Aggregate Demand and Supply

This article looks at the fate of craft brewers, arguing that the present environment is a perfect storm for them - with rising costs - notably energy, wages and borrowing - and ever more competition in the sector. As a result, profit margins are being squeezed, the number of smaller brewers is starting to decline and others think that this is symptomatic of a sector on the wane. 

More on profits, costs, break-even point, firms continuing to stay in business despite loss-making. In this instance, it's Jaguar Land Rover who've reported a record £3.6bn loss. 

This record loss is being attributed to a number of factors, not least a collapse in the Chinese market.

A follow-up to yesterday: Tesco is looking at cutting costs. 

A follow-up to yesterday's piece on the sustainability of the fashion industry, with the Commons environmental audit committee currently examining the environmental impact of clothes production.

How can retailers sell T-shirts and dresses at rock bottom prices? Well, in the first place because they're made in bulk in places with exceptionally low wages - and similarly low H&S standards - and secondly because they are loss-leaders to get people into stores and onto websites.

In some instances, this might also be seen as predatory pricing, selling a good for less than its marginal cost, but I doubt whether banning this practice would do anything for worker welfare or the sustainability of the sector.

Interesting economic news emanating from Dyson - their new electric car is going to be made in Singapore. Lots of entry points - microeconomic, macroeconomic and international. And lots of fascinating economics to consider.

And don't mention Brexit.

Is the journey towards the mass production electric car in danger of being parked? Tesla are proposing to lay off nearly one in ten on their workforce, suggesting that the company is inefficient. 

However, is this a fixed cost or a variable cost? And what effect would you expect this to have on productivity? And what about the profitability of the company? Lots of possible areas of interest - which makes for good economics in my book.

Wages are going up at Tesco, but look it's been cleverly managed so as not to adversely affect costs. Bonuses are being cut at the same time - and all the while the CEO takes home annual pay of £3m and a bonus of £1.6m.

It makes the generosity of the extra £1,200 for workers doing a 30 hour week seem small in comparison.

Really interesting look at Apple's response to lower than expected iPhone sales: should they lower price?

It depends upon a variety of factors? Has there been a change in the PED for iPhones? To what extent are they able to separate markets and charge different prices? Are they able to drive down costs - or squeeze profit margins - and which is the better play in the long-term?

I think I might start with this today.

Is this the first sign of Tesla starting to flag? Elon Musk announced that the electric carmaker is looking to cut around 3,000 jobs as it tries to ramp up productivity and efficiency in 2019.

It highlights the fact that the cost of making the car means that his ambition of it being a mass market vehicle are yet to be realised.

A nice article looking at the nature of the fuel market: supermarkets are cutting prices, in response to a fall in wholesale prices. Thus, you could look at the ways in which falling costs affect the equilibrium price of petrol.

However, the article also notes that many commentators are quick to point out that the price of fuel could have fallen quicker - suggesting that the supermarkets have a degree of market power in the market - allowing you to consider whether it's an oligopoly and the possibility that it's best described by the kinked demand curve. 

An interesting aviation story with a number of different angles that merit a look: competition, economies of scale, income elasticity of demand, costs.

You choose where to start...

An excellent prompt - can you think about how this news might affect a costs/revenues diagram, and potentially the profits of airlines?

You might also think about how market structure is relevant here, as well as trying to disaggregate the effects on the sector more generally. For instance, why might larger airlines be better able to cope with rising costs than smaller competitors?

Lots to ponder, not least the difference between variable and fixec costs.