Water is a valuable commodity; with global warming it appears to be even more scarce. A report suggested that British rivers could see an 80% decline in water volumes during the summer months because of global warming and increased demand. With most scarce commodities like electricity and gas, you have to pay depending on how …
UK Inflation Since 2000 Readers Question: How can we have both inflation and deflation in the economy at the same time? (the RPI falling to 0% and CPI rising to 3.2%) Deflation requires a fall in prices. We would need a negative inflation rate (e.g -0.3%) to have deflation Note if the inflation rate fell …
Readers Question: I have been learning about inflation for AS at the moment. I would like to know about whether inflation would be a short-term phenomenon as we were told inflation takes place when there is excess demand and price will rise, it will also encourage the company to produce more. Therefore, shouldn’t it be …
The Neo-Classical Theory of Firms makes the following assumptions Firms are profit maximisers. Firms will maximise profits where MR=MC In the short run, firms are subject to diminishing returns. In the short run, capital is fixed, therefore MC is upwardly sloping after diminishing returns sets in. Prices are flexible. If there is a shortage of …
Readers Question: Could deflation lead to devaluation of the UK Pound? Deflation in the UK means prices fall. This hasn’t happened since the 1930s, but, if it did happen, it could lead to a further depreciation in Pound Sterling. Firstly, deflation would mean interest rates would likely fall to 0%. This fall in interest rates …
Readers Question: Should we worry about water running out? In a way, water is a renewable resource. From a global perspective, water is almost infinite in supply. However, there can be serious water shortages in local areas. This is becoming an increasing problem due to population growth, climate change and rapid economic growth. Also, it …
Readers Question. Could you give any more information on how you think consumer buying habits will be affected by the credit crunch moving into 2009. Obviously people are spending less nowadays and tightening their purse strings. Will this continue into 2009? Will we see the birth of a new type of savvy consumer who knows …
Example of a AQA unit 4 question from June 2007. AQA paper available here Note: Some of the data can’t be published online. This is just a short guide to answer the question. I think it lacks – more use of data and more evaluation. Explain why Free Trade is important to EU member countries …