Resources and Markets
This revision workbook will help students preparing for the upcoming IB Economics exams ensure they are clear about the key theory they need in preparation for their exam. Read on to find out how to download your own copy.read more...»
This excellent clip from Phil Holden summaries the 6 types of market failure. An excellent revision resource, great the day before an end of topic test.read more...»
A short but fascinating TED talk entitled ‘Selling Condoms in Congo’ looks at a key development issue, AIDS, from the marketing persepctive.read more...»
To spice up the possibly mundane lesson on Production Possibility Frontier’s I made use of this fantastic TED talk by Yasheng Huang.read more...»
IB students should always be on the lookout for suitable articles to complete their internal assessment. This alcohol related piece from the BBC website is ideal.read more...»
I always try and make reference to businesses found in town. The students often find it easier to relate to and analyse. Morrisons is the the major supermarket in the town centre and last week they published promising results especially given the bleak economic times.read more...»
The major changes/additions to the microeconomics course are as follows…read more...»
Coffee is a lifeline for twelve million farmers in Ethopia who are vulnerable to volatile world prices and the monopsony power of the major coffee roasting businesses. But this heart-warming report from Jonathan Dimbleby finds that a new electronic trading system is providing a superb market place for the setting of prices - connected instantaneously to the world commodities market.
Prices agreed on the Ethiopian trading floor are transmitted round the world and the farmer is guaranteed payment within 24 hours. Since the exchange was launched over $400m has been traded without a single dollar of default. Farmers are getting the price that is agreed on the open-outcry market platform. Technology as a support to the problems of real people - outstanding.
A new series begins on BBC 2 this evening that looks ideal for the department DVD library.
Dragon’s Den star Theo Paphitis follows the fortunes of brave and bold British companies trying to expand in three of the world’s most dynamic emerging markets - India, Brazil and Vietnam. While Britain is still stuck in a recession, these economies are booming. There couldn’t be a better time than now for British businesses to seize these opportunities in some of the world’s fastest-expanding but risky markets - but how easy is it going to be?
Tonight Theo begins in Vietnam and it looks like a series that will be full of development and business economics.
Click here for a two minute clip of tonight’s episode.
A revision quiz for higher level candidates only that covers costs, revenues and profits.
Revision quiz (3) covers Government Intervention. Make sure you have learnt all the relevant diagrams- max/min prices, indirect taxation, ad valorem tax, subsidies, quotas and buffer stocks.
There is a slight air of panic in my boarding house with final IB exams only a week away! The Economics papers are on the 19th/20th May. To help you on your way here is the second revision quiz, many more to follow.
With the final IB papers for U6th students only a matter of weeks away I will be publishing regular revision quizzes that cover all sections of the course- both Higher and Standard level. A corresponding set of answers will follow a couple of days after publication. I also hope to produce some outline answers for past exam questions.
The first quiz is on An Introduction to Economics.
David Smith, economics editor of The Sunday Times and author of Free Lunch has just had his latest offering published- The Age of Instability.read more...»
A nice video summary of today’s budget by the BBC’s big three- Nick Robinson, Stephanie Flanders and Robert Peston.
The Economist Daily Chart is always an excellent source of data, especially in terms of development economics.read more...»
Another quirky story from my home county. The Gloucestershire town of Stroud is printing its own currency, 6 months on the BBC returns to see how economically successful it has been. Local businesses have to sign up to the initiative. The local cafe owner puts forward the multiplier argument for how local currency will benefit the Stroud economy. Critics see the the currency as a ‘gimmick’ that is in essence a glorified voucher scheme. For it to work and benefit the local community both firms and consumers have to be on side.
Here is the link to the Stroud Pound website.
A report from Sky News this morning really caught my attention. Air pollution in the UK kills 50,000 people per year. The negative externalities of poor air conditions include increased asthma cases, heart disease and respiratory diseases. Some MPs are becoming increasingly critical of the government for their apparent lack of action, quite rightly given the huge number of victims.
As some of you may be aware the Cheltenham Horse racing festival came to a climax yesterday with the Gold Cup race. Given the race was run by a locally trained horse there is no doubt that my home town was party central last night. There appears to be a more pressing issue for local residents that looks set to rumble on for a while.read more...»
The pressure is really on now with the final IB Economics papers only a matter of weeks away. During the coming weeks I will be posting daily revision blogs for both Higher and Standard level candidates. These will be a mixture of quizzes, presentations and revision sheets to aid your preparation. I will also be linking current economic news stories to the IB syllabus, remember that your examiners will be looking for your economic theory to be backed up by lots of real world examples. Do get in touch with any topics you would especially like covered, I will endeavour though to cover theory from all sections of the course.
A short interview with the CEO of MAN group discussing falling demand in the truck market and the future for the business.
The wonderful Rory Sutherland wows the audience at the TED conference in Oxford with a superb sixteen minute talk on advertising and aspects of behavioural economics. It is an immensely watchable video that will allow you to discuss with your students concepts such as perceived value, symbolic value,intangible value, hedonic opportunity cost and some ideas for nudging personal behaviour in socially beneficial ways. We learn of the extraordinary value of placebos, the rebranding of the potato in Prussian Germany. That all value is subjective and that persuasion is better than compulsion. Some super examples too of Veblen Goods, price discrimination and how the framing of the Italian penalty points system for drivers in Italy has a different impact than for motorists in the UK.
There is an excellent article in the Times today about the surge in the world price of cocoa. Cocoa prices have hit a 30-year high as poor weather threatens to drive the price of chocolate up again for Western consumers. Cocoa has reached $3,412 a tonne in New York as concerns deepened about demand outstripping supply for the first time since 1968. This is a really good article to use to consolidate students’ understanding of how shifts in supply and demand can lead to price volatility. And also the importance of price elasticity of demand and supply in shaping price changes.
“The surge in price also indicates that cocoa is increasingly being used for financial investment rather than merely sold to industry”
* What factors are limiting cocoa supply?
* Why is demand from western economies rising - even though many are still in recession?
* Will cocoa farmersd necessarily gain from higher world prices?
BBC Radio’s Global Business this week sees Peter Day in conversation with Professor Paul Romer from Stanford University, Paul Romer is an expert in the causes of long run run growth and his current focus is on the economics of new cities in developed and developing countries. It is a programme well worth listening to, Romer is tremendously optimistic about the opportunities created by faster economic growth - especially growth built around innovation and appropriate rules systems.
Long run growth is closely asscociated with the discovery / implementation of new ideas
2/ rules that govern how people interact and how the economy works
The two are closely inter-connected - Social rules often hold back the potential in new technology
Is growth good?
New technologies are potentially harmful if not accompanied by rules that make growth sustainable e.g. that limit pollution and over-fishing. Rules that put the right price on fuel and on carbon. Rules that set minimum standards for water quality and sanitation. Rules (or general principles on what types of transport are allowed and the size and pattern of properties).
Devices are getting smaller and using less energy per unit of output - this kind of growth that has a huge human value does not necessarily destroy the natural environment.
Romer’s current project is about building brand new cities - the entry of new cities that can be designed with very different sets of rules about transport patterns, density patterns and use of carbon.
In the developing world there are many new cities that will have to be built - this is an enormous opportunity. Successful cities are hubs of creative activity and chaotic innovation. But the framework of rules for new cities becomes even more important - government sets the framework of rules, the private sector operates within these rules. Rules can be enforced by law or by social custom.
The internet will ultimately speed up innovation in physical technologies and this leads Romer to be optimistic on sustainable growth. We will always face trade-offs, compromises and limits to consume less energy per unit of income. We face resource constraints and these will become ever more apparent as global living standards rise - but this will not stop progress. Indeed the price mechanism may accelerate experimentation, innovation and progress in finding some solutions to environmental crises.
Economic growth is ok if you have the right rules - more value, higher quality of life, more time with the kids, better investment in the things we care about.
World sugar prices are close to a 30 year high with values on the Chicago mercantile exchange hovering just under $30c per pound. For countries whose sugar exports account for a large proportion of their export earnings, the steep increase in world prices has brought about an improvement in their terms of trade and - because demand for many foodstuffs is price inelastic, a favourable change in their balance of trade. A good example of this is the African country of Mozambique, a nation almost destroyed by a long running civil war that eventually ended in the early 1990s but which has also been hit in recent years by severes drought hit many central and southern parts of the country, including previously flood-stricken areas. And where half of the population must survive on less than $1 a day.
This BBC news article reports that Mozambique’s government is planning to almost double its annual sugar production following soaring sugar prices and an abundance of available arable land. Helped by free access to the lucrative EU single market under the Everything But Arms (EBA) initiative, the issue is whether the sugar growing industry can scale up sufficiently to take advantage of a period of high prices to drive higher production, exports and lift average incomes for the thousands directly or indirectly employed by the sugar sector.
Sugar prices are inherently volatile and this poses big risks for investors in new supply capacity. Political risks and fluctuations in exchange rates must also be taken into account as Mozambique exports most of her sugar to European and American markets. In recent months the Mozambique currency has appreciated a little against the dollar which may make it slightly harder to sell sugar into US markets. But a weak currency against the Euro together with favourable trade arrangements is making Europe a good bet for a country desperate for higher foreign exchange earnings to boost her development.
Read more about the Everything but Arms Initiative here
A well publicised price war has broken out in the United States between Walmart and Amazon. Wal-Mart’s $10 promotion applies to the top 10 books coming out in November but the company is also selling 200 best-sellers for 50% of their list price. In a move that has sent shock-waves through the book industry, Wal-Mart has announced it will be selling 10 forthcoming books for just $10 each including Sarah Palin’s autobiography. As is often the case when an aggressive price war breaks out in an oligopolistic market, online bookseller Amazon matched the price cut within hours causing Wal-Mart to cut again to $9. Amazon returned the favour and Walmart has sinced shaved one cent to $8.99! The FT reports that Walmart’s website, the second busiest in the US after Amazon, has also cut prices by 50 per cent on 200 best-sellers.
The battle comes at a time when both Walmart and Amazon are under pressure from Google who are rolling out an online site capable of delivering e-books to any device with a Web browser, with an initial library of about half a million titles.
How long the price war will last is open to question. The October-December season is a hugely important time for all booksellers - the festive period is the peak time for sales and the intense battle for market share comes at a time of great change in the industry - not least the rapid growth of e-readers and online libraries. Some book publishers fear a price anchoring effect on their industry - namely that Walmart slashing prices and rivals following suit will lead book-buyers to expect new titles to cost $10, a low prices that would force the publishing industry to re-scale its entire business, including the advances paid to writers and ultimately affect the range of titles on offer.
For the giants of the book retailing industry, the economies of scale and drive for hyper efficiency in getting products to the market are simply a way of reinforcing their market dominance.
But what about the impact on smaller independent booksellers most of whom can never hope to compete on price but who provide light and shade in the book selling industry.
It is a reminder that there are different types of efficiency. Allocative, productive, dynamic and social. The latter two may be damaged if the price war escalates and many smaller booksellers go under. This BBC world service news interview focuses on some of the cultural issues of the rise of the giant retailers. Chris Doeblin from the independent Book Culture shop in New York City accepts that supermarkets will bring the price of books down - as they have with food prices - but at a (social) cost to many of us.
To what extent are speculators responsible for the increasing volatility of commodity prices? Expectations of price movements for globally traded commodities can have a huge impact on demand in the markets and the bets that speculators make on the forward prices of commodities such as oil can lead to rapid price hikes. We saw this with food and oil in 2008 - with enormous consequences for consumers and producers in developed and developing countries - and perhaps we are seeing this again as 2009 draws to a close. The world price of crude oil is already heading north again towardsa $90 a barrel.
This BBC world service audio report is a good resource on the impact of speculation and its possible links to exceptions to the law of demand where a rise in actual or expected prices can bring about an expansion of market demand.
“The International Food Policy Research Institute in Washington has studied price movements and concluded that they couldn’t all be explained by the fundamentals. And, perhaps most damning of all, a big-time speculator is now identifying speculation as one of the causes in the movement of the price of oil.”
I am currently sat at my kitchen table trying to start thinking about the term ahead. Slow progress so far, especially as I have just been distracted by Radio 4’s book of the week.read more...»
The BBC reports today that the Germans have drunk less beer this year!read more...»
Thomas Cook is offering Germans the opportunity to pre-book sun loungers before they arrive at their hotel on their holiday. The tour operator is offering tourists the chance to pay in advance for a poolside lounger when they book a Mediterranean package holiday, The offer is open to Germans only and they can pre-book a spot by the pool for 3 euros a day. Hotels in Turkey, Egypt and the Canary Islands have signed up. Thomas Cook hopes the scheme will end the perceived “beach towel wars”. Towel wars may still occur during the summer months though as this offer is only available on winter holidays.
There is a further article on this in today’s Telegraph.
Following the daily dose of proms on Radio 3 this week at 11pm The Essay is considering the economic and social issues associated with the NHS. For those of you considering applying for PPE in September this mini series is well worth a listen.
To mark the sixtieth anniversary of the founding of the National Health Service in 1949, Prof Jonathan Wolff asks whether health really is an intrinsic good and can be measured and quantified as well as charting changing definitions of sickness and health, from Descartes to RD Laing.
My brother and his girlfriend have come down to visit us in Devon for a few days. We are planning on visiting a few of the local watering holes of the coming days but will this be possible?read more...»
Walking around Dartmouth yesterday the cafes and chip shops were rather busy but this is not the case throughout the whole of the UK.read more...»
I am always keen when away to find stories from the local economy. Local meat producers have found an interesting way to keep there produce cool by insulating with wool from local rare breed animals. Owners of rare breed sheep, goats and alpacas get as little as 5 pence per kilo of fleece as the wool is often an unsuitable colour for the wool industry. By selling the fleece to meat producers incomes of the rare breed farmers will hopefully rise.
A great example of an of a local economy story. The full article can be read here.
I am down in Devon enjoying the varied English coastline. I am staying near to the naval town of Dartmouth and making regular use of the car ferry to cross between Kingswear and Dartmouth. A new ferry arrived on the route last month and almost doubled the capacity of each sailing. Although the multi million pound ferry was built in Holland it was fitted out in Falmouth. The increased capacity will bring an increased number of tourists to an already popular spot. The original investment in the ferry and the increased passenger numbers are likely to bring significant regional multiplier effects to the south west economy.
There is a video clip on the new ferry here.
An article from the Dartmouth Chronicle about the new ferry.
The BBC economics editor Staphanie Flanders guest presents the Bottom Line tonight on Radio 4 at 5.30pm. The program will explore the economics behind the airline industry. Worth tuning in.read more...»
An interesting piece from Adam Shaw on the BBC website that looks at the issue of choice and utility theory by considering the decisions faced by children in a sweet shop and the potential disappointment they may experience by picking the wrong sweet. A short but sweet article!
A topic from section 2 that is on both the higher and standard level syllabus.read more...»
Ten questions for higher level students on section 2 from the syllabus.read more...»
With only 24 hours to go before the first IB economics exam I will post through the day a series of 10 question quizzes to see how well you have revised. The first one is from section 1 of the syllabus and is suitable for both higher and standard level students.
A mini diagram quiz that I am going to get my L6th to do this morning. I will then get them up the front to draw their diagrams on the board.read more...»
Earlier today I looked with one of my classes at an area from the higher level syllabus that makes a regular appearance on the short answer paper.read more...»
Another cracking video clip from the BBC this time a report from the port of Felixstowe. In previous recessions trade into and of the port has grown (although at times slowly) but with the current global crisis there has been a 20% drop in the amount of traffic into and out of the port. A pretty serious sign as to the magnitude of the current downturn. The report also looks at the regional multiplier effects of reduced activity at the container port.
“If the bee disappeared off the surface of the globe then man would only have four years of life left. No more bees, no more pollination, no more plants, no more animals, no more man.”read more...»
Some interesting recession based facts from The Times yesterday.
Since last year’s budget in the UK:
Domino’s Pizza profits are up by 25%
Computer games sales are up by 20%
Sales of Argo’s cheapest sewing machines are up by 500%
Sales of turnips are up by 75%
Lunch box sales are up 75%
The average amount left under the pillow by the tooth fairy has gone down by 30%
Another interesting fact I discovered the other day whilst in conversation with a friend is that demand for osteopath’s are up (I thought that this would be an income elastic product) as people are keen to miss as few a days as possible from work because they fear for the security of their jobs.
A great video clip from the BBC website that looks at the market for apples and why prices for English apples have fallen by a fifth this year. Two of the major reasons are the cheaper imported apples into the UK from countries such as Chile and the falling demand for English apples overseas as recession takes hold - english apples are seen as a more luxury variety.
English producers have previously had their hand forced by supermarkets driving prices down and as a result more orchards in the UK are now independent growers who provide produce to the local market rather than national supermarkets.
A short piece in The Times today says that spam emails are responsible for as much greenhouse gas emissions each year as 3.1m cars. Globally spam uses 33 billion kilowatt hours a year- enough to power 2.4million homes. The UK was the joint fourth biggest emitter of C02 from spam in the world with 50,000 tonnes a year. A interesting example of negative externalities.
Following on from my earlier blog it seems that not all Easter eggs will be a bargain this year.
Apologies for the brief break in blogs I have moved house and jobs in the last week so it has been somewhat manic! With only three weeks to go until the IB exams start there will be plenty of revision material and advice posted over the coming days and weeks. Do get in touch with material you would like to see on the blog that will help you with your revision.read more...»
My lower sixth have been sent away over the Easter break to find an article that will form the basis of their first piece of coursework on microeconomics.
Remember candidates have to produce four economic commentaries (650 -750 words) based on news articles form within the last 6 months. These pieces must cover different areas of the IB syllabus. There is an article on the BBC website today that deals with tea prices and would be a an excellent basis for a micro commentary.read more...»