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International Baccalaureate: Economics
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With the aid of at least one diagram, explain three factors that may cause the demand for a commodity such as copper to increase.
They are many factors which can affect the demand for a commodity. They are called determinants of demand. One factor that influence the demand of commodity is the size of consumers? income. With increase in the level of income, there is increase in the demand for goods and services. A rise in income causes a rise in consumption. As a result, a consumer buys more. For normal goods, the income effect is positive, hence an increase in consumer income will result in a greater quantity of the commodity demanded (Q1 to Q3)
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With the aid of at least one diagram and examples, explain why the demand curve for a normal good (define this term) is downward sloping.
P1; a rightward shift of the demand curve of the commodity (D1 to D2). The demand curve for a normal good is downward sloping because of diminishing marginal utility, and the substitution and income effects. Firstly, diminishing marginal utility results in the curve being downward sloping. Consumers buy goods and services because these provide them with some utility (benefit or satisfaction). The greater the quantity of a good consumed, the greater the utility derived. However, the extra benefit provided by each additional unit increases by smaller and smaller amounts. For example, you buy a chocolate bar (Q1), which provides you with a certain amount of benefit (P5).
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With the aid of at least one diagram and examples, explain the difference between a movement along the supply curve and a shift of the supply curve
In other words, the price changes but the other non-price determinants remain constant. A movement along the supply curve, caused by a change in price, is called a ?change in quantity supplied?. The diagram above shows that as price increases from P1 to P2 quantity supplied increases from Q1 to Q2. There has been a movement along the supply curve from A to B. A price rise will cause an expansion up the supply curve, from A to B. A fall in price from P1 to P3 will cause a fall in the quantity supplied from Q1 to Q3 (contraction from A to C).
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The principle being that fairness and equality determine government policy. The German Karl Marx suggested that the government should take over and control the economy. It should own all the land, the factories and companies. In a socialist economy the government tries to spread money evenly among the workers. Many countries followed these socialist ideas, which later on led to Communism. Ludwig Van Mises thought markets like people needed to be free from government meddling. Van Mises predicted that the new soviet socialistic economy would never work, precisely because the government controlled wages and prices.
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Explain why governments may need to be wary about economic setting policy aimed solely at growth of GDP
Therefore, the government should take into account the % change in population. In addition, GDP cannot accurately measure standards of living. GDP cannot reflect achievements in levels of education, health and life expectancy. A society?s level of health and education contribute significantly to standards of living. Countries may achieve higher or lower levels of health and education with a given amount of GDP per capita, but these may remain unaccounted for in measures of GDP. Moreover, GDP does not take into account the quality of goods and services.
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That results in the increasing in the amount of consumers who buy the food from the firm and for certain, the profit will definitely increase. It can be compared to killing two birds with one stone. To produce healthy food, the firms will have to follow the ethical objectives that they set up before. Specifically, the objective must be known by every employee in every stage of making food. The procedure must be carried out carefully to ensure that all bacteria, virus, harmful microorganisms were killed and as a result, produced food will be clean and healthy to the consumers.
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At the centre of this process are international elites who have been able to bring the world economy under the domain of multinational corporations without losing the national economic priorities of the leading core states. Although the relationship between governments in the core states and elements of the international elite has been mainly harmonious, at times it is prone to tension and overt disagreement.
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Regardless, the depreciation of the currency could lead to problems for domestic producers and lead to cost-push inflation as the cost of imported materials has risen. Another problem is that usually, a current account deficit is funded by borrowing. This will accumulate debt and lead to high indebtedness and perhaps limit funds which could have been spent on the domestic country. Furthermore, if a country is unable to pay back loans in time, it will negatively influence their international credit ratings and make future loans unlikely, as foreign countries would not be incentivized to lend to countries whom are unable to pay back debts.
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International Trade Economics Commentary. In hope of shifting the Eurozone economy closer to its full employment level, the European Central Bank currently is purchasing European government bonds
or increase them (contractionary monetary policy). In hope of shifting the Eurozone economy closer to its full employment level, the European Central Bank currently is purchasing European government bonds proficiently boosting the money supply of the euro. If effective, the ECB?s ?quantitative easing? should reallocate loanable funds towards Spain and Italy?s private and public sectors as a result of lower interest rates on government bonds. The increase in supply of loanable funds should bring down the interest rates for private investors (households and firms), making private investments more appealing.
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Analysing the situation, numerous factors could have resulted in this dip. Primarily, gender discrepancy should be taken into respect. Females dominated industries have increased in size such as education and healthcare industries. Supporting my analysis, the rate of unemployment for women minimally fell by 0.1% unlike their male counterparts whom suffered greater losses. Males as a result saw a greater decrease in their unemployment percentages, falling by 0.8% in comparison to the female?s 0.1% probably due to discriminating reasons, academic motives or other social aspects.
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This essay will evaluate the concept of what negative externalities are and how they play a role in the economy.
This makes the marginal cost social costs of production greater than the marginal private costs together with the external costs. This is demonstrated in the graph below. In the graph above MPB represents private benefit, MSC represents private plus external costs, and MPC represents private. This being said, the negative externality is represented in the space between the MSC and MPC lines. It can be seen that the marginal private costs are below the social costs. This can be concluded because due to the production of paint there is pollution being produced causing an extra cost to third parties such as lung problems and respiratory issues.
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Movement along a demand curve: Considering the fact that two changes can occur, there are two possible ways of demonstrating this. Differences of the movement along a demand curve and the shift of the demand curve consists of two different changes, thus judging from the diagram below this example indicates the movement along a demand curve. A movement along a demand curve is the change in demand due to change in price, however the separation between the movement along the demand curve and the shift in the demand curve is how the shift in the demand curve changes due to income and other products.
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The determinants of demand are price, income, price of other products and etc. If there is an increase in price for a product, the quantity demanded for that product will change. If the price of a product falls, the people would have an increase in their real income, which reflects the amount that the real income will buy. Thus with a higher real income, the consumer will buy more of the product.
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Explain how interdependence and uncertainty affect the behavior of firms in the oligopolistic market
This means that the firms have to predict each other?s decisions and reactions to any circumstances in the market in order to be more competitive. The oligopoly concept is best defined as the complex behaviour of the firms inside the market. There is no single theory of price and output under conditions of oligopoly. Hereby are meant price wars, where oligopolists may choose to produce and price much with the consequence of a highly competitive industry or they will act together in cartels to become sort of monopoly.
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By exporting surpluses in exchange for goods which are produced more cheaply elsewhere, countries can increase their overall consumption of goods and services, as shown in the diagram below. The diagram above illustrates the production possibility curve for a country. This curve shows all the different quantities of two goods that the country could produce if it were operating at its most efficient level. In reality, no economy is ever able to achieve pareto efficiency, and instead are at a point somewhere instead the curve ? for example, point A.
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One of the theories that neoclassical economics is based on is the free market theory. This is the idea that if an economy is left to itself, it will always tend towards full employment equilibrium. If there is unemployment present due to a surplus of labor, then wages for workers will fall. This in turn will lead to an increased demand for labor, as it will be cheaper for firms to hire workers. As a result, the level of unemployment will decrease.
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Products such as food, a necessary good, have inelastic demand; even if the price of food increases overall, people don’t have the option of simply not purchasing food anymore. The article states that the rates of hotels in the centre of the capital have increased on average by 139% during the period of the Games, compared to afterwards. Despite this significant increase, most hotels are still booked up and one of the few hotels with vacancies is charging an extra £5,054.
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Economics Commentary- Prices of onions jumped yesterday, buoyed by a ban by India on the export of the item
On September 8, an Indian ministerial panel banned onion exports following a steep rise in prices, reports Reuters, quoting Food Minister KV Thomas. The restriction came in effect on Friday. ?We will review the ban every fortnight," said Thomas. Bangladesh meets much of its local demand for onions by importing it from the neighbouring country. Since Saturday, 80 onion-laden trucks entered Bangladesh till yesterday afternoon, our Chapainawabganj correspondent reports. No shipment took place at the Bhomra Land Port yesterday. The trucks carrying onions that came to the Ghojadanga Land Port on the Indian side returned without shipment, our Sathkhira correspondent reports.
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The effect of Cost Push Inflation can be observed in Figure 1. Figure 1: Market for food and other essential commodities In the diagram we can observe that in Cost-Push Inflation the Aggregate Supply curve is shifted inwards due to rising costs of production from AS to AS1. This leads to a decrease in GDP from Y to Y1, and inflation rate rises as the price level rises from P to P1. This means that the price for food and commodity rises drastically, in this case they rose by ?5.3% from a year earlier?.
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The government this week passed an emergency budget of $155bn (£100bn) to try to boost domestic demand, however the effects won't be felt for a few months. "The data underscores the sluggishness of domestic demand, as the economy's recovery has taken a breather because of a delay in reconstruction efforts and global economic slowdown," said Takeshi Minami from Norinchukin Research. Japan's economy bounced back from recession, triggered by the earthquake and tsunami, in the three months to September. However, the pace is expected to slow because of the pressure on exporters from the strong yen, as well as the bleak global outlook of growth.
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George Osborne from the article says that "There is clear evidence that increasing the cost of tobacco encourages smokers to quit and discourages young people from taking it up". Thus, by increasing the price they are trying to decrease consumption of such demerit goods. Although price and quantity demanded of a good have an indirect relationship, it is not always completely proportional since different types of goods exist and the sensitivity to price changes varies for each of them. This all depends on price elasticity, which is known as the responsiveness of change in quantity demanded due to a change in price.
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Economics Article Commentary - The article deals with the raise of a tariff on Chinese solar panels and their impacts on the market, as well as general tensions between the U.S. and China.
Other manufacturers will face tariffs of just under 250%. The levies will be retroactive for 90 days. The tariffs were in addition to fees ranging from 2.9% to 4.73% imposed last March. Chinese government subsidies helped drive down the price of solar panels by 80% over the last five years, and by 40% in the last year alone. The price drops drove some US solar panel makers ? such as Solyndra ? to collapse. The seven US-based solar panel makers which brought the complaint said the ruling from the commerce department would help American companies hold their own against Chinese competitors.
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What has happened to Canada's demographic over the past 50 years? What are the effects on employment?
I: Changes in the age structure of the Canadian population Proportionally More Seniors than Children Toward 2015 ________________ As seen in the graph (see Fig. II), the percentage of people aged 15-64 is quite high, as it represents the youth and adults of the population. However, the percentage of people aged 0-14 years is slowly decreasing, due to the aforementioned decrease in fertility of Canadians. The dotted lines represent projections, and through the projections it can be predicted that the percentage of the elderly will exceed that of the young, and will eventually be almost double the value. Fig.
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That population is around the population combined of Africa, North America and Europe. Naturally all these people will want phones, fridges, cars, washing machines, food and place for living. 2.000 new cars already join Beijing?s streets every day. In 2010 China had 40 cities of populations of more than a million, by 2020 it plans to have additional 225 cities. The implications for world?s commodity resources are stark and sobering: global demand for food and water is expected to increase by 50% and 30% respectively by 2030, the pressure on lead, zinc, cooper and corn is already becoming unsustainable and no one has a clue where the where the energy we?ll need is going to come from.
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