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here's d question

chiomy
1. assess whether pig farming is a perfectly competitive industry? 2. explain, using diagrams, why: (a) there was a fall in the number of pigs on Uk farms in 1999; b) pig farmers continued to produce in 1999 despite making losses. 3. discuss what might happen to the number of pig farmers in 2000 -2001. this question is on page 349 of economics 3rd edition by alain anderton and there are some diagrams associated to it. help. thanks
1) pig farmers operate in a perfectly competitive market and are price takers, they are faced by a relatively small number of processors/manufacturers and, especially, retailers who can take advantage of the imbalance in market power. rest i dont know lol cant c the diagrams. Dave :)
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Essay

jackassarmarni
In the aqa syllabus for the last question of a module you have to write a short essay. To get the higher marks you have to show sound analysis and judgement but im unsure what this means please help. Please explain with examples
I am currently doin AS economics. what analysis is, is when u put a point forward like for example, "One supply side policy which could be used to bring down unemplyment is for the government to invest in more education and training" then u must put "HOWEVER" this is where u get level 4-5 "HOWEVER this may be a good idea but it would take years to see the effects of this policy" the main thing is argue both sides. This shows the examiner that u understand the topic area and also are able to evaluate thro analysisng the given info ( usually items A and B in the actual exam question) Judgement in the essay is that when u have argued both sides like in the example above u yourself have to choose which one u agrre with. so for example i would write, "Even tho it would take a long time to see the effects of improvements in eduction on unemployment, it can bee seen as an improvment in capital goods(workers, labour is a capital good) and so in the long run there may not be high unemployment and the economy will be working much more near the PPF" here a judgement has been made on the previous argument and a reason for that judgement. Make sure u do this for every point u bring up in your essay, and if u do this in the exam it is guaranteed level 4-5 ( A or B) as long as u revise and your knowledge is good. :) good luck . Donna-marie.x
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multinationals and FDI

Jesika
hi...this isnt really an uni question but anyways.....can any one plz tel me the following: 1. what are the advantages and disadvatages of multinational corporations (MNC)?? 2. what are the advantages and disadvatages of Foreign direct investment (FDI)???? thanx in advance Jess xxx

OK, using the StudyZones search engine, I was able to find this:

First of all you should explain exactly what a MNC is: a company which has it main office (or parent) in one country and its other offices/manufacturing departments/bases/assembly plants in another country eg BP/Sanyo/Coke-a-cola/etc.

Multinational corporation, business enterprise with manufacturing, sales, or service subsidiaries in one or more foreign countries, also known as a transnational or international corporation. These corporations originated early in the 20th cent. and proliferated after World War II. Typically, a multinational corporation develops new products in its native country and manufactures them abroad, often in Third World nations, thus gaining trade advantages and economies of labor and materials. Almost all the largest multinational firms are American, Japanese, or West European. Such corporations have had worldwide influence—over other business entities and even over governments, many of which have imposed controls on them. During the last two decades of the 20th cent. many smaller corporations also became multinational, some of them in developing nations. Proponents of such enterprises maintain that they create employment, create wealth, and improve technology in countries that are in dire need of such development. Critics, however, point to their inordinate political influence, their exploitation of developing nations, and the loss of jobs that results in the corporations' home countries.

MNCs are, of course, of enormous benefit to countries, and particularly the UK. Overseas investment in the UK now exceeds £370B, much of it coming from the US and the EU, and much of it focusing upon manufacturing. Hence MNCs contribute 25% of the UK's manufacturing output, 35% of man. investment and 30% of our visible exports.

The drawbacks are as follows:

1. MNCs look for low cost locations and/or places where market access is easy. The UK fits the bill very well - low business taxes, cheap sites, relatively few regulations, weakish unions and lowish labour costs, tariff-free access to EU markets. But ny of this can change - and thus MNCs can then reconsider their strategy, and pull out at short notice. The effect on national output and employment could then be very severe.

2. Though there is often 'technology transfer' (i.e. domestic firms copy the advanced working practices found in most MNC plants) the more uncompetitive firms are likely to be taken over, or else may have to close down, resulting in unemployment, and still greater dependency upon MNCs for domestic growth.

3. All of the profits made by the MNCs in this country are repatriated to the parent company overseas - this is a net outflow on the invisible account of the balance of payments.

4. Any recession in the MNC's home country is likely to see a cutback in overseas operations, as confidence, sales and funds dry up - many US companies are currently cutting back on their overseas investments.

In principle a nation needs to resort to supply side policies to correct such imbalances - in other words policies designed to promote the growth of domestic firms, and thus reduce the reliance upon MNC plants. Such policies might include: privatisation, opening up of monopoly markets to greater competition, creation of flexible labour markets, tax incentives to domestic firms for investment, promotion of small firms (largely in niche markets), training and retraining schemes, direct government employment creation in the public sector, etc. Or of course the government can encourage UK firms to merge, to gain economies of scale and thus be able to compete more ffectively. It should be noted that UK MNC investment abroad actually exceeds overseas MNC investmrent in the UK, so the problem isn't quite as great as at first it seems.

Most of the multinational companies are likely to be large so your answer should include the benefits of economies of scale such as bulk buying, specialisation of process, specialisation of product, leading to a decrease in the average cost curve.

Specifically, multinational companies are able to benefit from a larger market than they would otherwise domestically. You may wish to expand your answer by considering the different types of multinational company. Some have production facilities in one country and merely have branches worldwide, others have multiple production centres. There are good reasons why some firms may wish to produce within one of the economic trade groupings such as the EU. They can be considered a domestic producer rather than be discriminated against as a foreign company.

Multinationals are able to use different pricing strategies worldwide and also transfer assets (and profits) as they wish between different parts of the company. This can save tax. They are able to earn larger profits in low tax countries and smaller profits in high tax countries.


FDI - An investment abroad, usually where the company being invested in is controlled by the foreign corporation. An example of FDI is an American company taking a majority stake in a company in China.

Foreign direct investment (FDI) is the movement of capital across national frontiers in a manner that grants the investor control over the acquired asset. Thus it is distinct from portfolio investment which may cross borders, but does not offer such control. Firms which source FDI are known as ‘multinational enterprises’ (MNEs). In this case control is defined as owning 10% or greater of the ordinary shares of an incorporated firm, having 10% or more of the voting power for an unincorporated firm or development of a greenfield branch plant that is a permanent establishment of the originating firm.

In the years after the Second World War global FDI was dominated by the United States, as much of the world recovered from the destruction wrought by the conflict. The U.S. accounted for around three-quarters of new FDI (including reinvested profits) between 1945 and 1960. Since that time FDI has spread to become a truly global phenomenon, no longer the exclusive preserve of OECD countries. FDI has grown in importance in the global economy with FDI stocks now constituting over 20% of global GDP.

The estimated stock of FDI in the UK at the end of 2002 was £367 billion. Of the FT top 500 companies operating in the UK, 313 were foreign-owned in 2002.

The benefits to the UK economy are:

1. FDI represents an injection into the circular flow of income; this has multiplier effects at both national and regional levels.
2. Much of the FDI is in depressed regions, which contributes to regional prosperity and employment.
3. FDI increaes the nation's stock of capital, and therefore raises productive potential and shifts he aggregate supply curve to the right. 4. FDI raises the overall productivity level of the economy, together with a technology transfer effect on other UK firms; it also improves the skills level of the UK workforce.
5. FDI widens the range of goods and services available to UK consumers, and also tends to lower their prices.
6. It accounts for about 30% of manufacturing employment, 35% of manufacturing investment, 35% of manufacturing output, and nearly 40% of UK manufacturing exports, allowing the UK to penetrate EU markets. 7. It helps, through the surplus it creates on the capital account, to finance the growing current account deficit.

The Advantages and Disadvantages of FDI for the MNE:

Disadvantages:

- More costly travel/communications abroad.
- Not having a close familiarity with local business tax laws, business scene in general, and various government regulations.
- The MNEs face risks such as exchange rate changes, expropriation by the government, and other actions that can be taken against them.
- Language and culture differences
- Higher wages/benefits must be paid to the personnel going abroad.

Advantages:

- Jumping the tariff wall (and other non- tariff barriers)
- Securing access to minerals located in the host country
- Lower wage in host developing countries for labor.
- Protection of market shares in exports if MNE's competitors also have established plants in the area.

'Advantages' and 'Disadvantages' of FDI Policy Instruments (UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION)

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economics homework...help! (911!!!)

chiomy
Hello. Could anyone out there (preferbly economic students) help me out with these questions on Balance of Payment on page 196 and Exchange rate on page 262 of economics third edition by alain anderton. i cant post the questions here because some data has to be studied to answer the question. please help. im really stuck and it is due next week wednesday. Thanks .::.~.::.Uzo.::.~.::.
Hey chi, The BoP question 1, u jus need to say that there are great fluctuations in the balance of trade mainly resulting in a deficit (from the graph:figure 30.6) which is worsening as the time goes on. (talk about the stuff thats written n the box next to the diagram its basically giving u the ansa!) However the total investment income is increasing greatly (as shown in fig 30.7) and explain that using the box next to it again! Question 2: Since there is a deficit, its implying that the pound is stronger than other currencies and so the value of the exports is expensive and so there are less orders coming their way and people find that importing into UK would be cheaper than buying goods within UK and so further damaging the BoP. Questiom 3: For this use the AD/AS diagram and say that the fall in exports and rise in imports means that the AD curve shfts to the left resulting in lower inflation and lower GDP. Lower inflation would be gud cz that means that people would feel that they can spend more (positive wealth effect) however fall in GDP means lower output, loss of jobs and greater unemployment. (build ur ansa through that n ull be fine) Page 262 Q1: The pound weakened initally however after 96, value of the pound strengthened Q2: at first increased exports and lower imports as the value of UK goods was cheap but after 96, strong pound = expensive UK goods causing fall in X and increase in M Q3:a) UK is in a floating exchange rate and so use interest rates in order to weaken the pound (increase interest rates) b)such policy will help inflation but create problems for output (look at point 4 in the summary at the beginnig of the chapter!) Good luck!
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preparing a budget(economics students)

chiomy
for the economics students has anyone answered the questions on page 240 of Economics 3rd edition by alain Anderton. please help with the question 2, 3 & 4 thanks
In regards to Q2, It was sensible not to increase tax revenues at this point was because GDP (national income) was very low at this point as shown in figure 36.7 this means people where not earning a lot of money and so to take more money of them through tax could discourage them from working and also discourage consumer spending when that is what the government really wants to avoid as they want to increase aggregate demand and this in turn would provide more jobs and encourage foreign investment, which then would boost the economy.Instead of increasing tax revenues they the mpc would most probrably reduce interest rates to compensate. In Q3 the 1993-1994 tax changes did not make a significant difference to aggregate demand, this is mainly because the taxes which they did decide to increase where new indirect taxes like airline flights and general insurance also increased excise duties on tobacco wine and petrol which are all inelastic goods thus not effecting aggregate demand. This allowed output of the economy to incease as direct taxes whre kept the same (income tax) the increase in output helped keep inflation down and this allowed the economy to grow healthly. Q4, it would have been a bad idea for the chancellor to cut taxes in 1996 or 1997 because, even though the governmount was trying to maintain high growth it may have encouraged a surging increase in aggregate demand which could have become unsustainable and id there wahere high demand for goods an d services there is the chance of high inflation. At this stage in the economy it would prove best not to change taxes. Hope this helps. Donna-marie.x
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I think the topic's elasticity. maybe...

reemie_trivedi_
Smaller airlines operate in several conutries and usually use aircraft that seat a maximum of 100.At the current price charged during peak hours (eg. school holidays), one airline finds that some tickets are unsold, leaving empty seats. Whhy might it be better for the airline to fly during peak hours with some empty seats, than to fill all seats at a lower price? Hi guys. This has something to do with price elasticity of demans and revenue earned right? Hah... hmm have to figure out how to do this in 750 words. I'll come up with something. I appreciate any help. thanx.
because there are a lot of big airline firms out there like virgin airlines they control the monoply in air travel. because this is a small airline u are talking about it is classed as elastic and an airline like virgin is quite ineslastic. if this small airline cuts the price they may fill the seats but be worse off in the long run, if they did endup being worse off they may be pushed out by the monopoly companies. hope this helps
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will the BoE cut interest rates today?

chiomy
hi, i need help with my economics homework. it is on page 246-7 of Economics Third Edition by Alain Anderton. Please help. via any means. especially question 3 and 4. lol Betty xxx
In regards to question 3 the bank of england should cut interest rates in 1999. This is because in fig 37.10 it shows claerly taht consumer confidence has decreased and by cutting interest rates it leaves people with more disposable income and thus encourage them to spend and so the consumer confidence may be restored. Also from fig. 37.8 it shows that the economy growth is decreasing so to stop the country going into a recession agrregate demand will have to be increased so again interest rates need to be cut to encourage consumer spending, and bussiness investment, because if interest rates are lowered then it is easier for firms to get a loan to invest in capital goods. For question 4 the Mpc may find it difficult to decide because the economic data for one month is unreliable. If the statisticians say that average earnings increased 0.564% last month, it is almost certain that this is not totally accurate. So the members of the MPC have to make judgements about how plausable are the statistics presented to them. These are guaranteed answers coz i did the same homework and got a "B" good luck and i hope u understand wot i wrote. Donna-marie.x
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dance

=lozza=
does anybody do gcse dance here? if so what is ur solo about? i dunno what to do im stuck help me and u will get 12 points IN 4 THURSDAY
i'm doing about an orphan who lives on the streets and this talented dancer [isadora duncan] finds me and she adopts the orphan, blah i hate it! Anyways its a scarf dance and a chair dance mixed together, it's good actually..
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Help!! macroeconomics multiplyer effect

Donna-marie
I was in class and my tutor ws explainig the multiplier effect but i was not listenig can anyone explain it to me, i would be very grate full.
the easiest definition i could find was: An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent.
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DE-INDUSTRIALISATION?

Jesika
is deindustrialisation in the UK good or bad???Also what are the advantages and disadvantages of it and how has the UK economy developed since the 1970s????Any info ne1 can give me wil b much appreciated...fanx in advance!Luv Jess.
http://www.tutor2u.net/economics/content/topics/manufacturing/deindustrialisation.htm http://www.tutor2u.net/economics/content/topics/manufacturing/deindustrialisation_causes.htm hope it helps (read it b4 accept it) ;D
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