spas and football club memberships.”
Craft beer has surged in popularity in New Zealand, while high-speed internet has encouraged new web-based services like Netflix at the expense of older technologies. The statistics agency said DVD players and sewing machines were among items removed from the Consumers Price Index after its three-yearly review, and Uber rides and Airbnb accommodation were among services added.
Attewell said the agency was "introducing the sharing economy to the CPI to keep it relevant for New Zealand."
"We added the electric light bulb to the basket in the 1920s, televisions and record players in the 1960s, microwaves and car stereos in the 1980s, and MP3 players and digital cameras in the 2000s,” he said. “As these items go out of fashion they are removed from the basket."
As well as components of the basket, Statistics New Zealand reviews the relative contribution of the main categories within the CPI. Food now makes up 19.3 percent of the gauge, up from 18.8 percent, due to increased spending at restaurants and rising prices, the agency said.
Inflation was 1.9 percent in the year through September, near the midpoint of the 1-3 percent range the central bank targets. The fourth-quarter report is due Jan. 25.

Deadweight loss or welfare loss

Useful look at welfare loss to society from government intervention through indirect taxation and welfare loss through monopoly power.

Wednesday, 10 January 2018

Diminishing Marginal Returns

Another look at the Law of Diminishing returns. Remember, diminishing marginal returns does NOT mean production goes down! It just means that additional output per variable factor (usually labour) goes down. Total production goes up at a slower rate.

This video will help explain: