Category: Economics: Ch 06
The Reverend Thomas Malthus argued that while population grows at a geometric rate, food supplies grow at an arithmetic rate. This led him to the controversial conclusion that if population grows unchecked society will run out of food. The article below argues that despite recent food price growth and food shortages, the ideas of the Reverend Malthus are as wrong as ever.
Malthus, the false prophet The Economist (15/5/08)
Questions
| 1. |
Explain the theory expounded by the Reverend Malthus in relation to population growth. |
| 2. |
Assess the principal factors that affect population growth.. |
| 3. |
Discuss whether the ideas of the Reverend Malthus have any relevance in a modern age. |
Increasing numbers of firms are offering goods to consumers for free. Chris Anderson, the editor of Wired magazine, has developed a thesis called freeconomics which postulates that this trend will increase and that firms that don’t join in will go to the wall. “As much as we complain about how expensive things are getting, we’re surrounded by forces that are making them cheaper,” Anderson wrote in a recent article.
The big giveaway Guardian (6/5/08)
Questions
| 1. |
Explain what is meant by the term ‘freeconomics’. |
| 2. |
How can firms afford to make goods and services available for free? |
| 3. |
“Anderson’s idea is that the internet, by reducing marginal costs, encourages businesses to make their money by offering free goods or services to an extent we have not witnessed before”. Discuss the extent to which doing business over the internet reduces marginal costs. |
Shell have announced record profits of $27bn. This is the highest profit ever made by a European company and is only surpassed worldwide by the annual profits of another oil company ExxonMobil at $40bn. These high profits have led to calls for a windfall tax to be imposed on the oil companies and the articles below consider the likely impact of a tax of this nature.
Threat of windfall tax to energy companies is ‘legalised piracy’ Times Online (28/2/08)
Tax uncertainty a sure-fire killer Times Online (28/2/08)
Q&A: Windfall tax on Shell BBC News Online (31/1/08)
The great fuel folly Guardian (5/2/08)
Video
Windfall tax suggested for fuel profits BBC News Online (February 2008)
Questions
| 1. |
Using diagrams as appropriate, show the impact on the equilibrium level of price and output of Shell of a windfall tax being imposed on their profits. |
| 2. |
Discuss the extent to which the high level of profitability of oil companies is determined by the oil price. |
| 3. |
Analyse whether a windfall tax is an economically efficient form of taxation. What alternatives could a government consider that might be more efficient?
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Reading the first article linked to below, you may be forgiven for thinking that farming has moved into the realms of science fiction. Dairy farming has moved determinedly into the era of technology and now benefits from extensive economies of scale with much higher productivity levels than even a decade ago. Yet 3000 dairy farmers are planning to leave the industry in the next two years and even the largest farms are struggling to make money. The processing sector has become significantly more concentrated and margins are being squeezed ever further by the power of the supermarkets, so has the market become unbalanced with too much power in the hands of supermarkets and processors?
Rising prices, failing farms. The strange story of milk Guardian (24/4/07)
Why British dairy farming is in crisis Guardian (24/5/07)
Questions
| 1. |
Describe the market structure of the milk industry. |
| 2. |
Discuss the extent to which this market structure has changed the level of prices in the market for milk in recent years. |
| 3. |
Evaluate possible measures that governments could implement to make the market for milk more competitive. |
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. |