1. 1. During the most recent recession the numbers applying to enrol in higher education have risen dramatically. How might we use economics to explain this phenomenon?
   1. Fewer jobs
      1. People who lose jobs may feel like reskilling for when the good times return
   2. Lower opportunity cost of study compared to reduced work openings
2. 2. This autumn UK universities turned away thousands of applicants whose grades would normally have got them a university place. What does this tell us about the type of economic system (allocation mechanism) that operates in the UK university sector?
   1. Te "price" mechanism in higher education is in A level points or equivalent not cash (this will not change in the unfree Market post 2012)
   2. When demand (applications) increase with relatively fixed supply (government rationing) that price, in A level points, will rise, so those who could previously afford the price (the lower points scoters) will be squeezed out of the market.
3. 3. The current student tuition fees for UK universities are capped at £3225, however from 2012 this cap has been raised and many universities have announced their decision to raise fees to the new limit of £9000 per annum. What normative and positive issues are raised by this change?
   1. Positive:
      1. In an unhampered Market raising the cash price would decrease demand. Increasing the range of prices should make consumers more price sensitive. In practice the new system is far from free, the spreads narrow, seemingly regardless of quality
   2. Normative:
      1. What is really happening is that the cost of HE is being transferred to the primary beneficiary, the graduate, in the short run. But will come back on the tax payer if graduates do not earn enough to repay. The artificial market will mean that the main "price" factor will still be qualifications, which will change little. Other factors are at play...like "credentialisation" where there is artificial demand created by professions externalising their training costs onto the individual trainee by insisting on degrees. See http://jockcoats.me/universities_challenged_there_may_be_trouble_ahead
4. 4. What is the likely impact of the growth in graduates on the nation’s production possibility curve (draw it).
   1. The PPC will be shifted to the right as increasingly educated workforce engages in higher value production
5. 5. Again, a curious fact about the most recent recession is that the employment rate (numbers in a job or actively seeking a job expressed as a percentage of all those eligible to work or seek work) for the 55+ age group has been rising while the opposite has been happening for younger age groups. How might we use economics to explain this fact?
   1. In a knowledge/service economy there are more jobs for people with experience and qualifications (see credentialisation). Younger, unskilled workers are squeezed out as appropriate jobs are the first to go.
6. 6. Go to the following url: http://www.guardian.co.uk/uk/2009/sep/24/prisoners-drink-swine-flu-gel As an economist, do you think the decision taken in this case was a sensible one? Justify your answer.
   1. Yes, probably. There are alternative goods for hygiene use. The risk of influenza as it turned out was small compared with the risk of injury for inappropriate use of the alcohol basses hand wash.