Category: Economics for Business: Ch 22
With the news this month of the death of Boris Yeltsin, it has been an opportunity to look back at the economic legacy of the first democratically-elected President of Russia. Boris Yeltsin took over at a time when all goods were scarce and the industrial infrastructure was crumbling. He adopted policies of extensive privatisation and abandoned price controls. To what extent has this created the Russia of today and what is the legacy he has left behind?
Yeltsin’s moment The Economist (subscription) (26/4/07)
Yeltsin’s economic legacy BBC News Online (24/4/07)
Questions
| 1. |
Explain the reasoning behind the policies that were adopted by Boris Yeltsin in his early years in office. |
| 2. |
Discuss the extent to which those policies enabled the development of the Russian economy. |
| 3. |
Assess the current state of the Russian economy. |
You do perhaps need to check the date for this story, but once you have established that it wasn’t written on April 1st, you can start to take it a little more seriously. An alliance of an American oil company and food producer is to turn pig fat into diesel fuel. The fuel will apparently have the same chemical properties as diesel but a lower carbon dioxide content and zero sulphur, so should be beneficial for the environment the companies argue.
Pig fat to be turned into diesel BBC News Online (19/4/07)
Questions
| 1. |
Using diagrams as appropriate, compare and contrast the environmental impact of conventional diesel and the new pig fat bio-diesel. |
| 2. |
Discuss the extent to which the new pig fat diesel will be better for the environment than conventional diesel. |
| 3. |
Evaluate two policies that the government could implement to encourage the use of alternative fuels like the new pig fat bio-diesel. |
In what is being heralded as a historic deal, the EU has reached agreement with the USA on what is termed an ‘open skies’ deal. This will allow EU-based airlines to fly from anywhere in Europe to anywhere in the USA and US carriers can operate to any European destination. So what will this deal mean for travellers, the environment and the airlines. The articles below look at the issues and also at the detail of the agreement, which still maintains many of the previous limitations on airlines and their ownership.
EU backing for ‘open skies’ deal BBC News Online (22/3/07)
Q&A: Open skies BBC News Online (22/3/07)
EU agrees open skies deal Guardian (22/3/07)
Open skies: Q&A Guardian (22/3/07)
Transatlantic fares set to tumble after ‘open skies’ deal Times Online(22/3/07)
Questions
| 1. |
What criteria should be used to assess the success of the ‘open skies’ deal? |
| 2. |
Assess the extent to which the ‘open skies’ deal will increase the level of competition in the transatlantic market for air travel. |
| 3. |
Discuss the options available to the EU to increase competition further in the market for air travel. |
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. |
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. |