Category: Economics 10e

China, in a contentious new law, has given its people additional private property rights and protection of private assets. Many were worried that this eroded fundamental socialist principles, and it can be argued that this moves China further towards becoming a market economy.

China announces new property law BBC News Online (9/3/07)
China passes new law on property BBC News Online (16/3/07)

Questions

1. Examine the implications for the Chinese economy of the new additional property rights.
2. Discuss the advantages and disadvantages of the new law giving additional private property rights.
3. Assess the extent to which this moves China closer to being a free market economy.

Having secured the 2012 Olympics, we now have to work out how to pay for it. Recent news has indicated that the cost of hosting the Olympics has risen significantly from the original estimate. However, there is considerable debate in the media about what the real cost is. The figures given are massive, but what will we be left with after the games are over? How can we value these assets? The blog below from Evan Davis looks at some of these issues and discusses the real cost of hosting the Olympics.

Why do costs overrun? BBC News Online (16/3/07)
Real cost of 2012? BBC News Online – Evan Davis blog (15/3/07)

Questions

1. Identify five fixed and five variable costs of running the Olympics.
2. Discuss the value of the opportunity cost of hosting the Olympics.
3. List the direct and indirect benefits of hosting the 2012 Olympics in London.

March 2007 has seen a lot of activity in government circles relating to the environment and environmental legislation. The EU has agreed a renewable energy target for all members while the UK government has released its own climate change bill. The Carbon Trust has then released a one-year pilot of a carbon labelling scheme, with Walkers Crisps being the first brand to bear the carbon labels. The aim is to increase consumers’ awareness of the carbon footprint of the goods they are buying. The articles linked below look at all these issues.

EU agrees renewable energy target BBC News Online (9/3/07)
EU seeks converts to eco-stoicism BBC News Online (9/3/07)
Navarra embraces green energy BBC News Online (9/3/07)
How Europe can save the world Guardian (11/3/07)
Carbon labelling scheme launched BBC News Online (15/3/07)
Labels reveal goods’ carbon cost BBC News Online (16/3/07)
New law in the climate jungle BBC News Online (13/3/07)

Questions

1. Explain the difference between private costs and external costs. Identify five external costs that arise from the generation of electricity by conventional means.
2. Using diagrams as appropriate, show the impact on the market for energy of increased use of energy generated from renewable sources.
3. Evaluate the likely effectiveness of the carbon labelling scheme introduced by the Carbon Trust.

Adam Smith is the face on the new £20 note. This could be used as an argument that economics has moved into the mainstream, but many people may not be aware of the influence that he has had on modern classical economics. The articles below may help reveal his ongoing economic influence.

What you should know about Adam Smith BBC News Online (13/03/07)
Why Brown reveres the man on the new £20 note Guardian (19/03/06)

Questions

1. Assess the impact of Adam Smith on classical economic theory.
2. Summarise the main works and theories of Adam Smith. (You may find the information in the Biz/ed Virtual Economy on Adam Smith helpful. For a complete list of works of Adam Smith, many online, see website C18 in the hotlinks section of this site.)
3. Discuss the extent to which Gordon Brown has been influenced by Adam Smith in his policies.

In a surprise move, the Tories have announced plans to tax air travel as part of their environmental policy. It was no surprise to hear the airlines criticise this, but disquiet about this policy has been expressed in traditional Tory circles and it amounts to a significant departure from the past for the party. Are they just flying a kite, or is this a serious policy initiative?

Tories reveal plans for green tax hike on air travel Guardian (11/3/07)
Tory plan for sky-high flight taxes Scotsman (11/3/07)
Airlines shoot down Tory ‘tax on fun’ Telegraph (12/3/07)
Green tax won’t help the planet or the Tories Telegraph (11/3/07)
Tories plan green tax on flights BBC News Online (11/3/07)

Questions

1. Why might a free market in air travel not result in an optimal number of flights.
2. Discuss the likely effectiveness of the tax on flying for reducing the demand for air travel. (You should consider the likely value of the price elasticity of demand in your answer.)
3. With the use of appropriate diagrams, assess the likely impact of the tax on flying on the equilibrium level of price and output in the market for air travel.