Obesity, Market Failure and Government Intervention.

Obesity

Obesity is accumulation of fat in the body that increases very fast. There are some methods which we can use to measure obesity. One of them is the Body Mass Index (BMI). It is calculated as your weight (kg) divided by your height (metres). Recent establishments show that people of average weight are considered to have a BMI between 18.5 and 25. People who have a BMI of over 30 are con

sidered obese.

Here is some interesting fats about obesity in the UK.

- 70% of men and 63% of women in the UK are overweight or obese.

- Obesity accounts for 30000 deaths a year in the UK.

- Obesity is estimated to cost the British economy over £2bn every year.

- One in five children in Britain eats no fruit at all.

Causation

1) Changing life styles. Some people don't have enough spare time to cook, so they have to buy something in supermarkets or take-away food. Especially workers, who have just one our for linch is likely to use fast food, which is, probably, could cause obesity.

2) The falling real cost of processed foods because of economies of scale. Fast food is always cheaper than fresh food, because companies who sell fast food are operating on the level of economies of scale (large size)

3) Calories.

4) A rise in relative poverty.

5) Bigger portions.

Obama harbours fear of 'double-dip recession.

Today at the press conference The Barack Obama has warned that the US economy could head into a “double-dip recession” unless urgent steps were taken to rein back America’s mounting levels of public debt. The problem is that the unemployment in USA rise to 10.2 per cent, the President said his administration faced a delicate balance of trying to boost the economy and spur job creation while bringing the rising deficit and debt under control.

Trade deficit balloons on car and oil imports.

Britain’s goods trade deficit with the rest of the world rise much more than expected in September to the biggest gap since January, hit by Britain's "cash for bangers" scrappage scheme which has driven a surge in car imports. The Office of National Statistics said today that Britain’s goods rise to £7.2 billion pounds in September from £6.1 billion in August, well above analysts’ expectations for the deficit to remain at £6.1 billion. Today's dire figures emerge ahead of key employment data tomorrow and after official estimates for third quarter gross domestic product (GDP) last month showed that Britain was still in recession. The trade deficit had been narrowing in recent months as economists and policymakers speculated that the weakness of the pound was boosting British exports and helping to rebalance the economy.

Car sales rise by 31.6% on scrappage scheme.

The biggest monthly increase was in October, when sales jumped by 31.6 per cent. Some 168,942 new cars were registered last month, up from 128,352 the year before, as sales of vehicles to private buyers increased by 86 per cent to 89,532, according to The Society of Motor Manufacturers (SMMT). Unfortunately sales of fleet cars decreased by 2 per cent to 74,445 because company cars are rarely old enough to qualify for the Government scrappage scheme, where owners of vehicles that are more than ten years old receive a £2,000 discount on a new model by trading in their old one.

House prices record first rise in 19 months.

The prices in Britain for houses are higher than they were a year ago, in the first annual house price rise for 19 months. New figures from Nationwide show that during October, house prices rose by 2 per cent compared to the same month last year, signalling the first annual rise since March 2008. However, the monthly pace of growth is slowing, with house prices rising by 0.4 per cent in October, compared to 0.9 per cent in September and 1.4 per cent in August. Prices have been slowly rising on a monthly basis since May. Nationwide said that this could be due to more sellers returning to the market, creating more competition

Smoothies and cola

1)Because smoothies contains balance vegetables and makes a balance diet and also it's healthier then other soft drinks.

2)Demand for smoothies would be more than cola because firms would make advertisement

which telling that smoothies are healthy and better for people to by smoothies rather killing

them selfs by drinking cola.

3)One result was that sales of cola and other soft drinks were affected,with people switching

to smoothies.

Surprise fall in youth unemployment dismissed as the ‘lull before the storm.

The rise of unemployment in UK get slowdown and in the three months to August as the number of young people out of work fell, official figures showed yesterday. Unemployment rise 88,000 to 2.47 million, but now situation is that the number of young people out of work fell to 946,000 — 1,000 fewer than the record high set in the three months to July. The number of people signing up for jobless benefits climbed at the slowest way in 16 months in September, rising by 20,800 to 1.62 million. Among 18 to 24-year-old, the figure increased by nearly 8,000 to 490,000.

However the statistics little bit surprised economists who who was thinking that unemployment will rise above 2.5 million and youth joblessness to climb to 1 million as tens of thousands of school and college leavers struggled to find jobs.

Insurer Zurich to cut workforce

Zurich is consulting with unions on plans to cut staff numbers by about 10% by the end of the year. The business employs 5,400 staff in 20 locations all around the country but it is unclear which offices will be affected. The news comes on the same day as rival Aviva, owner of Norwich Insurance, said it would cut 1,800 jobs by 2010. 'Acting swiftly' Zurich said the "decisive" restructuring would improve customer focus and help to achieve more "sustainable" growth in profits. And it said that between 700 and 900 posts were likely to be lost. But the business, which provides general cover for companies and individuals, operates from 20 sites, the largest being in Birmingham and Whiteley, Hampshire. "However, it is clear that if we want to remain competitive, we must act swiftly to increase efficiencies so that we can achieve our growth plans and safeguard the future of our business in the UK."

Stamp prices may rise next year

Stamp prices may rise again in April next year. Regulator Postcomm predicted prices for first-class stamps would rise by 3 p. to 42p. per stamp and prices for second-class stamps would rise by 2p. to 32p. per stamp. He also added that Royal Mail needed extra funding to compensate a decline in mail volumes. Regulator sad that even after rising in prices for stamps Royal Mail would still lose their money.
Stamp prices were last increased in April this year. Royal Mail has another problem. There are a lot of strikes (workers don’t want to work). This is caused by reduction in worker’s places and wages. The result of a ballot by the Communication Workers Union (CWU) calling for a nationwide strike by postal workers will be announced on either 8 or 9 October. While the CWU is demanding that Royal Mail signs an agreement with it to determine the exact scope of job cuts, Royal Mail counters that an earlier deal with the union in 2007 had already sanctioned all necessary future redundancies. The most recent figures show that the Royal Mail's letters and packages unit made an annual profit of £58m in 2008 from a turnover of £6.7bn. Royal Mail counters that this is a very small profit considering the size of the turnover, and staff cuts are required to prevent it returning to losses in the future

Answers:
a) The price elasticity of demand shows how demand responses to changes in price.
b) I’m not quite sure about changes in quantity demanded, because there is no information about demand for stamps in the chapter. I guess, that demand for stamps would not change a lot with rising in price for stamps, because there are not a lot of substitutes of using Royall Mail ( you have to buy stamps for using Royall Mail). So, I guess that the PED would be a number between 0 and 1, because % changes in price for first-class stamps is near 0,07 and % changes in price for second-class stamps is near 0,06. As I sad before changes in quantity demanded of first-class and second-class stamps would equal not a lot. That’s why PED would be between 0 and 1.
c) The number PED between 0 and 1 says us that demand for stamps is inelastic.

d) As I sad, there are not a lot of substitutes of using Royall Mail, that's why demand is inelastic. Also the amount, that person can spend on the stamps. The prices of stamps are not big so customers can buy it.

e) Because the demand for stamps is inelastic, Royall Mail wouldn't have a problems with consumption if the prices will go up. In my opinion, Royall Mail has problems with fundings because of another case (not connected with consumption).It can be a lot of spending or irrational spending.

f) 'Ceteris paribus' means all other things being equal or held constant.

Drinking

A)The amount of alcohol consumed per person has risen by 10% since 2000 - despite drink sales remaining steady. But researchers Mintel said wines and lagers were becoming stronger unfortunately people didn't see the changes. It shows that at list third men and fifth women drink more alcohol a day then it is recommended Because the limit for alcohol three or four units a day.Consumers have limited information to help them make healthy choices about their alcohol consumption.

Don Shenker, of Alcohol Concern Mintel carried out its own surveys as well as using data from a range of sources including the NHS and sales information from shops, bars and pubs to compile its report. Binge drinking among the young is often blamed for growing alcohol consumption, but the Mintel research showed those drinking at home were the group which saw the greatest rise. Moreover, in a sign that binge drinking may be becoming less socially acceptable, 22% fewer 18-24-year-olds agreed with the statement, "the point of drinking is to get drunk" than did five years ago, the report added.

B)http://news.bbc.co.uk/1/hi/health/8223294.stm

1) information failure - is a lack of information resulting in consumers and producers making decisions that do not maximize welfare. Just in simple examples (in the article) we can see that in some cases customers can consume more in situation where information failure exists.

2)

3) Yes, "stealth" drinking is an example of information failure. Because people really don't know about volume of alcohol and also about harmful of drinking. "Consumers have limited information to help them make healthy choices about their alcohol consumption" - sad Don Shenker, of Alcohol Concern.

4) In theory, the government should provide information to show all harmful of alcohol to people and the, probably, people will consume less (average consumption will decrease).

5) people don't know about volume of alcohol and people are not aware of harmful of alcohol.

The economy of China

The economy of China are good developed. Nowadays China is world wide exports China provides almost every thing in world starting from silk and clothes and end with cars trains, all countries buy goods from china i think because it is very cheap.I think that china is very good developed because chinese people is all around the world and they study worldwide for example they study in UK and they get good educated and their future generation will do everything to make the chinese economy stay the same or they will make the economy grow.

Demand and supply

(a) A rise in the cost of refining petrol (H)

(b) A fall in bus and train fares (B)

(c) A fall in the price of crude oil and an increase in the priceof cars(E)

(d) A rise in tax on petrol and a reduction in tax on cars(A)

Pound up as fears of Bank rate change ease

Sterling rallied sharply on foreign exchange markets yesterday as the Bank of England emphasised that it had no immediate plans to change the rate that it pays to commercial banks on sums deposited with it overnight. However, economists attending a “teach-in” at the Bank yesterday were said to have received indications that no such move was imminent, with officials suggesting the Bank was “some way” from deciding on any change. Sterling, which had traded as low as $1.5768 on Monday, rallied as high as $1.5989 once the comments began to circulate in the market. Yields on two-year gilts also rose by 14 basis points at one stage, one of the biggest one-day moves this year.

Bank defends Mervyn King.

MERVYN KING is not trying to talk down the pound, say Bank of England sources, who insist that the currency markets have misinterpreted the governor’s comments. The pound dropped below €1.09 and $1.60 on Friday, its lowest for nearly six months and four months respectively. Traders accused the Bank of trying to talk down the pound deliberately. It countered that the bulletin comment was an attempt to explain the fall in sterling that had already occurred since 2007, and was not a suggestion that it should fall further. Similarly, King’s comment was to a Newcastle newspaper that is running a campaign to boost local exports. The fall already recorded would be “helpful” in that effort, he said.

Multiple choices.

163-a 170-c 177-b 184-d

164-b 171-a 178-d 185-b

165-b 172-c 179-d 186-d

166-a 173-b 180-c

167-a 174-c 181-c

168-b 175-d 182-b

169-b 176-c 183-a

187-b 193-c 199-c 205-c

188-b 194-b 200-d 206-b

189-b 195-c 201-b 207-d

190-a 196-a 202-c

191-a 197-a 203-d

192-b 198-a 204-a

MPC member says cheap finance is gone for good

The member and leader of the Bank of England's interest rate setting committee said that finance never can be good as it was before the credit crunch and identified bank lending as the chief obstacle to Britain's economic recovery. And in the end he add"I think most people are starting to realise that finance is never going to be quite as cheaply available as it was in the years prior to the crash. Businesses are becoming more realistic about what they can get."

IMF leader warns of war in poor countries

The head of the International Monetary Fund warned today that the unemployment was caused by global financial crisis. And greater poverty and prolonged civil unrest and wars among poor nations can happen.But in the end of his speech he add that we almost see the light at the end of tunnel and even if crisis is not finished yet,we hope that crisis will stop in 2010.

Real Madrid don't have a problems with money.

There is recession all most everyone is suffering from the recession. This means most clubs too.

There are however if 

you exceptions for instance Manchester city and Chelsea, 

both clubs owned by people who got there money through oil. Another exception is Real madrid. Real madrid are very lucky because all spanish people and even government. Almost all banks in Spain belongs to government and because of that Real Madrid taking money fro

m the banks and don't give it back in time!!!! 

The Netherlands typifies a European fear that any big fiscal stimulus might just benefit others

Europe and america has a disagreement about the need to use fiscal stimulus to fix economic crisis and barrack obama called this debate as a “phoney debate”. Reasons for this debate are whether this stimulus wil be helpful; fiscal policy includes increase in government spending, while in european union it was said that there is an increase in demand from southern countries to get more communal fund and also there are many aims for which EU has to spend money.
 There are many other national problems in EU such as unemployment which government has to solve by increasing spending, however there is a scarcity of taxation revenueand labour party opposed public spending cuts. 
A surplus projected by Dutch government became a 5.5% deficit and one economist said that the government has to take some measures in order to solve this problem such as reduce wages in order to boost exports.

Home work Economics

Economics studies how to allocate scarce resources among alternatives uses.So the importance of economics is that without this science it would be  very difficult to use given limited amount of resources in the most effective and productive way. Economics consist of micro -and macroeconomics former studies economy in particular country solves real life problems such as  inflation ,unemployment ,etc. While the latter studies economic  relations between countries and how they agree about different aspects  such as export and import. Economics explains present in modern world such as credit crunch,overcrowding of some countries, etc.

As we know there are unlimited wants of that people have and even if they get at once everything what they want, new wants will appear. However, needs of people are limited to the most important things such as food and cloth,and so economics studies the relation between limited resources and unlimited wants.