Microeconomics
‘Eat Local ‘ Government Advertising Domestic Produce
Nov 9th
Why would a government encourage consumers to ‘buy local’?
What impact would this have on the demand / supply diagram for these products?
How could this be considered a form of protectionism?
IB Economics: Why might a government introduce this together with certain price controls (such as a minimum price / Buffer stock programme)?
How does elasticity of supply and demand affect incidence of tax?
Nov 2nd
pajholden explains the effect of indirect taxation. Note he concentrates mainly on specific tax but includes a brief section on ad valorem (percentage) tax later on. Click below.
A much longer (and therefore detailed) video by jodiecongirl. Use these if you really haven’t yet understood the key concepts, as these will take you through it slowly and step by step.
She also goes into depth about the impacts on producers and consumers in the following videos but this gets quite complex. (more suited to IB level):
General Rules About Taxes Part 1
General Rules About Taxes Part 2
A much briefer summary is here by agsmandrew and he manages to explore the impact on consumer and producer surplus (including deadwight loss) (good for a quick revision for IB students):
Visit this site and explore different possibilities on a supply/demand graph with varying levels of tax applied. Try answering the questions at the bottom. (Note – the graph also refers to Efficiency Loss which is not actually required on the IGCSE syllabus, but is necessary to IB Economics).
McConnell Brue Economics – Online Learning Centre – Interactive Graphing Exercise – Tax Incidence
Price Elasticity of Demand
Oct 30th
Introductory Videos
Video: Price Elasticity of Demand – part 1 by pajholden
Video: Price Elasticity of Demand – part 1 by pajholden
Interactive Tutorials
Economics Interactive Tutorial by Samuel Baker (Univ of Carolina)
Elasticity — A Quantitative Approach by Samuel Baker (Univ of Carolina)
The Market System – Part 1 on biz/ed – contains section on PED towards end
Price elasticity of demand and basic application in Excel by Tushar Mehta
The following videos deal with the important concept of how price elasticity of demand relates to total revenue. They cover similar ground so you may not feel the need to watch all of them, but they do take different approaches in presentation.
Price Elasticity & Total Revenue by BrynJonesOnline
Total Revenue and Elasticity by ElmagicRonaldo
Elasticity and Revenue by jodiecongirl
Price Elasticity of Demand (PED) – own price elasticity by economicsfun
Good real life example on the determinants (factors affecting) Price Elasticity of Demand … ‘gasoline’ (or petrol):
In Summary
Price Elasticity: From Tires to Toothpicks (Econedlink)
Price Elasticity of Demand (tutor2u)
Price Elasticity of Demand
(Welker’s Wikinomics)
Finally, before moving on to Price Elasticity of Supply, this 15 minute video explaining an unusual ‘spike’ in gas prices in the US in 2002, is excellent and highly recommended for applying the theory to a real life example (the latter part gets a little bit tricky, but still recommended for IGCSE and IB students):
A Song about Elasticity
Oct 28th
Some people have a lot of time on their hands, but we should sometimes be grateful for that … this song summing up the different elasticities is worth a listen (you never know, it might even help you revise this particular topic …)
The Effects of Price Controls
Oct 5th
This section of the IB syllabus requires you to understand the following:
- Maximum price: causes and consequences
- Minimum price: causes and consequences
- Price support/buffer stock schemes
Before learning about these concepts, it is first worth being sure of the following concepts:
- Consumer Surplus
- Producer Surplus
The rest of this post gives you links to online resources to help you become an expert in these concepts. Make sure you consult your text book(s) too, to provide further understanding.
Consumer and Producer Surplus
http://welkerswikinomics.wetpaint.com/page/Consumer+and+Producer+Surplus
Maximum prices and Minimum prices : causes and consequences
http://tutor2u.net/economics/revision-notes/as-marketfailure-maximum-prices.html (although you may not understand all of this yet – the bits on elasticity for example)
http://tutor2u.net/economics/content/topics/marketsinaction/black_markets.htm
http://www.fmhs.auckland.ac.nz/faculty/ltu/toni_ashton/supply-demand.swf [sections 7 and 8]
http://welkerswikinomics.wetpaint.com/page/Application%3A+Government-Set+Prices
Price support/buffer stock schemes
Supply and Demand Interacting – The Equilibrium Price
Sep 28th
Understand Demand? Understand Supply? Now we need both hands to clap, and when we put them together we can understand how prices are arrived at when market forces are left to their own devices (and also when they’re not). What Adam Smith called the invisible hand … you need to know this concept like the back of your own (not so invisible) hand.
Quite a lot of video tutorials on this fundamentally important economic concept.
Probably the best way to start (again) – take it away mjmfoodie:
Perhaps more detailed, jodiecongirl tackles market equilibrium:
But for an even deeper level of detail, here are two videos by richardmckenzie (note his tutorials are geared towards an MBA course!):
http://www.whitenova.com/thinkEconomics/supply.html
Now that you have hopefully grasped the fundamentals, it is worth checking your understanding further through these interactive tutorials:
http://hadm.sph.sc.edu/courses/econ/sd/sd.html
Notice that the above tutorial continues on to another page:
http://hadm.sph.sc.edu/courses/econ/sd/SD3.html
There are two good podcasts publishes by Biz/Ed which also include transcripts and possible questions:
Can the demand curve really slope upwards?
Sep 27th
Some rights reserved by Marshall Astor – Food Pornographer
Once you have learned about the theory behind Giffen goods, Veblen goods, and the role of expectations in theoretically causing an upwards sloping demand curves, it is well worth reading these articles:
As price goes up, so does demand – The Economist July 2007
How Rat Meat Becomes a Rarity – DANIEL HAMERMESH – NY Times
Remember: in IB Economics, it is always useful to be prepared to evaluate the assumptions behind the theory. Do you still accept that the demand curve can slope upwards? Why / why not? What assumptions have been made?
Supply
Sep 27th
Introduction and summary by MJMFoodie:
jodiecongirl runs through the determinants of supply:
jodiecongirl explains movements along and shifts of the supply curve:
Follow up activities to check your understanding:
Original MS Powerpoint file here
