I am a high school student in Canada taking an Economics course. This really all new to me and I have absolutely no clue how to answer this question.

Derive the income, cross price and own price elasticiticies for a Cobb Douglas utility function. What general feature of Cobb Douglas means that the demand curves must always be unit elastic?

• I'm afraid Cobb Douglas function is not on the UK syllabus, I don't even remember doing it at University. These are just a few points, but, I'm afraid you will need to look elsewhere
• Unitary elasticity of demand means the % change in Q.D equals the % change in Price. Therefore, to have unitary elasticity of demand it is necessary to have a bowed demand curve and not a straight line. The elasticity of demand will vary on a straight demand curve.
• The other way is to measure elasticity of demand by measuring the slope of a demand curve. This can be done by differentiating the demand equation.
  

Elasticity of Demand And Cobb Douglas

• Elasticity of Demand - Cobb Douglas
• Elasticity of Demand - Business Economics
  

Labels: readers questions

Mr P I none off your previous post you said that when explaining low unemployment and inflation you must consider supply and demand factors what are the demand factors

Reasons for Low inflation in UK

Demand side Factors

• Economic growth hasclose to long run trend rate, therefore, avoids inflationary pressure.
• Role of MPC in maintaining inflation close to government's target of CPI 2%. For example, MPC have increased interest rates 4 times in the past 18 months to reduce inflationary pressures.
• High Exchange Rate. This makes exports more expensive and therefore reduces export volumes.
• Diagram could involve a simple AD/AS framework with AD increasing at same rate as AS
  

Supply side factors

• Improved technology, which helps to reduce costs
• Supply side policies
• More flexible labour markets, less wage bargaining. Wage inflation lower (also effects demand pull inflation)
• e.t.c
  

Reasons for Low Unemployment

(demand side)

• Long period of economic expansion. This has created jobs. Draw a simple AD / AS diagram showing an increase in AD and Real GDP
  
• Sustained economic growth and low inflation creates a positive environment for encouraging investment, this has led to increased job opportunities.

Supply Side

Increased labour market flexibility
Improved education and training, for example, the new deal has provided job training to those who need it.

Labels: inflation, readers questions

- reasons for pay differential's, especially among different age groups, and different ethnic groups.

see:

• Why women are paid less than men
• Labour Market imperfections
• Reasons for Unemployment amongst ethnic minorities
• Essay: Explain wage differentials
  

Labels: readers questions, wages

when they ask about factors that lead to both low inflation and low unemployment, can we talk about many supply side policies as different points?

Yes.

Suppose they ask a question Why has unemployment fallen in UK.

I would say:

• More flexible labour markets (e.g. unions have less power)
• Better education and training (reducing occupational immobilities)
• Better information about getting jobs (lower frictional unemployment)
• More difficult to get benefits JSA
• Long period of economic expansion, creating jobs and reducing demand deficient unemployment

However, if you only gave supply side factors, you would not get full marks. You need to consider both demand side and supply side factors, for both inflation and unemployment

Labels: readers questions

in 200/01 the UK's public expenditure was 37% of gdp this forecast to increase to over 42% of gdp by 07/08 examine the likely economic implications apart from increased tax of this trend.

Effect on AD

• If govt spends more by borrowing some of the increased spending, higher Government spending should increase AD, (G is a component of AD.) - see: Government borrowing
  
• However, if tax increases at same rate then net effect on AD is likely to be neutral
• It depends whether government finances by borrowing or by tax
• Also, if higher spending is financed by borrowing it may cause crowding out
  

Effect on AS

• Higher government spending may increase productive capacity in the long run. For example, they may spend it on education and training e.t.c.
• However, if it is spent on paying for pensions e.t.c there will be no increase in productive capacity
• However, there is no guarantee that government spending will actually increase educational standards, there may be government failure
  
• Again, it depends what the government is spending its money on.

Efficiency Government vs Private Sector

How efficient is government spending compared to private sector spending. Higher government spending means a declining share of private sector spending and investment. Many economists argue government spending is more inefficient. THerefore, in the long run it can reduce productivity of the economy

Labels: government, readers questions

IM HAVING DIFFCUITYY with these essays i justr don't no wot 2 do howw can i approach unit 6

Do you mean edexcel unit 6. Maybe you could mentions some specific questions, we could then have a look at some sample answers.

Many of these Macro Economics essays are from Edexcel Unit 6

However, bear in mind that using a fairly simple AD/AS framework is a way to make a good start, for many questions on Unit 6.

All the questions require some evaluation, it is vital to bear in mind these points of evaluation

Labels: readers questions

If you would like help or advice for an Economics essay or economic dissertation you are welcome to leave a question as a comment on this post.

I shall try to answer the economics question and / or point to other resources but please bear in mind.

1. The replies will be guidance and not for duplication. Your essays should always be your own work.
2. My specialty is economics for British A Level standard. My university economics is rusty in parts, because generally I don't use it in teaching A level economics.
3. I can't guarantee to always give full answers it also depends on my time schedule.
4. The answers will not necessarily be complete. I know several of my essays on this site could be improved.
5. Please Write the Questions clearly and with proper spelling. Some questions I have not answered because they were not clear what was meant.
6. I will not answer on this blog, but the one here
   

I studied PPE at Oxford University and currently work as an Economics A Level teacher. I have also examined several different economic units for Edexcel AS and A2.

Labels: economics help, readers questions