The Law Assignment and Economics Assignment

This document discusses the law assignment and economics assignment. It explores the courts' obligations under the Human Rights Act and the concept of elasticity in economics. It also examines how tariffs, wages, and competition affect demand and supply.

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Student’s name
Part one: The law assignment
The courts when they encounter basic legislative provisions that seem to be conflicting
with conventions rights, the courts are compelled to use and interpret some interlocking
provisions regarding the Human Rights Act (HRA)that prompts them to engage in a conversation
with both the executive and the legislature. According to section 2, it stipulates that the courts
have an obligation to have regards for European Convention on Human Rights (EHCR)
jurisprudence1. Section 3 dictates that if there is a possibility, the courts should seek an
interpretation of the thought offending provision in the parliament that renders it compatible with
the convention rights. However, if the courts fail to establish the compatibility, they are backed
by the section 4 to announce the offending provision in the parliament as being incompatible. In
section 6, the courts as public entities are compelled to abide by the convention rights2. Since
section 6 stipulates that the courts are not allowed to breach that duty if the way in which they
have to act is determined by an incompatible statute, it is thus debatable that section 6 gives them
the power to deliver a declaration of incompatibility.
Section 2 by itself is not binding as courts can depart from the ECHR jurisprudence3.
This demonstrates Strasbourg’s lack of an adherent framework of precedent and identifies that
many of its decisions are prioritized as particularistic and some regard the state’s margin of
1 Legislation, Human Rights Act 1998 (1998)legislation.gov.uk<
https://www.legislation.gov.uk/ukpga/1998/42/section/2>
2 Ibid 1.
3 Ibid 2.

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appreciation, a discipline unavailable to national court since it originates from the rank of the
European Court of Human Rights as a global tribunal. According to Lord Hoffman, he was of the
view that if ECHR decisions forced a conclusion basically at odds with regards to the
distribution of powers as stipulated by the British constitution, then he would give the benefit of
the doubt as to whether such decisions should be adhered to. In the same context, Lord Slynn
prioritized that judges should always abide and follow the ECHR case law only in the absence of
some unique situations4. Lord Chancellor Irvine emphasized that it would be relevant on various
occasions to exercise the power to shift away from Strasbourg decisions demonstrating that it is
by doing so that British courts will be prosperous in leading to Strasbourg.
The important sections for evaluating the different functions of parliament and the courts
with regards to HRA sections are 3,4 and 19 of the Act and the interaction of such sections. In
section 19(1), the minister overseeing the Bill is required to issue a statement compatibility right
before phase of the second reading to the mandate that in his perspective the provisions of the
Bill are aligned with the convention rights. Section 3(1) requires the courts to go through the
basic and subordinate law every time it gets implemented in a manner that is uniform with the
convention rights, thus, this far it is possible to achieve that5. However, as of section 3(2), the
clause fails to impact the formality, operation in progress or implementation of any sort of
incompatibility with regards to primary or subordinate legislation. In such scenarios, where the
provision is rendered incompatible and the primary legislation in force prevents the termination
of any incompatibility, then as identified in section 4, it is acceptable that the highest appropriate
courts to effect a status of incompatibility.
4 Ibid 4.
5 Ibid 5.

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Thus, it is imperative to note that such declarations of incompatibility do not remove the
contradicting provisions that are enforceable, runnable and formal and lack attachments on the
individuals against whom they are made. The unanimous decision regarding whether to amend
the incompatibility through amendments of the law lies with the state and certainly the
legislature though provision is enhancing in section 10 for a legislative protocol that is needed to
provide such remedial action.
Sections 19 and 4 when viewed on the surface they seem to be transparent tools of
political constitutionalism6. On the first account, it could be interpreted as giving the judiciary a
transparent indicator that the law should be viewed as compatible and in the second, gives the
final word on whether have the legislation revised or not. Regarding section 19, the courts at first
showed little concern to the declarations of compatibility to a large extent for reasons such as
political constitutionalism should have to approve. The courts by far and large have been under
immense tension regarding the weighty statements by ministers as to what their motives are with
any piece of legislation.
With regards to Section 4 it was hailed as the primary provision of the Human Rights
Act. Many advocates perceived it as establishing a contemporary model of judicial review that
acted as an intermediary between political and legal constitutionalism7. However, other
advocates postulate that both constitutionalists with regards to legal and political aspects in real
life exhibit little difference regarding the feeble and robust judicial review and that the latter is a
chimera. The important thing to note is that the legislature has always complied with regards to
such decisions and initiated amendments regarding the offending law. However, the imperative
point is why the parliament has to comply.One is that parliament exercises its prerogative.
6 Ibid 6.
7 Ibid 7.

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Parliament exercising its prerogative is done rarely and remains parliament to exercise. Taking,
for instance, the highest profile of the declaration of incompatibility with regards to Belmarsh
Prison, the parliament can barely be identified as supinely agreeing on the decision by the court.
Though parliament respected judgment by the court that the prevailing detention program
entailed illogical segregation against non-UK citizens as almost took a year to give responses,
applying the new control-order scheme after one of the debates deemed to be the longest in
parliament. In the meantime, the inmates got released after the contemporary legislation got
enacted such that they could immediately get rearrested. Thus, parliament can barely be seen as
conceding judicial supremacy rightly or wrongly.
The second motive is a political culture that any state could deem it politically
inexpedient to oppose such a decision by the court only if it was confident of the overwhelming
political backing in advancing such as was the scenario when Roosevelt stood against the
Lochner-era logic of the U.S. highest court. It is thus highly disputable that based on the
preelection dedication of the Conservative Party to repeal the Human Rights Act as the logic
behind such is not compatible with political constitutionalism.
Part two: Economics assignment
Question1: Elasticity
Unit elasticity
With this kind of elasticity, an equal change in demand yields the same impact in the
price of a commodity hence the name unitary elastic of demand8. The unitary elastic demand is
assigned a numerical value that is equal to the one that is ¿=1)9. Unitary elastic demand is
characterized by a demand curve portrayed as a rectangular hyperbola as in the graph below:
8N, Gregory Mankiw., Principles of Microeconomics (Cengage Learning,5th ed,2008)
9 Ibid 8.

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Figure 1: Unitary elastic demand
From the graph, it can be deduced that a price change from OP to O P1 yields the same
magnitude as demand from OM to OM 1. Thus, such demand is said to be unitary elastic
Perfectly elastic demand
A small change in price according to perfectly elastic demand for commodity results in a
huge change in its demand. With regards to perfectly elastic demand, a small increment in the
price of a commodity leads to a decline in demand to almost zero while a marginal decrease in
price leads to a rise in demand to infinity10. Thus, a scenario where demand is perfectly elastic
gets denoted as ep = 00. The extent of elasticity of demand assists in designing the gradient of
a demand curve. Thus, the gradient of the demand curve explains the kind of elasticity. The
flatter the gradient of the curve, the greater the elasticity of demand. Thus, for a perfectly elastic
demand, the demand curve is portrayed as a horizontal straight line as shown in the graph.
10 Ibid 9.

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Figure 2: Perfectly elastic demand
From the above graph, it can be deduced that at price OP the demand is infinite.
However, a small increase in price would lead to a fall in demand to almost zero11. The logic
behind this is that at designated price P consumers are ready and willing to buy much quantity of
the commodity as they wish. However, a marginal price increment would lead to customers
declining to purchase the commodity. However, perfectly elastic demand is purely elastic and
does not work in real life. The concept of perfectly elastic can be applied in a perfectly
competitive market and for homogeneous commodities. Thus, in such scenarios, the demand for
a product is assumed to be perfectly elastic.
Perfectly inelastic demand
With the perfectly inelastic demand, a price changes of a goods and services produces no change
in the demand of a commodity. Thus, perfectly inelastic demand is assigned a numerical value of
zero that is (ep=0)
11 Ibid 11.

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With regards to this kind of elasticity, the demand curve is exhibited as a straight vertical line as
demonstrated in the graph.
Thus, deductions can be made from the graph that the movement of prices from O P1 to O
P2 and OP2 to OP3 shows no changes with regards to the demand of a commodity OQ. Hence,
demand, in this case, remains the same irrespective of price value12. Also, this kind of elasticity
is merely a theory and cannot be used in real life situations. However, referring to basic
commodities such as salt, their demand remains constant with the price change. Thus, the
demand for basic commodities is perfectly inelastic.
calculating price elasticity of demand
P1=£5
P2=£3
Q1=17
Q2=20
Thus, change in price
∆P= P1- P2
5-3=2
12 Ibid 12.

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∆P = 2
Change in quantity
∆Q= Q2-Q1
20-17=3
∆Q=3
Elasticity of demand
e p= ∆ Q
∆ P * P
Q
e p= 3
2 * 5
17
e p=0.4
Since e p is 0.4, which is less than 1, it means the product has inelastic demand. A decrease in
price does not increase the demand for the product. Thus, the revenues for the company will not
increase.
Question 2: Demand and supply
Tariffs
Tariffs are aimed at raising the price of an imported commodity by a particular amount
and is used by the government to stop cheap imported commodities from competing with a
domestic commodity. An increase in tariff will raise the price of a product making it expensive
and thus reducing its demand in the market.

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In the graph above an increase in tariff raises the price of the imported commodity which
in turn reduces the demand of the product. The same will occur when there is an increase in tariff
for iPhone 8. Thus, raising tariff on iPhones will raise their price making them exorbitant
compared to other phones and this will reduce their demand.
Samsung reduces its price by 10%
Samsung and iPhones from Apple are close substitutes as they are both manufacturers of
mobile phones. Substitute commodities are those commodities that are used in place of one
another for purposes of satisfying the specific wants. It is crucial to note that the demand for a
particular product varies directly with the price of a substitute commodity. For instance, the price
of Samsung phones reducing by 10% means that the demand for iPhones will reduce while the
demand for Samsung phones will increase as it is relatively cheaper to purchase Samsung phones
compared to substitute phones such as those by Apple.

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Increase in the wages
Wages are part of production inputs. It is crucial to fathom that the lowest price a
company charges for its commodity without making losses is money spent on producing such a
commodity13. Producing a product requires utilizing inputs and using means of production to
deliver output. An output is the finished commodity and the inputs are raw materials, labor
among other factors. Such inputs are commonly referred to as the primary factors. Raising the
prices of such inputs means that the cost of producing the good also increases. In this case, the
cost of producing goods in the economy will rise to make their prices go up, this will, in turn,
lead to a decrease in the supply of commodities. Also, reducing the price of wages would lead to
an increase in the supply of a commodity.
Question 3: Perfect competitive firms
13 Ibid 13.

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Perfectly competitive firm in the short-run
The short-run is characterized by the both the demand and supply curves intersecting to
determine the market clearing price14. The market-clearing price gets assumed by all firms in the
industry. The average revenue curve in this context refers to the individual demand curves. The
market price remains the same for every unit sold and this translates to the average revenue curve
becoming the marginal revenue curve for a company in perfect competition. For the firm, the
profit-maximizing quantity is at Q1 where marginal cost equals the marginal revenue. Such an
output yields gross revenue(P1*Q1). Now that revenue exceeds the total cost, the firm in this
illustration makes abnormal profits. Thus, it is imperative to note that the supernormal profit will
be made when the the average cost is less than the price.
14 Ibid 14.

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As with the case of firms in the long run, it is the entry of new firms leads to the price of
the product decreasing due to increase in the supply of quantity and the cost will rise due to
intense competitions for the factors of production15. The firms will continue seeking entry into
the market till price equals the average cost such that every entity will be earning real profits.
The short-run cost curves lie at the lowest of the long run average cost curve and have no
intention of exiting the market. The firms continue exiting the market until the price equals the
average cost such that entities remaining in the industry will be making normal profits.
Equilibrium in perfect competition demonstrating consumer and producer surplus
15 Ibid 15.

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In theory, it could be imagined assuming all the units of a commodity that can be bought at the
equilibrium price and employing the location of each unit bought on the demand curve to arrive
at the highest amount that the consumer would be able to purchase that unit16. It is the variation
between what the consumer would have paid and the stipulated lower equilibrium price that
comprises a type of surplus that goes to the consumer. If the surplus for each commodity bought
gets accumulate, then we derive the consumer surplus.
From the supplier side, there is a capacity for a type of surplus. Using the market supply
curves that slope upwards, some sellers will be more than willing to sell their commodities
despite their prices being lower since the market price will be above the marginal cost, and
regarding perfect competition a producer sells extra product if the price is higher than the
marginal cost. Thus, if each item is sold based on marginal cost, and there is a calculation of the
variation between the price and the stipulated marginal cost, then the accumulating such
differences, the summation of the quantity is known as producer surplus.
16 Ibid 16.

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Question 4: Monopoly
Price and output for a monopoly
In a perfect competitive market, the price and output are determined by the forces of
demand and supply as there are many buyers and seller who are all identical in all aspects. In this
market the firms become price takers.
A monopoly is characterized by one producer of a commodity that determines the prices
of the commodity by changing the monopoly output. In a monopoly, the producer is known as
the monopolist. The desire by monopolists to sell more makes them reduce the price of a
commodity. On the contrary, if they want to sell less, they raise the price. In a monopoly, there is
no variation between a firm and the industry. The demand curve by firms comprise the demand
curve employed by the whole industry17. The monopoly’s demand curve is the average revenue
and slopes downward. The negative marginal revenue and average revenue assert that when
average revenue is less than marginal revenue, then average revenue rises. Also, when MR= AR,
the AR does not change. A lesser MR compared to AR leads to a fall in AR. In this context, AR
is the price of the commodity and as AR falls under a monopoly making MR be
Monopoly welfare loss
The welfare loss of a monopoly can be demonstrated using the consumer and producer
surplus. The graph below demonstrates a firm competing in a perfectly competitive market with
many similar firms or has monopoly power in the industry. In perfect competition, the firm
produces at price Pc also known as the competitive price where both the supply and demand
17 Ibid 17.

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curves intersect. The firms are the same and employ supply curves that are similar. The supply
curve also known as the marginal cost curve are higher making it unprofitable to operate at Pc
would make it exit the market. However, if the supply curve was lower then it means that the
firm can make profits and this will attract other firms to enter the market until all firms are
making no profits. A firm producing at Pc will supply output Qc. However, the case of a
monopoly is different as it produces where MR=MC and the quantity are Qm being sold at a
price Pm.
Consumer and producer surplus in a perfect competition
The yellow region represents consumer surplus and the orange region represents the
producer surplus. The graph has five regions that is a,b,c,d,e.For perfect competition
Consumer surplus=a+b+c
Producer surplus=d+e
Consumer and producer surplus for a monopoly

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The yellow area is a consumer surplus and the orange region is the producer surplus.
There is an added region which is grey and the grey region represents the deadweight loss. It is
imperative to note that the surplus for both the consumers and producers as was the case with the
competitive market is lost. In the case of monopoly
Consumer surplus=a
Producer surplus=b+d
Deadweight= c+e
The impact of moving from perfect competition to monopoly is identified as bad for
consumers. The consumer surplus gets reduced by summation of area (b+c). Area b has moved
from consumers to producers leading to a total welfare loss18. However, producers benefit from a
monopoly, producer surplus increases by (b-e) and since b is the larger region compared to e it
results in a net gain. Areas c and e are identified as the deadweight loss. The consumers lose c
and producers, on the other hand, lose e and this is due to less output being produced as a result
of quantity decreasing from Qc to Qm.
18 Ibid 18.

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Bibliography
Gregory Mankiw, N., Principles of Microeconomics (Cengage Learning,5th ed,2008)
Legislation, Human Rights Act 1998 (1998)legislation.gov.uk<
https://www.legislation.gov.uk/ukpga/1998/42/section/2>