IB Economics
Monopolistic Competition
Feb 8th
Here is the IB syllabus requirement for this sub-topic:
Monopolistic competition
• Assumptions of the model
• Short-run and long-run equilibrium
• Product differentiation
• Efficiency in monopolistic competition
From www.reffonomics.com a useful introductory slide on calculating price and quantity under monopolistic competition scenario:
Which then leads to finding profit (from the same site, www.reffonomics.com) :
One that is earning a loss:
And one breaking even:
You can access all the resources here: Microeconomics by Dick Brunelle and Steven Reff – full credit to these industrious authors of the presentations above.
From http://highered.mcgraw-hill.com (McConnell Brue Economics) we have a useful interactive graph to explore with appropriate questions to solve – click on the image or title below
Now some video resources:
econsteve12 has given us three parts:
pajholden provides this video: click here
richardmckenzie offers this video:
And finally here is ACDCLeadership’s 60 seconds’ worth:
Development Economics TED Talks
Feb 4th
Here is a selection of TED talk videos which should help when studying Development Economics, and help to provide fresh and sometimes unusual perspectives on the topic. A suggested way of making use of these for your studies is to watch an entire video and summarise its key points in 100 words or under. This is no easy task as there will be lots to say, so you have to select what you think were the key / most interesting points. It is also good to include example detail (regions / countries / place names, dates, and figures) as good examples always help to boost your understanding of development.
Monopoly
Feb 1st
The IB syllabus requirements for this sub-topic are to understand:
- Assumptions of the model
- Sources of monopoly power/barriers to entry
- Natural monopoly
- Demand curve facing the monopolist
- Profit-maximizing level of output
- Advantages and disadvantages of monopoly in comparison with perfect competition
- Efficiency in monopoly
Here are a selection of useful resources to further your understanding of the above.
Two very good presentations on monopolies courtesy of http://www.reffonomics.com:
Above Video Source: mjmfoodie
Perfect Competition
Jan 25th
The IB Economics syllabus requires you to understand the following:
• Assumptions of the model
• Demand curve facing the industry and the firm in perfect competition
• Profit-maximizing level of output and price in the short-run and long-run
• The possibility of abnormal profits/losses in the short-run and normal profits in the long-run
• Shut-down price, break-even price
• Definitions of allocative and productive (technical) efficiency
• Efficiency in perfect competition
This selection of resources is designed to compliment your learning of this topic, with a focus on video clips and interactive resources.
Via: http://www.reffonomics.com
This is a very good interactive diagram to try out different scenarios buy adjusting the D=AR=MR line and/or the quantity produced.
Excellent interactive exploration of the relevant theory with multiple choice quiz questions to test your understanding(click on the image)
Via http://openmultimedia.ie.edu created by Javier Carrillo
mjmfoodie on Perfect Competition:
pajholden on equilibrium in perfect competition (click here to view)
richardmckenzie offers two detailed videos:
ACDCLeadership does his usual 60 seconds take on things:
Understanding the Balance of Payments
Jan 25th
This can be a difficult concept to understand (especially at IGCSE level, less so at IB level), mainly because we are trying to understand how an entire country manages its financial accounts of all transactions between itself and other countries. The real difficulty, i find, is that different nations take different approaches which means that there is no uniform ‘model’ of what Balance of Payments should be structured. In some cases, different phrases are used for the same thing (always a source of frustration to students when learning something first time round). Text books and online articles (try this and here) have plenty to say about it, but here are a few resources designed to help simplify understanding.
Here is a skeleton outline of the B of P, which is perhaps oversimplified. A student in my class typed notes from my whiteboard scrawl (thanks Jonathan):
This youtube video by pajholden helps understand the Current Account structure from a UK perspective: ‘balance of payments – structure of the current account ‘
Below, this simple interactive drag and drop exercise hosted at www.reffonomics.com is a useful reminder of how different ‘components’ of the Balance of Payments can be classified. Click on the table / image below.
Below, there is another really helpful interactive exercise by Rafael Pampillon hosted at http://openmultimedia.ie.edu to play around with the different components of the Balance of Payments, where they might be placed and how they might be applied. You are advised to read the guide attached to the .swf file (top right hand corner) but even if time does not allow for this, it is good to experiment as the feedback will help you realise the correct answers with a bit of trial and error). Click on the image below to access the page.
Finally, here is a bit more detail from http://tutor2u.net on the topic (better for IB level than IGCSE level):
http://tutor2u.net/economics/revision-notes/as-macro-balance-of-payments.html
The Long-Run: Cost Curves, Economies and Diseconomies
Jan 17th
www.bized.co.uk provides some useful materials for this topic. The starting point is their mind map. Click below to view the mindmap on its original site and in full.
A very useful MS powerpoint file, also courtesy of www.bized.co.uk, to expand on teh above mindmap can be accessed here:
pajholden gives an overview in 8 minutes:
Check your understanding of the different economies of scale using this simple interactive test from www.dineshbakshi.com (click on it):
Once you have learned about the different Economies of Scale, attempt to create a detailed revision diagram by clicking here:
A very detailed analysis by richardmckenzie of how the long run cost curve can be built up of multiple short run cost curves. He also includes the long run marginal cost curve:
This video (with very quiet audio – you will need to turn the volume up) explains the overall shape of the LRAC (Long Run Average Cost) curve with labels but it is simpler as it does not include the SRAC curves.
Now, could you identify economies of scale on a diagram? Pause this video at the start and see fi you can answer it before the commentator gives the answer:
Profit
Jan 13th
We need to understand this according to the syllabus:
- Distinction between normal (zero) and supernormal (abnormal) profit
- Profit maximization in terms of total revenue and total costs, and in terms of marginal
revenue and marginal cost - Profit maximization assumed to be the main goal of firms but other goals exist (sales volume maximization, revenue maximization, environmental concerns)
First review the difference between normal and supernormal (or abnormal) profit explained in this video by mjmfoodie:
Then, mjmfoodie also introduces us to profit maximisation “in terms of total revenue and total costs, and in terms of marginal revenue and marginal cost” (IB Economics syllabus):
The MC=MR is a golden rule which you really need to understand and remember. See it action in this fast-aced example by ACDCLeadership:
For a light hearted recap, SpongeBob Squarepants and Mr Crab discuss these principles (thanks to EdwardBahaw):
We must remember however, that profit maximisation is assumed to be the number one goal of firms. What about other goals?
Research / Discuss what other goals a firm might have – share them with others in your class.
Now, for each of the additional goals, discuss whether or not they in fact do in some way link to profict maximisation.
pajholden demonstrates that the profit maximising level can be different from output maximising level. Watch the video here:
objectives of firms
Top Tips for Tackling IB Economics Internal Assessments (“Coursework”)
Dec 17th
Welcoming further suggestions on this – add to comments, and I’ll update the Google document itself.
Data Response–Champagne, Supply and Demand
Dec 13th
Credit: I came across this useful practice data response question via a student’s blog associated with this teacher’s site: http://www.peteranthony.org/wordpress/
Image: Some rights reserved by epicxero
I think this is an excellent introduction to this 3rd paper which forms part of the IB Economics final assessment. The questions are straightforward, but you will need to pay close attention to the markscheme for these kinds of questions, which usually follow the same format.
1) The article (data to which to respond):
UK Newspaper, Daily Mail, on Champagne price decreases, October 2009
2) The questions
1. Define the following terms: a) demand, b) supply [4]
2. Using an appropriate diagram, explain one reason for why the price of a bottle of champagne has fallen? [4]
3. Using an appropriate diagram, explain one reason for why the price of champagne will probably rise next year? [4]
4. Using information from the text and your knowledge of economics, evaluate a decision not to raise the price of a bottle of champagne over the coming months before Christmas. [8]
Understanding Comparative Advantage
Dec 7th
Having played the desert island game, you should be in a position to develop your understanding of an important economic concept which is used to support international trade. 2 videos should help. The first is a rough-and-ready video with an easy to access example:
Now, MJMFoodie gives an old but polished example, and introduces Adam Smith and David Ricardo’s perspectives on these matters:
