Economics HL Commentary
Priyanka Kanwar CASE STUDY OF OPEC THE IMPLICATIONS OF ITS SUCCESS ON THE WORLD OIL MARKET Firms in perfect competition are 'price takers', i.e. they cannot influence the price. They must accept whatever price is determined by the industry and then adjust their level of output to maximize their profits. At times, they collude amongst themselves to restrict output and force the price to increase. This combination or collection of individual firms is known as a cartel. If all firms in the industry join the cartel, it assumes the form of a monopoly. However, in general, while most of the firms join the cartel, some remain outside. Therefore, cartels are mostly successful in creating an oligopoly. The firms constituting this oligopoly are often successful in raising prices and restricting output, with a view to maximize the profits of individual members forming the cartel. At the same time, there is a strong incentive for individual firms to cheat, because the cheating firm stands to gain more if it cheats, while other members cooperate. The best example of such a cartel is the Organization of Petroleum Exporting Countries (OPEC). This organization was originally formed in 1960 to benefit the oil exporting countries. It consisted of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Eight other nations joined by 1973, raising the total number of members to thirteen. However, 2 of
Eco commentary
OPEC CARTEL ECONOMICS COMMENTARY Source-: The Times Of India Made By:- Cartel-: It is a formal agreement between firms, when firms decide to collude with each other and act as a monopoly, which includes that that the firms will not compete with each other on price. Cartels usually occur in an oligopolistic industry, where there is small number of sellers and firms produce homogenous products. Cartel members may generally agree on price fixing, total industry output, market share, and allocation of customers, allocation of territories, big rigging, and establishments of common sales agency. The aim of such collusion is to increase profits by reducing competition. OPEC (Organisation of petrol exporting countries) is the finest example of a cartel; it is a legal collusion between firms, where different oil producing countries join hands with each of them to follow non price competition. Cartels are not considered healthy for economies but, as oil is the very Important commodity of our life, So the demand for oil is very Inelastic and all the countries want to make the maximum utilization of the resource by charging a consistent price all over the world and earning the maximum profit also. OPEC controls most of the world production of oil, so, there can't be a steep fall in the prices of oil for OPEC Cartelization (Abnormal
Economics LDC Types of Aid
ESSAY HIGHER ECONOMICS LEVEL: Explain the key issues in relation to the developing nations in Relation to Aid and Trade in terms of achieving Growth and Development Economic Growth occurs where there is an increase in the productive potential of the economy and is best calculated by the boost in a country's real level of output over a period of time. All in all generating economic growth rests on the basis of resources and the importance of the quantity and quality of the factors of production: land, labour, capital. A developing country is a country often with characteristics tending to be; dependency on primary products, low per capita incomes, high incidence of poverty, low levels of human capital (education, health, nutrition) and weak economy associates. Due to this they often they lack the enticement to undergo structural change and consequently, economic growth. Derisory markets and in appropriate intervention, are other credible reasons why Lower Economically Developed countries, do not succeed to expand economically. Apposite policies and strategies have been developed to explain the process of economic development. In a broad continuum, one can divide these into two imperative factors; integral (inward) and peripheral (outward) oriented strategies. The Harrod-Domar model lays emphasis on the importance of savings and efficiency. It "identifies the rate of growth
Pro Free Trade
Economics - For Free Trade REFUTATION: Firstly, the point that you first made on how domestic industries and jobs could be threatened is completely unviable, as free trade also CREATES jobs and growth. When foreign companies enter a market, and set up a firm or factory of their own they in turn are employing your domestic workers; they are promoting growth of the market outside of what your domestic companies can offer, thus creating a more stable economy. Growth is produced as a greater variety of goods are offered to your people, increasing their standard of living. There is no threat of foreign companies entering a market, as they create more jobs while also promoting economic growth and stability. Moreover, your view of dependency is unjustifiable as interdependency between countries is what the world is becoming, whether through trade or communication. When a country is dependent on another, it does not mean show weakness, as dependency does not go one way. That is why it is called interdependency, which is good as it creates a stronger between nations. Although transportation costs might be an issue, trade does not always have to be over long distances. No country in the world is so isolated that they would not be able to trade due to high transportation costs. STATEMENT: I will now be moving onto why free trade would be beneficial to the world economy. My
Economics HL - IA
IB Economics Internal Assessment March 20th, 2008 Word Count: 3688 Peter Frederiksen Svane 000134 - 031 Commentary number #1 Title of extract "Japan's chopstick dilemma" Source of extract http://www.atimes.com/atimes/Japan/HJ17Dh01.html Date of extract November 1st, 2006 Word count 740 Date the commentary was written November 3rd, 2006 Syllabus sections Section 1 Candidate name Peter Frederiksen Svane Candidate number 000134 - 031 The article, enlightening the effects of a rapidly increasing price (up to 30%) in the Chinese production of chopsticks, is a great example of how the hidden forces of supply and demand exerts its forces and thereby balance out the market to find its equilibrium. The increase in the price of Chinese chopsticks comes after a greater concern and rising production costs in its market. Providing almost 98% of Japan's chopsticks, China's decision to boost up the prices has a great impact on the regular Japanese consumer. Free chopsticks at restaurants, convenience stores, etc. have been the norm in Japan; people have simply taken it for granted. Nevertheless, the Japanese consumers and importers can no longer ignore the fact that the price of Chinese chopsticks is rising. They will have to respond to this minor crisis. As mentioned, greater concerns about the deforestation and an actual increase in the production cost of
The Economics of Housing. Factors affecting prices and demand.
INTRODUCTION: House and land are one of the basic needs which always have demand to the people. Population increased, so the demand is getting high for land and house. So it is obvious that the price will increase for increasing demand. And that is what was happening in most part of the world and same as UK. A House price in UK is one of the most popular topics for conversation. The purpose of house prices in local and national housing market is a typical example of microeconomics. Determine the price of a property in the market, both the buyer and seller offered and agreed before their final transaction. So there is a price from seller and buyer both. Buyers offer a price for the property that seller may accept or reject. Demand and supply are two main factors that changes house prices, so the factors that effect to change demand and supply are very important. The aims and objective that I need to discuss in this assignment are: . To give the definition of demand and supply. 2. To conduct a time series analysis showing the house prices in the last five years. 3. To identify the background factors behind changes of housing prices. 4. To make an analysis of the housing price scenario. The theory of demand: The theory of demand is a simple illustration of the general relationship between demand and price. It means when the price of a good increases, the quantity
free-market economy and central planned economy.
Economics Essay T1- What are the main characteristics of a free-market economy and central planned economy. T2 - Evaluate the possible consequences that may be in counted when an economy makes a transition from central planning towards a free market. . Task 1 An economy may be defined as the state of a country or region in terms of the production and consumption of goods and services, and the supply of money. A planned economy is an economic system in which economic decisions are made by centralized planners, who determine what sorts of goods and services to produce how they are to be priced, and allocated. Since most known planned economies rely on plans implemented by the way of command, they have become widely known as command economies. These are generally associated with socialist or communist economic systems. A free market economy is an economy in which the allocation for resources is determined only by their supply and the demand for them. Every economic system is based on a different philosophical stand than the others. These differences are caused by the different responses that each economy has to the problem of scarcity. However, economies don't always work as their theoretical models and take some components from each system to develop an economy that works. Thus, economies are graded as being free market economies or planned economies using a tool
Utah House Passes $1 Cigarette Tax Hike
COMMENTARY COVERSHEET Economics commentary number: _______________________HL Number 1_______________ Title of Extract: _______Utah House Passes $1 Cigarette Tax Hike________ Source of extract: _______ CS News__________ Date of extract: _________Nov 29, 2010_________ Word count: ______651________ words Date the commentary was written: _________ Sections of the syllabus to which the commentary relates: _____Section 1________ Candidate name: _______________ Candidate number: _________________________ Utah House Passes $1 Cigarette Tax Hike March 08, 2010 - SALT LAKE CITY - A bill passed by the House here in a 19-8 vote would increase the state's cigarette $1, to total $1.695, The Associated Press reported. Supporting lawmakers have argued the tax increase would generate $43 million in the coming fiscal year. The bill now goes to Gov. Gary Herbert, who has said he's opposed to any increases, but hasn't voiced a veto threat to a tobacco tax hike, according to the report. Republican Rep. Paul Ray, who proposed the measure, said he's "comfortable" the governor will be on board. "He hasn't told me specifically he is," Ray said in the AP report. "But you've been up here long enough you can just kind of see how things go." Herbert spokeswoman, Angie Welling, told the AP the governor will consider the tax increase in the context of the overall budget, and noted he hasn't
What is scarcity?
Donnelisha Jackson Due: 9/24/09 In this day and age, scarcity is a concept that all individuals will soon learn to understand whether they use the technical term or not. The problems with our economy are derived from scarcity, which is the reason why economists exist. If all people could cope with their unlimited wants, it makes one wonder if the world would be a better place. In order to truly understand the difficulties with scarcity in everyday life, one must first know and understand its meaning. The term scarcity refers to the insufficient amount of goods or service to satisfy the unlimited wants that human beings naturally have. In basic terms, scarcity applies to all things with a "nonzero" value. From those insufficient amounts of things with a "nonzero" number, problems like poverty, hunger, and multiple complications arise. An example as to when scarcity occurs on a minute scale is when one has an economics and math exam on the same day. Which do you study for the most if both at all? Scarcity is the reason why economists exist. Actually, scarcity causes all societies to ask the same question. How do we manage our unlimited wants with the resources we have available or how do we deal with scarcity? Well, one thing all societies must consider having businesses produce things that don't require the same resources such as paper production companies going into
Economcs commentary - Title: Euro Zone Posts Current Account Deficit
Euro Zone Posts Current Account Deficit in August By GEOFFREY T. SMITH OCTOBER 22, 2009, 5:32 A.M. ET FRANKFURT -- The euro zone's current account swung back into a deficit in August, as the economy's export-led recovery paused for breath after a strong run over the late spring and early summer. The current account posted a seasonally and calendar-adjusted deficit of €1.3 billion ($1.95 billion) from a revised surplus of €3.7 billion in July, according to data released Thursday by the European Central Bank. Exports fell 2.7% to €105.5 billion, after rising in each of the three previous months, while imports edged up 0.5% to €99.5 billion. The figures were in line with analysts' expectations, which had been primed by earlier national data, especially from Germany, which accounts for over half of total euro-zone exports. Carsten Brzeski, an economist with ING Bank in Brussels, said he expects the setback to be temporary, and that exports should continue to recover as global demand picks up, irrespective of the sharp rise of the euro on the foreign exchange markets in the last month and a half. "Euro-zone exporters have learned to live with a strong euro over the last years ... although of course it will start to hurt a bit" if the single currency continues to rise, he said. The euro rose above $1.50 for the first time in a year on Wednesday, but fell back