Monthly Archives: February 2012

4.4c Genetic Engineering & Biotechnology


A clone is a group of genetically identical individuals. It can happen naturally such as asexual reproduction which produced genetically identical progeny and so identical twins are genetically identical. It is also possible to produce clones artificially. In livestock, a egg can be fertilized in vitro which allows it to develop into a multicellular embryo. Individuals cells then can be separated from the embryo  while they are still pluripotent, or capable of developing into all types of tissue, and transplanted into surrogate mothers. Only a limited number of clones can be taken this way because after a specific number of divisons the embryo cells are not pluripotent anymore. Another method of cloning involves the use of non-reproductive cells. The first mammal that was cloned from adult cells was Dolly the sheep. Reproductive cloning of humans involves using adult differentiated cells is a controversial idea. A method that is less controversial though is therapeutic cloning. This could involve production of embryonic stem cells for disease treatment. This type of cloning refers to producing embryonic stem cells from a denucleated unfertilized egg cell that had a nucleus transplanted into it from a patient’s cell or a cell that is a close genetic match like a relative. Stem cell therapies are promising for diseases that are degenerative such as Parkinson’s disease and multiple sclerosis. However if stem cells are not genetically compatible with a person, the individual’s immune system will reject them.

4.4b Genetic Engineering & Biotechnology

The polymerase chain reaction 

A clone is a group of genetically identical organisms, or a group of cells that have been derived from a single parent cell. The word cloning can also mena the production of a number of genetically identical DNA molecules. The polymerase chain reaction (PCR) is a way that can be used to amplify small quantities of DNA which makes it possible to study the DNA further without the risk of using up a limited sample. The DNA extracted from fossils can be amplified using PCR. PCR involved repeated cycles. The first stage of the cycle denatures the DNA sample or separates the two strands using heat. The second stage anneals with a primer selected to math a specific target within the DNA. This is done with cooler temperatures to facilitate the annealing. The final stage extends the primer using DNA polymerase from a bacterium adapted to life at high temperatures. The final stage is done at intermediate high temperature. These processes occur in a thermal cycle which alternates between the three needed temperatures. PRC primers do not bind unless there is a complementary strand to bind to. One test for the presence of genetically modified ingredients in food involves the use of primer that binds to genetically modified DNA. Any such DNA present is amplified by the PCR but if there is none present, the PCR has no effect.

DNA profiling 

Variations in genetic information between individuals can be found throughout the DNA, in non-coding and coding areas. For instance, on the short arm of chromosome 1, there is a sequence of 16 bases that is repeated many times. While some people have 14 repeats, others have have as many as 40, so the number of repeats differs between individuals. Because these differences continue throughout the genome, it can be used to define a unique fingerprint for each individual. Variations between the genetic information means that the pattern of fragments produced by restriction enzymes will be different for each individual. Gel electrophoresis involves separating charged molecules in an electric field. The samples are placed in wells cast in gel and the gel is immersed in a conducting fluid with an electric field. The sample will move a certain distance through the gel according to charge and size of the molecule. This gel can be thought of as resisting the movement of the sample so that smaller molecules move further than larger molecules.

Genetic fingerprints have broad applications. They can be used in forensics investigations, in paternity caes and in evolutionary studies. Gel electrophoresis followed by staining is a way that allows restriction fragments of amplified DNA to be separated to that it can be analyzed and seen.

4.4a Genetic Engineering & Biotechnology

The Human Genome Project 

The Human Genome Project was a cooperative venture between different independent research groups and a private research company. The  HGP was able to obtain a sequence of the human genome, or all of the DNA in a human cell. Fewer protein coding regions were found than expected. The estimated number of the total number of genes dropped from 100,000 genes to 25,000 genes. This project stimulated huge improvements in sequencing technology. This made it possible to sequence the genomes of other organisms to help understand the human genome.

Knowledge has been gained about the importance of specific sequences. The presence or absence of the sequence can be detected using microarray technology. DNA microarrays are an efficient and speedy way to find thousands of short sequences of DNA at the same time. A microarray is a flat plate that holds a lot of different DNA sequences called probes. Probes are short fragments of DNA that have a known sequence. When an unknown DNA sample is tested using a microarray, it is broken into small pieces that are then tagged with a fluorescent dye.The sample DNA is then washed over the microarray and if a section of the DNA is complementary to one of the probes, it binds to the probe and is held on the microarray. When light is shone on the microarray a pattern of fluorescent dots shows where the sequence from the sample is bound to the DNA probe.

New research fields such as bioinformatics and pharmacogenomics  have emerged the from HGP. Bioinformatics is the use of computers to store and analyze huge amounts of data generated by the sequencing of genomes. Pharmacogenomics is a field that links differences in genomic information in different populations to any differences in their response to drug treatment.

Genetic engineering 

Agriculture depends on the use of plants or animals with desirable characteristics such as livestock that can produce larger quantities of muscle or milk. Selective breeding is a traditional method where crosses or matings are deliberately made so that offsprings would have desired characteristics from one or both parents. For example, modern varieties of wheat can yield up to three times more than 19th century varieties.

Gene transfer technology takes advantage of the universality of the genetic code so that the desirable qualities found in different donor species can be transferred to different host species. There are several steps of preparing recombinant DNA. Donor DNA from another species is inserted into a bacterial plasmid. An example of this is the use of this procedure is the introduction of the gene for human hormone insulin into plasmid, which is taken by the bacterium E. coli. The bacterium is then able to manufacture human insulin. The DNA for the insulin has to be produced from mRNA rather than inserting the DNA gene for insulin directly. This is because human insulin genes contain introns which can’t be removed by bacteria. Before the advert of the gene transfer technology, patients with diabetes had to inject themselves with insulin that was from the pancreas of an animal. Now however, they can use human insulin manufactured by genetic engineering. Enzymes called restriction endonucleases are important for this procedure. These enzymes cut DNA at specific sequences. Restriction enzymes were first observed in bacteria. These bacterias used restriction enzymes to defend themselves against viral infections. The enzymes were able to cut up the viral DNA to prevent the viruses from being replicated.

Golden rice- an example of genetic modification 

An example of genetic engineering in agriculture is “golden rice”. This involved three genes, two from daffodil plants and one from a bacterium into rice plants so that the orange pigment (beta-carotene) is produced in the rice grains. Beta-carotene is a precursor to vitamin A. The development of golden rice was intended to be a solution to the problem of vitamin A deficiency, which can cause blindness among children globally. Rice is the staple diet in many areas where vitamin A deficiency is common. Critics of golden rice have argued that the absorption of beta-carotene from golden rice will not meet the recommended daily allowance of vitamin A.The first version of this rice could have provided people with 15-20 percent of the recommended daily allowance of vitamin A. The second version is estimated to be able to provide 50% of the recommended daily allowance of beta-carotene. Critics suggest that the way of overcoming micronutrient deficiencies lies in improved and varied diets which includes traditional diets as well. Unpolished rice for instance provides large quantities of beta-carotene.

Alternative recombinant methods 

One of the first medical by-products of a genetically engineered animal to gain approval was an anti-clotting agent called anti-thrombin which was extracted from the milk of genetically engineering goats. The mammary glands of mammals are specialized for protein production and some of the post-translational modifications required to make proteins functional was only carried out in mammalian systems. By combining the gene with a regulatory regions from the genes of a milk-specific protein, it can be ensured that the gene will be expressed in a mammary gland. A single goat can produce about 3 kg of therapeutic protein each year.

Data-based question: determining an open reading frame 

1. There are 64 codons in the genetic code.

2. 3 codons from the 64 codons are stop codons.

3. Open reading frames are those that don’t have stop sequences and can therefore code for the production of a protein. Since RF1 and RF2 have stop codons and RF3 does not, RF3 is the open reading frame.

10.3 Polygenic inheritance

Polygenic inheritance and continuous variation

There are examples of inheritance in which two or more genes can affect the ame character. These genes have a additive effect. Mendel discovered this in beans when a cross between purple-flowered plant and a white-flowered plant gave purple-flowered plants in the F1 generation but when these self-pollinated, the expected ratio of 3:1 did not happen but instead a range of flower colors were seen. The reason for this is there are two unlinked genes with co-dominant alleles. Self pollination of the F1 should give five different shades of flower color in the ratio 1:4:6:4:1. If the number of unlinked genes and co-dominant alles were larger than there would be more phenotypic variants. The frequency of the variants can be predicted using alternate rows of Pascal’s triangle. As the number of genes increases the distribution gets closer to normal distribution. Many characters in humans and other organisms are close to the normal distribution such as the height and intelligence of humans. The closeness to a normal distribution indicates that more than one gene is involved and this is known as polygenic inheritance. When the variation due to this inheritance is examined carefully, it is found to be continuous with a complete range of variation rather than distinct classes. This is due to the fact that differences in phenotype between classes are subtle and the effects of the environment cloud these differences so that they become undetectable.

Inheritance of skin color 

The theory that characteristics that show continuous variation could be due to combined effects of many genes was shown in the early 20th century but not much progress was made in identifying the genes that were involved. Skin color in humans is an example. A study of families in Liverpool conducted in 194 showed a minimum of three or four genes affecting skin color but many more genes can be involved. Mutations of several genes are known that can prevent melanin to produce, leading to albinism but genes varying the amount of melanin production is required to explain the continuous variation in humans. A mutation gene known as SLC24A5 was discovered that causes paler skin and accounts for more than 25 per cent of variation between European and African population but the other variation must be due to other genes. When these have been discovered, it will be possible to know the exact amount of genes involved in this example of polygenic inheritance.

Data-based question: gene linkage in mutant tomatoes 

1a. Smooth oblate and peach round are recombinants. This is because the characters are different from both parents.

1b. Smooth fruits and  clustered flowers and peach fruits and few flowers are recombinants. This is once again due to the fact that their characters differ from their parents.



3a. 210/1000= 21%

3b. 342/1000= 34.2%


10.2 Dihybrid crosses & gene linkage

Advanced genetics

In a dihybrid cross, the inheritance of two genes is figured out together. Mendel preformed these crosses, for example his cross of pure-breeding peas that had round yellow seeds with pure-breeding peas that had wrinkled green seeds. All the first generation hybrids had round yellow seeds showing that this is due to dominant alleles. When Mendel then allowed the first generation plants to self-pollinate, he found that four different phenotypes appeared in the second generation; smooth yellow (one of the original parental phenotypes), smooth green (a new phenotype), wrinkled yellow (a new phenotype), and smooth yellow (one of the original parental phenotypes).

If the genotype for the first generation is SsYy, the gametes produced can have either S or s with either Y or y, so the four possible gametes are SY, Sy, sY, and sy. If the inheritance of these two genes is independent, the chance of the gamete containing S or s will not affect the chance for it to have either Y or y. The chance of a gamete containing each allele is 1/2 so the combined chance of containing two specific alleles is 1/4 (1/2 x 1/2). This theory that alleles of two genes do not influence each other when passing on to gametes is called independent assortment. Mendel’s results show a 9:3:3:1 ratio. The predicted and actual results are similar. The conclusion is that these genes are inherited independently of each other which allows new combination to be created.

Independent assortment and meiosis 

Observations in meiosis of grasshoppers (Brachystola) showed that homologous chromosomes pair up during meiosis and then separate and move to opposite poles. THe pole to which each chromosome in a pair moves depends on which way the pair is facing, thus making this random. Also, the direction that one pair is facing does not affect the direction other pairs face. This is called independent orientation.

Now the link between genes and chromosomes and be made. If a cell is heterozygous for a gene, one chromosome in a pair will carry one alle of the gene and the other chromosome will carry the other allele. The orientation of the pair will determine which allele moves to which pole. Every allele has a 50% chance of moving to a particular pole. Because chromosome pairs have random orientation, the chance of two alleles coming together to the same pole is 25%. After Mendel passed away, his theory about independent assortment was given the status of a law (Mendel’s law of independent assortment), however exceptions  had been found. These exceptions are called gene linkage and can be explained because of meiosis.

Gene linkage

In 1903, William Bateson, Edith Saunders, and Reginald Punnett discovered the first exception of the law of independent assortment. When they crossed sweet pea plants with purple flowers and log pollen grains with plants with red flowers and round pollen grains all the F1 plants had purple flowers and long pollen grains. When these plants were self pollinated, four phenotypes were observed in F2 generation but not in the 9:3:3:1 ratio. The cross was repeated with larger numbers. Although the observed outcome was not the expected ratio, results like this were not unexpected. Genes were known to be part of chromosomes and since there are more genes than chromosomes, some genes must be found together on the same chromosome. Alleles of these genes would then not follow the independent assortment law and would pass together into a gamete. This can be seen in the results for the sweet pea cross becuase there were more purple long and red round plants than expected. This occurs because this was the original parental combination of alleles. This pattern is called gene linkage. Many more examples have been found after 1903 always with higher frequencies of the parental combinations that predicted from the ratio.

Crossing over and recombination of linked genes 

Drosphilia contain eight chromosomes in the diploid nuclei. In males, one is the X chromosome and the other is the Y chromosome, and in females two are X chromosomes. The other six chromosomes are autosomes. Diploid nuclei have tow of eahc type of autosome so in Drosphilia there are three types of autsomes and in humans there are 22. Geneticists in the early 20th century found four  groups of linked genes in Drosphilia and this corresponds to the three types of autosomes and one X chromosome.

There are two types of linkage autosomal gene linkage which are when the genes are on the same autosome, and sex linkage which is when the genes are located on the X chromosome. The linkage between the pairs of genes is not always complete and new combinations of alleles can form sometimes. This happens because of crossing over. The formation of a chromosome or DNA with a new combination of alleles is recombination. An individual that has this recombinant chromosome and thus has different combinations from either of its original parents is called a recombinant.

Data-based question: gene linkage in Zea mays 


2. The genes are linked. This is because the actual frequencies are not in the 9:3:3:1 ratio.


4. The genes are linked. This is because the actual frequencies are not in the 1:1:1:1 ratio.

5. starchy/waxy and non-shrunken/shrunken are linked because they are also linked to color.

The Big Giveaway

1. Explain what is meant by the term ‘freeconomics’. 

The term freeconomics means that businesses provide goods and services for free or at a low price. This causes consumers to be more committed as they are receiving what they want at lower prices than they were before.

2. How can firms afford to make goods and services available for free?

Firms can afford to make goods and services available for free by reducing marginal costs or having other sources of income. Marginal costs are the cost of producing one extra unit for an item. An example of another source of income can be if there are advertisements and such that help the firm gain a profit. For example, Facebook is a free social networking site however the company still makes a lot of money. This happens because of the advertisements that are placed on the page. Facebook is used worldwide by people, so when other companies want to advertise their products, they pay Facebook to do so because those advertisements will be seen by many people. Since Facebook has personal information about each person and show the “likes”, the advertisements could appeal to specific people’s wants to advertise. Also, people can see how many of their other friends have “liked” a specific product and would be persuaded to buy it as well. This way, Facebook makes money from companies that want them to advertise their products and such for them, and those companies make money once consumers on Facebook have seen what they are selling. So, Facebook can afford to make its good and services for free because they are paid a lot of money by other companies to advertise their goods and services, thus making a profit. This is similar to the situations of other firms because they also have goods or services that are free but make profits from other things they provide.

3. “Anderson’s idea is that the internet, by reducing marginal costs, encourages businesses to make their money by offering free goods or services to an extent we have not witnessed before”. Discuss the extent to which doing business over the internet reduces marginal costs.

There is an extent to which doing business over the Internet reduces marginal costs. This depends on other factors that can affect the company to have different outcomes in the long run or short run. In the short run, it can reduce marginal costs as it is electronic but in the long run, it could cause more competition to arise therefore causing the marginal cost to increase. An example of this is MEGAVIDEO, a server that provides movies and television shows for viewing. MEGAVIDEO allows 72 minutes of viewing for free, but after these minutes, you must pay or wait for another 72 minutes to view the rest of the movie or show. This is advantageous to the company because most movies go over the 72 minutes, so the people will get very frustrated with waiting to finish the movie, especially if they are on a very intense or important scene. Therefore, some may be willing to pay for the unlimited service so that they do not have a limited time to watch something, which will increase MEGAVIDEO’s marginal revenue. However, it may be disadvantageous providing 72 minutes free if the people are only watching shows on it because the episode will end before the 72 minutes, therefore they will not need unlimited access as it isn’t a bother to them.

The stakeholders of this are MEGAVIDEO, consumers, and competition. In the short run, MEGAVIDEO will be winners because they are making a profit. Also, they are reducing their marginal costs because they do not have to pay for packaging and such for the movies. They simply have to upload to the server, probably just once, and once it is on their server millions of people can watch it. Therefore, they are saving a lot of time because they do not have to upload a movie more than once. Also, in the short run, consumers will be winners because they can watch the first 72 minutes which is enough time to watch a 40 minute episode. However, if they want to watch a full movie and are not willing to pay for it on MEGAVIDEO, they always have other options to view movies.

In the long run, MEGAVIDEO could be losers. This is because once other companies see that they are making a profit and reducing their marginal costs, they may follow MEGAVIDEO’s path, and this will increase competition. Once the competition increses, because consumers have many options, they may choose not to pay for MEGAVIDEO and rather use a site that is free for a longer amount of time or a site that has the same conditions as MEGAVIDEO but at a higher viewing quality.This will increase the marginal cost of the company because they will have to keep uploading more and more movies and shows so that they can be ahead of their competition which will cost them a lot of time. Also if their competition increases, their marginal revenue will start to decrease if people are not paying for unlimited use on their server anymore. Even in the long run, the consumers will be winners because they will have options available to them no matter what and can choose whatever sites or means of watching movies and shows they want.

Coffee Shortages in Venezuela

1.Using supply and demand diagrams, as appropriate, show why there have been coffee shortages in Venezuela.

There have been coffee shortages in Venezuela because of the price ceiling that has been set. The price ceiling is set below the equilibrium therefore there is more demand than supply. Because there is more demand than supply, a shortage occurs because the supply can’t cover all the needs of the consumers.




2. Discuss the effectiveness of price controls as a policy to reduce inflation.

The government of Venezuela decided to keep price controls on items such as coffee, beans, sugar, and powdered milk to decrease inflation. This has angered coffee companies and caused them to stop supplying coffee in supermarkets as they feel that they are not making profits with the low selling prices. Instead, they have stored their coffee in warehouses in hopes that the government will change to a fair price. They decided not to supply at all because of the government’s price controls, which means that coffee shortages will occur as the demand for coffee outweighs the supply. Also, this will not stop until the government negotiates a fair price so the government and coffee companies have to come to an agreement so that citizens can buy coffee once again, companies can make profits, and the government can reduce inflation. So, the price controls have not been effective in reducing inflation and instead have angered coffee suppliers.

3. Analyse the impact of the price controls on Venezuela’s major economic targets

The price controls have not been able to reduce inflation. The government has decided to lower the prices of coffee which only caused the coffee suppliers to stop supply. The stakeholders are the citizens of Venezuela, the government, and coffee companies. By lowering the price by a lot, the coffee companies decided not to supply at all. This could lead to a black market within the country where the prices of coffee will be very high and the government will have no control over it. In the short run, the citizens are losers since they are demanding coffee but not getting any supply. Even if there is a black market, only the rich people will be able to afford it, so the poorer people will still be losers. The government are also losers because their method was not effective and they have just angered companies. Also, in the black market, the government has no say and control in the price of coffee. Lastly, the coffee companies are both losers and winners. Because they are not supplying in the supermarkets, they are not making any profit so they are losers. However, they could make a profit if they decide to sell coffee at black markets and because there is no substitute for coffee and the government can’t control the situation, the demand will be inelastic to a certain degree and they will make a lot of profit. However, is some cases, the government could intervene in the black markets within the country, which could lead to a black market outside the country. In this case, the coffee suppliers are winners. Though the coffee suppliers will make less money if they sell coffee internationally, they are not making any money within their country so it is still more beneficial. The government will loose because they can’t control the international black market of coffee. Lastly, consumers of other countries are winners because they can afford the coffee at cheaper prices, however the consumers of Venezuela are losers because they are still not receiving coffee.

In the long run however, since the suppliers and government have not found a common price, the situation can get much worse. If the government found a way to lower prices by negotiating with coffee companies and deciding on a price that suited both companies instead of angering the coffee companies, they would be able to reduce inflation. If this were to occur, most of these stakeholders would be winners because the citizens would get coffee at a fair price, the government would be able to reduce inflation, and the coffee companies would be able to make a profit and sell coffee at a reasonable price.

Theory of the Firm Vocabulary

1. Cost Theory (total, fixed, variable costs; calculating costs)

  • Total cost: fixed costs + variable costs
    • Average total cost: total cost / output
  • Fixed costs: costs that remain unchanged when output changes (e.g. rent, interest on loans, insurance)
    • Average fixed cost: Fixed cost / output
  • Variable costs: costs that vary directly with the level of output so they change according to the number produced (e.g. cost of raw materials, packaging costs, direct labor)
    • Average variable cost: variable cost / output
2. Law of diminishing returns

  • As more and more of a variable factor are added to fixed factor, output will rise initially but will l eventually fall.
  • Example: McDonalds hire three new workers that increase output by 10 burgers but adding another worker would only increase the output by 5. Adding a fifth worker will only increase output by 2. It gets cramped and there isn’t space so it because inefficient.
  • Is a short-run law
  • Graph

3. Short-run

  • The short run is the period of time in which at least one factor of production is fixed. Over this time period the firm can only expand production by using more of the variable factor.

4. Long-run

  • The long run is the period of time when all factor inputs, including capital, can be changed.
  • Economies of scale: advantages of increasing in size (e.g. greater revenue)
  • Diseconomies of scale: disadvantages of increasing in size (e.g. poor communication)
  • Graph
5. Revenues (TR, AR, MR)

  • Total revenue (TR): all the revenue earned by the business. Total revenue = price x quantity demanded.
  • Average revenue (AR): total revenue divided by number sold.
  • Marginal revenue (MR): the increase in total revenue as the result of one more sale. This is not necessarily the same as the price. It is only the same as price, if price remains constant.

6. Profit, sales & revenue maximization

  • Profit maximisation: Companies that are trying to create the biggest gap between their costs and revenue to increase the profit. (companies like Tiffany don’t want to increase sales by reducing costs but rather just get the most profit from their good) A firm will maximize profits where MC=MR.
  • Sales revenue maximisation: it means earning the maximum possible revenue from the quantity sold. This will not be the same as profit maximizing as the additional units will have a higher cost and may therefore be less profitable to sell. Sales revenue is maximised where MR=0.
  • Sales volume maximisation: it means selling the maximum possible number of units without incurring a loss. Sales volume is maximised where AR=AC. The firm might be able to sell more than this, but the diagram shows that on all units of output beyond this, AC is greater than AR and, therefore, a loss would be incurred.
  • Graph

7. Perfect Competition (elements of)

  • Perfect competition is considered as the ideal or the standard against which everything is judged.
  • Perfect competition is characterized as having:
    • Many buyers and sellers. Nobody has power over the market.
    • Perfect knowledge by all parties. Customers are aware of all the products on offer and their prices.
    • Firms can sell as much as they want, but only at the ruling price. Thus sellers have no control over market price. They are price takers, not price makers.
    • All firms produce the same product, and all products are perfect substitutes for each other, i.e. goods produced are homogeneous.
    • There is no advertising.
    • There is freedom of entry and exit from the market. Sunk costs are few, if any. Firms can, and will come and go as they wish. There are no barriers to entry such as licenses.
    • Companies in perfect competition in the long-run are both productively and allocatively efficient.
8. Shut down and break-even price
Where MC meets AVC (average fixed cost) is the shut down price. This is because they can’t meet their costs therefore must shut down.  Where MC meets ATC is the break even price.
9. Monopoly (elements of, model, theory)

  • Model: Monopoly is the opposite of perfect competition. In the literal sense, it exits when one single firm or a group of firms acting together control the entire market for that good or service and no substitutes are available. This is a situation of pure monopoly. Economists focus more on the degree of monopoly power that exists rather than absolute monopoly power. A market concentration ratio is used to measure the degree of concentration within that industry or group of industries. The five firm concentration ratio is used commonly to indicate the proportion of the industry’s output produced by the five largest firms.
  • Theory: In perfect competition, as there are many firms competing against each other, no one controls the price; therefore they are price takers. However, under monopoly there is only one firm in the industry. So there is no difference between the demand curve for the industry and and the demand curve for the firm. As the monopolist is subjected to the normal demand curve, to sell more, the price must be lowered. However compared the other markets, the monopolist’s demand curve is probably more inelastic as close substitutes are not available even at higher prices.
  • Assumptions about the Model
    • One firm
    • Price Setter
    • Barriers to entry
    • Some monopolies are considered Natural Monopolies i.e. barriers to entry are very high and the firm enjoys economics of scale where it can produce at a lower cost than many small firms combined e.g water supply, gas, electricity
  • Pros
    • natural monopolies can gain economies of scale
    • abnormal profits used for Research and Development
  • Cons
    • anti-competitive behavior & predatory pricing
    • high prices for lower output
    • productively & allocatively inefficient
10. Oligopoly (elements of, model, theory)

  • Definition/Model: Oligopoly is when a few suppliers who provide the same product dominate a market. Petrol companies and the soap and detergent industry are good examples. Each firm has to be concerned about what the others in the industry will do.
  • Assumptions about the model
    • three or four large companies dominate the industry, but small companies do exist
    • firms are interdependent, all will watch what the competitors do and act accordingly
    • there are barriers to entry, this means it is difficult for other firms to enter the industry;
    • non price competition, as companies cannot compete by prices, therefore they have to compete with the service they offer
    • the oligopoly must be collusive (collusion)
    • advertising
11. Monopolistic competition (elements of, model, theory)
  • Definition/Model: Monopolistic competition is made up of a large number of small firms who produce goods that are only slightly different from other sellers.
  • Assumptions about the model  
    • Large number of firms: Each firm has a small share of the market
    • Independence: because of the large number of firms in the market, every firm is unlikely to greatly affect the other. When making decisions firms do not have to think about how its rival will react.
    • Freedom of entry
    • Product differentiation: This makes it different from perfect competition. This is also why each firm has a down ward sloping demand curve.
  • Examples
    • Petrol stations, restaurants, hairdressers.
  • Theory
    • Monopolistic Competition in the short-run
      • Graph
      • In the short run firms are able to make abnormal profits.
      • Profit maximized when MC=MR
      • In monopolistic competition the AR and MR curves are more elastic because more substitutes are available.
    • Monopolistic Competition in the long-run
      • Graph
      • In the long run new firms can enter the market. Other firms are attracted by the abnormal profits and they will be competed away until there are just normal profits.
      • This means that the demand for the product of each firm will fall and the AR will shift to the left.
12. Advertising and Branding

  • Advertising definition: The presentation of a product, idea or organization to convince individuals to buy, support, or approve of it.
  • Branding definition: Creating a name, symbol or design that identifies what differentiates this produce from others. How consumers perceive a branded product will be enough for goods to be sold at a very different price.
  • Multiple branding definition: Marketing two or similar and competing product by the same firm under different and unrelated brands. This could be effective on the barriers to enter a market for new firms.
13. Forms of collusion

  • Formal Collusion
    • Cartel definition: Limited number of competing firms, which are selling a similar product, decide to collude rather than compete.
      • When the cartel acts like a single monopolist and maximises profits, it is most successful.
      • Profit maximisation for the cartel graph
      • To maximize profits, MC is equal to MR and there is a optimum price.
    • Reasons for a cartel
      • geography: productive capacity or pre-cartel market share
      • cartel members want non-price competition so that they can gain optimum quantity.
  • Informal or tactic collusion
    • Priceleadership definition: This is when one firm sets a price that is accepted as the market price by the other producers. There is no formal or written agreement.
14. Price discrimination

  • Definition: charging different prices for the same/similar good to different consumers
  • Price discrimination occurs in an imperfect market, when a sale from the same supplier, of an identical good or service is charged for a different price for different consumers. Price discrimination is used to profit the discriminating firms. But, the price discrimination has to be for different consumers, in different markets.
  • Stakeholders:
    • Winners:
      • Suppliers (able to set a higher price to those able to buy it at that price)
      • Poorer consumers (able to buy the good/service at a price they can afford. If price not that low, they wouldn’t have been able to buy it)
    • Losers:
      • Richer consumers (have to pay a higher price for the same good, but not a big loser because they are still able to pay for the good/service)

15. The kinked demand curve theory

  • Asymmetrical reaction : asymmetrical reaction to the change in price by one firm.
  • eg. a decrease in price by one firm will lead to a decrease in price by other firms to protect market share.
  • Elastic part of graph (top part of graph) – to increase price at the elastic part of the graph would not be effective as not many other firms would increase their price (because price is high)
  • Point at kink : point showing discontinuity (how good changes from elastic to inelastic)
  • Inelastic part of graph (bottom part of graph) – Price War! Constant competition of price (if one firm decreases price, other firms fallow

4.3c Theoretical Genetics


Genetic Diseases and carriers 

A genetic disease is an illness that is caused by a gene. There are more than 400 genetic diseases that can occur in humans and most of these are caused by recessive alleles. Therefore, these diseases only develop if the individual is homozygous for the recessive gene. If a person is heterozygous with a dominant gene and the recessive gene carrying the genetic disease, they will not show symptoms of the disease, however they can pass the recessive gene to their offspring. The parent is therefore a carrier.

Genetic diseases caused by a recessive allele usually appear unexpectedly. Both parents must be carriers but since they do not show symptoms they are unaware of this. The probability of these parents having a child with the disease is 25 percent. A small proportion of genetic diseases are caused by a dominant alle. It is not possible to be a carrier of these diseases because if the person has one dominant allele they will develop the symptoms. If one parent has the allele of the disease, the chance of the child inheriting the disease is 50 percent.

Most genetic diseases reduce the chances of survival and reproduction, so the alleles causing them are rare and barely passed to a offspring. There are a small number of genetic diseases where the frequency of the allele that causes them is much higher. In these cases, the alleles that give an advantage, causing the frequency to increase by natural selection.

Sex linkage 

Thomas Morgan was one of a group of genetics that realized the importance of Mendel’s experiments and investigated the pattern of inheritance of otehr species to find out of it works in other species. Morgan chose to study the fruit fly Drosphila. Its life cycle is 2 weeks which allows crossing experiments to be done quickly with many flies. Many of Morgan’s experiments showed the same pattern of inheritance as pea plants. Firstly, two alles of each gene are present. These two alleles can either be homozygous or heterozygous. Just one allele is passed on to offspring in gametes. Lastly, one allele is usually dominant over another allele.

Unlike pea plants Drosphila, has separate males and females and this allowed Morgan to preform reciprocal crosses. Examples of these included crossing normal winged males with small winged females and small winged males with normal-winged females.

In most cases, the ratios were the same whichever way the cross was done but in some cases it was different. The first example of this in Drosphila involved in eye color. This pattern of inheritance, where there are differences in genotypes and phenotypic rations between males and females is called sex linkage. Geneticists had observed that the inheritance of genes and of chromosomes showed clear parallels which indicated that the genes were probably located on chromosomes. The female Drosphila had two X chromosomes while males only had one copy. Morgan concluded that sex linkage of eye color could therefore be caused by the eye color gene being located on the X chromosome. Male Drosphila also have a Y chromosome, but this gene does not carry the eye color gene. This similar pattern of sex linkage due to a gene on the X chromosome has been discovered in humans. Hemophilia, or red-green color blindness is a very common sex linkage condition.

Determination of gender in humans 

The gender of an individual is determined at the time of fertilization by one chromosome carried in the sperm. This can either be a Y or X chromosome, and because they determine the sex of an individual, they are called sex chromosomes. The X chromosome is large with many genes important to the development in both males and females. The Y chromosome is much smaller and has fewer genes. Part of the Y chromosome has the same sequence of genes as a small part of the X chromosome, but some of the genes on the rest of the Y chromosome is not on the X chromosome because it is not needed to female development. An example of this is TDF which is only found on Y chromosomes. It starts the development of male features such as testes and testosterone production. Therefore, males have one Y chromosome for male development and one X chromosome for other vital genes. Females have two X chromosomes and because they do not have the TDF gene on a Y chromosome, they develop ovaries instead of testes and female sex hormones are produced. Females pass one X chromosome in each egg cell so all offsprings inherit a X chromosome. However, when sperms are formed, half contain X chromosomes while the other half contain Y chromosomes so the chances of inheriting both are half. If a Y chromosome is inherited, a son is produced but if a X chromosome is inherited, a daughter is produced.

Haploid and Diploid  

In the body cells of most eukaryotes, there are two chromosomes of each type, which are called two homologous chromosomes. This is a diploid cell. Experiments in genetics show that parents only pass on one copy of each gene to their offspring because only one gene is passed on in a gamete. Since their is only one chromosome of each type in a gamete, it is haploid. When a male gamete and female gamete fuse in fertilization, the zygote that is produced is diploid. Division of the zygotes results in the production of more cells due to mitosis. All the cells in our body are therefore identical and haploid. To produced haploid gametes, a special type of division is needed, called meiosis.

Data-based questions: hemophilia in Queen Victoria’s family 

1. There are no male carriers as this condition is sex linked and a recessive trait. Only if they have two recessive genes would they be affected. This condition occurs on the X chromosome, and because males have one X and Y, if they had the gene on their X chromosome, they would be affected automatically. They can not be carriers as they either have it on their X chromosome and are affected, or they do not have it on their chromosome and are not affected.

2. Because this is a recessive trait, if there is a dominant allele present, hemophilia would not affect the person. Only when there are two recessive aleles of the gene would the female be affected. This would require passing the gene from a carrier mother and a affected father which is very rare. Therefore there are no females on this chart.

3. It is sex-linked because only males are affected. This suggests that the trait came from the female carrier as a normal male is not affected. Because males only need one X chromosome as they also have a Y chromosome, if they inherit the gene from their mother, the condition will be expressed. Since males are affected even if the father has not been, this trait is sex linked.

4.                                                             Alexandria

Nicholas II




The chances of a daughter being a carrier is 50% and of the daughter not affected is 50%.

5.                                                                  Victoria Eugenia


Alfonso XII



There is a 50% chance that the second son is affected and 50% chance that the third son is affected. However, the normal male symbols indicate that neither are affected therefore their alleles are  XCBY.