Category: Essentials of Economics: Ch 08
Bolivia may have the second largest gas reserves in Latin America but it also has an acute shortage of diesel. People have blamed a variety of causes: smugglers, the government and nationalisation. In truth, the cause may be a combination of all these factors, but whatever the cause, the diesel shortage is acting as a significant constraint on further economic development and is an ongoing headache for the President Evo Morales.
Fuelling Bolivia’s crisis BBC News Online (8/11/07)
Questions
| 1. |
Use supply and demand analysis to illustrate the reasons for the shortages in diesel in Bolivia. |
| 2. |
Explain the impact that fuel subsidies may have had in causing the shortages of diesel. Use supply and demand analysis to illustrate your answer where appropriate. |
| 3. |
Discuss the underlying factors that may be leading to the shortages in diesel. |
Al Gore’s contribution to the global climate change debate is not in question and he has, along with the IPCC, been awarded the 2007 Nobel Peace Prize for his work in raising awareness. If you haven’t seen his film “An inconvenient truth” then do get hold of the DVD – it may just be the most interesting PowerPoint presentation you will ever see! However, does he really understand the nature of the debate? The article below suggests that he has not yet taken account of the most fundamental trade-off in dealing with climate change – the trade-off between our own quality of life and that of our descendants in the future.
Save the earth in six hard questions MSN Slate (22/10/07)
Questions
| 1. |
Explain what is mean by a trade-off “between the quality of our own lives and the quality of our descendants’ [lives]”. |
| 2. |
What is meant by the term ‘risk-averse’ and how is this relevant in the climate change debate? |
| 3. |
Consider the questions raised by the article. Discuss how relevant the conclusion reached is in the light of these questions. |
Cement may be quietly emerging as one of the biggest obstacles to lowering carbon emissions to reduce the extent of global warming. The cement industry rarely features in media analysis of the ‘worst polluters’, but in fact the industry is responsible, because of the high energy requirements of manufacture, for more than 5% of carbon dioxide emissions. A building boom globally has fuelled demand for the material. Concrete is the second most used product on the planet, after water, so what can be done to reduce the impact of the industry on the environment?
The unheralded polluter: cement industry comes clean on its impact Guardian (12/10/07)
Questions
| 1. |
With reference to the article, identify the main external costs resulting from the production of cement. |
| 2. |
Discuss the view expressed by Dimitri Paplexopoulos, managing director of Titan Cement that “.. [c]ement is needed to satisfy basic human needs, and there is no obvious substitute, so there is a trade-off between development and sustainability“. |
| 3. |
Discuss policies that governments could adopt to try to move the market for cement towards a more socially optimal level of production. |
A report from Cycling England has suggested that a £70m investment in cycling each year could save the government £520m per year. The savings result from the positive benefits of increased cycling – lower carbon dioxide emissions and lower NHS costs as we become healthier. But, do the numbers add up?
Investment in cycling could save £520m, government told Guardian (17/9/07)
Questions
| 1. |
Define the terms (i) external benefits (ii) external costs and (iii) marginal social benefit. |
| 2. |
Identify three external benefits that result from increased cycling. |
| 3. |
Using diagrams as appropriate, show how the market equilibrium and the socially optimum level of cycling will differ. |
| 4. |
Discuss policies that the government could adopt to move the market closer to the social optimum. |
The article linked below is a blog article by George Monbiot looking at the rise of neoliberal economic views and discussing whether these are simply an intellectual justification for the rich and powerful to reinforce their position.
How the neoliberals stitched up the wealth of nations for themselves Guardian (Comment is free) (28/8/07)
Questions
| 1. |
Write a brief summary of the neoliberal views of the founder of the Mont Pelerin Society – Friedrich Hayek. |
| 2. |
Explain the neoliberal argument that “….. we are best served by maximum market freedom and minimum intervention by the state. The role of government should be confined to creating and defending markets, protecting private property and defending the realm.“ |
| 3. |
Discuss the view espoused by George Monbiot in the article that neoliberal policies like “minimal taxes, the dismantling of public services and social security, deregulation, the breaking of the unions” serve to make the elite even richer and simply act as a “wealth grab“. |