Economics help blog – Page 108

Outsourcing jobs and geographical immobilities

16 November 20173 November 2017 by Tejvan Pettinger

This is an example of applied economics. Two different personal cases of outsourcing work. Outsourcing web-development I had a job for website development – make a menu of my other website on biographies more mobile friendly. I could have tried to do it myself, but it would have taken several hours. I’m better off specialising …

Demand Deficient Unemployment

8 January 20182 November 2017 by Tejvan Pettinger

Demand deficient unemployment occurs when there is insufficient demand in the economy to maintain full employment. In a recession (a period of negative economic growth) consumers will be buying fewer goods and services. Selling fewer goods, firms sell less and so reduce production. If firms are producing less, this leads to lower demand for workers …

Mobile Phone – Product Life Cycle

29 January 20181 November 2017 by Tejvan Pettinger

When did you get your first mobile phone? I got mine in 1999, which it turns out was the year of most rapid growth in mobile phone use. Mobile phones look to have the classic product life cycle of introduction, growth and maturity. Introduction A long slow period of introduction from 1985 to 1997. I …

The case for and against interest rate rise

16 November 201731 October 2017 by Tejvan Pettinger

UK interest rates were last raised over a decade ago – July 2007, but it is widely expected that this week the MPC will vote to raise base interest rates from their current low of 0.25%. The logic for an interest rate rise is that – inflation (3%) is above the 2% target, fall in …

Pros and Cons of Heathrow Expansion

17 May 201930 October 2017 by Tejvan Pettinger

Many business leaders are strongly arguing that Britain urgently needs to expand its airport capacity in the south-east. The easiest and quickest method to increase airport expansion would be to expand Heathrow to include a third runway and sixth terminal. However, there is vocal opposition from local residents and green groups against expanding Heathrow. Opponents argue that expanding Heathrow is unnecessary and would significantly increase noise and air pollution, reducing the quality of life for many thousands.

Arguments for Expansion of Heathrow

Without increasing airport capacity, the UK will lose out on business competitiveness and tourism. Lack of airport capacity is often cited as a constraint on expanding UK business. Heathrow is the quickest option to build a world-class hub airport. The alternative, such as building a hub on the Thames estuary would take several years longer (up to 20 years).
source (FoE) – who also criticise these figures
Cost Effective. Heathrow already had good transport links. A third runway would be the cheapest way to create additional capacity.
Existing Infrastructure. Heathrow already has a well-developed transport infrastructure which increases the efficiency of adding an extra runway at Heathrow. High Speed II could be extended to Heathrow offering a fast connection from Birmingham.
Employment. Heathrow is also a big employer in the area supporting 250,000 jobs. Relocating to another hub airport would lead to job losses in the Heathrow area.
In 2001, over 8.5 million passed through Heathrow, representing almost 40% of all visitors from overseas. pdf
Predicted air travel growth. In 2000, the Department for Transport produced air passenger forecasts for the United Kingdom. These forecasts predicted a significant increase from 160 million passengers per annum (mppa) in 1998 to over 400 mppa by 2020. The 2003 Air Transport White Paper subsequently forecast traffic growing between 400 to 600 mppa by 2030. The majority of these new passengers are projected to pass through airports in the South East of England. (expansion of Heathrow airport)

Advantages of Free Trade

15 December 201829 October 2017 by Tejvan Pettinger

A look at the advantages and benefits of free trade. Readers Question: Why isn’t trade among countries like a game with some winners and some losers? Often in the political world, trade is seen as a game of tit for tat. e.g. the US places tariffs on imports of Chinese chickens; China retaliates by placing …

Reducing a Trade Deficit

8 January 201829 October 2017 by Tejvan Pettinger

Readers Question: Discuss the circumstances in which reducing the exchange rate and introducing quotas are effective policies to tackle a trade deficit. The trade deficit occurs when the value of imports is greater than the value of exports. This could reflect a lack of competitiveness or high levels of consumer spending on imports. The trade …

Petrol Price Per Litre $ Around the World

5 January 201828 October 2017 by Tejvan Pettinger

Source: World Bank

This shows the price of petrol per litre around the world. Varying in price from $0.02 a litre in Venezuela to Eritrea with a price of $3.33. Generally Western European economies have the highest price of petrol due to higher petrol tax.

Out of 217 countries listed by the world bank.

Most expensive place to buy petrol in the world

Eritrea $3.33
Norway $2.27
Netherlands $2.15

The UK is the 12th most expensive country at – $1.92
The US is one of the cheapest countries – ranked 199/217 on list – $0.76

The cheapest places to buy petrol

Venezuela – $0.02
Saudi Arabia – 0.16
Kuwait – 0.22

Reasons for variation in the price of petrol around the world

Oil producer/importer. Countries which produce oil Saudi Arabia, Venezuela and Kuwait unsurprisingly have the cheapest prices. The one exception is Norway – which despite being a major oil producer has one of the highest prices. By contrast, countries which import oil and petrol have higher prices.
Tax levels. In the UK fuel duty is £0.5795 per litre. In addition, VAT is charged at 20%. Approx 60% of the fuel price motorists pay in the UK is tax. This compares to China which has no fuel tax. Malaysia has even had a fuel subsidy.
Wage costs and renting. The other significant cost for petrol is the rent for a petrol station and wages of workers. Wages and costs in Western Europe are higher than in the developing world – explaining part of the price differential.

Petrol consumption per capita

petrol-consumption-per-capita

The US has the highest petrol (gasoline) consumption in the world by quite a long way. This is due to

US has one of the world’s highest living standards,
A transport system geared towards the motorist, long distance car journeys are more common with extensive highway network and more limited public transport systems.
Relatively low price compared to countries with similar living standards.

As China experiences economic growth, its per capita consumption is likely to grow rapidly.