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International Baccalaureate: Economics

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  • Peer Reviewed essays 1
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  1. Peer reviewed

    Economics Article Commentary. London gets EU reprieve over air pollution. The air pollution is a kind of Negative externalities of consumption.

    3 star(s)

    The tiny sooty particles in London's air are believed to cause asthma, cardiovascular problems, lung cancer and premature death. The negative externalities of consumption produced here make the marginal social benefits in each case less than the marginal private benefits. The marginal social benefit is equal to the marginal private benefits plus the external benefits. If these goods are being over-consuming, then for some of those goods, the overall cost to society is greater than the benefit received . The graph below shows the effect of a negative externality of consumption. According to the article, people who drive cars enjoy the private benefits of the cars, but this will create external costs for other people.

    • Word count: 699
  2. IB Price Floors Commentary. Rice from Thailand was being sold at 13,00 thousand baht, however the price floor that the government has introduced has pushed the lowest price for rice up to 15,000 baht

    This will cause the supply curve to shift to the right as shown in diagram 1 below. The effect of the price floor is shown in diagram 2 below. Before the government decided to add the price floor, the market equilibrium was at quantity Qe at the price Pe.

    • Word count: 334
  3. Explain how barriers to entry may affect market structure

    This essay will examine the relationship between barriers to entry and market structure In perfect competition and monopolistic competition, where there are many small firms, firms are able to enter or leave the market freely. This means that the existing firms do not have the ability to stop new firms from entering or leaving the market if they so desire. In the case where the existing firms are making abnormal profits, the positive economic profit arising when AR > AC, new firms are attracted into the industry because of the absence of entry barriers and by the opportunity to make abnormal profits.

    • Word count: 520
  4. Explain why the government might choose to grant a subsidy to producers of wheat.

    If a subsidy is granted to producers of wheat, their costs of production will be lowered. Producers can choose to pass this on to consumers by lowering their prices, thus achieving the government's aim of increasing consumption. Without a subsidy, the original equilibrium would be at price P1 and quantity Q1. Following the introduction of a subsidy, the supply line would shift outwards, because it will have become cheaper for firms to produce their goods. This is represented by the change in equilibrium to price P2 and quantity Q2, as price will decrease and quantity will increase.

    • Word count: 429
  5. Scottish government reintroduces alcohol pricing bill commentary

    In the case of this news article, the main reason why Scotland's government wishes to impose a minimum price per unit of alcohol is that it wishes to discourage people from consuming as many alcoholic products. If their proposal is adopted and officially put into place, Scotland will be the first country in Europe to have such a limit on alcohol purchases.

    • Word count: 415
  6. Economic Commentary, Title of Extract: China to Release More Data on Air Pollution in Beijing

    The air pollution in Beijing is a negative externality. Negative externality is cause by over consumption or production which outcome a spilled over negative effect which affected the third party, in this case which is the whole society in Beijing. The consumers of use of cars are consuming at the marginal private benefit instead of the marginal social benefit, which include the cost of the air pollution they produced by consuming the use of cars. When, market failure exists. A simply diagram can explain this clearly: Market of use of car In above diagram, it shows the market of consumption of use of car.

    • Word count: 824
  7. Economics Commentary - article on the Haitian Earthquake

    First of all, there will be a change in Haiti's economy because there's a huge effect of Haiti's production. Haiti lost 250,000 people and 300,000 people were injured. They lost loads of labor and enterprise just because of this. Labor are human resources providing power to make goods and services Enterprise is a firm is an owner of a factory or company e.g. Nike, Apple. Capitals such as Houses, hospitals and factories were destroyed. Capital is man made resources that use for production. Many animals got kill by this earthquake and tsunami and destroyed timbers there's loss of land.

    • Word count: 729
  8. Economics commentary Demand and Supply. Title of extract: Prices of TCM herbs shoot skyward

    The appreciation of the Chinese yuan has made the exports of Chinese herbs more expensive. On the other hand, herbal plantations are destroyed and less land is available for plantations due to rapid urbanization. These factors shift the supply curve to the left. As seen in Figure 1, the initial price and quantity of TCM herbs are P0 and Q0 respectively. As the 6.9 magnitude earthquake and massive landslide hits China, the supply of TCM herbs decreases significantly, causing a shift of the supply curve to the left from S0 to S1.

    • Word count: 996
  9. Exchange Rate Revision Notes.

    rate system * Floating Exchange Rate- an exchange rate system where the value of the currency is allowed to be determined by the demand for and supply of the currency on the foreign exchange market. o There is no government influence on the value of the currency * Appreciation- the value of a currency rises in a floating exchange rate system (demand & supply for currency)

    • Word count: 541
  10. Economics Commentary- Market Failure. In the article, the negative externality was the spilling of toxic chemicals that caused large-scale environmental pollution[1]. The full cost of this polluting is not reflected in the market prices of

    Goods with a negative externality are called demerit goods. In a free market economy, demerit goods are overprovided, and therefore overconsumed. Cigarettes, for example, are demerit goods, as smoking has a negative effect on a third party, like the consequences of second hand smoking. In the article, the negative externality was the spilling of toxic chemicals that caused 'large-scale environmental pollution'1. The full cost of this polluting is not reflected in the market prices of the goods that the Biaoxin Chemical Company produces. Moreover, even though the company does offer job opportunities to the local population, the company causes a greater social cost to the people than the social benefit that can be gained through the income of the jobs.

    • Word count: 764
  11. Demand-deficient Unemployment article commentary.

    The decision was made to 'stop vulnerable workers from losing their jobs in a labour market that had deteriorated rapidly.'2 However, this means that low-paid workers have less disposable income available which may lead to purchase power decreasing and increasing inequality in the economy. Graph showing a decrease in AD (Fig 1) Demand-deficient unemployment (Fig 2) Average AD AD LRAS Average AS Price Real Level Wage Pl W a b Pl W AD AD Y Y Y Q Q Real Output (Y)

    • Word count: 768
  12. Economics article commentary. June Harvest to Reduce inflation

    However, as far as this article is concerned it is basically cost push inflation that is of major concern. Cost push inflation is caused by rising costs of production that forces producers to increase prices of the final products. High food prices have been the main driver of inflation due to the drought that hit the country early last year. Agriculture depends on natural factors beyond human control such as weather. A drought will cause shortages that will result in escalating prices as shown in the diagram below.

    • Word count: 745
  13. Economics commentary - China set to introduce new rules on smoking in public

    This good produced is harmfully or damagingly affecting the society. Therefore there is misallocation of resources. Traditionally Government intervenes by adding to the basic price, taxes to lower the demand on the good which influences the social and private cost positively by lowering their quantities as shown in {figure A}. Concerning the article, the negative externality is present in china due to cigarettes supported by the fact that 1 out of 3 people is smoking, which is considered a negative pick rate, which surely affects the environment and the third party, as mentioned above. This fact, and the increase of cigarettes consumption, makes "The country's authorities believe smoking kills more than one million people every year and that figure is predicted to triple by 2030".

    • Word count: 978
  14. Economics Commentary. This article describes changes to the EU Common Agricultural Policy (CAP) and the different views to these changes. It deals with the economic principles of minimum prices, subsidies and buffer stocks.

    This causes Supply to shift outwards. This creates a surplus (the quantity from Q1 to Q2). The EU eliminates this by buying up surplus. This shifts demand outward, creating a new equilibrium at the minimum price. An example diagram for wheat is shown on the right. The EU stores the surplus as a buffer stock. When there is a supply shortage, they can release some of the surplus into the market. This allows the EU to stabilise prices in the event of an exogenous shock. Stability is created because prices and supply will always be constant through government manipulation of demand and supply.

    • Word count: 711
  15. Economics Commentary. This article deals with the development of African countries through export-led growth and export performance.

    Protectionist policies such as subsidies have also lowered prices. Because demand for agricultural commodities is very income inelastic, demand has barely changed. This means that prices of agricultural products have fallen dramatically. At the same time, people are now consuming more manufactured goods, which are income elastic. This increases the cost of manufactured products, which are Africa's primary imports. The falling global price of agricultural commodities and increasing cost of manufactured goods means that Africa faces deteriorating terms of trade.

    • Word count: 752
  16. Article analysis. The article I chose is about the recent rise in inflation in Hong Kong which mainly accelerated the food prices and the private housing rents.

    The consumer price index is the official measure of inflation in a country. Hong Kong's CPI has risen by 5.6% in one year which consists of the prices of food and property which are the major drivers of inflation. As it states in the article, the reason for this rise in inflation is strong domestic demand. This rise in aggregate demand, which is the total demand for goods and services produced in an economy over a period of time, has caused demand pull inflation in Hong Kong, which occurs when the demand exceeds the supply in an economy.

    • Word count: 727
  17. Economics Commentary - U.S. Concerned Over Indian Trade Barriers

    There are a number of gains to be made from trade including lower prices, greater choices, differences in resources, and increased competition between producers. By reducing imports, India is limiting its economic efficiency. Trade results in a consumer surplus2 because consumers have the choice of buying the same goods at cheaper prices. (See Graph Below) In the graph above, the world price (PW) is perfectly elastic because as long as consumers are willing to pay the world price3 they can import as much as they want.

    • Word count: 763
  18. Economics Commentary: Ethanol as a substitute fuel.

    Ethanol is being touted one of the better eco-friendly fuel alternatives on the market today. A United States Department of Agriculture (USDA) report indicates supplies of corn and soybean crops will decrease going into 2011, pointing to strong quantity demanded, higher prices and an increase in corn and soybean plantings in the following years. The decrease in supply translates to an increase in quantity demanded and an increase in prices. Consumers plan to buy more gasoline with more usage of their cars as well as purchasing of more cars, thus more gasoline (with ethanol in it)

    • Word count: 759
  19. Why does there appear to be a movement towards oligopoly in certain markets? Evaluate how this affects the way in which producers make decisions, and how does it affect the welfare of consumers?

    Also the firm does not have to produce at a productive efficiency nor allocative efficiency. There can be different reasons for a movement towards oligopoly to appear in certain markets. If there is a monopolist which operates in a perfectly contestable market for instance it could lead to an oligopolistic market structure. In a market where the costs of entry and exit by other rival firms is zero then a market is considered to be perfectly contestable. Entry costs are barriers for a firm to enter the industry, these barriers could be that all the raw materials are owned by the monopolist (then nobody else could enter), but they could also be legal barriers such

    • Word count: 879
  20. Economics comment

    As the demand is crippled, the demand line in supply and demand graph shifts to the left. By doing this, the price gets reduced, as a new market equilibrium is made. The area that was hit by the tsunami is an area that consumes a lot of oil as it is an industrial area, not a residential area. The Fukushima power plant was also severely hit by the earthquake. Market equilibrium before accident Demand line shifted to left The article also refers to the new demand for diesel oil has increased in Japan, as people want to invest more in that area, instead of pure oil.

    • Word count: 733
  21. Practice coursework

    As it stops supplying, it shifts the supply and demand graphs completely. In a short term, supply shifts to the left, as it is less. In doing so, for the same amount of oil, the price has gone to a higher figure. By doing that, the shares index of the western countries, such as European countries and the US have dropped, because of the adjustment via disposable income. That happens because of the effects of the shifting of the supply curve. As the price goes higher, the general public have less money to spend on the economy and firms, decreasing the firm's profit, damaging that countries' economy.

    • Word count: 625
  22. Economics Commentary 1

    In previous years Russia has unexpectedly turned of the gas flow into Europe. These gas flow shortages have been caused by international disputes between Russia and other countries in Eastern Europe. Countries in the eastern region will have a more reliable and dependent source in the Nabucco pipeline, so they can depend less on the Russians. Hence forth bringing another company/competitor onto the market making the price elasticity of supply more elastic. The Price elasticity of supply would go from inelastic to elastic.

    • Word count: 675
  23. Economics Commentary

    In this situation Procter & Gamble and Unilever are supposed to be two rival oligopolists. What has happened is that to ensure a high maximum profit the two firms have colluded and charged the same price. This makes them act as a monopoly. This is also known as collusive oligopoly. There are two main types of collusion, tacit collusion and formal collusion. In this case we are looking at a formal collusion. A formal collusion is when the firms openly agree with each other the price they will charge for the product; this is also known as a cartel.

    • Word count: 603
  24. IB Economics Article Commentary. Effects of the Ban of Plastic bags in California.

    This produces allocative efficiency.). However when resources are not used in the best possible option Market Failure arises (A situation in which the market does not allocate resources to their highest valued use (absence of allocative efficiency)). This sometimes occurs when there are external effects in some transaction of goods, which affects the third party (People who are not directly involved in a given economic transaction. Third parties are affected when there are externalities.) negatively or positively. Environmentalists and some governors in California would agree that Plastic bags are cheap and effective when carrying small amount of goods but they

    • Word count: 724
  25. Evaluate the view that greater economic efficiency (allocative and productive efficiency) will always be achieved in perfect competition compared to monopoly.

    = minimum average total cost (min ATC). Figure 1: Perfectly Competitive Firm Figure 2: Monopoly at long-run equilibrium: at long-run equilibrium: Pe = min ATC (Productive Efficiency) Pe = min ATC (Productive Efficiency) Pe = MC (Allocative Efficiency) Pe = MC (Allocative Efficiency) Figure 1 shows the long-run equilibrium of a perfectly competitive firm. The diagram clearly shows that a perfectly competitive firm achieves economic efficiency (productive and allocative efficiency) in the long run. At the profit- maximizing level of output Qpe, price (Pe) is equal to marginal cost (MC), and therefore society's scarce resources are being allocated efficiently.

    • Word count: 610

Economics is a social science which studies how resources are utilised and the production, consumption and transfer of wealth. It looks at how human decision-making affects the relative prosperity of nations and societies and the factors which inform these decisions. As a social science, it relies on scientific methodology, analysis and the fact that it underpins economies makes it relevant on a daily basis. Indeed you will be encouraged to keep a keen eye on the news as many of the theories and topics you will be studying will be exemplified on a regular basis.

The IB course will cover macro-economics: those theories which deal with the economies of countries and the economic decisions of governments. It also covers microeconomics which looks at the variables which affect companies, individuals and markets. Other topics you'll cover are development economics and international economics and a global perspective is a key element of the course.

There are three examinations requiring a variety of techniques including essay writing. Marked by Teachers can help you gain the key skill of writingextended answers with their impressive collection of IB Economics essay examples. There is also internal assessment, which requires a portfolio of commentaries based on topical economic news items.


Conclusion analysis

Good conclusions usually refer back to the question or title and address it directly - for example by using key words from the title.
How well do you think these conclusions address the title or question? Answering these questions should help you find out.

  1. Do they use key words from the title or question?
  2. Do they answer the question directly?
  3. Can you work out the question or title just by reading the conclusion?
  • Evaluate the policies available to a government that wishes to reduce unemployment rate

    "For this essay, I have only compared two policies of structural unemployment as it would not be equal to compare a policy for a type of unemployment (i.e. frictional) then another policy to help another type of unemployment (to seasonal) as the policies are dependent on their respective types. Therefore in conclusion, I think that although the first policy of skills training has its drawbacks, like being effective only in the long run, it does have great benefits in solving structural unemployment, and it does outweigh the second policy, as the negative effects the second policy might have on its people is higher, therefore I think the first policy is a more permanent solution to reducing unemployment."

  • Discuss the proposed introduction of a graduate tax in Scotland

    "In conclusion , we have to accept that graduation tax will be a very smart move if applied as it is going to help the government , the students and also the universities to pass this big economic crisis .During this essay we saw politicians , academics ans also people who represent the students who agreed about this measure and find it really positive and there were also groups such as the Institute of Directors which stated that the negative impact is bigger than the positives .It was also reported from the president of NUS that students will only accept this measure only , if some other changed will take place , such as public funding . 792 Words"

  • Discuss and evaluate the proposition that perfect competition is a more efficient market structure than monopoly.

    "In conclusion, the statement that claims that a perfect competition is more efficient than a monopoly is true. Perfect competition satisfies both methods of measuring efficiency, whereas a monopoly satisfies none, when profit maximizing. In a perfect competition, the consumer and producer surpluses are maximized, meaning Pareto optimality is achieved. Additionally, the lower prices of goods, means that the consumer has more disposable income to buy other goods, yielding a positive externality to third parties. This also aids economic growth. A monopoly often loses incentive to invest in their goods and products due to them being the sole seller of their good. This stalls advancements in technology, and means the PPC does not shift further outwards, stunting economic growth."

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