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					MODULE BOOKLET

EC1002CN Introduction to Microeconomics
LEVEL: C SEMESTER: Autumn 2005

Department of Economics, Finance and International Business

Department of Economics, Finance and International Business TABLE of CONTENTS 1. Welcome to the Module..................................................................................................... 3 2. Teaching ........................................................................................................................... 3 3. Problem Based Learning ................................................................................................... 4 4. The Teaching Team .......................................................................................................... 4 5. Tutorial Activities ............................................................................................................... 5 6. Module‘s Website – WebCT .............................................................................................. 6 7. Module Assessment .......................................................................................................... 6 7.1 Coursework ................................................................................................................ 6 7.2 Seen Exam ................................................................................................................. 7 7.3 Reassessed Coursework (Summer Resit) .................................................................. 7 7.4 Resit Exam ................................................................................................................. 7 8. Summary of Modules Aims, Learning Outcomes and Assessment.................................... 8 9. Books And Other Learning Resources .............................................................................11 10. Weekly Lecture Programme ...........................................................................................12 Week 1. Introduction to Economics and Microeconomics ................................................12 Week 2. Demand, Supply, Price and Output Determination ............................................14 Week 3. Price Elasticity of Demand and Supply ..............................................................21 Week 4. Government Intervention in the Market ..............................................................25 Week 5. Supply: Economic Profit, Short and Long-run Production ..................................29 Week 6.Supply: Shorth and Long-run Costs, Revenues and Profit Maximisation ............39 Week 7. Perfect Competition and Monopoly ....................................................................47 Week 8. Markets Efficiency and the Public Interest .........................................................55 Week 9. Consumer Choice Theory: Indifference Curve Analysis .....................................59 Week 10. Consumer Choice Theory: the Effects of Price Changes .................................63 Week 11. Imperfect Competition: Oligopoly and Monopolistic Competition .....................65 11. WinEcon.........................................................................................................................66 12. Assessment Criteria .......................................................................................................74 13. Assessment Criteria and Student Feedback For Coursework ........................................78 14. Past Examination Papers ...............................................................................................79

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Department of Economics, Finance and International Business

1. Welcome to the Module Welcome to the Introduction to Microeconomics module. This is a first year (certificate level) module administered by the Department of Economics, Finance and International Business. The module is core for all students enrolled on any of the economics or business economics degrees offered by the department. For most of you this will be the first encounter with economics in general and microeconomics in particular. We hope you will find the module enjoyable and that you will understand how some basic economic concepts and thinking can be easily applied to understand the choices of either single individuals or businesses. The teaching team has put a lot of effort in organising and structuring the module so that you can receive the greatest support and acquire a good knowledge of economic concepts that you will require in future modules. We hope you will actively participate to the module‘s activities and that you will help us make the module a success.

2. Teaching The teaching on the module is structured around three main principles: 1) acquire a good understanding of fundamental microeconomic concepts and economics principles; 2) help you develop further IT skills (in particular for economics applications); 3) make you actively participate to your own learning. The module is taught according to the principles of Problem Based Learning (PBL). This approach involves your active participation in your own learning. The teaching team will provide you with the basic knowledge and will support your learning. On the other hand, you will be required to work in groups independently to solve a set of tasks set by the teaching team. There are four hours of contact time with the teaching team that are organised as follows: (1) a two-hour lecture each week (2) a one-hour small group tutorial (3) a one-hour IT workshop The lecture sets out main themes and covers certain fundamental ideas developed in economics. The lectures need to, and do, move along at a good pace. Each week you will need to read the relevant chapters from the course text plus additional readings to clarify certain points covered in the lecture and to examine some issues in greater depth. The two hours allocated to the tutorial and the IT workshop are structured with the aim of strengthening your understanding and to apply the material covered in lectures to problems. The tutorial activities will require you to engage in problem solving that will help you clarify the issues discussed in the lecture. However, three tutorials will be dedicated to Problem Based Learning activities. In week 4, 8 and 10 you will be asked to engage in the analysis and solution of specific tasks on your own under the supervision of your tutor. You will then be asked to report your findings in the following week‘s class.

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Department of Economics, Finance and International Business 3. Problem Based Learning The basis of PBL is that students learn by doing. It is a student-centred system whereby students, working within small groups, generate the information necessary to respond to, or solve, specific problems or tasks. The module provides a structured environment within which PBL is applied at specific points during the semester and you can learn more effectively. This is how the contact time is organised. Lecture (2 hours weekly): every week you will attend a two-hour long class where the teacher will outline the main topics and concepts under investigation. Lectures are expected to be highly interactive where an active participation of the students will be required Tutorial (1 hour weekly): every week you will be asked to come prepared to engage with problem solving activities. You will be asked to work in small groups. Each week, one group will be required to lead the discussion and to present the solutions to the rest of the class. In weeks 4, 8 and 10 you will be asked to engage with a Problem Based Learning task. Each group will be asked to work independently on the problems under the supervision but no interference of the tutor. Each group will then present the results of the PBL tasks during the following week. IT Workshop (1 hour weekly): during the IT workshops you will have the opportunity to improve your IT skills through the introduction of basic skills in the use of Excel, Word and Powerpoint. The aim of these workshops is to give you the basic IT skills that you will be using throughout the first year and in the following years at university. Some of the weekly problems will also require you to use Excel to plot graphs and produce solutions. The IT workshops are based on individual work since each single student is expected to develop these key IT skills. 4. The Teaching Team The lectures in the North and City campus are taken by the following staff: Room SH405 Phone 3046 Email g.volpe@londonmet.ac.uk

Dr Guglielmo Volpe, Module Leader Location: North Campus, Holloway Road Office Hours: Dr John Sedgwick Location: North Campus, Holloway Road Office Hours: Dr Parvin Alizadeh, Module Leader Location: City Campus, Moorgate Office Hours: Dr Chris Hicks Location: City Campus, Moorgate Office Hours:

SH406

3044

j.sedgwick@londonmet.ac.uk

p.alizadeh@londonmet.ac.uk

c.hicks@londonmet.ac.uk

The lecturers are supported in their work by a group of well trained and dedicated tutors who will be taking some of the tutorial and workshops.

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Department of Economics, Finance and International Business

5. Tutorial Activities The tutorial activities are organised around a set of problem solving activities and three PBL problems. You should come prepared to deal with these problems every week. Your active participation and involvement is key to your own learning and to the success of our learning strategy.  Starting from week 2 you are required to work in groups of no more than 6 people. The groups stay the same throughout the semester. Each group uses the tutorial time to deal with and occasionally present the weekly problems. Each group is expected to work independently and to produce the solutions to the set tasks for the following week. Every week the tutor will ask one of the groups to present the solutions to some or all of the tutorial activities during the following week. It is important that every member of a group actively participates to the weekly activities. Students who do not collaborate and participate to the group activities will be removed from the group and, in the extreme case, excluded from the module. In week 4, 8 and 10 each group must work on the set PBL tasks and should present the results of their analysis in the following week‘s tutorial. Your are expected to work on your own in the IT workshops since the objectives of these classes is the development of each single student‘s own IT skills. The role of the tutor in the tutorial is mainly to facilitate the discussion and to use the tutorial problems to complement the learning of the weekly topics. Each group should appoint a ‗group leader‘. The ‗group leader‘ should be the same throughout the semester and has various responsibilities: o o o o o  He/She coordinates the activities of the group. Brainstorming sessions to identify the relevant issues and essential information required to solve or respond to the problems. Identifies specific study tasks to be undertaken by group members. Allocates study tasks to individual members. Keeps discussion going and ensures that all members participate in team discussions. Keeps in contact with the tutor to highlight problems and difficulties.

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It is important that each member of the group fully participates to the weekly activities and contributes towards the tasks for the coursework. ‗Free-riders‘ i.e. students who do not actively engage in the group will not be tolerated and will not be allowed to stay in the group. Students who do not fully participate will be asked to leave the module. Each group is expected to prepare two short Powerpoint presentations after the completion of PBL tasks 1 and 2. The presentations are not marked but are an integral part of your learning process. The dates for such presentations are: o Week 6: each group provides a 5 minutes Powerpoint presentation on PBL task 1 5



EC1002CN Introduction to Microeconomics

Department of Economics, Finance and International Business o   Week 10: each group provides a 5 minutes Powerpoint presentation on PBL task 2

The deadline for the submission of the coursework is Monday of week 11: 12th December 2005 The coursework is submitted as a group coursework. Each group will need to submit a declaration in which it specifies how the marks should be distributed among each member of the group.

6. Module’s Website – WebCT The module has its own web site developed on WebCT. The website is still in development although we hope that most of its features are in place when you need them during the course of the semester. These are some of the support that you can expect to receive from the website:   We are planning to make available on the website the weekly lecture notes. The site contains a bulletin that will enable us to keep in touch with you by informing you about anything of importance concerning the module (organisation of extra seminars, cancellation of lectures, etc.). The bulletin will also enable you to contact and exchange ideas with other students enrolled on the module. Multiple-choice tests and other self-test tools will be made available throughout the semester.

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Accessing WebCT – In order to access the module‘s web-site you will need a login name and a password that have already been created for each student: your login name will be your computer ID number while the password is given by your date of birth (ddmmyy). Details on how to access the module‘s website, how to use WebCT and how to add a course to your account on WebCT can be found at the following address: http://www.londonmet.ac.uk/webct

7. Module Assessment The assessment strategy includes two components: 1. Coursework (40%). 2. Seen examination paper (60%) The coursework accounts for 40% of the overall mark while the exam accounts for 60% of the overall mark. To pass this module you MUST PASS BOTH THE COURSEWORK and the EXAM. The pass mark for each component is 40%.

7.1 Coursework As mentioned above the coursework stems from your tutorial activities. The coursework will normally be submitted by the group. However, under exceptional circumstances, submission may be received from individuals, providing they have already received prior permission from the tutor. The coursework is structured as a Portfolio Coursework. At the end of the weekly tutorial activities for weeks 2, 3, 6 and 7 you will find one problem whose solution must be EC1002CN Introduction to Microeconomics 6

Department of Economics, Finance and International Business part of the portfolio coursework. Moreover, the portfolio must also include the solutions to the two PBL tasks presented in week 4 and 8. Regulations 1. The portfolio coursework can be submitted as a group work or as an individual piece of work. 2. Each group should also submit a declaration stating how the overall mark should be distributed among each member of the group. The tutor will allocate a total amount of marks that the students must agree to share within the group. For example, the tutor can award a total mark of 240 points to a group of 4 students. The group will then decide how to allocated these points among each member. The distribution can be equal (60 marks each) or it can be reward more some members and less others. 3. All essays must be typed and contain graphs (possibly generated with Excel when appropriate), data and statistics used to develop the analysis. 4. As mentioned above, individuals have the right to opt out of their group and produce a personal coursework, although they must obtain permission and produce evidence of having worked on the problems in the seminars. 5. Be aware that you MUST PASS the coursework in order to pass the module. Submission Date The coursework should be submitted by Monday 12th December 2005

7.2 Seen Exam At the end of the semester (week 13, 14 or 15) you will be required to take a 2-hour long seen examination. Regulations 1. The exam accounts for 60% of the overall mark. 2. The exam will last two hours. The exam is a seen exam. This means that the actual exam paper will be circulated to all students two weeks before the exam takes place. This will give you the opportunity to see the exam in advance, revise properly and come prepared to the exam. 3. The exam paper will definitely include the PBL task that will be discussed in week 10. The other questions are likely to be similar to the problems that we will be dealing weekly in the tutorials. 4. Please notice that you MUST PASS the exam in order to pass the module. 7.3 Reassessed Coursework (Summer Resit) If you fail the coursework in the Autumn semester you will be required to resubmit the coursework during the summer session. Information about the resit coursework will be circulated towards the end of the academic year. 7.4 Resit Exam If you fail the Autumn semester exam you will be asked to resit the exam in August. Information about the structure and content of the resit exam will be provided during a revision class organised during the summer period prior to the exam.

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8. Summary of Modules Aims, Learning Outcomes and Assessment This section contains a copy of the so-called ‗Module Specification‘ document. This is the official document that outlines the module‘s content and structure. This document was officially approved by external examiners. MODULE SPECIFICATION 1. 2. 3. 4. 5. Module title Introduction to Microeconomics Module code EC1002CN Module level C Module Leader Dr Guglielmo Volpe Home academic department EFIB

6. Teaching location City and North 7. Teaching semester Autumn 8. Teaching mode day 9. Module Type STAN 10. Credit rating for module 15 11. Prerequisites and corequisites None 12. Module summary INTRODUCTION TO MICROECONOMICS Introduces students to basic concepts, theory, and application in economics, and relevant empirical material to set the subject in context, including through the extensive and integrating use of IT. The module also provides an introduction to the understanding of a number of major current economic issues and problems and identifies ethical issues that may arise, and introduces and develops critical awareness of students with respect to both theory and policy. Semester: Autumn Prerequisite: None Assessment: coursework 40% + exam 60% EC1002CN Introduction to Microeconomics 8

Department of Economics, Finance and International Business Notes: not with EC1001CN. 13. Module aims This core microeconomic theory and IT model aims to: * introduce students to modern economic ideas, concepts and theories that are used to understand how different markets work and to assess performance; * enable students to analyse economic events, and to identify any resulting ethical issues; * develop knowledge and use of IT; * raise graduate employment awareness. The principal graduate attributes focused on in the module are A1, A2 and A3. 14. Learning outcomes On successful completion of this module students will be able to: 1. apply knowledge of basic economic concepts such as opportunity cost, elasticity, economic profit and marginal analysis in coursework and examinations and be able to explain these basic concepts from first principles; [A2] 2. demonstrate an understanding of modern economic theories of consumer and producer behaviour through their application to personal and business decision making; [A2] 3. make analysis of and predictions about the consequences of economic shocks for particular markets; [A2] 4. conduct an investigation of aspects of government microeconomic policy, taking account of wider ethical perspectives; [A2, A3] 5. demonstrate ability to locate, present, interpret and use economic data using a range of IT techniques; [A2] 6. conduct analysis of the economic rewards attributable to higher educational qualifications; [A2] 7. demonstrate self-awareness regarding graduate employment, including being able to audit current skills and attributes. [A1] 15. Syllabus An introduction to some basic ideas and concepts Introduction to Windows NT and the university network, World Wide Web, IT and the library, WinEcon, Word, PowerPoint, Excel Supply and demand. An introduction to competitive markets Demand and elasticity Consumer theory, indifference curves and demand curves Production and cost Perfect competition and monopoly The structure of industry: monopolistic competition and oligopoly Factor markets, including graduate labour markets Economic efficiency, markets, and government microeconomic policy 16. Assessment strategy The assessment strategy is developed with the aim of testing the module's learning outcomes. In particular, students will be assessed by means of both formative and summative assessment through coursework and examination. Assessment comprises the submission of a coursework portfolio and a seen examination. Coursework (40% of overall mark): students will submit a portfolio of work undertaken in computer workshop sessions, seminars, and independent study. They will be required to collect and analyse economic data and demonstrate IT skills. One task will be to examine the returns to higher education. To promote an awareness of employability students will prepare and critically assess their personal CV. The coursework will be submitted in week 7 of the module to provide early formative assessment of learning outcomes 5-7. EC1002CN Introduction to Microeconomics 9

Department of Economics, Finance and International Business Exam (60% of overall mark): at the end of the semester students will be required to take a two-hour seen written examination. The examination will be designed to test the students' knowledge base and their ability to apply theoretical models to the analysis of real world events. The exam will be structured in sections where students will have to answer short questions, solve problems, and examine ethical issues relating to government microeconomic policy. In the seen examination learning outcomes 1-4 will be assessed. 17. Summary description of assessment items Assessme nt type CWK EXS Description of item Coursework portfolio (1800 words max.) 2 hour seen examination paper % Weighting 40 60 Qual Mark 40% 40% Qual Set Tariff Week due 8 14 -

18. Learning and teaching Student contact time will be 4 hours per week. Lectures of 1 hour duration will deliver core subject knowledge. A whole-group workshop of 1 hour will provide examples of how to analyse economic problems. In 2 hour small group seminars students are located in either seminar rooms or computer labs. In seminars students receive formative feedback on their knowledge and understanding of economic concepts and processes by working though introductory exercises and problems which students prepare before the session. In IT workshops students develop and demonstrate IT skills, use PC software to explore economic principles interactively, and locate, present, and analyse economic data. 19. Bibliography Sloman, J. (2003). Economics. 5th ed., Prentice Hall. Mankiew, N.G. (2004). Principles of Economics, 3rd ed., Thompson. Begg, D., Fischer, S. and Dornbusch, R. (2000). Economics, 6th ed., Mcgraw Hill. 20. Approved to run from 21. Module multivalency The module is core for: BSc Business Economics, Single Honours and Major BA Economics, Single Honours, Joint and Minor BSc Financial Economics, Single Honours, Joint BSc International Economics and Finance, Single Honours BA Economic Studies, Single Honours and Major BA Business Economics, Major, Joint and Minor BA Politics, Philosophy and Economy 22. Module designation undergraduate only subject IT 23. Subject Standards Board Economics

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Department of Economics, Finance and International Business 9. Books And Other Learning Resources Main Textbook The one main textbook we will be using is: Sloman J., Economics, 5th edition, Prentice Hall, 2003. You should purchase this book. You will find this book useful also for the second semester module Introduction to Macroeconomics. Ample copies are available in WATERSTONES Bookshop located in Calcutta House and in BLACKWELL‘S located in Holloway Road. Other Books There are a lot of good introductory textbook in economics. The following is a list of some of the most widely known: Begg D., Fischer S, Dornbusch R., (2000), Economics, McGraw Hill Mankiw N.G, (2004), Principles of Economics, 3rd ed., Thompson Parkin M., (2003), Economics, 6th ed., Addison Wesley Curran J., (2001), Taking the Fear out of Economics, Thompson Krugman P., Wells R., (2005), Microeconomics, Worth These books are good complements to the main textbook. You are advised to consult these books if you are finding the main textbook or some parts of the main textbook difficult to understand. A combined consultation of these books and the help of your lecturer should help you overcome any difficulty. Articles and Electronic Access From time to time we can refer you to some articles published in economics journals or in business magazines and newspapers. The library in both the North and City campus has a good stock of this material that can often also accessed electronically. Contact your subject librarian for more information on how to access such information.

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Department of Economics, Finance and International Business

10. Weekly Lecture Programme Week 1. Introduction to Economics and Microeconomics Synopsis What is economics? What does economics study? In today‘s lecture you will be given the answers to these questions and you will be introduced to the two main branches of economics i.e., macroeconomics and microeconomics. There will be a discussion about possible different economic systems and then we will focus on the main topics covered in the microeconomics course. Scarcity, opportunity cost, demand and supply, microeconomics and macroeconomics, economic systems, economic reasoning, production possibility frontier Sloman J, (2003), Chapter 1 WinEcon, chapter 1

Key Terms and Concepts

Reading Computer Courseware

Tutorial Questions Problem 1 Imagine that a country can produce just two things: goods and services. Assume that over a given period it could produce any of the following combinations: Units of goods 0 10 Units of services 80 79

20 77

30 74

40 70

50 65

60 58

70 48

80 35

90 19

100 0

a) Draw the country‘s production possibility curve. b) Assuming that the country is currently producing 40 units of goods and 70 units of services, what is the opportunity cost of producing another 10 units of goods? c) Explain how the figures illustrate the principle of increasing opportunity cost. d) Now assume that technical progress leads to a 10 per cent increase in the output of goods for any given amount of resources. Draw the new production possibility curve. How has the opportunity cost of producing extra units of services changed? Problem 2 When you made the decision to study economics, was it a ‗rational‘ decision (albeit based on limited information you had available at the time)? What additional information would you like to have had in order to ensure that your decision was the right one? Problem 3 Would redistributing income form the rich to the poor reduce the overall problem of scarcity?

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Department of Economics, Finance and International Business IT Workshop – WinEcon 1. 2. Introduction to WinEcon. Please see the WinEcon workshop activities listed in section 11 below (page 63). Introduction to WebCT. Students should access WebCT and become familiar with its environment. See section 9 on page 6.

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Week 2. Demand, Supply, Price and Output Determination Synopsis In a market economy the price mechanism plays a crucial role in sending information from buyers to sellers and from sellers to buyers. Buyers demand goods and services while sellers supply the required goods and services. Thus, the concepts of demand and supply are central to the working of a market economy. In today‘s lecture we will explore these two concepts and will understand what determines demand and supply, what is the relationship between demand, supply and the price and how demand and supply changes affect the market price. The law of demand, demand curve, determinants of demand, supply and price, supply curve, determinants of supply, equilibrium price and output, movement along and shift of a curve Sloman J, (2003), Chapter 2, sections 2.1, 2.2 and 2.3 WinEcon, chapter 2, sections 2.1, 2.2, 2.3 and 2.4

Key Terms and Concepts

Reading Computer Courseware Tutorial Questions

Problem 1 The demand and supply schedules for chewing-gum are: Price (pence per pack) 20 30 40 50 60 70 80 Quantity demanded (millions of packs a week) 180 160 140 120 100 80 60 Quantity supplied (millions of packs a week) 60 80 100 120 140 160 180

a) Draw a graph of the gum market and mark in the equilibrium price and quantity (try to use Excel to plot the graph) b) Suppose that the price of chewing-gum is 70 pens a pack. Describe the situation in the chewing-gum market and explain how the price of gum adjusts. c) Suppose that a fire destroys some gum-producing factories and the supply of gums decreases by 40 million packs a week. c.1) Has there been a shift of or a movement along the supply curve of gum? c.2) Has there been a shift of or a movement along the demand curve for gum? c.3) Use the graph you have drawn in a) above to illustrate the change in the market. c.4) What are the new equilibrium price and equilibrium quantity of chewing-gum? d) Suppose that an increase in the teenage population increases the demand for chewinggum by 40 million packs per week at the same time as the fire in the production plan occurs. d.1) Has there been a shift of or a movement along the supply curve of gum? d.2) Has there been a shift of or a movement along the demand curve for gum? d.3) Use the graph you have drawn in c.3) above to illustrate the change in the market. d.4) What are the new equilibrium price and quantity of chewing-gum? EC1002CN Introduction to Microeconomics 14

Department of Economics, Finance and International Business

Problem 2 What is the effect on the market for DVD players if: a) the price of a DVD rises? b) The price of a DVD falls? c) The supply of DVD players increases? d) Consumers‘ incomes decrease? e) The wage rate of workers who produce DVD players increase? f) The wage rate of workers who produce DVD players rises and at the same time the demand for DVDs increases? Explain the two stages to your answer. Problem 3 Suppose that the following events occur one at a time: a) The price of crude oil rises. b) The price of a car rises. c) All speed limits on highways are abolished. d) Robot technology cuts car production costs. Which of these events will increase or decrease (state which): i) The demand for petrol? ii) The supply of petrol? iii) The quantity of petrol supplied? iv) The quantity of petrol demanded? Problem 4 In the Rolling Stone magazine several fans and rock stars were bemoaning the high price of concert tickets. One superstar argued: ―It just isn‘t worth £40 to see me play. No one should have to pay that much to go to a concert.‖ Assume that the band Coldplay sold out arenas around the UK at an average ticket price of £40. a) How would you evaluate the argument that ticket prices are too high? b) Suppose that due to the stars‘ protests, ticket prices were lowered to £25. How might this price be too low? Draw a diagram using supply and demand curves to support your argument. c) Suppose Coldplay really wanted to bring down ticket prices. Since the band controls the supply of its services, what do you recommend they do? Explain using a supply and demand diagram. d) Suppose the band‘s next CD was a total dud. Do you think they would still have to worry about ticket prices being too high? Why or why not? Draw a supply and demand diagram to support your argument. e) Suppose the group announced their next tour was going to be their last. What effect would this likely thave on the demand for and price of tickets? Illustrate with a supply and demand diagram. The following questions are more challenging and ask you to use the theory of demand and supply to analyse specific issues. Problem 5 Find the flaws in reasoning in the following statements, paying particular attention to the distinction between shifts of and movements along the supply and demand curves. Draw a diagram to illustrate what actually happens in each situation. a) ―A technological innovation that lowers the cost of producing a good might seem at first to result in a reduction in the price of the good to consumers. But a fall in price will increase demand for the good, and higher demand will send the price up again. It is not certain therefore, that an innovation will really reduce price in the end.‖ EC1002CN Introduction to Microeconomics 15

Department of Economics, Finance and International Business b) ―A study shows that eating a clove of garlic a day can help prevent heart disease, causing many consumers to demand more garlic. This increase in demand results in a rise in the price of garlic. Consumers, seeing that the price of garlic has gone up, reduce their demand for garlic. This causes the demand for garlic to decrease and the price of garlic to fall. Therefore, the ultimate effect of the study on the price of garlic is uncertain.‖

Coursework Portfolio Problem Attempt this question and include it in your portfolio coursework. Make sure that your answers are clearly explained and discussed. The demand and supply schedules for crisps are

Price (pence per bag) Quantity demanded (millions of bags per week) Quantity supplied (millions of bags per week) 50 160 130 60 150 140 70 140 150 80 130 160 90 120 170 100 110 180

a) Draw a graph of the crisp market and mark in the equilibrium price and quantity b) Suppose that the price of crisps is 60 pence a pack. Describe the situation in the crisps market and explain how the price of crisps adjusts. c) Suppose that a new dip comes onto the market, which is very popular and the demand for crisps increases by 30 million bags per week. c.1) Has there been a shift of or a movement along the supply curve of crisps? c.2) Has there been a shift of or a movement along the demand curve for crisps? EC1002CN Introduction to Microeconomics 16

Department of Economics, Finance and International Business c.3) Use the graph you have drawn in a) above to illustrate the change in the market. c.4) What are the new equilibrium price and equilibrium quantity of crisps? d) Suppose that a virus destroys several potato farms with the result that the supply of crisps decreases by 40 million bags a week. d.1) Has there been a shift of or a movement along the supply curve of crisps? d.2) Has there been a shift of or a movement along the demand curve for crisps? d.3) Use the graph you have drawn in a) above to illustrate the change in the market. d.4) What are the new equilibrium price and quantity of crisps?

IT Workshop Activities - Excel - Workbooks and Worksheets Introduction Economics is a discipline that often involves the analysis of numerical data in one form or another. Spreadsheets such as Excel are very useful for manipulating data. In this workshop you will learn some basic concepts and techniques which will help you manipulate data. You will:       Enter data into cells Select, cut and paste, copy and paste cells Learn the key distinction between a relative cell address and an absolute cell address Use mathematical functions and notation Use short-cut menus Alter the format and appearance of cells

Worksheets (or Spreadsheets)
A workbook in Excel consists of a number of worksheets that sit on top of each other rather like sheets of paper. In this workshop you will make use of only one worksheet within a workbook, such as the one displayed in the figure below:

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Figure: An Excel Worksheet
As you can see, a worksheet consists of a number of cells, which take the form above of white rectangles. In the worksheet in the figure above, there are 480 whole cells visible. There are 15 columns visible, labelled A through O and 32 rows, labelled 1 through 32. You can refer to a particular cell by its column and its row: For instance A1 is the cell at the top and farthest to the left. It is in the first (Ath) column and the first row. The cell in the bottom right corner is nd O32. It is in the Oth column and the 32 row. In today‘s workshop we will continue with our learning of Excel. The following tasks will help you familiarise yourself with the basic tasks of inputing and editing figures, calculating simple mathematical operations and using shortcuts.

Task 1 Entering Data into Cells Manually To enter data in a cell manually, you left-click on the relevant cell and type in the data. For instance: Action 1. Type 7 in A1. 2. Type 7*2 in A2. 3. Type =7*2 in A3 Just displays 7x2. I wanted the answer! To get Excel to carry out a calculation, put an equals sign or a plus in front: =7*2. Comment

Task 2 Selecting a Cell or Range of Cells. Cutting, Copying and Pasting.

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Action 1. Select one cell 2. Select a range of cells Comment Left-click on the relevant cell once. Depress the left mouse button at one corner of the range and drag the pointer to the opposite corner of the range and release. The selected area is now highlighted. You can now perform an operation on this range. Choose Copy from the Edit menu. Then move the pointer to the cell at the top left-hand corner of where you wish to copy the cells. Now choose Paste from the Edit menu. Cutting and pasting is essentially the same procedure. The difference is that the original selection does not remain where it was! Task 3 Relative and Absolute Addresses One of the most ingenious features of spreadsheets is the distinction they make between absolute and relative addresses. Try this example to illustrate this: Action 1. Enter 1,2,3,4,5,6,7,8,9,10 respectively into cells A1-A10 of a new worksheet. 2. Enter =2*A1 in cell B1. 3. Now copy cell B1 to cells B2 through B10. We have made cell B1 twice A1. This as you will see is a relative cell address. See task 2, if you have forgotten how! Look at B2. B2 is not twice A1. It is twice A2. In other words it has multiplied the cell to its immediate left by 2, rather than A1. B3 is twice A3, B4 is twice A4 etc. 4. Enter =2*$A$1 in C1. The only difference from before is that there is a dollar sign before the A and before the 1. This is an absolute cell address. 5. Now copy this cell to C2 through C10. Notice that that the cells in column C are all twice A1. They are all 2! Comment

3. Copy the range to another part of the worksheet

6. Save this workbook as excellent.xls. Task 4 Mathematical Functions and Notation Spreadsheets can cope with very sophisticated formulas. If you want to make them depend on other cells‘ values, then refer to those cells using their address. One cell is to be the product of two others e.g. D5 = A5*B5 One cell is another cell raised to a power e.g. D6 = A6^C6 Powers are ^, natural logs are ln ( ), exponents are exp ( ). You can find other functions you need by choosing the Function option on the Insert menu or by using Help Action 1. In cells D1-D10, put 1,2,3,4,5,6,7,8,9,10 respectively. Comment Do this as follows: Enter 1 into D1 and =D1+1 into D2. Copy D2 into D3.D10 Think about what you have done! You

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have made addresses. 2. Make cells E1-E10 the square of column D. 3. Make cells F1-F10 the product of columns D and E. 4. Make cells G1-G10 the natural log of column F. 5. Make cells H1-H10 the exponent of column G. Task 5 Short-Cut Menus Most operations in Excel can be carried out using the drop-down menus at the top of the Excel Window. However in Excel 97 by using the right mouse button a number of short-cuts are available to access the most heavily-used commands. Action 1. Copy F1.F10 and paste the cells into I1.I10 using the right-hand mouse button. Comment Select the cells F1.F10. Click on the right button. Choose Copy. Move the cursor to I1. Right-click. Select Paste. 2. Experiment with other shortcuts. Task 6 Altering the Format and Appearance of Cells Action 1. Alter the format and appearance of cells A1.I10. 2. Make these cells have a bigger font with a pattern in the background and a border, but not a grid! Comment Select the relevant cells. Select Format from the top menu bar (or by right-clicking) This brings up a dialogue box with tabs across the top. Font: Allows you to increase the (font) size of data, to bold or italicise etc. Border: Allows you to alter the lines bordering selected cells. 3. Experiment with some other choices! Save your work in excellent.xls. use of relative cell

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Week 3. Price Elasticity of Demand and Supply Synopsis Last week we investigated the concepts of demand and supply and explained how adjustments in price help guide the market towards equilibrium. Today we focus our attention on the effects of price changes on the quantity demanded and supplied. The question we will try to answer is the following: how much will the quantity demanded of a product change given a change in price? If you are the manager of a business and you would like to increase revenues, what should you do? Should you cut the price? Or increase it? We will introduce you to the concept of elasticity of demand and supply and will show how important this concept is to many business and economic decisions. Price elasticity of demand, measuring the price elasticity of demand, interpreting the figure for elasticity, determinants of price elasticity of demand and supply, income elasticity of demand and cross-price elasticity of demand Sloman J, (2003), Chapter 2, sections 2.4 and 2.5 WinEcon, chapter 2, section 2.5

Key Terms and Concepts

Reading Computer Courseware

Tutorial Activities Problem 1 Rain spoils the strawberry crop. As a result, the price rises from £4 to £6 a box and the quantity demanded decreases from 1,000 to 600 boxes a week. Over this price range, a) what is the price elasticity of demand? b) Is the demand for strawberries elastic or inelastic? Problem 2 Good weather brings a bumper tomato crop. The price falls from £7 to £5 a basket, and the quantity demanded increases from 300 to 500 baskets a day. Over this price range, a) What is the price elasticity of demand? b) Describe the demand for tomatoes. Problem 3 If the quantity of dental services demanded increases by 10% when the price of dental services falls by 10 percent, is the demand for dental service inelastic, elastic or unit elastic? Problem 4 If the quantity of haircuts demanded decreases by 10% when the price of a haircut rises by 5%, is the demand for haircuts, elastic, inelastic or unit elastic?

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Department of Economics, Finance and International Business Problem 5 The demand schedule for computer chips is: Price (£ per chip) 200 250 300 350 400 Quantity demanded (million of chips per year) 50 45 40 35 30

a) Suppose that the price of chips is £400. What happens to total revenue if the price of a chip falls from £400 to £350? Compute the price elasticity of demand over this price range. Is demand elastic or inelastic? b) In the same way, what happens to total revenue if the price of a chip falls from £350 to £300? Compute the price elasticity of demand over this price range. Is demand elastic or inelastic? c) At what price is the total revenue at a maximum? d) What relationship exists between price elasticity of demand and total revenue? Problem 6 Suppose that a 12 percent rise in the price of orange juice decreases the quantity of orange juice demanded by 22 percent and increases the quantity of apple juice demanded by 14 percent. Calculate the cross price elasticity of demand between orange juice and apple juice. Problem 7 Judy‘s income has increased from £13,000 to £17,000. Judy increased her demand for concert tickets by 15 percent and decreased her demand for bus rides by 10 percent. Calculate Judy‘s income elasticity of demand for a) concert tickets and b) bus rides. Which of the two goods is an inferior good? The following questions are more challenging and ask you to use the concept of elasticity to analyse specific issues. Problem 8 You are the manager of a coffee bar. Your objective is to maximise revenues. You know that your customers are price sensitive. What pricing strategy should you follow in order to achieve your business objective? Problem 9 The price of food in the university canteens and the price of printing in the university tend to be higher than the prices for similar goods/services outside the university. How can you explain this price difference?

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Coursework Portfolio Problem Attempt this question and include it in your portfolio coursework. Make sure that your answers are clearly explained and discussed.

Suppose the government imposes an excise tax of £1 for every litre of petrol sold. Before the tax, the price of a litre of petrol is £2. Consider the following four after-tax scenarios. In each case, (i) use an elastic concept to explain what must be true for this scenario to arise; (ii) determine who bears relatively more of the burden of the tax, producers or consumers; (iii) illustrate your answer with a diagram. a) The price of petrol paid by consumers rises to £3 per litre. Assume that the demand curve is downward sloping. b) The price paid by consumers remains at £2 per litre after the tax is imposed. Assume that the supply curve is upward sloping. c) The price of petrol paid by consumers rises to £2.75. d) The price of petrol paid by consumers rises to £2.25.

IT Workshop – Using Excel with Economic Data Introduction In last week‘s workshop you learned some basic ways of manipulating data in Excel. In this workshop, you are going to apply those techniques to economic data. You will use Excel to calculate averages, percentage changes, differences and correlations. House All houses First time buyers Year Transactions (000) average price (£) price (£) 1990 1,398 59,785 45,234 1991 1,306 62,455 47,094 1992 1,136 61,366 46,931 1993 1,196 62,333 47,669 1994 1,274 64,787 48,231 1995 1,135 65,644 46,489 1996 1,242 70,626 48,693 1997 1,440 76,103 52,674 1998 1,347 81,774 61,344 1999 1,469 92,521 71,623 2000 1,433 101,550 75,840 2001 1,458 112,835 85,021 2002 1,586 128,265 103,754 2003 1,344 155,627 109,336 2004 1,787 180,248 131,693 Source: Office of the Deputy Prime Minister website – www.odpm.gov.uk/ Table 1: Housing Market Data The data in table 1 summarises the behaviour of some housing market indicators from 1990 to 2004. The data is, however, not complete and you will need to derive certain economic statistics using the data above. You will be required to use Excel to calculate certain statistics to summarise the data. You can input the data into Excel yourself or you can download the data from WebCT.

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Tasks Task 1 Finding the Average Level and the growth of House Transactions Action 1. Calculate the average level of house transaction in the UK over the 1990-2004 period. 2. Calculate the yearly percentage change in house transactions from 1990-2004 Task 2 Calculating the house price changes (Inflation Rates) Action 1. Calculate the annual price changes (inflation rates) for the all houses prices 2. Using Excel‘s Insert, Function, find out the average rate of inflation over the period. 3. Repeat actions 1. and 2. but using the ‗first time buyer prices‘ 4. Calculate the yearly difference in house prices for the 1990-2004 period between the ‗all house price‘ and the ‗first time buyer price‘. Task 3 Computing correlations and variances Action 1. Compute the correlation between the annual level of house transactions and the all houses average price level. 2. Use the all house price inflation that you have computed earlier to compute the variance of inflation 3. Repeat 2. by using the figures for first time buyer inflation. 4. Save your work as housing.xls Comment Use the Insert, Function option to compute the correlation. What is the name of the function you will be using? Comment Inflation is measured as the percentage change in the general price index. Comment Find a quick way to do this using Excel‘s Insert, Function.

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Week 4. Government Intervention in the Market and Background to Demand Synopsis In many modern economies the government intervenes in order to influence or control the operation of the market. For example, the government can become concerned about the high price of petrol. In order to help consumers, the government can decide to fix the price of petrol below the present market price. What would be the consequences of such a policy? Similarly, the government is worried that too many people smoke and would like to reduce the consumption of cigarettes. So, a tax is introduced on each packet of cigarettes sold. What would be the effects of such a policy intervention on demand, supply and the equilibrium price and quantity exchanged? In today‘s lecture we will explore these issues and will understand the market reactions to some government interventions. Prices controls, effects of imposing taxes on goods, rejection of market allocation Sloman J, (2003), Chapter 3, sections 3.1 and 3.2 WinEcon, chapter 2

Key Terms and Concepts

Reading Computer Courseware

Tutorial Activities Problem Based Learning – You must attempt this task with your group. This problem is part of your coursework assessment and you should include it in your coursework portfolio. You should work on this problem during today‘s seminar. The tutor will guide you and will give you support during the seminar time. However, you should not expect your tutor to give you the solutions. Next week each group is expected to provide a short presentation of their main findings. The presentation is not graded and is not part of the assessment. Nonetheless, you should take this as an opportunity to develop your presentation skills. At the end of the presentation the tutor will give you feedback on your work. Task The table below presents statistics for the world market of petrol from 1997 to 2005 (first quarter).

Year

Price ($ per barrel)

Demand (thousand of barrels per day)

Supply (thousand of barrels per day)

1997 20.61 1998 14.41 1999 19.3 2000 30.26 2001 25.95 2002 26.15 2003 30.99 2004 41.47 2005* 50.53 * figures are for the first quarter

73,321 74,045 75,804 76,893 77,670 78,369 79,902 82,529 84,379

74,190 75,693 74,867 77,774 77,729 76,935 79,650 83,024 84,119

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Department of Economics, Finance and International Business a) With the help of graphs, provide a short analysis of the trends in demand and supply and market price over time. (150 words) b) Use the theory of demand and supply to explain the changes in the market over time. (500 words) Sources of information The Energy Information Administration website - http://www.eia.doe.gov/ The International Energy Agency website - http://www.iea.org/ The Organisation for Economic Cooperation and Development (OECD) website www.oecd.org/ The Economist – www.economist.co.uk The Financial Times – www.ft.co.uk The BBC News – news.bbc.co.uk Learning Outcomes  Apply principles of demand and supply theory to the analysis of statistical evidence  Understand use of spreadsheets in producing graphs for economic analysis  Search for information about factors affecting the oil market and use them to interpret the evidence within the context of the demand and supply theory  Provide a rational and structured approach to the manipulation of imperfect and incomplete information IT Workshop
Introduction In Excel, you can create a chart and embed it into a worksheet. To do this you use the Excel Chart Wizard which allows you to select the type of chart you want to create. Some of the chart types available are displayed in the Chart Wizard screen shown in Figure 2.

Figure 2: Chart Wizard Chart Types

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It is important that you have thought about what you want your chart to display, before you begin to create it. What kind of chart do you wish to produce? Which data will you use? The data you will use in this workshop is shown in Table 2. Year 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 Economic Growth 0.48387 3.924988 4.317952 3.670024 1.070694 1.784351 0.37877 4.563574 5.571568 2.573536 1.327843 3.95643 Unemployment (%) Inflation 2.2 1.8 1.5 1.4 1.5 1.9 2.8 2.9 2.2 1.9 2.9 3.5 7.363981 3.193746 1.440227 4.084211 6.434555 3.70592 3.863114 1.327169 1.271506 3.308951 3.654883 2.116942

Table 2: Data for Creating a Chart Task 1 Creating a Chart Using the Chart Wizard

Figure 2: The Chart Wizard Button Action 1. Enter the data in Table 10.1 into cells a1..d12 of a worksheet. 2. Save the worksheet as charting.xls. 3. Select the data in your worksheet from cell A1 to cell D12. 4. Click the Chart Wizard button on the Standard toolbar (see fig. 2). 5. Choose the Column Chart type. 6. Click the Press and hold to view sample button and hold the button down. A sample of the chart is displayed. If you were to choose a different kind of chart, e.g. a bar chart, you could also get a preview of that. The dialogue box shown in Figure 1. is displayed. Comment

7. Release the mouse button and choose XY (Scatter) as the chart type. 8. Choose a chart sub-type which draws lines as well as marking points. 9. Click the Press and hold to view sample button and hold the button down. Notice that the data in columns B, C and D is being measured on the vertical axis against the data in column A, which is the year, on the horizontal axis. This displays the source of the chart data. The range you want is selected automatically

10. Click Next

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because you have selected the relevant data already. 11. Click Next This displays the chart options. Use the tabs to select options for your graph. You can give the chart a title, and indicate what is being measured on each axis: % on the vertical axis and Year on the horizontal. The fourth step allows you to choose whether to create the object as an embedded object on the same worksheet as the data or to create a chart on a separate worksheet. Choose the default option. Excel nows displays your graph on the worksheet. Click on the background of the chart and the cursor will become a four-headed arrow. Keeping the mouse button depressed, drag the graph. Select the chart. Click on and drag its handles - the black squares.

12. Click Next

13. Click Finish. 14. Move the chart so that it does not obscure your data.

15. Resize the chart. 16. Click anywhere outside the chart in the worksheet and save the worksheet, charting.xls, once more. Task 2 Charting trends in the Housing Market Action 1. Open up housing.xls that was created at the end of last week workshop. 2. Create a time series chart, plotting the trend in house market transactions from 1990-2004

Comment

You should now use the ‗line type‘ of graph. Select only the house transaction column. When prompted add the year column references into the ‗category X labels‘

3. Plot an XY graph by using the figures for house transactions and all houses prices 4. Plot a time series graph of the all houses price inflation 5. Save the file with the new charts as housingcharts.xls

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Week 5. Supply: Production, Short and Long-Run Costs, Revenues Synopsis From this week we start the analysis of supply decisions by firms. This will keep us busy for about four weeks during which we will investigate issues concerning production, costs, profit maximisation, market structure, competition and monopoly. In today‘s lecture we focus on two concepts. The first concept is that of economic profit. We will show you how economists and accountants differ in their definition of economic profits. The second part of the lecture is dedicated to the issue of production. What are the factors that firms use in production? How do they combine to produce the required level of output? We will answer these questions and we will introduce you to some key concepts such as diminishing returns, marginal product and total product. Implicit and explicit costs, rent, economic and accounting profit, low of diminishing returns, factors of production, total and marginal production Sloman J, (2003), Chapter 5, section 5.1 WinEcon, under ‗Economics for Business‟, chapter 3, sections 3.1 and 3.2

Key Terms and Concepts

Reading Computer Courseware

Tutorial Activities Problem 1 Sidney‘s runs a successful business that makes sweaters. Sidney‘s Sweaters receives £400,000 a year for the sweaters it sells. Its expenses are £80,000 a year for wool, £20,000 for utilities, £120,000 for wages, £10,000 in interest on a bank loan and £20,000 for the depreciation of buildings and machines. Sidney is aware that if he sold his business he would incur in an economic depreciation of £25,000 and that he would be able to work for an annual wage of £40,000. Sidney also knows that the normal profit that he could expect to earn by investing his resources in government bonds is £50,000. a) Compute the ‗accounting‘ profit that Sidney‘s Sweaters makes each year. b) Compute the ‗economic‘ profit that ‗Sidney‘s Sweaters makes each year. Problem 2 Jackie owns and operates a web-design business. Her computing equipment depreciates by £5,000 per year. She runs the business out of a room in her home. If she did not use the room as her business office, she could rent it out for £2,000 per year. Jackie knows that if she did not run her own business, she could return to her previous job at a large software company that would pay her a salary of £60,000 per year. Jackie has no other expenses. a) How much total revenue does Jackie need to make in order to break even in the eyes of her accountant? That is, how much total revenue give Jackie just zero accounting profit? b) How much total revenue does Jackie need to make in order for her to want to remain self-employed? That is, how much total revenue would give Jackie just zero economic profit? Problem 3 Rubber Duckies‘ total product schedule is (try to use excel to draw the graphs): EC1002CN Introduction to Microeconomics 29

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Labour (workers per week) 1 2 3 4 5 6 7 8 9 10 a) b) c) d)

Output (rubber boats per week) 1 3 6 10 15 21 26 30 33 35

Draw the total product curve. Calculate the average product of labour and draw the average product curve. Calculate the marginal product of labour and draw the marginal product curve. What is the relationship between average product and marginal product when Rubber Duckies produces (i) fewer than 30 boats a week and (ii) more than 30 boats a week?

Problem 4 Marty‘s Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Marty owns three frozen-yogurt machines. His other inputs are refrigerators, frozen-yogurt mix, cups, sprinkle toppings and, of course, workers. He estimates that his daily production function when he varies the number of workers employed (and at the same time, of course, yogurt mix, cups and so on) is as shown in the table below: Labour (workers) 0 1 2 3 4 5 6 Output (cups of yogurt) 0 110 200 270 300 320 330

a) What are the fixed inputs and variable inputs in the production of cups of frozen yogurt? b) Draw the total product curve. Put the quantity of labour on the horizontal axis and the quantity of frozen yogurt on the vertical axis. c) What is the marginal product of the first workers? The second worker? The third worker? Why does marginal product decline as the number of workers increases? The following questions are more challenging and ask you to use the theory of production to analyse specific issues. Problem 5 You own and operate a bike store. Each year, you receive revenue of £200,000 from your bike sales, and it costs you £100,000 to obtain the bikes. In addition, you pay £20,000 for electricity, taxes and other expenses per year. Instead of running the bike store, you could EC1002CN Introduction to Microeconomics 30

Department of Economics, Finance and International Business become an accountant and receive a yearly salary of £40,000. A large clothing retail chain wants to expand and offers to rent the tore from you for £50,000 per year. How do you explain to your friends that despite making a profit, it is too costly for your to continue running your store? Problem 6 You are the manager of a small fast food restaurant. At present you hire three workers. The last waiter you hired was able to lead to an increase in production of 10 hamburgers per hour. You now decide to hire a further worker and after a probation period you realize that this worker is able to increase production by 7 hamburgers per hour. On the basis of this evidence, you decide to fire the new worker. Is this a wise business decision?

IT Workshop Getting Started with PowerPoint Introduction The purpose of this workshop is to enable you to create and save a simple presentation. PowerPoint is the Microsoft Office tool you use to create a presentation. It can also be used to create a drawing that you can insert into a Word file. In this workshop you will:  Create a presentation selecting a pre-defined presentation design and slide layout  Enter text into a slide  Insert a picture into a slide  Change the presentation view  Add and delete slides  Rearrange slides  Run a slide show Presenting Information in a Slide If you are ever asked to present some information, it can be very helpful to illustrate the points you want to make with some well-designed slides. However, there are many pitfalls to using slides. They are often too densely packed with information, too ‗busy‘ in the use of fonts and colour, and used too intensively. If you follow these guidelines you should have good presentation material to back up your points:        Give your slides a consistent layout. Use an existing presentation design. Do not have more than seven lines of text on a slide. Never put paragraphs of text on a slide. Use short sentences with a maximum of seven words. Use very simple illustrations. Try not to have more than one illustration on a slide. Use colour and different types of font sparingly. Try to restrict yourself to three colours and one font. You may use the font in different sizes to denote different levels. Do not use more than 4 slides for each 10 minutes of talk, if possible.

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Department of Economics, Finance and International Business Tasks Task 1 Using an Existing Presentation Design and Layout PowerPoint has many pre-defined presentation designs which you can use. If you select one of these all the decisions about use of colours, font size and style, and layout have already been made for you. This is the quickest way to produce a presentation. However, when you are a more experienced user of PowerPoint you may well prefer to create your own ‗look and feel‘ for your slides. You select an existing presentation design when you open a new Office document. The screen in which you select your design is shown in Figure 1.

Figure 1: The Presentation Designs Screen Once you have selected a design you can select a predefined layout for each slide you produce. You select the layout of your slide from the New Slide screen shown in Figure 2.

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Figure 2: The New Slide Screen Action 1. Log on to the university network. 2. Click on the Powerpoint icon on the desktop 3. Click the Presentation Design page tab. 4. Check the ‗Blank presentation‘ button. 5. Click OK The New Slide screen appears. This screen has a selection of layouts for your slide. The icon is highlighted and the words Title Slide are displayed in the right-hand box. The slide is displayed with text placeholders and the instructions ‗Click to add title‘ and ‗Click to add sub-title‘. Your name appears as the title of the slide You have a title page for a presentation which is a profile about you. The file extension for all PowerPoint files is ppt. Icons representing presentations are displayed as in Figure 1. Comment

6. Select the first icon which is for a layout of a title and subtitle.

7. Click OK

8. Click on the title text placeholder and type your name. 9. Click on the sub-title placeholder and type Profile. 10. Save the presentation using profile.ppt as the filename.

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Department of Economics, Finance and International Business Task 2 Adding New Slides to Your Presentation The quickest way to add a new slide to your presentation is to click the New Slide button. The New Slide button is towards the right-hand side of the PowerPoint toolbar.

Action 1. Click the New Slide button. 2. Select a layout for your new slide. This time select the second layout which should be called Bulleted List. 3. Type Personal Details as your title. 4. Type the following personal details as a bulleted list under the title:     Your date of birth Your address Your telephone number Your marital status

Comment The New Slide screen appears.

When you type the address, press Shift and Return to make new lines. If you do not do this you will automatically make a new bullet with each line.

5. Save the presentation as personal.ppt

You now have presentation with two slides.

Task 3 Adding a Picture to Your Presentation The quickest way to add an illustration to a slide is to insert a picture from the library of prepared pictures called Clip Art. Pictures are a very powerful way of communicating an idea. Try to use them only when they enhance the content of the slide. You can also make your own pictures with PowerPoint. With PowerPoint you can draw charts and organisation charts too. First you will add a new slide to your Profile presentation with a layout which allows a space for a picture. Then you will select and insert a picture. Action 1. Click the New Slide button. 2. Select a layout for your new slide. This time select the layout in the bottom left-hand corner which is called Text & Clip Art. 3. Type Hobbies as your title. 4. Type your hobbies as a bulleted list. 5. Double-click on the icon to add Clip Art. EC1002CN Introduction to Microeconomics A dialog box about Clip Art appears. Comment The New Slide screen appears.

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Department of Economics, Finance and International Business Action 6. Click OK. 7. Select the category Sports & Leisure from the left-hand column. 8. Select the picture of a tennis player. 9. Click Insert. 10. Click on the picture and keep the mouse key down to move the picture to the position you want. 11. Now click on the picture and press Del on your keyboard. 12. Insert a different picture which reflects one of your hobbies. 13. Save the presentation as enhanced.ppt You now have a three-slide presentation. The picture is deleted. The picture is inserted into your slide. Comment The Microsoft Clip Gallery is displayed. New pictures are displayed on the righthand side of the screen.

Task 4 Changing the Presentation View There are five different ways you can view your slides. The slide view and the outline view are shown as tabs on the left hand side of the screen. The other views can be chosen by clicking on he buttons that are in the bottom left-hand corner of the screen. The buttons are shown below: From left to right: Notes Page View, Slide Sorter View and Slide Show The functions of these different views are explained in the table below: Button Slide View Function In slide view you see the whole slide or magnify to zoom in on a section for detailed work. To move from slide to slide drag the scroll bar at the right of the PowerPoint window. This is the best view to outline your ideas for the presentation. It shows the text of all your slides so you can assess whether there is a logical flow. This view shows you your whole slide set. It a useful view to review the order of your slides, delete and add slides. You can use the Slide Sorter toolbar to set timings for a slide show and to select animated transitions for moving from slide to slide. In this view you can type notes to support the slide. You can print these out to use during your presentation. You can also use the Notes view for handouts. 35

Outline View

Slide Sorter View

Notes Page View

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Department of Economics, Finance and International Business Button Slide Show Function This view will display the slide full screen for a slide show. When you click the left mouse button the next slide is displayed.

Action 1. Click on the 5 view buttons and see how the view of your presentation changes.

Comment

Task 5 Rearranging Slides In order to rearrange your slide sequence, it is best to be in Slide Sorter view which gives you an overview of all your slides. In this exercise you will first create a new slide and then you will change its position in the presentation. Action 1. Click the Slide Sorter view and click on the first slide. 2. Click on the New Slide button. 3. Select a layout for your new slide. This time select the third layout which is called Two Column Text and click OK. 4. Double-click on the new slide to move to Slide View where you can edit the slide. 5. Enter the title Private Things About Myself and then enter a two column list of things about yourself that you would rather keep secret. 6. Now you decide that this slide should come last in your presentation. Click Slide Sorter view. 7. Click on your second slide and drag it to the last slide. Release the mouse button. The slide about the private you will be the last one and all the other slides move back a number. Comment The first slide is highlighted.

The New Slide screen appears. The new slide is inserted as slide two in your presentation.

Slide View opens.

You have completed a slide about the private you.

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Department of Economics, Finance and International Business Task 6 Deleting a Slide In order to delete a slide it is best to be in Slide Sorter view which gives you an overview of all your slides. You have decided that you do not want to display a slide about the private you so you will delete it. Action 1. Make sure you are in Slide Sorter view. 2. Click on the last slide. 3. Press Del on your keyboard. The slide is highlighted. The slide is deleted. Comment

Task 7 Changing the Design of the Presentation There are many presentation designs you can choose from. To change the design you click the Apply Design button on the toolbar.

Action 1. Click the Apply Design button. 2. Click on any design names in the left-hand column. 3. Look at designs until you find one you like. 4. Click on the design you want and click Apply.

Comment

The design is displayed on the right-hand side.

The design is applied to your presentation.

Task 8 Running a Slide Show When you have completed your presentation there are various ways you can show it. You can:    Print it out and photocopy it onto acetate to use overhead transparencies on an overhead projector. Display it on your computer if you are only presenting to a very small group gathered around your computer. Project it onto a large screen from your computer. This is the best method but you need a screen projector.

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Department of Economics, Finance and International Business Action 1. Open your presentation and display the first slide. 2. Click the Slide Show view button in the bottom left-hand corner of the PowerPoint screen. 3. Click the left-hand mouse button when you want to move to the next slide. 4. If you click Slide Show on the menu bar there are many options you can select to automate your show, select slide transition options, and even animate the show. Experiment with these options. But remember not to overuse them, as they can seem a bit ‗flash‘ and detract from the content. Good luck! Comment

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Week 6. Supply: Short and Long Run Costs and Profit Maximisation Synopsis The main objective of the firm is to maximise profits. Profits can be defined as the difference between revenues and costs. In today‘s lecture we concentrate our attention on the issue of costs. In particular, we will investigate how to measure costs and how to compute key costs for the firm such as total cost, average cost and marginal cost. The concept of total revenues is already familiar from the analysis of demand and elasticity. The combination of the cost and revenue analysis will then enable us to understand what rule the firm should follow in order to maximise profits. Short and long-run costs, fixed and variable cost, average cost, marginal cost, economies of scale, minimum efficient scale, profit maximising condition Sloman J, (2003), Chapter 5, sections 5.2, 5.4, 5.5 and 5.6 WinEcon, under ‗Economics for Business‟, chapter 3, sections 3.3, 3.4, 3.5, 3.6 and 3.7

Key Terms and Concepts

Reading Computer Courseware

Tutorial Activities Problem 1 To answer this problem please look at the production schedule for Rubber Duckies in problem n.3 in last week‘s seminar activities. Suppose that the price of labour is £400 a week and total fixed cost is £1,000 a week (try to use excel to carry out the tasks below). a) Calculate total cost, total variable cost, and total fixed cost for each output and draw the short-run total cost curves. b) Calculate average total cost, average fixed cost, average variable cost, and marginal cost at each output and draw the short-run average and marginal cost curves. c) Suppose that the company‘s fixed cost increases to £1,100 a week. Explain what changes occur in the short-run average and marginal cost curves. Problem 2 To answer this problem please look at the production schedule for Marty‘s Frozen Yogurt in problem n.4 in last week‘s seminar activities. Marty pays each of his workers £80 per day. The cost of his other variable inputs is £0.50 per cup of yogurt. His fixed cost is £100 per day (you should try to use excel to carry out the tasks below). a) What is Marty‘s variable cost and total cost when he produces 110 cups of yogurt? 200 cups? Calculate variable and total cost for every level of output given in Marty‘s production schedule. b) Draw Marty‘s variable cost curve. On the same diagram, draw his total cost curve. c) What is the marginal cost per cup for the first 110 cups of yogurt? For the next 90 cups? Calculate the marginal cost for all remaining levels of output. d) For each of the given levels of output, calculate the average fixed cost (AFC), average variable cost (AVC), and average total cost (ATC) per cup of frozen yogurt. e) On one diagram draw the AFC, AVC and ATC curves. f) What principle explains why the AFC declines as output increases? What principle explains why the AVC increases as output increases? Explain your answers. EC1002CN Introduction to Microeconomics 39

Department of Economics, Finance and International Business g) How many cups of frozen yogurt are produced when average total cost is minimized? Problem 3 Evaluate each of the following statements: if a statement is true, explain why; if it is false, identify the mistake and try to correct it. a) A decreasing marginal product tells us that marginal cost must be rising. b) An increase in fixed cost increases the minimum-cost output. c) An increase in fixed cost increases marginal cost. d) When marginal cost is above average total cost, average total cost must be falling. Problem 4 The demand and total cost schedules for Pallino Ltd are given in the following table: Q 0 1 2 3 4 5 6 7 8 9 10 P 42 38 34 30 26 22 18 14 10 6 2 TC 50 52 58 68 82 100 122 148 178 212 250 TR MC MR AC

a) Complete the table by filling in the schedules for total revenue, marginal cost, marginal revenue and average cost. b) What is the quantity level that maximizes the firm‘s profit? Explain your answer. c) Using TC and TR figures, check your answer to b). What is the profit made the firm? d) What is the price charged by the firm? Problem 5 Wolfsburg Wagon (WW) is a small automaker. The accompanying table shows WW‘s longrun average total cost: Quantity of cars 1 2 3 4 5 6 7 8 LRATC of car £30,000 £20,000 £15,000 £12,000 £12,000 £12,000 £14,000 £18,000

a) For which levels of output does WW experience economies of scale? b) For which levels of output does WW experience diseconomies of scale? c) For which levels of output does WW experience constant returns to scale?

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Department of Economics, Finance and International Business The following questions are more challenging and ask you to use the theory of costs and profit maximisation to analyse specific issues

Problem 6 The TESCO store in Enfield used to be open 24-hours a day. However, recently management has changed the opening times and the store will be open only from 6am to midnight. Use the concept of marginal economics to explain the management decision. Problem 7 In your economics class, each homework problem set is graded on the basis of a maximum score of 100. You have completed 9 out of 10 of the problem sets for the term and your current average grade is 75. What range of grades for your 10th problem set will raise your overall average? What range will lower your overall average? Explain.

Coursework Portfolio Problem Attempt this question and include it in your portfolio coursework. Make sure that your answers are clearly explained and discussed.

Don owns a small concrete-mixing company. His fixed cost is the cost of the concrete batching machinery and his mixer trucks. His variable cost is the cost of the sand, gravel, and other inputs for producing concrete, the gas and maintenance for the machinery and trucks, and his workers. He is trying to decide how many mixer trucks to purchase. He has estimated the costs shown in the accompanying table based on estimates of the number of orders his company will receive per week. Quantity of trucks FC 20 orders 40 orders 60 orders 2 £6,000 £2,000 £5,000 £12,000 3 £7,000 £1,800 £3,800 £10,800 4 £8,000 £1,200 £3,600 £8,400 a) For each level of fixed cost, calculate Don‘s total cost for producing 20, 40 and 60 EC1002CN Introduction to Microeconomics 41

Department of Economics, Finance and International Business orders per week. b) If Don is producing 20 orders per week, how many trucks should he purchase and what will his average total cost be? Answer the same questions for 40 and 60 orders per week. c) Suppose that Don purchased 3 trucks, expecting to produce 40 orders per week. a. Suppose that, in the short run, business declines to 20 orders per week. What is Don‘s average total cost per order in the short run? What will his average total cost per order in the short run be if his business booms to 60 orders per week? b. What is Don‘s long-run average total cost for 20 orders per week. Explain why his short-run average total cost of producing 20 orders per week when the number of trucks is fixed at 3 is greater than his long-run average total cost of producing 20 orders per week.

IT Workshop – An Introduction to Using Word
Introduction The purpose of this workshop is to introduce you to the word-processing software Word. Word is one of the applications in Microsoft Office and can be opened by double-clicking the Word Icon on the computer desk-top. Word is the market-leading word-processing software and mastering it will help you both in your university career and beyond. If like me, your handwriting is mostly illegible, Word can make your work look highly-professional. Try to write up all your essays and assignments in Word. In this workshop you are going to create and edit a simple document. There are at least four different ways of creating, editing and saving documents in Word:     Click on buttons on the tool bar Select options from the drop-down menus: File, Edit, View, Insert, Format, Tools, Table, Window, Help Press combinations of particular keys Click the right-hand mouse button

Word’s Buttons In this workshop you are going to explore Word‘s buttons. Open up Word by double-clicking on the Word icon. This will bring up the Word window, the top part of which is shown in the Figure 1. To know what each button does, just hold the cursor over it and the name of the button will appear under it.

Figure 1: Word‟s buttons The purpose of these buttons is explained in the table below. Button Name Button’s Function

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Centres text on the page. Align centre Aligns text to the left-hand margin. Align left Aligns text to the right-hand margin. Align right Bold Bulleted list Copy Cut Font Font Size Italics Makes selected text italicised if the button is in and not italicised if the button is out. Aligns text to left and right-hand simultaneously. (Try it to see what I mean!) Creates a new document. New Numbers a selected list (of separate paragraphs). Numbered list Office Assistant Open Cheerful extra Help feature that gets on my nerves. Enables you to open an existing document. You must tell it where to look for the document in ‗Look in:‘ and select the name of the file. Pastes in data from the clipboard to the insertion point. (The insertion point is wherever you click the mouse just before pasting.) Prints one copy of the entire document. Print Print Preview Redo typing Enables you to save the current document. Save The first time you do this you must choose where the document is to be saved in ‗Save in:‘ and provide a name for the file. Checks the document. spelling and grammar of your Provides a preview of the document, so that you can see what it looks like on the page(s). Redoes the previously undone typing. sides Removes selected data and stores it in the clipboard. Allows you to alter the font (type face) of selected text. Allows you to alter the size of selected text. Makes selected text bold if the button is in and unbold if the button is out. Puts bullet points next to items in a selected list (of separate paragraphs). Copies selected data and stores it in the clipboard.

Justify

Paste

Spelling and Grammar

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Allows you to alter the style of selected text. Style Underline Underlines selected text if the button is in and removes the underline if the button is out. Undoes the previous typing. (Click the down arrowhead to undo something further back!) Increases or reduces the size of the text (data) on screen.

Undo typing Zoom Table 1: Word‟s buttons

Task 1 Creating and Saving a Document Action 1. Log onto the University computer system. 2. Double-click on the Word icon. To open up Word. 3. Type in the paragraphs shown in the grey box Figure 3, without editing them in any way. 4. Save this file as botch.doc on your floppy disk. Do not include the numbers, but do include the errors. If you make a typing mistake of your own, leave it for now. It can be corrected later. Choose the A: drive in ‗Save in:‘ and call the file botch. The file will be saved as botch.doc. .doc is the extension for all Word files. Comment

1. Lecture on Indifference Curves 2. Introduction 3. I suggest you think about indufference curve analysis in three stages: 4. Second the indifference map. 5. Third the consumer‘s equilibrium. 6. First the budget line. 7. The Budget Line 8. Suppose there are only two goods, X and Y and that a consumer has a fixed income of £5000 per period, which he spends on X and Y. Assume that the price of good X is £50 and that the price of good Y is £100. 9. How much X can he buy, if he buys no units of Y? How much Y can he buy, if he buys no units of X? Figure 3 Botch.doc Task 2 Saving an Existing File with a New Name Make a copy of the old document botch and call the new document, perfect.doc. Action 1. Open up botch.doc and save the file with a new name, perfect.doc. Comment To do this, do not click the save button as this saves the document without changing

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its name. Click on File in the menu-bar, then click on Save As. Choose the A: drive and name the file perfect. This will be the new document. Task 3 Cutting and Pasting If there is some text in a document, which is in the wrong place, use Cut and Paste to move it. Select the text using the mouse and then click the Cut button. This removes the text. Next click the mouse at the point in the document where the text belongs. Click the paste button. Action 1. Cut paragraph 6 and paste it between paragraphs 3 and 4. Task 4 Copying and Pasting If you wish to reuse text that already exists, elsewhere in the document, use Copy and Paste. Select the text using the mouse, then click the copy button. Click the mouse at the point in the document where you wish to reuse the text. Click the paste button. Action 1. Copy the words ‗Indifference curve analysis‘ in paragraph 3 and paste them at the top of the document. Task 5 Bold, Italic and Underline – Action 1. Underline the questions in paragraphs 9 and 10. 2. Make bold and italicise the word fixed in paragraph 8. Task 6 Numbering and Bullets – Action 1. Number the paragraphs: First the budget line, Second the indifference map. Third the consumer‘s equilibrium. Delete the words first, second, third and capitalise the The‘s. Comment Select the paragraphs you wish to number and then click the numbering button Comment Select the text you wish to underline and then click the underline button. Select the text you wish to italicise and make bold and then click the appropriate buttons. Comment Comment

Task 8 Changing Style, Font and Font Size –

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Action 1. Put the first three words ‗indufference curve analysis‘ into the Arial font and increase the font size to 14 point. 2. Put paragraph 7 and 2 in the style of Heading 2. Task 9 Spelling and Grammar – Action 1. Spell check the document. There are errors. Comment You do not need to accept all Word‘s recommendations! Comment Select the text, choose Arial from the Font box and 14 from the Font Size box Select paragraph 7. Choose Heading 2 from the style box.

Your document should look something like Figure 4. It may not be in exactly the same fonts, because my computer may have different default settings to yours.

Indifference Curve Analysis Introduction I suggest you think about indifference curve analysis in three stages: 1. The budget line 2. The indifference map 3. The consumer‘s equilibrium The Budget Line Suppose there are only two goods, X and Y and that a consumer has a fixed income of £5000 per period, which he spends on X and Y. Assume that the price of good X is £50 and that the price of good Y is £100. How much X can he buy, if he buys no units of Y? How much Y can he buy, if he buys no units of X? Figure 4 The Corrected Document: perfect.doc

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Week 7. Perfect Competition and Monopoly Synopsis Last week you learned that profits are maximised when marginal revenue equals marginal cost. In today‘s lecture we focus on the amount of profits that a firm makes and on the level of output it produces. We will discover that these decisions depend on the level of competition that a firm faces. A firm in highly competitive market will be forced to keep prices down and to be as efficient as possible. On the other hand, a firm that faces little or no competition is likely to be able to control its price and will not have incentives to be very efficient. Our focus, in today‘s lecture, is on the pricing and production decision by firms that operate in a perfectly competitive market and by a monopolist. Perfect competition, entry and exit, breakeven point, monopoly, barriers to entry, inefficiency Sloman J, (2003), Chapter 6, sections 6.1, 6.2 and 6.3 WinEcon, Chapter 4

Key Terms and Concepts

Reading Computer Courseware Tutorial Activities

Problem 1 For each of the following, is the business a price-taking producer? Explain your answers. a) A small bar/café in Holloway Road/Moorgate. b) The makers of Pepsi Cola. c) One of many sellers of potatoes at a local farmers‘ market. Problem 2 Kate‘s Katering provides catered meals, and the catered meals industry is perfectly competitive. Kate‘s machinery costs £100 per day and is the only fixed input. Her variable cost is comprised of the wages paid to the cooks and the food ingredients. The variable cost associated with each level of output is given in the following table: Output 0 10 20 30 40 50 Variable Cost 0 200 300 480 700 1000

a) Calculate the total cost, the average variable cost, the average total cost and the marginal cost for each quantity of output. b) What is the break-even price? What is the shut-down price? c) Suppose that the price at which Kate can sell catered meals is £21 per meal. In the short run will Kate earn a profit? In the short run, should she produce or shut down? d) Suppose that the price at which Kate can sell catered meals is £17 per meal. In the short run, will Kate earn a profit? In the short run, should she produce or shut down? e) Suppose that the price at which Kate can sell catered meals is £13 per meal. In the short run, will Kate earn a profit? In the short run, should she produce or shut down? EC1002CN Introduction to Microeconomics 47

Department of Economics, Finance and International Business Problem 3 Each of the following firms possesses market power. Explain its source. a) Merck, the producer of the patented cholesterol-lowering drug Zetia. b) Telewest, a provider of local telephone service. c) Chiquita, a supplier of bananas and owner of most banana plantations. Problem 4 John has just made a documentary movie about his football team. He is thinking about making the movie available for download on the internet, and he can act as a single-price monopolist if he chooses to. Each time the movie is downloaded, his internet service provider charges him a fee of £4. John is arguing about which price to charge customers per download. The table below shows the demand schedule for his film: Price of Download £10 £8 £6 £4 £2 £0 Quantity of downloads demanded 0 1 3 6 10 15

a) Calculate the total revenue and the marginal revenue per download. b) Suppose that John wants as many people as possible to download the movie. Which price would he choose? How many downloads would be sold? c) Suppose now instead that John wants as much total revenue as possible. Which price would he choose? How many downloads would be sold? d) Suppose that instead he wants to maximize profits. Which price would he choose? How many downloads would be sold? e) If he wanted to charge the efficient price, what price would he choose? How many download would be sold? Problem 5 The figure below shows the demand and cost curves for a single-price monopolist. a) What is the profit maximizing level of output? b) What is the profit maximizing price level? c) What is the firm‘s total profit?

MC 30 20 10

ATC

D 10
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15

Quantity
48

Department of Economics, Finance and International Business The following questions are more challenging and ask you to use the theory of perfect competition and monopoly to analyse specific issues Problem 6 The graph below illustrates your local electricity company‘s natural monopoly. The diagram shows the demand curve for kilowatt-hours (kWh) of electricity, the compnay‘s marginal revenue (MR) curve, the marginal cost (MC) curve, and its average total cost (ATC) curve. The government wants to regulate the monopolist by imposing a price ceiling.
Price of kWh (£)

0.80

0.50 0.30 D 5 MR 8 10

ATC MC

Quantity of kWh (thousands)

a) If the government does not regulate this monopolist, which price will it charge? b) If the government imposes a price ceiling equal to the marginal cost, £0.30, will the monopolist make profits or lose money? Shade the area of profit (or losses) for the monopolist. If the government does impose this price ceiling, do you think the firm will continue to produce in the long run? c) If the government imposes a price ceiling of £0.50, will the monopolist make a profit or lose money? Coursework Portfolio Problem Attempt this question and include it in your portfolio coursework. Make sure that your answers are clearly explained and discussed. The market for cotton jackets is perfectly competitive. The market demand for cotton jackets is given the following table: Price (£ per jacket) Quantity of downloads (jackets per week) £74 40,000 £66 50,000 £58 60,000 EC1002CN Introduction to Microeconomics 49

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£50 70,000 £45 80,000 £40 90,000 £35 100,000

Each firm in the industry is price-taker and ha the same cost structure given in the table below. There are currently 100 firms in the industry. Output (jackets per week) Average total cost (pounds) Average variable cost (pounds) Marginal Cost (pounds) 100 £101 £36 £24 200 £58 £28 £12 300 £43 £21 £10 400 £36 £20 £20 500 £35 £22 £35 600 £37 £26 EC1002CN Introduction to Microeconomics 50

Department of Economics, Finance and International Business £58 700 £41 £32 £82

a) b) c) d) e) f) g)

What is the market price? What is the output for each firm? What is the industry quantity traded? What is the economic profit of each firm? What is the break-even point? What is the shutdown point? Now consider the long-run behaviour of the market for cotton jackets. Suppose the cost structure given in the table above corresponds to the scale of plant that is associated with the minimum point on the long-run average cost curve. a. What is the market price in the long-run equilibrium? b. What is the output of each firm in the long-run equilibrium? c. What is the industry quantity traded in long-run equilibrium? d. What is the number of firms traded in long-run equilibrium?

IT Workshop – Word: Drop-Down Menus, Tables and Help - Introduction
In the previous workshop you used Word‘s buttons to edit a document, originally called botch.doc. You can also use the drop-down menus, instead of the buttons to edit a document. The drop-down menus offer more scope when editing a document, but you will just experiment with these menus briefly in this workshop. Tasks 1-6 are a re-cap of basic editing functions you learned about in the previous workshop, but this time using the drop-down menus. Tasks 7 is about using tables. Task 8 makes you use Help to find instructions to: do search and replace, insert a footnote, insert a picture and use Print Preview. You should devote at least half your time to tasks 7 and 8. Task 1 Saving an Existing Document with a New Name Action 1. Open up botch.doc and save the file with a new name, flash.doc. Comment To do this, do not click the save button as this saves the document without changing its name. Click on File in the menu-bar, then click on Save As. Choose the A: drive and name the file flash. This will be the new document.

Task 2 Cutting and Pasting Action Comment

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1. Cut paragraph 6 and paste it between paragraphs 3 and 4. Select the text. Choose Cut from the Edit menu. Move the cursor to the point between paragraphs 3 and 4. Choose Paste from the Edit menu.

Task 3 Copying and Pasting Action 1. Copy the words ‗Indufference curve analysis‘ in paragraph 3 and paste them at the top of the document. Comment Select the text. Choose Copy from the Edit menu. Move the cursor to the top of the document. Choose Paste from the Edit menu. Task 4 Numbering and Bullets Action 1. Number the paragraphs: First the budget line. Second the indifference map. Third the consumer‘s equilibrium. Delete the words first, second, third and capitalise the The‘s. Comment Select the paragraphs you wish to number. Then select Bullets and Numbering from the Format menu. Notice that doing it this way provides many more possibilities, than the button. You can customise numbers and bullets this way. Experiment.

Task 5 Changing Style, Font and Font Size Action 1. Put the first three words ‗indufference curve analysis‘ into the Arial font and increase the font size to 14 point. Comment Select the text. Choose Font from the Format menu. Now you can choose the font, font style, font size, color, underline… Choose a different font and font size from last time. Task 6 Spelling and Grammar Action 1. Spell check the document. There are errors. 2. Save the document flash.doc. Task 7 Creating Tables Action 1. Create a new file tablefun in Word. Comment Comment Use Spelling and Grammar from the Tools menu

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2. Create a table with two columns and four rows. 3. Write the words Name, Degree Programme, Age and Consuming Interest in the four cells down the lefthand side 4. Write you name, degree programme, age and consuming interest in the relevant cells down the right-hand side. 5. Delete the row with your age in it 6. Embolden the text in the first column, increase the font size to 14 and change the font style to whatever you choose. 7. Change the font size and font of the right-hand column to match the first column, but do not make the text bold. 8. Make the first column rather narrower and the second column a bit wider. 9. Put a thicker border around the table as a whole, but remove the gridlines within the table. 10. Save the file tablefun Select the row from the Table menu, then select delete row from the Table menu. Select the first column and then … Select Insert Table from the Table menu and choose 2 columns and 4 rows.

Select the second column and then …

You can drag the vertical line down the middle of the table to the left and the line on the right-hand side to the right. Select all the cells in the table and use Format, Borders and Shading…

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Task 8 Using Help in Word You can now produce a reasonable document in Word. There are all sorts of other useful features of the software that we cannot deal with in just two workshops. You will, however, be able to teach yourself all sorts of new tricks, if you make sensible use of Word‘s Help facility. To learn how to use Help, you will use it to:     Look through a document for a particular word and replace it with another word Insert a footnote Insert a picture Use Print Preview Comment

Action 1. Open up your version of flash.doc and save it as edited.doc 2. Click on Help in the menubar and choose Microsoft Word Help. 3. Type in the white space provided find a word and change it. 4. Click on the blue button next to Find and Replace. 5. Choose Replace. 6. Using the instructions provided, change the word indifference to neutrality and the word Y to the word Z. 7. Now use Help to insert a footnote after the word equilibrium. 8. Now use Help to insert a picture anywhere you choose and resize it, using its handles. 9. Now use Help to look at your document using Print Preview.

A rather irritating face will appear together with a box which will contain the question ‗What would you like to do?‟ Help will then provide another box asking you what you want to do. The first option is Find and Replace. This will produce yet another box entitled Find and Replace.

The handles are the white squares.

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Week 8. Markets, Efficiency and the Public Interest Synopsis In today‘s lecture you will learn how a perfect market economy could under certain conditions lead to ‗social efficiency‘. However, we will show that in the real world markets often fail to achieve the ‗social good‘. In particular, we will discuss cases in which the action of some people can affect other people without the market acknowledging such an effect. The presence of what are called social costs and social benefits will lead to inefficiencies in the market and opportunities for government intervention. Social efficiency, Pareto optimality, externalities, social cost, social benefit market failures Sloman J, (2003), Chapter 11, sections 11.1, 11.2 WinEcon, Chapter 6, sections 6.1, 6.2, 6.3 and 6.5

Key Terms and Concepts

Reading Computer Courseware Tutorial Activities

Problem Based Learning – You must attempt this task with your group. This problem is part of your coursework assessment and you should include it in your coursework portfolio. You should work on this problem during today‘s seminar. The tutor will guide you and will give you support during the seminar time. However, you should not expect your tutor to give you the solutions. Next week each group is expected to provide a short presentation of their main findings. The presentation is not graded and is not part of the assessment. Nonetheless, you should take this as an opportunity to develop your presentation skills. At the end of the presentation the tutor will give you feedback on your work. Task Read the following article and, with the help of graphs, provide an economic analysis of the current situation in the milk industry and market. (500 words) Scottish dairy farmers have blockaded the country's major milk tanker depots in a protest over pricing policies. During the second blockade in a fortnight, farmers targeted eight sites as part of the campaign for a fairer price for their milk. According to the National Farmers Union (NFU), one in four Scottish dairy farmers have gone out of business over the last six years… John Kinnaird, president of NFU Scotland, said: "There are only 1,400 dairy farmers left in Scotland and the industry is now at breaking point." There were almost 5,000 producers about 20 years ago. Ken Boyns, head of economics at the Milk Development Council, said the UK retail average price for milk was about 52p a litre. In 2003 it was estimated that supermarkets made about 13p a litre, processors about 16p a litre and farmers 18p a litre. In 2004 the average UK milk price received by the farmer was 18.5p but Mr Boyns pointed out that production costs vary across the country. While supermarkets, corner stores and those delivering milk to the doorsteps have increased the price of milk, most dairy farmers have seen very little of it, the NFU said. Mr Kinnaird added: "These family farms represented at protests today are being run out of business by companies that see no further than their next shareholder statement."… EC1002CN Introduction to Microeconomics 55

Department of Economics, Finance and International Business Sean Rickard from Cranfield University used to be the chief economist for the NFU. Mr Rickard said: "We have too much milk, too many farmers producing too much milk, it's basically a commodity and as long as you're in that position the price will always be weak." He said farmers should join together into co-operatives to process milk if they want a greater share of profits… BBC News Website, November 2003, available on http://news.bbc.co.uk/1/hi/scotland/4160832.stm

Sources of information The Economist – www.economist.co.uk The Financial Times – www.ft.co.uk The BBC News – news.bbc.co.uk Farmer Weekly Interactive – www.fwi.co.uk Learning Outcomes  Use the theory of perfect competition or monopoly to analyse real world industry  Show a rational and logic approach to the analysis of complex and imperfect information  Ability to search for relevant information to complement available information and to support analysis

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Department of Economics, Finance and International Business IT Workshop – Embedding Excel Graphs Into Word or Powerpoint In this workshop we will learn how to embed excel produced graphs into Word and Powerpoint. This is an important skill that will help you in the future to prepare professional economic reports and presentations. Task 1 – Embedding Excel Graphs into Word Action 1. Open the file housingcharts.xls that was created back in week 4 2. Click on any of the charts that you have saved in the file and copy it in the buffer memory 3. Open Word (if you wish you can open one of the files we saved in the previous workshops) 4. Paste the Excel file into the document 5. Resize the chart to a size that fits the page or your document To paste the chart simply type CTRL+V or use the menu Edit and Paste To resize the graph just click on the graph, point the mouse to the bottom right hand corner of the chart, left click the mouse and by, keeping your finger down, drag the mouse up/left (to shrink the chart) or down/right (to enlarge the chart) Click on the chart and then click on the icon. Comment

To copy the chart you can either type CTRL+C or use the menu Edit and Copy

6. Position the chart in the middle of the page

Task 2 – Excel Graphs and Text in Word This task will show how you can neatly combine text and graphs into word Action Comment 1. Go back to the Excel file and copy another chart into the buffer memory 2. Go back to the word file where you pasted your previous chart and position the cursor below the chart 3. Insert a table of two columns and one row To insert table in Word click on the icon and, by keeping your finger down, drag the mouse to select one row and two columns

4. Click on the table‘s left cell and then paste the chart 5. Click on the table‘s right cell and type some text 6. Save your work in the file txt&graph.doc

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Department of Economics, Finance and International Business Task 3 – Embedding Excel Graphs into Powerpoint Action 1. Open the file housingcharts.xls that was created back in week 4 2. Click on any of the charts that you have saved in the file and copy it in the buffer memory 3. Open Powerpoint (if you wish you can open one of the files we saved in the previous workshops) 4. Open a blank slide To open a blank slide choose File and New from the menu or click on the icon 5. Click anywhere in the page and paste the chart 6. Resize the chart to a size that fits the page or your document To paste the chart simply type CTRL+V or use the menu Edit and Paste To resize the graph just click on the graph, point the mouse to the bottom right hand corner of the chart, left click the mouse and by, keeping your finger down, drag the mouse up/left (to shrink the chart) or down/right (to enlarge the chart) From the menu choose Insert and Text Box. Position the cursor on the slide where you would like to position the text, click and by keeping your finger down, drag the mouse to the define the size of the textbox that you wish to create Choose the animation by clicking on Slide Show and Custom Animation

Comment

To copy the chart you can either type CTRL+C or use the menu Edit and Copy

7. Add some text to explain the chart

8. Add some motion to your slide by adding some animation to the chart and the text 9. Save your work in the file gr&txt.ppt

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Week 9. Consumer Choice Theory: Indifference Curve Analysis Synopsis Do you remember our discussion about demand and supply in weeks 2 and 3? Well, today we go back to those lectures and we focus on consumer demand. In particular, we look at how a rational consumer makes her consumption choices. This involves looking at the financial constraint faced by each consumer and at the preferences that each consumer has. The combination of the two will allow us to determine the optimum consumption decisions. Budget constraint, budget line, indifference curve, marginal rate of substitution Sloman J, (2003), Chapter 4, sections 4.1 and 4.3 WinEcon, Chapter 3

Key Terms and Concepts

Reading Computer Courseware Tutorial Activities

Problem 1 For each of the following situations, decide whether John has increasing, constant or diminishing marginal utility. a) The more economics classes John takes, the more he enjoys the subject. And the more classes he takes, the easier each one gets, making him enjoy each additional class even more than the one before. b) John likes loud music. In fact, according to him, ―the louder, the better‖. Each time he turns the volume up a notch, he adds 5 utils to his total utility. c) John enjoys watching old episodes of the sitcom Friends. He claims that old episodes are always funny, but he does admit that the more he sees an episode, the less funny it gets. d) John loves crisps. The more he eats, however, the fuller he gets and the less he enjoys each additional packet of crisp. And there is a point at which he becomes satiated: beyond that point, more crisps actually make him feel worse rather than better. Problem 2 Monica likes to have croissant and capuccino for breakfast. The table below shows Monica‘s total utility from various consumption bundles of bagels and coffee. Quantity of croissant 0 0 0 1 1 2 2 3 3 4 4 Quantity of capuccino (cups) 0 2 4 2 3 0 2 1 2 0 2 Total Utility (utils) 0 28 40 48 54 28 56 54 62 40 66 59

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Suppose Monica knows she will consume 2 cups of coffee for sure. However, she can choose to consume different quantities of croissants: she can choose either 0, 1, 2, 3 or 4 croissants. a) Calculate Monica‘s marginal utility from croissants as she goes from consuming 0 croissant to 1 croissant, from 1 croissant to 2 croissants, from 2 croissants to 3 croissants, and from 3 croissants to 4 croissants. b) Draw Monica‘s marginal utility curve of croissants. Does Monica have increasing, diminishing or constant marginal utility of croissants? Monica now has to make a decision about how many croissants and how much coffee to have for breakfast. She has £8 of income to spend on croissants and coffee. Use the information on her utility given in the table above. c) Croissants cost £2 each, and coffee costs £2 per cup. Which bundles are on Monica‘s budget line? For each of these bundles, what is the level of utility that Monica experiences? Which bundle is therefore her optimal bundle? d) The price of croissants increases to £4, but the price of coffee remains at £2 per cup. Which bundles are now on Monica‘s budget line? For each of these bundles, what is the level of utility (in utils) that Monica experiences? Which bundle is therefore her optimal bundle? e) Compare your answers from parts a) and b). As the price of croissants increased from £2 to £4, what happened to the quantity of croissants that Monica chose to consume? What does this imply about the slope of Monica‘s demand curve for croissants? Problem 3 Fred is a utility maximiser. His income is £100, which he can spend on cafeteria meals and on notepads. Each meal costs £5, and each notepad costs £2. At these prices Fred chooses to buy 16 cafeteria meals and 10 notepads. a) Draw a diagram that shows Fred‘s choice using an indifference curve and his budget line, placing notepads on the vertical axis and cafeteria meals on the horizontal axis. Label the indifference curve I1 and the budget line BL1. b) The price of notepads falls to £1; the price of cafeteria meals remains the same. On the same diagram, draw Fred‘s budget line with the new prices and label it BLH. c) Suppose that Fred‘s income falls to £90. On the same diagram, draw his budget line with this income and the new prices and label it BL2. Is he worse off, better off, or equally as well off with these new prices and lower income than compared to the original prices and higher income? Illustrate your answer using an indifference curve and label it I2. d) Give an intuitive explanation of your answer to c).

The following questions are more challenging and ask you to use the consumer choice theory to analyse specific issues Problem 4 Mike spends his income on petrol for his car and food. The government raises the tax on petrol, thereby raising the price of petrol. But the government also lowers the income tax, thereby increasing Mike‘s income. And this rise in income is just enough to place Mike on the same indifference curve as the one he was on before the price of petrol rose. Will Mike buy more, less or the same amount of petrol as before these changes? Explain your answer with the use of graphs.

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Department of Economics, Finance and International Business IT Workshop In this workshop you will have the opportunity to explore various websites that contain news, statistics, reports and other useful information about economics. You should become familiar with these websites since they will be helpful for your studies. Task 1 – Websites with economics teaching and learning material Action Comment Access The Business and Economics The website contains a lot of material for Website at www.bized.ac.uk both students and lecturers. The website provides support for both students who do Look for access to statistics and search for not have any background in economics and the housing market statistics those who already have some knowledge. Access The Economics Network at Bristol University www.economicsnetwork.ac.uk Search the website for textbooks in economics that you can find useful for the future (the website stores details of more than 3500 textbooks!) Task 2 – Websites of UK Institutions Access the Treasury Website at www.hm-treasury.gov.uk Look for the latest statistics about the state of the UK economy Access the Bank of England website at: www.bankofengland.gov.uk Look at the link that provides you with information about a possible career with the Bank of England! This organisation has a wealth of material as well as useful links to other economics resources

The Treasury website holds very useful information concerning the government fiscal policy and the overall UK economic policy

The Bank of England is a very useful source of information about the UK monetary policy. The website provides you with a lot of statistics on money and interest rates as well as analysis and explanation of the Bank‘s operation This website allows you to quickly access the various government departments

Access the DirectGov website at: www.direct.gov.uk

Task 3 – Websites of International Organisations Access the OECD (Organisation for The website contains reports, statistics and Economic Cooperation and Development) other economic information about the 30 website at: www.oecd.org countries that make up this organisation. Search the website for statistics on the oil Can you check what the member states? market. Click on the Statistics link and then on the Energy link Access the International Monetary Fund The IMF is an international organisation that (IMF) website at: www.imf.org was set up to guarantee the stability of Click on the link For Students and then click international financial markets. It publishes on the EconEd link. You will be able to regular reports and statistics about the state access some very interesting games that will of single nations‘ economy and the world help you understand the basics of topics economy such as money and international trade EC1002CN Introduction to Microeconomics 61

Department of Economics, Finance and International Business Access the World Bank website at: www.worldbank.org Click on the Countries link and choose a country you are interested in to get information about its economy and the World Bank work there Access the European Central Bank (ECB) website at: www.ecb.int Click on the link For Students and look at the publications available to students The World Bank is an international organisation that was set up with the mission of helping the development and growth of poor countries

The European Central Bank deals with the monetary policy within the Euro Area. The website contains a lot of information and statistics about the conduct of the monetary policy The EU website is a useful gateway to various resources concerning the European Union

Access The European Union website at: Europa.eu.int Click on the link Europe is Fun and play the games there! Task 4 – Sources of Economic Statistics Access the Office for National Statistics (ONS) at www.statistics.gov.uk Browse the website and look for the latest statistics on the state of the UK economy Access the Economic and Social Data Service (ESDS) website at: www.esds.ac.uk Click on the International link and see how you can access a wealth of statistics by using the Athens Account

The Office for National Statistics is the body in charge of collecting socio-economic statistics for the UK. Most of the statistics are freely available for downloading.

The ESDS is the repository for UK and International socio-economic data that are made available to the academic community (IMF, OECD, World Bank etc. statistics). You will need an Athens Account (www.athens.ac.uk) to access the datasets. Ask your librarian on how you can get the Athens Account The BEA gives access to a wealth of statistics about the US economy

Access the Bureau of Economic Analysis (BEA) www.bea.doc.gov Look up for the latest statistics about the US economy Access the Pacific Exchange Rate website at: pacific.commerce.ubc.ca/xr Look for the latest $/£ exchange rate

This is a very useful website for those of you interested in exchange rate statistics. You can freely download time series statistics for all exchange rates in the world!

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Week 10. Consumer Choice Theory: The Effects of Price Changes Synopsis Last week you have been introduced to the consumer choice theory. In today‘s lecture we will take a more detailed look at this theory by investigating the effects of both price and income changes on the optimum consumption decisions. You will learn that each change in price is likely to cause two effects on our consumption decision: a substitution effect that induces us to exchange a more expensive good for a cheaper good and an income effect whose influence is not always clear. The overall outcome of these two effects is not always straightforward and can lead to unusual results. Relative prices, changes in prices and income, income effect, substitution effect, deriving the demand curve Sloman J, (2003), Chapter 4, section 4.3 WinEcon, Chapter 3

Key Terms and Concepts

Reading Computer Courseware Tutorial Activities

Problem Based Learning – You must attempt this task with your group. This problem is NOT part of your coursework assessment but it will be included in the final exam paper. You should work on this problem during today‘s seminar. The tutor will guide you and will give you support during the seminar time. However, you should not expect your tutor to give you the solutions. Next week each group is expected to provide a short presentation of their main findings. The presentation is not graded and is not part of the assessment. Nonetheless, you should take this as an opportunity to develop your presentation skills. At the end of the presentation the tutor will give you feedback on your work. Task Read the following article and, with reference to indifference curve analysis, provide an economic analysis of the change in the demand for bicycles in London. Make sure that your analysis covers all factors affecting such a demand. (500 words) Chain reaction Cycling is undergoing a surge of interest since the London bombings, as commuters decide to head to work under their own steam. Could they be avoiding the threat of terror only to face a more everyday danger on the roads? Two hours after the bombings on 7 July, a man walked into a bike shop in London Bridge. "He said 'I'm never going on the Tube again. Sell me a bike,'" recalls Travis Lindhe, manager of On Your Bike, where sales have increased from three bikes a day to 15 ever since. A cyclists' organisation, the London Cycling Campaign, reports a 10 to 30% increase in use of bike stands at three points in central London, although it says this news is hardly a cause for celebration, given the circumstances. Fear has driven primary school teacher Stephen Thorpe, 45, on to the saddle of his new bike for his journey from Bow, east London, to Kennington. "You wake up in the morning and think 'I've got to get on the Tube and I'm taking a risk,'" says Mr Thorpe, who used to cycle part-time. "I was half an hour behind the Liverpool Street bomb, which was a very frightening experience. EC1002CN Introduction to Microeconomics 63

Department of Economics, Finance and International Business "But when I ride to work I don't have to worry about being a potential bomb victim." Traffic hazards are not such an issue because his route is on towpaths and quiet streets, he says. Nationally, there has been a small but steady fall in cycling over the past 20 years, with the capital bucking this trend. But the bomb attacks momentarily changed this. Birmingham City Cycles reported a surge in sales on 7 July, when it was also beset by transport and security problems. Not everyone is reacting through anxiety. Some of London's new breed of two-wheeled commuters say it's just to avoid the delays and disruption on public transport. Cycling was already enjoying a boom in the capital and this has accelerated that trend, says Barry Mason, of Southwark Cyclists. "The congestion charge increase, the obesity debate and then the long dry summer meant there were more and more cyclists on the road. Sadly the bombs have given it another kick." It's fast, healthy and no longer considered nerdy or for the super-fit, he says, so the novices should be welcomed… The environmental benefits of this trend are diminished because it does not seem that motorists are switching from their cars to bikes. But for those new cyclists, there is an uncomfortable fact that they are far more likely to involved in an accident than in a bombing.… BBC News Website, 27 July http://news.bbc.co.uk/1/hi/magazine/4719015.stm Sources of information The Economist – www.economist.co.uk The Financial Times – www.ft.co.uk The BBC News – news.bbc.co.uk Learning Outcomes  Apply consumer choice theory to the analysis of changes in consumer behaviour  Use graphical approach to interpret actual consumer choices  Display rational approach to the elaboration and manipulation of uncertain and imperfect information
th

2005,

available

on

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Week 11. Oligopoly and Monopolistic Competition Synopsis Today is our last lecture and we will go back to the issue of market structure to investigate two additional forms of market structure: oligopoly and monopolistic competition. These two forms of market structure are common in may developed economies. Under monopolistic competition, there will normally be quite a large number of relatively small firms. Think about small businesses such as restaurants, builders, repair garages and other small traders. They are in fierce competition with each other, and yet competition is not perfect. The are all trying to produce a product that is different from their rivals. Under oligopoly there are only a few, usually large, firms competing. Think about companies such as Ford, Coca-Cola, Nike, BP. Sometimes oligopolists will attempt to collude with each other to keep prices up. On other occasions, competition will be intense with rival firms trying to undercut each other‘s price or developing new or better products in order to gain a larger share of the market. Monopolistic competition, horizontal differentiation, oligopoly, explicit collusion, tacit collusion, game theory, Nash equilibrium Sloman J, (2003), Chapter 7, sections 7.1 and 7.2 WinEcon, Chapter 5

Key Terms and Concepts

Reading Computer Courseware

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11. WinEcon
Introduction WinEcon is a computer-based learning package for level 1 students, taking units in economics. It consists of 25 chapters covering all the major areas in the level 1 Economics curriculum. The purpose of introducing WinEcon on this unit, is to ensure that you are properly trained to use it. We hope that it will help you perform well in level 1 Economics units. We recommend that you use it to complement other methods of study. You will find that WinEcon will help you review Economics concepts you have learned from lectures and books. It will also interact with you - asking you to perform simple learning tasks and to answer questions. At this university, WinEcon is not used to assess you. It is simply designed to help you understand introductory economics principles in a new, and we hope, exciting way. Studying with WinEcon There are many different ways in which people study and there also many different uses for WinEcon. So there is NO ONE way to study with WinEcon. In the review of WinEcon in the September 1995 edition of the Economic Journal, John Sloman identifies at least fifteen different possibilities! As first-year students you have a good deal to get used to. You have to work out a sustainable way of studying that suits you. If you decide to make heavy use of WinEcon, we suggest two basic ways to use the courseware: 1. The first method, which we suspect is the better of the two currently, is to use WinEcon as an electronic tutor, which stretches and tests you after you have first studied the topics in lectures and reading. WinEcon will help you review concepts you have learned from lectures and books. It will also interact with you - asking you to perform simple learning tasks and to answer questions. 2. The second possibility is to use WinEcon earlier in your learning - to use it as a partial substitute for reading books. For instance in a Microeconomics principles course, you will be introduced to the concept of elasticity relatively early on. The first time this is explained to you, you will probably gain an idea of what elasticity is about, but the precise definitions and ways of calculating it will require further work. Students are usually encouraged to study further by reading and by then answering tutorial questions. The alternative provided by WinEcon is to go to the Elasticity section of the Demand and Supply chapter and work it through. Various concepts of elasticity are first explained, then you are required to answer questions which test your understanding. If you do adopt this second strategy, use the WinEcon Workbook, edited by J. Soper and P. Hobbs in tandem with WinEcon. This encourages you to keep brief notes and summarises what you have learned. Do not attempt, however, to take extensive notes when using WinEcon. Textbooks are much easier to use for this purpose. EC1002CN Introduction to Microeconomics 66

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The Location of WinEcon WinEcon can be accessed in a number of the computing labs both in Moorgate, Tower Hill (City Campus) and in the Technology Tower (North Campus). Moorgate Rooms: MG101, MG102, MG103, MG107/8, S11, S14, S17, S19/20, 417, 419 (+ 5 laser printers), 422 (+ 3 laser printers) Tower Hill Rooms: G7, G7A, TH301, TH303, TH307, TH311A, TH314, TH317 Technology Tower: floors 4, 5 and 6

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WinEcon’s Structure WinEcon is arranged much like a textbook. It is divided into 25 chapters. Each chapter contains several sections and each section consists of topics. As you can see in Figure 1 each section starts with an introduction and ends with a summary.
Each Chapter contains a number of sections Each Section contains an introduction, a number of topics and a summary.

Section

Introduction

Topic

Topic

Topic

Topic

Summary

Chapter

Section

Introduction

Topic

Topic

Topic

Summary

Section

Introduction

Topic

Topic

Topic

Topic

Topic

Summary

Figure 1: The WinEcon Structure It will take you just a few minutes to learn how to navigate your way around WinEcon. It is easy to find what you are looking for, as long as you have a full reference. You need to know the name or number of the chapter, section and topic. This should be indicated on the outline for the relevant unit. Task 1 Opening WinEcon There are just a few steps needed to open WinEcon. The icon for WinEcon is shown in Figure 2.

Figure 2: The WinEcon Icon
Action 1. Turn the machine on. 2. Log onto the University system using your username and password. 3. Double-click on the WinEcon icon on the left-hand side of the Windows NT screen. Comment There are switches on the computer itself, the screen and the wall! If you haven‘t got one of these, apply to the IT Users Support Offices in Moorgate Now wait for 30 seconds or so, while the courseware loads.

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Department of Economics, Finance and International Business Usually the system will present you with the ―tabs‖ screen, shown in Figure 3:

Figure 3: The “Tabs” screen On some versions of WinEcon this ―tabs‖ screen does not fully present itself immediately. You may be required to give a username and password first. If you are faced with just the Startup tab, then do the following:

Possible Action 1 2 3 4 Type the word student as your User Name. Press ENTER. Type the word student as your Password. Press ENTER.

Comment It does not matter if you use upper or lower case. You will see the cursor jump to the Password field. Again, it does not matter which case you use. If you entered the password correctly you will see a row of tabs appear (shown in Figure 3).

Task 2 Using the Tabs Page On the tabs page - shown in Figure 3, there are six different tabs.

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Action Click on Startup

Comment This allows you to log-in, log-out, and choose one of four courses:     Introductory Economics Introduction to Macroeconomics Introduction to Microeconomics Economics for Business

We strongly advise you not to change from the default course, which is Introductory Economics. This will make the whole of WinEcon available to you and you will not run the risk of confusion over chapter numbers, which differ between courses.

Click on the Using WinEcon tab Click the Tutorials tab Click on the Tests tab

This contains a short tutorial on how to use WinEcon. This provides access to all chapters, section and topics. This is the most important tab. This gives access to tests on the content of WinEcon. It also provides links to the relevant topics so you can review topics in which you are weak. This provides exam type tests. (You will not be able to access these usually!) This gives you access to various tools. Click on the icon to access the tool you want. These icons are shown in Figure 4.

Click on the Exams tab Click on the Tools tab

WinEcon comes with a notebook to which you can write and copy notes. You can also save notes onto a floppy disk.

WinEcon comes with a fully functioning scientific calculator.

You can use the glossary to find out the meaning of an economics term.

You can use the reference tool to find complementary references in four leading Economics textbooks

Figure 4: WinEcon Tools Icons Task 3 Basic Navigation In this task you will learn how to access a topic within WinEcon called Factors Affecting Supply, which is part of a chapter called Introduction to Demand and Supply. EC1002CN Introduction to Microeconomics 70

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Do not worry too much about the economic content in this task and the next two. Just try to get an idea about how to find your way around WinEcon. The final task, task 7, will require you to study the Economic content more carefully.

Action 1. Open up WinEcon. 2. Click on the Tutorials tab. 3. Select the chapter called Introduction to Demand and Supply, by clicking the left mouse button once on Chapter 2. 4. Select the section called Supply. 5. Select the topic called Factors Affecting Supply.

Comment

This brings up a list of chapters, sections and topics. Notice how the list of sections updates.

You will see the list of topics update. In a few seconds the relevant topic screen appears.

6. Click on the Go To Tutorial button.

You are now ready to explore the topic called Factors Affecting Supply.

Topic title

TextCard

Figure 5: The „Factors Affecting Supply‟ page

Task 4 Exploring a WinEconTopic You will now complete the topic Factors Affecting Supply by going through the text cards. Ignore the economics content of the screen for a moment and look at the text card in Figure 6 to see how text is presented in WinEcon.

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Economics content

Current card Next-Card button

Total number of cards

Figure 6: The „Factors Affecting Supply‟ text card

On the card in Figure 6 there are the following:  The heading Introduction.  Some text for you to read.  Two numbers in the bottom left-hand corner of the text card. These inform you that you are reading the first of five text cards (1 of 5).  A forward arrow in the bottom right-hand corner of the screen. If you click this arrow, you will advance to the next text card.
Action 1. Click on the next card button to work your way through the topic. Comment The screen change as you go through the cards.

2. When you get to card 3 (of 5) try answering the question that appears on the right-hand side of the screen. (Which of the following affects the supply of bread?). 3. When you are finished exploring the Factors Affecting Supply click on the Go to Tabs Page button at the bottom of the screen.

Click on the answer that you believe to be correct.

This takes you back to the Tutorials tab within the Tabs Page. See if you can access the Factors Affecting Supply topic once more.

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Department of Economics, Finance and International Business Task 5 Navigating Around WinEcon Next you will learn further navigation techniques. You will learn about the Next Page button, the Previous Page button and the Go Back button. You can use the navigation bar shown in Figure 7 to move around a WinEcon section.

Right-mouse click menu

Go Back button

Next Page button

WinEcon Help (available next release) Go to Tabs Page button Previous Page button

Figure 7: The WinEcon Navigation Bar

Action 1. Start from the Factors Affecting Supply page. 2. Click on the Previous Page button (shown in Figure 7) to go to the previous page.

Comment

This takes you to the Section Introduction. Notice that the Previous Page and Next Page buttons perform a different function from the Next Card and Previous Card buttons. The Previous Page and Next Page move you from one page to another. The Next Card and Previous Card buttons move you from one text card to another on the same page.

3. In the bottom right-hand corner of the Section Introduction there is a list of the topics in this section. Select the topic called Shifts in the Product Supply Curve and then click on the Go to Topic button. 4. Now click on the Go Back button to return to the page you have just come from. 5. Now click on the Next Page button to get to the next page.

This will take you the Shifts in the Product Supply Curve topic.

This will take you back to the Section Introduction. You should now be back on the page entitled Factors Affecting Supply.

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Department of Economics, Finance and International Business Task 6 Learning about Supply and Demand You will next study some Economics and answer some simple questions.
Action 1. Access the Comparative Statics topic, in the Supply and Demand Analysis section of the chapter entitled Introduction to Demand and Supply. 2. Work your way through the six text cards on this page and answer the two questions asked. Make a note of these questions, the correct answers and the explanation. Comment The fourth section of Chapter 2 is displayed.

Include the relevant diagrams in your answer.

12. Assessment Criteria To test whether you have understood this unit and reached a passing standard in each of the learning outcomes the following methods of assessment are used in this module. 1. Coursework 2. Seen examination.

Marks for assessment will be awarded on the basis of the following criteria 1. Seen examination paper Marks for the seen examination paper will be awarded on the basis of the following criteria:  answer focuses on question(s) asked  degree to which the answer covers all aspects of question  degree to which answer exhibits understanding and knowledge of relevant analysis  degree to which answer demonstrates consistency, coherence and purposeful analysis  assessment of the importance of the topic under discussion  evidence of the use of a variety of sources  degree of originality of the answer (i.e. more than a rehash of some text or texts)  clarity of explanation  elements of critical analysis  conclusions that are related to the subject of the essay  conclusions that cover the main issues and which offer a critical assessment of the work undertaken  referencing of material used

2.

Coursework

Marks for the coursework will be awarded on the basis of the following criteria:  answer focuses on question(s) asked  degree to which the answer covers all aspects of question  degree to which answer exhibits understanding and knowledge of relevant analysis and/or theoretical and empirical literature EC1002CN Introduction to Microeconomics 74

Department of Economics, Finance and International Business            degree to which answer demonstrates consistency, coherence and purposeful analysis assessment of the importance of the topic under discussion evidence of the use of a variety of sources degree of originality of the answer (i.e. more than a rehash of some text or texts) clarity of explanation elements of critical analysis conclusions that are related to the subject of the essay conclusions that cover the main issues and which offer a critical assessment of the work undertaken referencing of material used quality of presentation full referencing of material used at end of coursework.

PLAGIARISM is an offence and carries a penalty in accordance with University regulations.

Assessment Criteria and Student Performance in Exam and Coursework The framework below sets out the core assessment criteria for the assessment and describes typical performances within the level of award, whilst allowing for variation of marks within that level. Assessment is multi-dimensional, so good performance in some aspects may compensate for poor performance in others. However, very poor performance in English cannot be compensated, The standard of English should be such as to convey clearly the intended meaning. If, because of poor command of English, meaning cannot easily be discerned, the piece of work will be failed. Work of a third class standard (41 – 49%) is likely to:       demonstrate only a basic understanding of the question; have limited coverage of relevant course material; provide basic economic analysis which has a low degree of conceptual clarity and perhaps contains errors; lack diagrams or use diagrams which are not very accurate and are poorly explained; if appropriate, analyse data in a basic manner, perhaps with some errors present material in a just satisfactory manner normally with some errors

Work of a lower second class standard (50 – 59%) is likely to:      clearly demonstrate a fair understanding of the question; have a reasonable coverage of relevant course material; provide fairly accurate economic analysis without serious errors, although arguments are not fully developed; use diagrams which are fairly accurate and fairly well explained; if appropriate, analyse data in a fairly accurate manner with a reasonable attempt at interpretation 75

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Department of Economics, Finance and International Business  present material in a satisfactory manner normally with few errors.

Work of an upper second class standard (60 – 69%) is likely to:        demonstrate a good overall understanding of the question; have a good coverage of relevant course material; provide detailed and largely accurate economic analysis with good development of arguments; apply largely accurate diagrams specifically to the question with good explanatory text; offer some evaluation of theoretical/policy issues; if appropriate, analyse data in a largely accurate manner, with good interpretation and some critical evaluation of results present material well normally with no errors.

Work of a first class standard (70% +) is likely to:        demonstrate a depth of understanding; have a comprehensive coverage of relevant course material; provide detailed and accurate economic analysis without good development of arguments; apply accurate diagrams specifically to the question and integrate them with a high level of economic analysis; offer a critical and sophisticated evaluation of theoretical/policy issues; if appropriate, analyse data in a highly accurate manner, with excellent interpretation and critical evaluation of result be an excellent presentation of the material with no errors.

A Marginal Fail or pass degree standard (33 – 40%) is likely to:       show little evidence of understanding the question; have very limited coverage of relevant course material; provide little economic analysis; contain many errors and omissions; if appropriate, analyse data with little understanding present material in an unsatisfactory manner normally with some errors

A Clear Fail (0 – 29%) is likely to:     show no evidence of understanding the question; largely ignore relevant course material; show no economic analysis; contain little that is accurate or relevant; 76

 if appropriate, show no understanding of data analysis; EC1002CN Introduction to Microeconomics

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13. Assessment Criteria and Student Feedback For Coursework
MODULE TITLE: Student Name: GRADE AWARDED Excellent st (1 ) Subject matter Introduction, interpretation of title, motivation and broader context. Coverage of the topic: Breadth Focus or relevance Depth of knowledge Structure: logical and coherent Evidence of understanding Appropriate use of diagrams Accuracy of diagrams Explanation of diagrams Appropriate use of equations Explanation of equations Accuracy of calculations and results Critical analysis, including critical selfassessment Insight and originality Appropriate use of sources Evidence of use of a variety of sources Appropriate referencing of sources or claims in the main text Relevant conclusions related to the subject of the essay Full referencing of sources listed at the end of the coursework Clarity of expression Spelling Grammar and syntax Overall standard of presentation Good (2.1) Rating Scale Satisfactory (2.2) Limited (3) Poor (Fail) Not applicable Student Number: Date: Tutor:

Comments
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14. Past Examination Papers
Last year‘s exam paper is presented hereafter. However, please notice that this year‘s exam paper is likely to differ in structure. More information will be circulated towards the end of the semester.

EXAMINATION QUESTION PAPER UNIT/(SUBJECT) CODE: EC1002CN

UNIT/(SUBJECT) TITLE:

Introduction to Microeconomics

DATE:

DURATION:

2 hours

START TIME:

FINISH TIME:

MATERIALS SUPPLIED:

None

MATERIALS PERMITTED: Students will require a calculator, writing implements and a ruler on their desks

INSTRUCTIONS TO CANDIDATES:    The exam paper is divided into two parts. Part A contains 4 questions. ALL questions must be attempted. Each question accounts for 12.5 marks. Part B contains 2 questions. You must attempt ONE question only. This part accounts for 50 marks.

DO NOT TURN PAGE OVER UNTIL INSTRUCTED © London Metropolitan University

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Part A - Answers ALL questions (each question accounts for 12.5 marks) Question 1. Suppose that the demand price elasticity of petrol is =-0.5. Suppose that the representative low income household has a yearly income of £9,000 and that she consumes about 1,200 litres of petrol in a year at a price of £1 per litre. The household uses the rest of the income to buy other goods that are assumed, for simplicity, to be priced at £1. Now suppose that the government introduces a tax of 50 pence per litre in order to reduce petrol consumption and to reduce pollution. Assume for simplicity that the price of petrol increases exactly by the amount of the tax. a) Compute the new level of petrol demanded and consumed by low income households. b) Compute the government tax revenues raised from the petrol tax. The government is concerned about the welfare of low income households and decides to redistribute the tax revenues back to households. Suppose that the income elasticity of the demand for petrol is =0.3. c) Compute the new level of petrol demanded and consumed by low income households d) On the basis of the quantities of petrol and other goods consumed by households before and after the introduction the government policies, would you conclude that the welfare of low-income households has increased or decreased? Explain your analysis. Question 2. The TESCO store in Enfield used to be open 24-hours a day. However, recently management has changed the opening times and the store will be open only from 6am to midnight. Use the concept of marginal economics to explain the management decision. Question 3. You have been hired as a business consultant by a company that is losing competitiveness in the market. After inspecting the company you realise that the company is producing output at a level where the marginal cost is falling. Advise the company on how to adjust its production level. Explain your answer. Question 4. You are an economic adviser to the Competition Commission in the Department of Trade and Industry. You have been given the following information about the Minimum Efficient Scale as a percentage of production for the following UK industries: Industry MES as % of production Car 200 Cellulose Fibres 125 Cigarettes 24 Beer 12 a) Advise the Competition Commission about the likely level of competition in these industries. b) Advise the Competition Commission on whether economic policies to regulate or change the industry are required. What effect might removing trade barriers
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have on these industries? Part B - Answer ONE of the following two questions (50 marks) Question 5. Read the following article and comment on it by answering the questions at the end.
“Money back University education may be a waste of time and money for many THERE are two main parts to the government's higher education policy—to get people to pay more of the costs of their university education, and to get more people to go there. New figures suggest that the second part of the policy may be undermining the first. Behind the government's conviction that people should borrow money to cover the costs of their higher education and pay it back when they are gainfully employed is the assumption that graduates earn much more than non-graduates. But the latest edition of an annual survey by High Fliers Research, a consultancy, of 15,000 students graduating this summer from the country's top 30 universities, shows that starting salaries, having risen for the past decade, are now falling. The typical starting salary expected has dropped from £18,700 in 2002 to £18,500 this year. That is barely above the £15,000 minimum for repaying a student loan. Confidence in finding a job is also lower. Whereas 42% of finalists in 2000 expected a ―proper‖ (ie, graduate) job on graduation, the proportion has fallen steadily since then, to 37% now. That chimes with some more data, this time from the government's own Higher Education Statistics Agency, which has been following the fortunes of 242,500 graduates from 2002. More than a third of those either could not find a job at all, or had to settle for a low-skilled one, such as sales assistant or clerk. Furthermore, a new survey of 2,000 students and graduates by doctorjob.com, a recruitment website, showed a quarter thought their degree had not equipped them for the job market. Some 40% thought their degree was more or less a waste of time, money and effort. Most ominous of all is some startling recent research in Labour Market Trends, a government publication, looking at the variation in earnings of students who left school with good examination results (meaning two or more A-levels). Those with degrees in subjects like law, maths and economics can expect earnings around 25% higher than average. But returns on other subjects are sharply lower. Social studies brings a 10% premium. Education and languages may have returns close to zero. On average, arts degrees show a negative return. In other words, those graduates earned less than if they hadn't done their degree at all. It may be that demand for graduates has slumped temporarily because the economy slowed a couple of years ago. In the past, financial returns to higher education overall have been very high in Britain; the government also likes to point to international studies that link extra years spent in education to higher economic growth. But it seems likely that government policy, which has pushed up the proportion of youngsters going to university by nearly a quarter over the past ten years, and plans to increase it from its current 43% to 50% by 2010, has also had an effect. By all accounts, the quality of university education has fallen as the government has pushed more youngsters through the system without a commensurate increase in funding. And the price of most things tends to fall as quantity increases. It would be surprising if that did not apply to graduates. At present, students leave university with debts of around £12,000. If the government succeeds in pushing higher tuition fees through Parliament, that could rise to £27,000. But if EC1002CN Introduction to Microeconomics 81

Department of Economics, Finance and International Business returns to higher education go on falling as the price rises, will people want more of it or less? At present, they seem to want more. This year a record 24% of graduates expect to go on to postgraduate study. Some may think a master's degree offers so much more than a dumbed-down undergraduate degree. More likely is that it sends a powerful extra signal to employers. Extra education is a useful filter: those that complete it show employers both that they had the brains to get in, and the grit to finish. But in the longer term, students and their parents are likely to think a lot harder about whether to study full time or part-time, how long for, in what subject and where. When three years of full-time higher education at the age of 18 was free, good and rare, the returns to almost any course were unsurprisingly juicy. Now higher education has become costlier, worse and commonplace, consumers are likely to get choosier about it. The Economist - June 2003‖

Comment on the article above by answering the following questions a) What is the economic rationale for making students pay for their own higher education? b) Explain the economics of studying for a degree. Why should a young person study for a degree rather than to join the labour market at 18? c) Use a simple labour demand/labour supply model to explain why, according to the article, ‗…the starting salaries for graduates are falling…‘ d) Given the evidence provided by the research published in Labour Market Trends would the introduction of a flat student fee across different degrees be an efficient policy? What advice would you give to the government? e) Explain why more students are expected to go on to postgraduate studies. What does it mean that ―… a master‘s degree… sends a powerful extra signal to employers‖?

Question 6. Read the following article and comment on it by answering the questions at the end.
―Aviation/Pollution Slowly but surely, a consensus is developing among European governments and airlines over the need to include aviation in the proposed European Union emissions trading scheme. Led from the front by BAA, owner of Britain's five biggest airports, aviation wants in as soon as possible. This is an interesting example of an industry lobbying for something which in the short term at least will quite plainly damage its economic interest, for as things stand aviation isn't part of the Kyoto protocol and technically cannot be included until 2013 at the earliest. It is therefore free to grow and pollute all it likes, without the constraints that emission trading will impose on other industries. This is despite the fact that aircraft are amongst the world's biggest contributors to global warming. Aviation collectively accounts for about 1 per cent of global CO2 emissions, which EC1002CN Introduction to Microeconomics 82

Department of Economics, Finance and International Business in itself doesn't sound that much. Yet because the greenhouse gases produced by aircraft are distributed at altitude, as it were, the effect on global warming is about three times that amount. There's not much point in forcing industry to cut its emissions if aviation is only going to fill the gap.

Aviation wasn't included in Kyoto because the Americans vetoed it, and then didn't sign up to the treaty anyway. Including aviation in proposals to reduce greenhouse gases is in any case highly problematic. Where, for instance, is the burden of enforcement meant to fall? With the airline's country of origin, or its destination? It all seemed just too complicated to think about on top of everything else, and was therefore shelved. As a result, aviation has also been omitted from the European emissions trading scheme, which comes into effect at the beginning of next year. Early inclusion would require a quite considerable degree of co-operation between EU member states. Again, there's the problem of enforcement on a source of emissions which of its nature is largely international. Those nations that place a lesser burden on aviation than others would gain a competitive advantage in a key growth industry. Yet it's not impossible. So why on earth is an industry which seems to have had a lucky escape so keen to take its punishment? Under the emissions trading scheme, industries are allocated the right to produce a specified quantity of carbon emissions which is reduced as the years pass. Those that cannot achieve the required efficiencies must buy the right to pollute from those who can. Inclusion in this system would force airlines progressively to replace older fleets with more efficient aircraft. This is not obviously an appealing prospect to an industry already struggling with over capacity and poor rates of return. Yet it is a lot better than the alternatives, such as nationally imposed taxes designed to reduce the overall level of airline travel. The fear is that unless the airline industry moves voluntarily to set its own house in order, eventually it will be forced to in a manner which is a good deal more unpalatable. It's also, of course, the right thing for airlines to be doing. Companies that ignore their social and environmental obligations will increasingly do so at their peril. The Independent, June 2004‖

Comment on the article above by answering the following questions

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a) The fuel used by airlines is not taxed by governments. The recent growth in airtravelling has led to an increase in the pollution created by airlines. Why do you think that governments have been reluctant to tax the fuel used by airlines? b) How has the UK government attempted to induce a fall in air-travel and as a consequence the pollution caused by airlines? c) The article mentions that the airline industry should become part of the ‗European Trading Emission‘ scheme. Briefly explain the economic rationale of the European Trading Emission scheme. Why is an emission trading scheme regarded as an efficient way of dealing with pollution? d) How would the ‗European Trading Emission‘ scheme impact upon the structure and behaviour of the airline industry? Who would be the winners and who would be the losers? END OF PAPER

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