Year 13 - Recent test results!!!!!

Guys,

I have decided to publish these results as they do not make for great reading!!
As a group you should all be getting at least 'A' grade in the multiple choice (more than 29) as it is likely your score on the data question will not be as good.

Grade boundaries are as follows:
 
A* = 32
A = 29
B = 25
C = 22
 
Charlotte = 32
Georgia = 24
Larissa = 25
Michael = 33
Elizaveta = 29
Sami = 24
Ramez = 28
Ruardri = 29
 
We will be having a two tests every week up to the examination. This could be a data Q or a multi choice.
 
Please make sure you complete both data questions and set up a blog. If you can write the second question on the blog (the chocolate Q) that would be helpful.

Unit 3: Past Paper & Mark Scheme (June 05)

June 05 Unit 3 Past Paper

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June 05 Unit 3 Mark Scheme

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University: Some practice interview questions for Economists

Don't worry if you have no clue....but I suggest you revise.....

Some Practice Interview Questions

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Oxbridge Candidates + any others who may have an interview

It's the week before Oxbridge interviews so I thought I would leave the syllabus for one minute and post instead a great piece from RSA animate (one in a tremendous series) on the divided brain. It is a thrilling animation and one that repays a second or a third look. It is challenging for sixth form students but that is one of the main purposes! And the Prisoners’ Dilemma makes a brief appearance near the end too! Do have a look....enjoy!

Unit 3: Case Study Question - Waterstones, the book seller

See below for a question on Waterstones....we will discuss in class and you will complete for homework.

Unit 3 Case Study: Waterstones pricing strategy failure!

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Unit 3: Brand Loyalty in Mobile Phones

Brand loyalty is hugely important in all kinds of industries and markets. The costs of acquiring a new customer vastly outweigh the expense of selling more to existing buyers and most of the mobile phone suppliers in this oligopolistic industry focus an enormous effort in building brand identity and brand loyalty to reduce the rate of customer churn (people who switch brands).

 

According to a new report, over eight in ten iPhone users said they would pick iPhone again when they replace their mobile, while 60 per cent of consumers who use smartphones running Google’s Android said they would stick with phones using the same software. Blackberry users have notably less attachment to their mobiles - and I speak as a Blackberry use of several years standing!

 

When brand loyalty is strong, the cross-price elasticity of demand for price changes between two substitutes weakens, fewer consumers will switch their demand when there is a change in relative prices in the market. Robust brand loyalty makes it easier to charge premium prices and enjoy supernormal profits in the long run because loyalty is a barrier to entry.

 

When we become strongly attached to a brand, our purchasing decisions are more likely to stay in default mode and we may no longer even consider rival products.

Questions:

1. Just how contestable is the mobile phone market?
2. What price & non-price strategies could they use to increase their market share?

  

 

Unit 3: Tacit Collusion in the Supermarket

UK supermarkets are currently involved in 'price matching' and 'big price drop' schemes


On the surface the brand price match scheme shown in the picture below looks like a good deal for consumers in this time of financial hardship and distress.

But what if this ‘parallel pricing’ serves merely as a form of tacit collusion with prices on a range of products actually higher than they might be without the illusion of price comparisons and discount voucher compensation?

IGCSE: Monetary Policy Notes and an interactive game....

Monetary Policy

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Click here to access the Bank of England Balloon game......more difficult than it looks!

Click here to access a game in which you try and control the Eurozone economy...something which the current lot are struggling with!!

Quantititave easing made simple..

IGCSE June 11 Past Paper

Y10 IGCSE Homework - Please complete questions 1 (iv), 2, i, ii & iii

IGCSE Past Paper - June 11

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Unit 3: Pricing Strategies - Cut price cup cake deal goes wrong…...

‘Need a Cake’ is a small business in Reading owned by Rachel Brown, who has been in the baking business for 25 years and simply loves making and decorating cakes. Her website says “I can never remember a time, even as a child, when I did not enjoy creating innovative cakes.” The business employs eight people, and normal production is around 100 cakes a month. Mrs Brown thought she would like to try expanding a little, and decided to offer online vouchers for a discount deal in order to drum up some new customers - with disastrous results.


Need a Cake offered a deal of 12 cupcakes with a choice of flavours and designs for £6.50, which would normally cost £26 - a discount of 75%. The offer was posted via Groupon - a US based group-buying website. The Groupon offer is a ‘deal-a-day’ subscription website used by companies that offer deals in the hope of gaining new customers, or using the offer as a loss leader to attract customers who will then spend more on other goods during their visit. It offers discount coupons to subscribers which give discount deals on anything from restaurant meals to spa treatments. It uses collective buying power to achieve lower prices and the deals it offers are available only if a minimum number of people sign up.

Mrs Brown’s offer on the website invited customers to ‘construct their ideal cupcake, choosing from sponge flavour, icing and decoration options’. It proved far more tempting than she imagined - with 8,500 orders for a total of 102,000 cakes.

The company had to bring in less skilled agency staff to try to meet the upsurge in demand, and for a business which takes pride in making cakes of exceptional quality that caused real worries about maintaining the usual standards. Potentially worse though, was the effect on the finances: after spending an extra £12,500 on staff and distribution, Mrs Brown made a loss of £2.50 per order. She had not calculated the effect of the discount on her breakeven level of output, and had no idea that the effect of the discount offer would wipe out her profit for the year. She has not gone bust, but says “Without doubt, it was my worst ever business decision.”

Some help from an AS Economicss student would have helped here - application of the formulae for Price Elasticity of Demand and Breakeven level of Output could have been added to some awareness of the risks for small businesses using open offers on the internet and might have helped to analyse the decision for her.

Questions for discussion:

What type of pricing strategy was this?

Why was it not successful?

Unit 3: Analysis and evaluation - do monopolies always make supernormal profits?

This is another great example highlighting the difference between analysis and evaluation.


The theory states that the existence of strong barriers to entry generally allow for monopolies to make long-run supernormal profits. An example or two plus a well-drawn diagram will be the icing on the cake in terms of analysis. But is it always true?

One example to show how it is not always true is the postal service. In many countries, the postal service has been (or still is) a statutory monopoly. However, it is not immune to the impact of technology and the advent of email and social media has led to a significant decrease in demand.

Students may be surprised to know that 15 years ago most people sent birthday cards through the post. Nowadays, a quick message on facebook seems to suffice. This changing behaviour is having a significant impact on the US Postal Service, which delivered 3 billion pieces less in the 2011 fiscal year than the year before it. All up this led to a loss of $5.1 billion and calls for help from the US government.
The power of innovation and technology is also a game changer. Ten years ago, Microsoft was public enemy # 1 in terms of being a powerful monopoly and stifling competition. Much smaller companies like Apple were simply unable to compete….....well that was then and this is now.

By producing products that consumers want, Apple has forged ahead and is now a larger company (by market capitalisation). And there are not too many calls for Apple to be regulated or split up!

Unit 4: A must watch - EU debt explained by comedians.....

Brilliant sketch by Clarke & Dawe, which does help explain the EU debt crisis......Economics is crazy!



On a more serious note, Click here to access a great infographic on EU debt. It is interesting to see that despite being skint itsself, America is owed lots of money from various EU countries!

No wonder Obama is worried about the EU!

IGCSE/Unit 2: Evaluating Macroeconomic Policies

I came across this article on the BBC website that looks at the majority of policy options facing the UK.

It provides an excellent overview of macroeconomic policy, outlining the advantages and disadvanatges and thus providing some useful evaluation for students in year 11 and 12.

Unit 2/4: Cartoon on inequality - perfect for explaining analysis and evaluation!

This cartoon is something that you are sure to have an opinion on and can be used to clearly explain the difference between analysis and providing evaluative comment.

The analysis comes under the heading about why the cartoon is often true and the evaluation comes from considering whether it is always true.

Try and make some comments under each of the headings. If you do this, you should have analysed and evaluated!

IGCSE & Unit 2: Video Clips on Unemployment

Here are some updated charts on unemployment for the UK and a range of other countries.

Unemployment Charts November 2011

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In addition, here are some short video news clips on aspects of unemployment. These clips provide a window on the human and social cost of high rates of unemployment and are especially useful in reinforcing the causes of unemployment and evaluation of policies likely to be most effective in bringing jobless rates down over time.




BBC Scotland: (Oct 2011) ‘Lost generation’ fear for youth - this video actually mentions hysteresis effects - superb!


BBC News (Oct 2011) Unemployment in the UK reaches a 17-year high

BBC London: (Oct 2011) One in Ten is unemployed in London

BBC news: (Oct 2011) Youth unemployment in UK expected to reach 1m

Guardian Interactive: UK unemployment since 1984

IGCSE & Unit 2/4: Economics data from EU

The Economist has published an updated interactive graphic which is a 5* must-use resource for students grappling with Europe. The full article and infographic can be accessed here

Unit 1: Government Failure - Is the Sun Dipping on Solar Subsidies?

To promote the expansion of renewable energy sources, many governments have introduced subsidies for consumers who install solar panels.


In April 2010, the Labour government introduced generous feed-in tariffs to encourage households to install solar photovoltaic systems. Anyone spending £13,000 up front to fit a system to their home was paid 41.3p per kilowatt hour (kWh) generated – enough to earn them a typical annual income of £900 a year in payments, on top of a £140-a-year saving in reduced electricity bills. The big six energy companies are required by law to pay householders who generate their own energy.

It looks like the days of generous subsidies for solar panels are coming to an end and there is a rush on to install them before the feed-in-tariff system is changed.

The number of installations of solar panels has risen due to incentives available from feed-in tariffs (FITs) and because of the rise in the cost of standard household energy. Since 2004 the average annual bill for a dual-fuel energy customer has risen by 117 per cent, to £1,293. The price of solar panels has come down as manufacturers have exploited economies of scale and the importation of cheap solar panels from China. The average cost of installation has dropped from an average £13,000 to £9,000 for the technology

For some economists, solar subsidies are inefficient with expensive opportunity costs. They argue that the millions of pounds allocated to the feed-in-tariff scheme is better spent encouraging innovation in marine energy, reliable offshore wind technology, organic solar cells and carbon capture and storage. The UK Treasury points to examples of mis-selling and inappropriate placing of solar panels as evidence that subsidies are being misused.

The money to pay for feed-in-tariffs comes from increasing everyone’s energy bills many of whom cannot even think of affording to install their own equipment.

In October 2011 the Coalition government announced that all homes with new solar electricity panels must meet minimum energy efficiency standards in order to benefit from subsidies

The British government has pledged to produce 20% of our electricity from renewable resources by 2020. With big-scale wind turbines running into planning difficulties, solar panels have an important part to play. But should the government continue to use generous feed-in-tariffs as the main incentive for this source of renewable energy? Can the sector survive without direct government intervention?

Check out these video links:

BBC news video: Rush to beat solar power deadline in Nottingham

BBC news video: Somerset solar farm build is under way in Puriton

BBC news video: Lower solar tariffs cost firm £1m
BBC News video: Thousands of council tenants offered free solar panels

Unit 3: Jan 11 - Examiners Report

Jan 11 - Examiners Report

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Unit 3 Micro: Time of Use Pricing for Energy

When is electricity demand highest in the UK? The answer comes at the end of the blog!

 

The UK government is committed to the rolling out of smart energy meters between now and the end of 2020. Millions of homes will have smart meters installed which track how much electricity you use and when you use it - the installation cost is approximately £350 per unit although this may come down with the utilisation of economies of scale.

Meters will give consumers and the monopolistic utility firms minute-by-minute information about energy consumption and this could fast-forward the launch of time of use pricing tariffs for us all in the years ahead. It will mark a move away from flat-rate tariffs towards fully-fledged peak and off-peak pricing.

 

At the moment around one in ten households are on Economy 7 tariffs which offers lower prices for electricity used during off-peaking times in the late evenings and early mornings. Economy 7 seems to have been around for as long as CEEFAX and if you understand that you are giving your age away!

 

This is a clear example of price discrimnation - as usual, there re advantages and disadvantages:-

Advantages

There are several economic arguments for time of use pricing providing that consumers are properly aware of what the pricing tariffs are and how they might be able to benefit from them.

 

• It makes sense for prices to be lower during the night when the UK electricity generating network is operating with spare capacity. Savvy households will be able to re-organise the timing of using their major appliances and save money.  
• Fewer people will leave their appliances on standby (a deadweight loss of scarce energy) if they know what the financial cost is.
• Advances in technology in power storage heaters and immersion heaters ought to mean for example that water heated up at night at lower prices can be utilised effectively during the day without the need for re-heating.

Disadvantages

 

• On the other hand, critics claim that large working families do not have such flexibility and might end up paying higher average tariffs when their washing machines and hot water boilers are working flat out to meet the heavy demands of a growing family.
• They are also concerned about the amount of private data that can be stored on these meters and they doubt whether electricity supply companies will necessarily pass on savings to consumers in the form of lower prices.

Time of use pricing is common in many other countries, the example I give below comes from Ontario in Canada.

Ontario Pricing Example:

 

Current smart meter time-of-use rates for summer:

 

1/ Weekends & Holidays - All Day - 5.9 ¢/kWh

 

2/ Summer Weekdays (May 1 to October 31)

 

7 am to 11 am - 8.9 ¢/kWh

 

11 am to 5 pm - 10.7 ¢/kWh

 

5 pm to 7 pm - 8.9 ¢/kWh

 

7 pm to 7 am - 5.9 ¢/kWh

 

It may not be too long before it becomes routine to set the timer switches on all of our washing machines, tumble dryers, dishwashers and immersion heaters so that they switch on only when the rate is lower.

Questions for discussion:-

Is the approach of charging more to boil a kettle for a cup of tea when everyone else is doing so (for example at half time in the football or during a break in Coronation Street) equitable?

Will greater use of the price mechanism be a sufficient incentive for consumers to alter their behaviour in ways that enhance sustainability?

 

Or will it just bring even greater confusion in the market place and risk hitting vulnerable groups with older appliances who have little choice about when their consumer durables are switched on and off?

 

The answer to the question: When is electricity demand highest in the UK? Answer: between 5pm and 7pm on weekday nights!

 

BBC news video: The smart way to consume energy?

 

BBC news: Smart meters ‘must not deter switching’

 

 

 

IGCSE: Price

IGCSE: Fish & Chips - Movement along the demand curve

1,200 people queued to get their hands on a fish and chip takeaway meal for just £1. Fosters Fish and Chips shop in Didsbury, Manchester, was offering the special promotion to celebrate its first birthday.


And the £4.75 savings on the usual price appeared to be reason enough for 1,200 customers to wait hours in line.
 

The staff opened the shop early in preparation for the expected rush and made sure they stocked extra fish and chips to meet demand. However they had to stop serving at 10pm when their stocks ran out.


A great exampleof a price fall causing a movements along the demand curve.