Category: Economics: Ch 01
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. |
The kibbutzes in Israel have always been renowned as a system where everything is evenly shared. However, with the news that Israel’s oldest Kibbutz has agreed to essentially privatise itself and start paying people according to ability, it seems that the reach of capitalism and the market system is now almost total. What alternative systems are left to organise and allocate resources? With most forms of socialist organisation more or less discredited as an efficient way of allocating resources, it seems that globalised capitalism is all that is left. However, in the article from the Guardian below Timothy Garton Ash argues that capitalism may, by its very nature destroy itself.
Global capitalism now has no serious rivals. But it could destroy itself Guardian (22/2/07)
Israel’s oldest Kibbutz votes for privatisation Guardian (20/2/07)
Questions
| 1. |
Describe the changes that have taken place in the system used to allocate resources in the Degania kibbutz. |
| 2. |
Assess the reasons why the Degania kibbutz has decided to pay members according to ability. |
| 3. |
Discuss the validity of Timothy Garton Ash’s argument that global capitalism is in danger of destroying itself. |
In a new book, Will Hutton, the editor of the Observer and well-known economic commentator, has argued that we have overstated the economic threat from China. He argues that their economic model is flawed and that extensive corruption in the system is distorting economic growth in the country. The article below from the Guardian is an edited extract from his new book that considers many of these issues.
Power, corruption and lies Guardian (8/1/07)
Questions
| 1. |
“….. the transition from communism remains fundamentally problematic”. Discuss the extent to which these problems are likely to affect the pace of development in China. |
| 2. |
Explain what Will Hutton means by ‘Leninist corporatism’. Why does he believe this to be a problem for China? |
| 3. |
Assess the likely impact of corruption in China on long-term development and the rate of economic growth. |