Academic Success!

Students and staff at Pipers Corner School have a reason to celebrate after achieving a 100 per cent pass rate at A level.

Some 15 per cent of the girls at the school in Great Kingshill achieved all A*/A grades.

Two thirds of all results at A level were at grades A* to B and a number of girls achieved full marks on their examination units.

The Pipers girls have successfully gained places at some of the country’s top higher education institutions including the University of Exeter, UCL (University College London), University of Bristol, Durham University, Cardiff University, the University of Leeds and Loughborough University to study a diverse range of subjects including history, sports and exercise science, geography, philosophy, forensic computing and security, psychology, business and management studies and agriculture.

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Cocoa

50-year-old cocoa farmer, George Koffi Kouame, looks over at his wife, who's grating cassava into a large tub. It's the only thing they can afford to eat at the moment.

"I go to the kitchen and there's no fish, nothing," he says. "What are we supposed to eat?" George harvested his cocoa in October but still hasn't been paid for it.

"I delivered 1.8 tonnes of cocoa, but up until this day I haven't received any money," he says, reaching into his pocket to pull out the receipt as proof.

"If there's no money, what can I do?" he asks.

"The money from cocoa supports the farm, the family and it sends my children to school."

Ivory Coast is facing an unprecedented cocoa crisis and it is all down to the price.

The international price has fallen sharply since the end of 2015, in part due to abundant supply and weak demand.

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Questions

1. Explain how the price mechanism allocates goods and services?

2. What factors may lead to a shift in a) demand and b) supply?

International trade

An international agreement forecast to boost global trade by $1 trillion (£800bn) a year has come into force.

The Director General of the World Trade Organization (WTO), Roberto Azevedo, called it "the biggest reform of global trade in a generation".

The Trade Facilitation Agreement (TFA) involves streamlining customs procedures.

Mr Azevedo said it would have a bigger impact than eliminating all existing taxes on imports, known as tariffs.

It involves countries signing up to a long list of reforms, including easier access for businesses to information, reduced fees and simpler and faster procedures.

WTO economists estimated it would cut the cost of trading by 14.3%, and that developing nations would gain the most.

TFA is one of the few successes of a much wider set of negotiations that were launched in late 2001 in the Qatari capital and known as the Doha Round.

It is not the only product of the Doha Round, but most of the negotiating agenda ran into the sand.

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Questions

1. Using a diagram, explain how tariffs restrict world trade

2. Using AD/AS explain how exports stimulate growth

Growth

The UK economy grew by more than previously reported in the final three months of 2016, according to the latest official estimate.

Gross Domestic Product (GDP) increased by 0.7%, up from 0.6%, according to the Office for National Statistics (ONS).

The upward revision is mainly due to manufacturing industry having done better than thought.

The ONS cut its estimate for growth in 2016 as a whole to 1.8%, down from the 2% it forecast last month.

This downward revision pushes UK slightly below Germany, with an estimate of 1.9%, in the G7 growth league, said John Hawksworth, chief economist at PwC, "though the difference is well within the margin of error on any such early GDP estimates."

The downward revision appeared to have been prompted by weaker North Sea oil and gas production during the first six months of 2016, and did not reflect the underlying strength of the UK economy, he added.

"Excluding oil and gas output, estimated UK GDP growth might actually have been revised up in 2016," added Mr Hawksworth.

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Questions

1. How may fiscal expansionary policy cause growth?

2. How can monetary policy be used to cause growth?

3. Using AS/AD illustrate your answers to (1) and (2)

4. Who are the losers when the economy grows?

Japanese firms

From a cancelled earnings announcement, to a chairman resigning, to a shambolic shouting match between executives and reporters at a hastily organised press conference - it would be fair to say that Toshiba is facing a sorry state of affairs.

Toshiba has now confirmed that it will ask for another month before it releases its earnings - but it has issued a preliminary report warning of losses worth some US$3.4bn.

Many analysts are concerned that this is a sign of far worse things to come.

"It's really unheard of in Japan to miss your planned earnings announcement," Marc Einstein with Frost and Sullivan told me.

"Timing and being on time is sacred in Japanese business culture - so things must be considerably worse than anticipated."

So what's gone wrong at Toshiba - once a poster child for post-war industrial Japan, now a company that hasn't made a profit since 2013?

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Questions

1. What is a Zombie company?

2. How do Japanese firms survive?

Interest rates

Take a tweet about UK economic growth - one I'm pretty sure I have written: "BoE forecasts growth of 2%".

Pretty simple. And true, to an extent, when the Bank of England made its prediction about how the UK economy would perform last year.

But not quite the full picture.

To see that, Minouche Shafik, deputy governor of the Bank of England, says that the tweet (or series of tweets given the 140 character rule) following the BoE economic forecast should actually read:

"If economic circumstances identical to today were to prevail on 100 occasions, the best collective judgment of the Monetary Policy Committee is that the mature estimate of Gross Domestic Product growth would lie above 2% on 50 occasions and below 2% on 50 occasions."

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Questions

1. If interest rates fall how will that affect a) growth b) unemployment c) inflation

2. Your answer should include 'it depends' - but depends on what?

3. How would you use AD/AS to expand on your answer?

Rates

There is growing unease in the business community as it braces itself for England's first rate revaluation since 2010.

The government is promising help in the Budget, but critics are calling the rates system itself "unfit for purpose in the 21st century".

As the commercial rental value of business premises are brought up to date, there will inevitably be some big losers. (You can learn more about the process here.)

To get a snapshot 'rate reaction', we asked six shopkeepers we have previously profiled for our My Shop video series to reveal how they will be affected in April. Some are angry, some pleasantly surprised - and one thinks he knows a better way.

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Questions

1. How do pay-per-minute cafes make a profit?

2. What options are available for businesses faced with a rates rise?

3. Why have rates risen?

Strikes

British Airways cabin crew will stage a fresh seven-day strike from 3 March in their dispute over pay, the Unite union has said.

The announcement comes during a four-day stoppage by BA staff that is due to finish on Saturday.

The airline said it had flown all customers to their destinations during all the strikes and would do so again.

BA said once contingency plans had been finalised it would publish more details next week.

Unite said the next planned stoppage will start at 00:01 on Friday 3 March and end at 23:59 on Thursday 9 March.

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Questions

1. What other forms of industrial action are there?

2. Using AD/AS how might a strike affect macro economic equilibrium?

3. What factors determine who wins in a strike?

Stamps

The prices of first and second class stamps are to rise by 1p from 27 March, Royal Mail has announced.

It will take the price of a first class stamp to 65p, and second class to 56p.

Royal Mail said the price rises were necessary to maintain the universal service - the principle that it delivers letters across the whole of the UK for the same price.

A stamp for large first class letter will rise by 2p to 98p. A large second class letter will go up by 1p to 76p.

The increases are in line with the rise in the Consumer Prices Index (CPI), which rose by 1.8% in the year to January.

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Questions

1. What factors affect PED for stamps?

2. Why might this price rise encourage advance purchases?

3. How will this affect consumer surplus?

Theme 2 revision questions

Essential Revision Questions for Theme 2

1.    Large firms gain a competitive advantage over smaller rivals so they can…….

2.    Define economies of scale

3.    Internal economies are where….?

4.    Explain technical economies of scale

5.    Explain marketing economies of scale

6.    Explain managerial economies of scale

7.    Explain two more economies of scale….

8.    Define and explain external economies of scale

9.    Explain minimum efficient scale

10. What is a) a monopsony b) a monopoly

11. Why is brand recognition so important?

12. Draw a diagram to show diseconomies of scale and give examples

13. Define corporate culture

14. Define organic growth

15. List six ways a business may grow

16. Complete:

Type	Organic	Inorganic
Advantages
Disadvantages

17. What is ‘conglomerate integration’?

18. Define ‘competitive advantage ‘and explain how R&D may give you a competitive advantage

19. What is the importance of risk spreading economies?

20. What are the incentives to increase market power?

21. What is the difference between ‘product innovation’ and ‘process innovation’?

22. What is the role of Innovate UK?

23. What extension strategies are there for the product life cycle?

24. How does asymmetric information arise and what is the significance of this?

25. What is ‘viral marketing’?

26. What are the advantages of online retailing compared to High Street stores? (Make sure you read: http://bit.do/Jessbringscake)

27. What is ‘viral marketing’?

28. What is micro marketing?

29. Explain ‘creative destruction’

30. Draw and explain ‘the Long Tail’

31. What advantages do small firms offer? (make sure you read: http://bit.do/Jessbringscake1)

32. Small firms may differentiate over a) USP b) flexibility c) customer service d) niche markets e) relationships – make sure you can expand on each point

33. What is the relevance of ‘ceteris paribus’ to PED, YED etc?

34. What factors influence PED?

35. How is PED important for a business?

36. List and explain six types of pricing

37. What factors influence the most appropriate pricing strategy?

38. Demand is price inelastic – would you gain by raising price?

39. How may price change to reflect social trends?

40. Non-price competition is using the marketing mix – what is in the marketing mix?

41. What are the advantages of online distribution to a) customers and b) businesses?

42. What factors affect the degree of income elasticity?

43. How income elasticity of is demand important to a business – and are there limitations to its use?

44. Define ’recession’

45. Define productivity

46. List six factors influencing productivity?

47. How does productivity affect competitiveness? (Make sure you read: http://bit.do/Jessbringscake2)

48. How does productivity affect economic growth?

49. Define ‘human capital’?

50. Define ‘investment’

51. Define a) capital intensive and b) labour intensive production

52. Much capital is purpose designed – what is the problem with that?

53. What is the formula for capacity utilisation?

54. State and explain two different ways of meeting quality standards

55. Define cell production

56. What is the difference between quality control and quality assurance?

57. Explain the usefulness of Kaizen

58. What are the disadvantages to JIT?

59. Why are lead times important to lean production?

60. What is the relevance of market research to competitive advantage?

61. How have open economies affected globalisation?

62. Why does structural change come with globalisation? (Make sure you watch the videos at: http://bit.do/Jessbringscake3 )

63. What is the attraction of the UK to FDI?

64. What made globalisation possible?

65. What is ‘trade liberalisation’?

66. What are ‘international capital flows’?

67. How do developments in transport and communication cut the costs of international trade/

68. What is a MNC?

69. Define a) developed economies  b) developing economies  c) em3erging economies

70. Why is GDP not a very satisfactory indicator of growth?

71. What does HDI measure and what does it NOT tell us?

72. What is the difference between mean and median incomes?

73. Define and explain absolute advantage?

74. Define and explain comparative advantage?

75. Explain ‘common markets’?

76. What is the connection between international trade and economic growth?

77. In the context of trade, what are ‘invisibles’?

78. What is a ‘floating exchange rate’?

79. If sterling rises, who loses?

80. If sterling falls, who loses?

81. How might a fall in the exchange rate cause inflation?

82. What are the stages of th4e economic cycle?

83. What are ‘animal spirits’?

84. Complete the table:

	Boom	Downturn	Recession	Recovery
Employment
Skills shortages
Inflation
Confidence
Investment

85. Explain the terms ‘leading and lagging indicators’

86. How MAY a recession affect a firm? (It depends…..)

87. What are the leakages in the circular flow of income?

88. What are the injections in the circular flow of income?

89. The formula for AD =…..?What are capital goods?

90. What is the ‘balance of trade’?

91. Now watch this: http://bit.do/Jesshaseatenallthecake1

92. What is a) inflation b) deflation c) reflation?

93. What are a) index numbers and b) weights?

94. What is the difference between real and nominal values?

95. Watch this and make notes: http://bit.do/Jesshaseatenallthecake1

96. How might inflation affect a firm?

97. What is a wage-price spiral?

98. How might inflation affect and individual?

99. How is unemployment measured?

100.               What causes structural unemployment?

101.               What is technological unemployment?

102.               What are two types of labour immobility and how may the government reduce each?

103.               What are the main causes of unemployment/

104.               Watch this and then be able to explain what can cause unemployment: http://bit.do/Jesshaseatenallthecake1

105.               How might unemployment affect a firm?

106.               How might unemployment affect and individual?

107.               What are the four main macroeconomic objectives?

108.               Watch this and then be able to explain how to reduce demand pull inflation: http://bit.do/Jesshaseatenallthecake1

109.               Why is zero inflation NOT the target?

110.               What is on the current account?

111.               What is an external deficit?

112.               Watch this and be able to explain how a falling pound may cause inflation: http://bit.do/Jesshaseatenallthecake1

113.               When does a current account occur?

114.               Watch this and be able to use it to show the impact of a current account deficit; http://bit.do/Jesshaseatenallthecake1

115.               What is a) real income b) disposable income?

116.               Explain expansionary fiscal policy

117.               What is the difference between a) direct and b) indirect taxes

118.               Define ‘national debt’

119.               What is a contractionary policy?

120.               What are austerity policies?

121.               Using this: http://bit.do/Jesshaseatenallthecake1 explain the possible effect of austerity policies on the economy

122.               What decisions are taken by the Monetary Policy Committee?

123.               Using this: http://bit.do/Jesshaseatenallthecake1 explain the impact of a rise in interest rates on the economy

124.               List seven supply side policies?

125.               Using this: http://bit.do/Jesshaseatenallthecake1 explain the effect of supply side policies on the economy

126.               What do the CMA do? (Read: http://bit.do/jessisillaftereatingcake)

127.               Explain the main macroeconomic policy conflicts. (Also watch here: http://bit.do/Jessnoweatsfruit1)

128.               Explain the significance of ‘short termism’

129.               What is ‘sustainable growth’?

130.               What are a) free market policies and b) interventionist policies?

131.               The government may intervene using subsidies. Arguments for/against?

132.               The government may intervene using taxes to reduce market failure.   Advantages/disadvantages/

133.               The government may intervene by banning the product – problems?

134.               The government may intervene for macroeconomic aims – using this: http://bit.do/Jesshasgoneback2cake explain how the government may intervene to reduce inflation, or stimulate growth.

135.               Is inflation a problem|?

136.               If PED = -0.6 what does that tell us about revenue if we raise our prices?

137.               What are quality circles?

138.               What is the significance of elasticity if we follow a penetration pricing policy?