Microeconomics: IB Economics
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Microeconomics: IB Economics
A brief overview of relevant articles for IB, A-Level and Pre-U economists relating to microeconomic issues
Curated by Graham Watson
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Passengers loved it but the Airbus A380 never took off with buyers | Business | The Guardian

Passengers loved it but the Airbus A380 never took off with buyers | Business | The Guardian | Microeconomics: IB Economics | Scoop.it
Even as it first entered service in 2007, orders were piling up for rival in the pipeline from Boeing
Graham Watson's insight:

More on the economics behind the failure of the A380 - this time focussing on the demand-side of the equation. It's interesting to note that changes in the prevailing model of flying, and the economics of having to fill a greater number of seats than the Boeing 787 to make flying viable helped account for Airbus's 'big beast'.

 

Lots of chance to apply a range of economic concepts when analysing the demise of the A380.

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Betting companies could be forced to fund self-exclusion tools | Society | The Guardian

Betting companies could be forced to fund self-exclusion tools | Society | The Guardian | Microeconomics: IB Economics | Scoop.it
Regulator to consider use of software to protect vulnerable people and problem gamblers
Graham Watson's insight:

Another gambling related story, this time looking at how the regulators might insist that betting companies develop software blocking problem gamblers from accessing their sites. It's a move that goes beyond self-regulation, and suggests that the industry hasn't done a good enough job of policing itself.

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Football is addicted to gambling – and it’s harming children | Jonathan Freedland | Opinion | The Guardian

Football is addicted to gambling – and it’s harming children | Jonathan Freedland | Opinion | The Guardian | Microeconomics: IB Economics | Scoop.it
Weak advertising curbs fail to tackle gambling’s stranglehold on the English game, says Guardian columnist Jonathan Freedland
Graham Watson's insight:

More on the issue of problem gambling - with the links between football and gambling explored in this Guardian article.

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Why did the Airbus A380 fail?

Why did the Airbus A380 fail? | Microeconomics: IB Economics | Scoop.it
It was billed as the future of air travel, but airlines increasingly saw the jet as too big and inefficient.
Graham Watson's insight:

more detailed analysis of the reasons behind the failure of the A380 - it seems that my initial diagnosis might well have been correct, although demand-side factors have also played a role.

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Airbus says A380 superjumbo production will end

Airbus says A380 superjumbo production will end | Microeconomics: IB Economics | Scoop.it
The aircraft manufacturer will cease production of its giant jet after key buyer Emirates cuts orders.
Graham Watson's insight:

Is this a rare bird? Not the A380 itself but the notion of diseconomies of scale. The article suggests that "The costly aircraft has struggled to compete with more efficient, smaller models".

 

That certainly hints at the possibility.

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Restaurants could make £7 for every £1 invested in cutting waste, report reveals | Global development | The Guardian

Restaurants could make £7 for every £1 invested in cutting waste, report reveals | Global development | The Guardian | Microeconomics: IB Economics | Scoop.it
Global study sets out how industry could make waste reduction pay, using data taken from across 12 countries
Graham Watson's insight:

A lovely article that highlights how tackling food waste in restaurants could generate significant returns for those companies that look to tackle the issue.

 

It looks at how simple measures - like weighing the amount of food waste has had an impact on the amount of edible food being disposed of, as well as highlighting the scale of the problem: "In the UK alone almost 900,000 perfectly edible, freshly prepared meals end up in the bin every day because they haven’t been sold in time by restaurants and cafes."

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Crackdown on young celebs in gambling ads

Crackdown on young celebs in gambling ads | Microeconomics: IB Economics | Scoop.it
Cartoon figures and young stars will be banned from many adverts in a bid to protect children.
Graham Watson's insight:

There can be no doubt that problem gambling generates negative externalities, and the government is looking to further regulate the industry. In this case, it's trying to overcome the problems associated with young people gambling, by regulating how the sector advertises gambling.

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Biggest offshore windfarm to start UK supply this week | Environment | The Guardian

Biggest offshore windfarm to start UK supply this week | Environment | The Guardian | Microeconomics: IB Economics | Scoop.it
High hopes for Hornsea One as developer says its output could fill the gap left by nuclear
Graham Watson's insight:

Peak Guardian is getting close with the news that the Hornsea One offshore windfarm is about to start supplying the UK with electricity this week.

 

It's a project on a magnificent scale, as the article notes: "Hornsea One will cover 407 sq km, five times the size of the nearby city of Hull. At 1.2GW of capacity it will power 1m homes, making it about twice as powerful as today’s biggest offshore windfarm once it is completed in the second half of this year." And it's developer is optimistic that it could fill the gap left by Britain's aging nuclear power stations as they come offline.

 

So lots to ponder - the environmental implications of this, as well as the economies of scale that are making renewable generation ever more price competitive.

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Ban zero-hours contracts that exploit workers, says TUC

Ban zero-hours contracts that exploit workers, says TUC | Microeconomics: IB Economics | Scoop.it
People on such contracts get worse working hours and are paid less than other workers, the TUC says.
Graham Watson's insight:

The TUC's latest research of zero hours contracts indicates that such workers are more likely to work night shifts - and that this represents tentative proof of their exploitative nature. 

 

However, I suspect that the argument is a little bit nuanced than this - my gut instinct, though, is that they're an issue. And I'm reminded of the fact that the previous Prime Minister, David Cameron, was so dismissive of them in the 2015 televised election debates.

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Sainsbury's-Asda merger faces crunch decision

Sainsbury's-Asda merger faces crunch decision | Microeconomics: IB Economics | Scoop.it
The UK's competition watchdog will decide shortly whether to give the green light to the proposed tie-up.
Graham Watson's insight:

The Competition and Markets Authority is soon to rule on whether or not the proposed Sainsbury's-Asda merger should be given the go-ahead or whether it will be deemed uncompetitive. 

 

It's an interesting one: on the one hand there may well be economies of scale that can accrue to the merged entity, and the nature of the sector is, with the arrival of the discounters, increasingly competitive but will it mean for customer choice, and how many stores will it have to divest? 

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Energy firm SSE loses 160,000 customers

Energy firm SSE loses 160,000 customers | Microeconomics: IB Economics | Scoop.it
The energy company says it has lost more customers and cuts its profit forecast for this year.
Graham Watson's insight:

Evidence of increased 'churn' in the energy sector with one of the 'Big Six' having lost 160,000 customers in a year, and forced to cut its profit forecast as a result.

 

Signs of increased efficiency?

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Government housing delivery plan 'flawed'

Government housing delivery plan 'flawed' | Microeconomics: IB Economics | Scoop.it
The public spending watchdog says the government's housing planning system is underperforming.
Graham Watson's insight:

The housing market and government failure seem to be synonymous and in this case, the National Audit Office has concluded that the government's housing planning system is not fit for purpose, and will inevitably fail to meet the target of building 300,000 homes a year from the mid-2020s.

 

This would be even more interesting if you thought that the 300,000 target were a sincere one. However, ever since it was made, anyone with sense has seen it as pie in the sky. Between 2005-06 and 2017-18, 177,000 new homes per year were built on average, with the number never rising above 224,000 - as a result the system would have to deliver a 69% increase in housebuilding, something that simply isn't going to happen, and might be made even less likely by Brexit, if EU construction workers return home.

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The class pay gap: why it pays to be privileged | Society | The Guardian

The class pay gap: why it pays to be privileged | Society | The Guardian | Microeconomics: IB Economics | Scoop.it
The long read: Within Britain’s elite occupations, the advantages of class are still mistaken for talent
Graham Watson's insight:

Excellent long read in today's Guardian, looking at what it means to be posh and how a privileged background is distinctly advantageous in certain professions.

 

This is the sort of issue that skews labour market outcomes and generates wage differentials that are utterly unrelated to productivity. And I should know having taught in one of the country's leading public schools for nearly twenty years.

 

In many respects, it makes teaching marginal productivity theory harder - and probably one of the reasons why I find it hard to justify executive pay settlements.

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Renewable energy will be world's main power source by 2040, says BP | Business | The Guardian

Renewable energy will be world's main power source by 2040, says BP | Business | The Guardian | Microeconomics: IB Economics | Scoop.it
Annual energy forecast predicts record surge in wind, solar and other renewables
Graham Watson's insight:

Just the headline from BP'a annual energy forecast is enough...

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BBC launches eco-friendly fashion and lifestyle brand | Media | The Guardian

BBC launches eco-friendly fashion and lifestyle brand | Media | The Guardian | Microeconomics: IB Economics | Scoop.it
BBC Planet seeks to capitalise on Attenborough’s warnings about ecological catastrophe
Graham Watson's insight:

An example of diversification - and evidence of the strength of a brand, with the BBC planning to launch an eco-friendly fashion and lifestyle brand under the BBC Planet name.

 

An interesting example for Business Management students, methinks.

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Why Insulin Is So Expensive | So Expensive

Insulin prices have tripled in the last 15 years. Three manufacturers produce insulin for the United States drug market and their prices don't seem to show signs of decreasing any time soon. Why is insulin so expensive?

Graham Watson's insight:

A fascinating Business Insider clip looking at why insulin is so expensive in the US - and why it hasn't always been that way.

 

Insulin is an essential drug for diabetics, but the price has increased so dramatically. Why? You would think that the absence of patent protection would reduce the price of insulin.

 

Well, insulin is only produced by three firms in the US - who claim to set prices independently - but as a good economist, you might think differently.

 

This is a fantastic look at the nature of the markets and a really rather worrying clip. 

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Morrisons faces women's equal pay action

Morrisons faces women's equal pay action | Microeconomics: IB Economics | Scoop.it
If the legal challenge succeeds, female workers could receive back pay averaging £15,000, lawyers say.
Graham Watson's insight:

Another supermarket is now facing claims of gender-based discrimination, with Morrisons workers suggesting that men and women at equal levels in the company's warehouse were paid different amounts for doing jobs of equivalent value.

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Plastic pollution: One town smothered by 17,000 tonnes of rubbish

Plastic pollution: One town smothered by 17,000 tonnes of rubbish | Microeconomics: IB Economics | Scoop.it
One small town has become a dumping ground for the world's waste and it's causing a stink.
Graham Watson's insight:

And this is where much of that plastic waste generated both in the West and in China, ends up. The town of Jenjarom in Malaysia has become the epicentre of the illegal plastic recycling industry, and as a result is having to deal with sizeable negative externalities.

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Digital ad market under fresh scrutiny amid competition concerns | Media | The Guardian

Digital ad market under fresh scrutiny amid competition concerns | Media | The Guardian | Microeconomics: IB Economics | Scoop.it
UK government backs investigation into dominance of Facebook and Google
Graham Watson's insight:

It looks like the tech sector had better get ready for more regulatory scrutiny, with the news that the Culture Secretary wants the Competition and Markets Authority to look at the digital ad market, fearing that Facebook and Google are dominating the market, and acting against consumer interests. 

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Traffic jams 'cost drivers a week of their lives a year'

Traffic jams 'cost drivers a week of their lives a year' | Microeconomics: IB Economics | Scoop.it
Drivers are warned London's A406 North Circular Road should be "avoided at all costs".
Graham Watson's insight:

Fantastic illustration of one of the negative externalities of congestion: the loss of output due to workers, and goods, being stuck in traffic. This BBC article highlights the most congested roads in the UK, and in doing so, it is hoped that some commuters might avoid them.

 

Certainly the headline says it all: "Traffic jams cost drivers a week of their lives a year". That's got a decent sized opportunity cost.

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New Ofgem cap prompts E.On to raise energy prices

New Ofgem cap prompts E.On to raise energy prices | Microeconomics: IB Economics | Scoop.it
Prices will rise for 1.8 million customers as E.On becomes the first supplier to react to Ofgem's new cap.
Graham Watson's insight:

Oligopoly alert - just watch for others to follow suit. E.On has become the first energy supplier to raise its prices in response to OFGEM lifting its price cap. I suspect - and economic theory would support this view - that they won't be the last company to do so.

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Scottish government launches £10m Saltire Fund

Scottish government launches £10m Saltire Fund | Microeconomics: IB Economics | Scoop.it
The Scottish government resurrects a £10m prize to help commercialise clean energy technology.
Graham Watson's insight:

An interesting insight into many things - not least the best way for governments to fund innovation. 

 

The Scottish government have relaunched the £10m Saltire Fund designed to help promote the development of tidal power. This is despite the fact that it its last incarnation, between 2008 and 2017, no-one claimed the prize.

 

Tidal power is clearly an emerging sector - and the use of prizes is

an increasingly common way of funding such innovation. It stops the government from having to pick winner, and reduces the opportunity costs of research and development.

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Brexit crisis command centre starts hiring civilians | Politics | The Guardian

Brexit crisis command centre starts hiring civilians | Politics | The Guardian | Microeconomics: IB Economics | Scoop.it
Recruitment agencies told military-style operation could stay open for two years
Graham Watson's insight:

A Brexit story which is fundamentally microeconomic: just think about the opportunity cost of employing all of these workers?

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Pret a Manger charity to invest in homeless hostel in London | Business | The Guardian

Pret a Manger charity to invest in homeless hostel in London | Business | The Guardian | Microeconomics: IB Economics | Scoop.it
Foundation to give £200,000 to project to boost firm’s existing homeless employment scheme
Graham Watson's insight:

Corporate social responsibility? Business ethics, an oxymoron?

 

Either way, Pret a Manger is investing in a homeless hostel in London, although cynics might point out that £200,000 is a relatively small sum.

 

That said, it's something - and certainly enough to raise the profile of the brand.

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Ikea to sell refurbished furniture to boost culture of recycling | Business | The Guardian

Ikea to sell refurbished furniture to boost culture of recycling | Business | The Guardian | Microeconomics: IB Economics | Scoop.it
Swedish retailer expands old furniture exchange scheme as part of circular business model
Graham Watson's insight:

The Guardian catching on, rather late in the day, to Ikea's announcement that it is going to sell refurbished furniture, in another attempt to become more environmentally-friendly. It has pledged towards creating a circular business model predicated upon reusing and recycling all material and products. 

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