The document discusses market power and pricing strategies in the smartphone industry, noting that average smartphone selling prices are expected to fall 9% in 2013 due to intense competition between manufacturers as well as emerging markets and substitute devices. It also explores concepts of economies of scale that can lower costs and prices for consumers as smartphone production increases.
The document outlines ways to challenge and enrich ambitious economics students. It recommends encouraging students to think counter-intuitively, write in more depth, and explore the work of interesting economists. Suggested activities include student reading groups, an online magazine, investor challenges, economics societies, entrepreneurship competitions, external essay competitions, and external enrichment lectures and summer schools. The goal is for students to be ambitious, questioning, develop context awareness, and build a portfolio of economics and finance experiences.
In this revision presentation we look at recent trends in UK trade union membership, consider how trade unions can affect both pay and employment and challenge the textbook view that union-negotiated pay increases inevitably have negative consequences for employment.
In this revision presentation we cover key examples of pure and quasi public goods and consider the arguments for and against an increase in government spending on public goods.
Poverty Reduction Policies in Low Income Countriestutor2u
This revision presentation covers some of the main causes of continued high levels of extreme poverty in low and middle income countries and considers a range of pro-poor government interventions designed to increase productivity and regular employment and waged income in formal labour markets.
You don’t need to produce a lot of evidence in your macroeconomics exams but knowing some basic and key facts and figures can make your answers stand out from the crowd! Here is a quickfire journey through twenty important economic numbers that won’t change before the exam – use them to support your answer and impress the examiner!
Quantitative easing (QE) involves central banks creating new money to buy financial assets, lowering interest rates and increasing the money supply. The Bank of England has purchased £445 billion in assets through QE as of 2019.
Advantages of QE include giving central banks an additional monetary policy tool beyond interest rates, helping to prevent deflation, boosting business confidence and exports. Disadvantages include potentially worsening wealth inequality, risking inflation, distorting capital allocation, and reducing pension incomes. The impact of QE on the real economy has uncertain time lags and effectiveness.
This document discusses the advantages and disadvantages of countries joining the eurozone and adopting the euro as their single currency. The key advantages include eliminating currency conversion costs to boost trade, attracting more investment, increasing price transparency for consumers, and providing a more stable currency. However, joining also means losing independent monetary policy tools and interest rates being set by the ECB for the entire bloc rather than individual countries. Sharing a currency also means the risks of economic downturns in trading partners are increased. Recent data on unemployment, inflation, debt levels, and Germany's economic slowdown are also presented.
The document discusses market power and pricing strategies in the smartphone industry, noting that average smartphone selling prices are expected to fall 9% in 2013 due to intense competition between manufacturers as well as emerging markets and substitute devices. It also explores concepts of economies of scale that can lower costs and prices for consumers as smartphone production increases.
The document outlines ways to challenge and enrich ambitious economics students. It recommends encouraging students to think counter-intuitively, write in more depth, and explore the work of interesting economists. Suggested activities include student reading groups, an online magazine, investor challenges, economics societies, entrepreneurship competitions, external essay competitions, and external enrichment lectures and summer schools. The goal is for students to be ambitious, questioning, develop context awareness, and build a portfolio of economics and finance experiences.
In this revision presentation we look at recent trends in UK trade union membership, consider how trade unions can affect both pay and employment and challenge the textbook view that union-negotiated pay increases inevitably have negative consequences for employment.
In this revision presentation we cover key examples of pure and quasi public goods and consider the arguments for and against an increase in government spending on public goods.
Poverty Reduction Policies in Low Income Countriestutor2u
This revision presentation covers some of the main causes of continued high levels of extreme poverty in low and middle income countries and considers a range of pro-poor government interventions designed to increase productivity and regular employment and waged income in formal labour markets.
You don’t need to produce a lot of evidence in your macroeconomics exams but knowing some basic and key facts and figures can make your answers stand out from the crowd! Here is a quickfire journey through twenty important economic numbers that won’t change before the exam – use them to support your answer and impress the examiner!
Quantitative easing (QE) involves central banks creating new money to buy financial assets, lowering interest rates and increasing the money supply. The Bank of England has purchased £445 billion in assets through QE as of 2019.
Advantages of QE include giving central banks an additional monetary policy tool beyond interest rates, helping to prevent deflation, boosting business confidence and exports. Disadvantages include potentially worsening wealth inequality, risking inflation, distorting capital allocation, and reducing pension incomes. The impact of QE on the real economy has uncertain time lags and effectiveness.
This document discusses the advantages and disadvantages of countries joining the eurozone and adopting the euro as their single currency. The key advantages include eliminating currency conversion costs to boost trade, attracting more investment, increasing price transparency for consumers, and providing a more stable currency. However, joining also means losing independent monetary policy tools and interest rates being set by the ECB for the entire bloc rather than individual countries. Sharing a currency also means the risks of economic downturns in trading partners are increased. Recent data on unemployment, inflation, debt levels, and Germany's economic slowdown are also presented.
Supply-side policies aim to increase potential economic growth through microeconomic reforms that improve market efficiency. Examples discussed include privatizing industries like Royal Mail; reducing business regulations; lowering taxes on individuals and corporations; welfare reforms to incentivize work; education reforms; increasing wages; changing migration policies; investing in infrastructure for transport, energy, and housing; and establishing regional enterprise zones with tax breaks.
Microeconomics - Great Applied Examples for Examstutor2u
In this presentation, I have chosen loads of current examples that you might want to use as context in your microeconomics exams. We look at examples from different market structures, recent mergers and takeovers, the world's most valuable companies, the largest employer, unicorn business, de-mergers, the biggest initial public offerings (IPOs) and much else. Hopefully a useful video to go through to add some super examples into your revision notes.
This revision presentation considers the variety of stakeholders impacted by business activity. How will a change in objectives, such as a move from profit maximisation to revenue maximisation have an effect on different stakeholders?
This revision presentation looks at profit satisficing as an alternative objective for businesses. Why might firms satisfice? What are some of the possible consequences for economic welfare and efficiency?
There are different types and sizes of firms in the UK economy. Types include public limited companies, privately-owned firms, start-ups, state-owned businesses, social enterprises, co-operatives, and partnerships. In terms of size, micro businesses have 0-9 employees, small to medium sized businesses (SMEs) have 10-250 employees, and large businesses employ over 250 people. The document also discusses business births and deaths in the UK economy.
In this short revision video, we look at the substantial productivity gap between the UK and many of the UK’s major competitor countries.
Paul Krugman, the Nobel Prize-winning economist said twenty fives years ago that “Productivity isn’t everything, but in the long run it is almost everything,”
In this presentation we consider the theory of wage-setting with a monopsony employer and the possible impact that a trade union might have on wages and employment. We also look at efficiency wage theory and mutual gains from pay bargaining between stakeholders.
This document discusses various types of labour market failures including skills gaps, geographical immobility, economic inactivity, inequality, discrimination, and monopsony power. It provides examples and analysis of each failure using diagrams. Potential policy remedies are outlined for each failure, such as increasing apprenticeships, improving housing affordability, raising the minimum wage, and enhancing workers' rights. The impact of minimum wages on monopsony employers is analyzed using a diagram showing how a minimum wage can increase employment levels and wages by counteracting monopsony power.
This document discusses behavioral economics concepts and policy interventions. It summarizes key concepts like loss aversion, default choices, and herd behavior. It then examines several policies using behavioral insights, including the UK sugar levy, auto-enrollment pensions, and presumed consent for organ donation. It evaluates whether nudges can significantly impact behaviors at scale and addresses potential unintended consequences and limitations of behavioral policies.
A market is where buyers and sellers interact to transact, which can occur in-person or digitally. The forces of supply and demand determine market prices and equilibrium. A market can be divided into sub-markets that cater to different consumer groups. For example, the car market contains sub-markets for electric, hybrid and gas-powered vehicles, while the housing market has sub-markets for residential and commercial property. Pharmaceutical companies view sales in country-level sub-markets.
Using the data, explain two likely causes of the forecast of slower growth for the UK economy
Examine two difficulties facing economists when forecasting economic growth
The UK economy experienced strong growth in 2018, with the fastest growth in the OECD. Unemployment is at its lowest level since 1975. However, the UK also has the highest government debt as a percentage of GDP in the world. Business investment has declined recently due to uncertainties surrounding Brexit.
In this revision video we consider some of the strategies that might be effective in controlling the monopsony power of businesses such as multinational coffee roasters and giant retailers including Amazon and the major supermarkets.
The Human Development Index is is a composite index measuring average achievement in three basic dimensions of human development that tracks progress in providing a long and healthy life, improved knowledge and a decent standard of living.
This document provides an overview of various topics in economics that are studied at the A-Level, including: why economics studies human behavior and markets; what explains the divide between rich and poor; how businesses and consumers will be affected by Brexit; and other issues such as climate change, the future of work, housing affordability, and economic forecasts. For each topic, the document provides a brief description and prompts the reader to access more background information using a QR code or video link.
2018 has been a year dominated by increased uncertainty over the possibility of the UK making a disorderly exit from the European Union and, given the instability of domestic politics at the moment, it would be a surprise if 2019 panned out differently. According to research from the National Institute of Economic and Social Research, If the government’s proposed Brexit deal is implemented, then GDP in the longer term will be around 4 per cent lower than it would have been had the UK stayed in the EU. This is roughly equivalent to losing the annual output of Wales or the output of the financial services industry in London. This is equivalent to a loss of 3 per cent in GDP per head, worth around £1,000 per person per annum to people in the UK.
Supply-side policies aim to increase potential economic growth through microeconomic reforms that improve market efficiency. Examples discussed include privatizing industries like Royal Mail; reducing business regulations; lowering taxes on individuals and corporations; welfare reforms to incentivize work; education reforms; increasing wages; changing migration policies; investing in infrastructure for transport, energy, and housing; and establishing regional enterprise zones with tax breaks.
Microeconomics - Great Applied Examples for Examstutor2u
In this presentation, I have chosen loads of current examples that you might want to use as context in your microeconomics exams. We look at examples from different market structures, recent mergers and takeovers, the world's most valuable companies, the largest employer, unicorn business, de-mergers, the biggest initial public offerings (IPOs) and much else. Hopefully a useful video to go through to add some super examples into your revision notes.
This revision presentation considers the variety of stakeholders impacted by business activity. How will a change in objectives, such as a move from profit maximisation to revenue maximisation have an effect on different stakeholders?
This revision presentation looks at profit satisficing as an alternative objective for businesses. Why might firms satisfice? What are some of the possible consequences for economic welfare and efficiency?
There are different types and sizes of firms in the UK economy. Types include public limited companies, privately-owned firms, start-ups, state-owned businesses, social enterprises, co-operatives, and partnerships. In terms of size, micro businesses have 0-9 employees, small to medium sized businesses (SMEs) have 10-250 employees, and large businesses employ over 250 people. The document also discusses business births and deaths in the UK economy.
In this short revision video, we look at the substantial productivity gap between the UK and many of the UK’s major competitor countries.
Paul Krugman, the Nobel Prize-winning economist said twenty fives years ago that “Productivity isn’t everything, but in the long run it is almost everything,”
In this presentation we consider the theory of wage-setting with a monopsony employer and the possible impact that a trade union might have on wages and employment. We also look at efficiency wage theory and mutual gains from pay bargaining between stakeholders.
This document discusses various types of labour market failures including skills gaps, geographical immobility, economic inactivity, inequality, discrimination, and monopsony power. It provides examples and analysis of each failure using diagrams. Potential policy remedies are outlined for each failure, such as increasing apprenticeships, improving housing affordability, raising the minimum wage, and enhancing workers' rights. The impact of minimum wages on monopsony employers is analyzed using a diagram showing how a minimum wage can increase employment levels and wages by counteracting monopsony power.
This document discusses behavioral economics concepts and policy interventions. It summarizes key concepts like loss aversion, default choices, and herd behavior. It then examines several policies using behavioral insights, including the UK sugar levy, auto-enrollment pensions, and presumed consent for organ donation. It evaluates whether nudges can significantly impact behaviors at scale and addresses potential unintended consequences and limitations of behavioral policies.
A market is where buyers and sellers interact to transact, which can occur in-person or digitally. The forces of supply and demand determine market prices and equilibrium. A market can be divided into sub-markets that cater to different consumer groups. For example, the car market contains sub-markets for electric, hybrid and gas-powered vehicles, while the housing market has sub-markets for residential and commercial property. Pharmaceutical companies view sales in country-level sub-markets.
Using the data, explain two likely causes of the forecast of slower growth for the UK economy
Examine two difficulties facing economists when forecasting economic growth
The UK economy experienced strong growth in 2018, with the fastest growth in the OECD. Unemployment is at its lowest level since 1975. However, the UK also has the highest government debt as a percentage of GDP in the world. Business investment has declined recently due to uncertainties surrounding Brexit.
In this revision video we consider some of the strategies that might be effective in controlling the monopsony power of businesses such as multinational coffee roasters and giant retailers including Amazon and the major supermarkets.
The Human Development Index is is a composite index measuring average achievement in three basic dimensions of human development that tracks progress in providing a long and healthy life, improved knowledge and a decent standard of living.
This document provides an overview of various topics in economics that are studied at the A-Level, including: why economics studies human behavior and markets; what explains the divide between rich and poor; how businesses and consumers will be affected by Brexit; and other issues such as climate change, the future of work, housing affordability, and economic forecasts. For each topic, the document provides a brief description and prompts the reader to access more background information using a QR code or video link.
2018 has been a year dominated by increased uncertainty over the possibility of the UK making a disorderly exit from the European Union and, given the instability of domestic politics at the moment, it would be a surprise if 2019 panned out differently. According to research from the National Institute of Economic and Social Research, If the government’s proposed Brexit deal is implemented, then GDP in the longer term will be around 4 per cent lower than it would have been had the UK stayed in the EU. This is roughly equivalent to losing the annual output of Wales or the output of the financial services industry in London. This is equivalent to a loss of 3 per cent in GDP per head, worth around £1,000 per person per annum to people in the UK.
1. Monopolistic Competition
Monopolistic competition is a form of imperfect competition and can be found in many real
world markets ranging from clusters of sandwich bars and coffee stores in a busy town centre
to pizza delivery businesses in a city or hairdressers in a local area. Small-scale nurseries
and care homes for older people might also fit into the market structure known as
monopolistic competition.
Monopolistic competition is similar to perfect competition but some economist regard it as
perhaps more realistic, because the products are differentiated (or ‘non-homogeneous’).
The assumptions of monopolistic competition are as follows - as you check through them, look to see
the differences between this mark structure and perfect competition.
1. There are many producers and many consumers - the concentration ratio is low
2. Consumers perceive that there are non-price differences among the competitors' products i.e.
there is product differentiation
3. Producers have some control over price - they are “price makers” not “price takers.”
4. The barriers to entry and exit into and out of the market are low
AC1
P1
MR
AR
Price and
Cost
Quantity of Output
AC
MC
Q1
2. In the short run the profits made by businesses competing in this type of market structure can be at
any level - in our example above the business is making supernormal profits indicated by the
shaded area.
Strong brand loyalty can have the effect of making demand less sensitive to price.
Unlike monopoly, there are no barriers to entry. This means that the short run supernormal profit
attracts new producers into the market, and so normal profits only are made in the long run
As more firms enter the market, the demand curve facing any existing firm moves to the left (as
consumers choose the products offered by new or alternative companies).
The demand curve continues to move to the left until it is tangential to the AC curve. At this point, the
monopolistically competitive firm is at its profit-maximising level of output (because MR = MC) but is
making normal profit (because AR = AC).
The long run equilibrium may be as shown in our second diagram shown below - with normal
profits being made. The reality is that a stable equilibrium is never reached - new products come and
go all of the time, some do better than others. Existing products within a market will typically go
through a product life cycle that affects the volume and growth of sales.
One of the implications of monopolistic competition is that an inefficient outcome is reached.
Prices are above marginal cost
Saturation of the market may lead to businesses being unable to exploit fully the internal
economies of scale - causing average cost to be higher than if less firms and products were
supplying the market.
Critics of heavy spending on marketing and advertising argue that much of this spending is
wasted and is an inefficient use of scarce resources. The debate over the environmental
impact of packaging is linked strongly to this aspect of monopolistic competition.
P2 = AC2
MR
AR
Price and
Cost
Quantity of Output
AC
MC
Q2