The Economics Graph... Oh What A Laugh!

I know what you're thinking: 'Oh boy, she's lost it! Economics graphs aren't a laughing matter?'. Trust me though, any part of my studies where we are urged to use coloured pens is, indeed, an incredible incentive to actually do the work. And, I've always had a little bit of an obsession with coordinating my colours when using coloured pens.
So that's why I found myself sat in my economics classroom, just before lunch, doing an impression of a seven year old when she realises it's Christmas.... "Yesssssss!" (whilst pumping a single fist into the air). Truth be told, I didn't even hear what we were actually doing in the lesson, but the words 'coloured' and 'pens' ignited a spark deep within my soul.
So after a moment of deep contemplation as to which colours I should put where, I got to work on my first ever Demand Schedule. Yes, a proud moment indeed.

At a guess, you probably aren't reading this post to find out about my slight OCD for presentation, or my love of coloured pens. You're probably here to truly experience the meaning of 'The Demand Schedule', so I'll try my hardest to fulfil your thirst for knowledge.
As my notes say, "The demand schedule is one of the most widely used concepts in economics.... Blah blah blah"
In the most basic terms I can muster up, the demand schedule is the relationship between price per unit and quantity demanded. Simple, right? It gets a little harder, but I managed to continue the rest of the lesson with such basic and undetailed knowledge and a little pizazz from my coloured pens.
It was when I came to do the accompanying homework that my troubles really set in, so I faced the fact that I wouldn't be able to fly through economics A Level armed with nothing but a set of coloured pens (despite the fact that I possess multiple width nibs and a wide spectrum of colours).
So here are the five questions I asked myself in order to understand this topic further. Hopefully they're useful, if not then I don't know what to suggest...

Q1: So, what does this sneaky little demand schedule look like?

It can look like one of two things: a rectangular hyperbola, or a straight line (inversely proportionate, that is)

Q2: What is a rectangular hyperbola? Some kind of cross between hyperactivity and ebola?

Yes. Just kidding, but it doesn't have anything to do with rectangles, or over exaggeration, as it's name would suggest. It's basically a curved line that is constantly decreasing in gradient, never touches the x or y axes and never ever ever ever becomes flat (be that horizontal or vertical).

Q3: And what would cause movement along these lines?

A change in price.

Q4: What's the difference between movement along the demand schedule (moving from one end of the line to another) and a shift (when the positioning of the line changes entirely?)

Movement: increase in demand at a specific price (e.g if a sweater was featured in a magazine, the price wouldn't change, but more people would want to buy it... Ah, the power of print)
Shift: increase in quantity demanded at all prices (e.g cobalt blue is the new black, so no matter whether your new blue skinnys are Primark or Hudson, the price will go up on both items to make maximum profit from a new trending item)

Q5: Which variables can cause a shift in the demand schedule?

• A complementary good becoming cheaper/more expensive. A complementary good is an item that you'd buy in conjunction with the original good (e.g music for an iPod. If the price of music goes down, then more people are more likely to buy iPods, causing a rightward shift in the demand schedule. Likewise, if music became more expensive, then people would buy less iPods, or alternatively turn to illegal downloads... You see my point)
• A substitute good becoming cheaper/more expensive. A substitute good is one that you would buy instead of another (e.g if the iPhone 5 is raised in price by £100 (which would be unjustifiable, as it's already more expensive than its worth) then Samsung Galaxy sales would probably shoot up, causing a rightward shift in the demand schedule for Samsung's and a leftward shift (decrease) for iPhone sales) 
• Increase/decrease in personal wealth (e.g if your father has just bought a super car (not mentioning any names...) then you probably won't have enough money for a new iPad, therefore causing a leftward shift in the demand schedule for iPads. Not that one purchase would make a dramatic difference, but you get the idea) 
• Advertising. A good advert can boost sales by massive proportions (e.g 'Compare the Market' with that adorable yet slightly confusing little meerkat. There's no denying that the popularity of that advert lead to massive boosts in sales and also public knowledge of compare the market, as well as people trying to imitate that 'simples' catchphrase, therefore causing a rightward shift of the demand schedule for that website and a great deal of heartbreak and crushed dreams when children of all ages realised that they couldn't accurately imitate the meerkat... What's happened to humanity?) 

I know what you're thinking (yep, I really am a mind reader now), why haven't I been able to see some of the glorious graphs (alliteration... The English department would be impressed) that I spent hours slaving over. Well, after a long period of staring at my iPad in disgust and confusion, I realised that I didn't know how to upload a picture. The mind is a wonderful thing, but google is better, and I think I've finally worked it out. Hallelujah! 

A basic demand schedule...

 The differences between a movement in the demand schedule and a shift....

And finally, a rectangular hyperbola, if my descripion didn't suffice (which I doubt it will have done...)

So, I hope you've learnt at least one of three things from this blog post: A) that I really like using coloured pens. B) that I'm quite old fashioned: I could have easily drawn those graphs on the computer but I prefer good old pen and paper. And finally, C) anything about the demand schedule. Hopefully you learnt C, but if you really didn't, then I suppose A will suffice.

I Command (economy) you to read this...

For my homework assignment this week, I was given the task of defining three forms of economy, depending on the governments level of control. So I started off by simply defining those terms, which is surprisingly easy with the large content of Google at my fingertips. However, problems arose when I was urged to actually prove I knew what they meant. I must confess that I do know a little bit about them, but explaining them to the whole of my Internet community? Oh my goodness me. Here goes:

Numero Uno: Command Economies.
Definition: An economy where supply and price are regulated by the government rather than market forces. Government planners decide which goods and services are produced and how they are distributed.

My teacher started off our teachings on these three types of economies by giving us a list of six countries: North Korea, Cuba, Hong Kong, USA, Sweden and New Zealand, and we were then asked to put them along a continuum stretching from Command Economies, through Mixed Economies and ending at Free Economies. As he could have easily predicted, I didn't get that many in the correct positioning, but one I did get right was good old North Korea.
North Korea is a Command Economy, as the government controls what supply and trade happens within that country (because they're Communist... Even an ex GCSE history student knows that!). So basically, if the North Korean government decides it wants to make lots of iPhone 5s (topical, eh?) then they demand that companies do. That's an example of a Command Economy.
Another is Cuba (which I didn't put down on my sheet, as other than cigars, I know very little about what the Cuban economy does or how it is operated). So, using Cuban cigars as my example, if Cuba wants to maintain it's status as the best cigar making country on the planet, then the government will demand that industry creates more cigars.

Numero Dos: Mixed Economies.
Definition: An economic system in which both the private enterprise and a degree of state monopoly  (usually in public services, defence, infrastructure, and basic industries) coexist. All modern economies are mixed where the means of production are shared between the private and public sectors.

I, in my own mind, am regarding these economies as 'the middle ones'. They're like trench coats: they fit under the umbrella of summer coat and also winter coat, but are never warm enough for the winter weather, but always slightly too thick on a hot day. Mixed economies, in the same way as trench coats, possess some key components of a command economy in that they are partly controlled by governments; and they also possess the main component of a free economy (that is, free trade).
Oddly, I made a mistake in matching the list of countries to the mixed economy box. Even more oddly, in fact, is that when I discussed this post with my father, he made exactly the same mistake as I did (like father like daughter...) and there I was thinking he was economics oracle...
Anyway, we both made the mistake of not classifying the USA as a mixed economy, which (according to my Economics teacher) it is. Huh. Along with the US, New Zealand and Sweden both have mixed economies too, as their economies are partly controlled by their governments and partly by private businesses and organisations.

Numero Tres: Free Economies.
Definition: A market economy based on supply and demand with little or no government control. A completely free market is an idealised form of a market economy where buyers and sellers are allowed to transact freely (i.e. buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes, subsidies or regulation.
(i.e. not an economy where everything is free. Oh, how wondrous that would be...)

I begin with a quote that my father delivered me (again, in our weekly economics discussion) from an origin of which I can't quite remember, but nonetheless, it got the point of free economies across: "Doing business in the US and UK is hard work; but doing business in Singapore and Malaysia is vroom vroom". Why is this, I hear you all crying. The answer is a simple one, and one that is featured in the above definition (which you probably haven't read, which is why I'm repeating it!): there is very little/no government intervention. We were given the example of Hong Kong as a Free economy, but I think that Malaysia and Singapore are more Free because they aren't controlled by a Communist country, mainly because of my father's recent interjection of business into those two areas, and of course, his colleague's fabulous quote.

To recap:
Command economy: where business and trade are commanded by the government
Mixed economy: where business and trade are controlled by a mixture of government and private business
Free economy: when businesses are free from government intervention.
So there you have it, my version of killing three birds with one stone: homework, blog post and revision. Not bad for an evening of 'hard work'.

Keeping Promises.. Burberry

If you cast your mind back to my first post (shouldn't be difficult, it was only on Monday), I promised you some posts about how my favourite companies are faring in the stock markets. And I'm always true to my word.
You can imagine my mixed emotions when I was casually flicking through news stories in bed yesterday morning (because I'm THAT dedicated to economics) when I came across a story about Burberry (let me repeat: err... Burberry!). You can imagine my delight when it dawned on me that I might have a possible first post that's actually about economics, but also my distraught frame of mind when I realised that shares had dropped, and big time.
The overview of the situation? Burberry's shares dropped by just over 20% to £10.88 (from £13.75), which is the lowest figure since last October, which wiped £1.3 billion off their stock market.
What, I hear you cry, caused this decrease? The answer, according to The Guardian, is a simple one: China. The Chinese love a good luxury item, to prove this, all you have to do is visit an outlet mall in any country. At the moment, however, Chinese luxury trends are a-changing. In a country where 'bling' was the new black, refined, more elegant styles are making a comeback. So how does this affect Burberry? The traditional camel, red and black check has been seriously blinged out and sold in China, so is this causing less sales? There's also the argument that as the Communist once-a-decade leadership transition is upcoming, people are being more frugal with their expenses, and gift giving is especially uncommon.
It is also argued that all luxury brands are taking a hit, with LVMH (Louis Vuitton Moët Hennessy) falling 3.4%. Although this isn't as bigger drop as Burberry, the future doesn't look bright for luxury brands.
What positives can we fashionistas take from such a devastating blow to our industry? Products that wouldn't be on sale until the holidays are coming into stores fresh for October - victory!
Whatever your opinion on the matter, it's quite a result.

Want more?
Bloomberg
This is Money

Bonjour, Bonjourno, Hello, Howdy (for the cowboys amongst you)...

If any of these first readers (which is probably a very limited number) have ever wondered what teenage girls who have a head filled with fashion, reality tv shows and gossip have to say on the subject of economics, you have come to the right place!
I'm a wannabe fashion journalist by day, but now I hope to be an apsiring economics blogger by night. In a world filled with doom and gloom and men in musty brown suits, I hope I can shed some light on what's caused this in a more interpretable way for the masses (althought I can't help with the brown suits: the explanation is well beyond my mental capacity).
So here we have it, the beginning of a new economic era (fingers crossed). Consider me the beginning of clearer explanations of what economics really is: from current affairs, to goverment plans, to how my favourite businesses are fairing in the stock markets (err... Burberry!), plus (if you're lucky) you may get to read some of my hair brained schemes to a) get rich from and b) to sort out the world's economic crisis. They're.... riveting, to say the very least.
This is a small step for the Economics department of my school (a very small step) but a giant leap for economies everywhere (maybe not...still). Enjoy!