Category: Economics 10e: Ch 01

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.

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.

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.

Recent economic history has led many commentators to believe that a free-market capitalist economy is the only efficient method of allocating resources. The transition of former Eastern Bloc economies has furthered this perception. In the article from the Guardian linked below, Andrew Murray considers this argument and argues that capitalism may not be the be all and end all of economic organisation.

No, capitalism is not the only way to order human affairs Guardian (8/3/07)

Questions

1. Discuss the arguments for and against using a free-market economy as the principal method of resource allocation.
2. Assess the principal reasons for the transition of planned economies to market economies over the past two decades.
3. Examine the validity of the arguments raised by Andrew Murray in his article.