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Reflection

1. How effective was PBL?

In my opinion, PBL is very useful. It helps us understand and apply our knowledge to the real world problems and it makes us think and we were be able to figure out the problem by ourself (or in a group).

2. What is the most important thing you learnt about Price controls?

I have learned that it is important to set price controls because the main effect of price ceiling is that it is beneficial to poor consumers. It teaches us what a well managed rationing system is.

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The invisible hand #2

Non price allocation

Why do price ceiling cause shortages?

When a price ceiling is set, a shortage occurs. ‘Shortage’ means the inability of people to have as much as they would like at a zero price. For the price that the ceiling is set at, there is more demand than there is at the equilibrium price.

What are black markets?

Black market is goods and services which aren’t part of the official or legal economy of a country. This can be legal activities where taxes are not paid or illegal activities, for instance, weapons, prostitution or drug dealing. Black markets can or do exist everywhere. The demand are sold at higher prices than in the conventional market.

And how can they alleviate (reduce) shortages?

Goods, services and trade in black market can be sold to consumers at any price since the supply is limited and the quantity demanded is very high.

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The Invisible Hand #1

“How can we, as policy group do to set the price of gasoline so that each priority group can get the right amount of gas they need.”

According to the voice mail, we know that the price of gasoline is too high, so the government has to set price control by using price ceiling. Bu the problem is that the price controls may produce gas shortages, then we need to set the prices based on who we think should get gas, meaning that high priority group can get any amount they want, medium-priority groups can get most of the gas they want and the low-priority group can get the left overs. To be able to get priority groups, we need to do some ranking to see who should have priority. What we don’t know yet is the perfect price of the gas. Also, why or how the price is high.

Explain why J.R. would say that price ceilings “prevent the laws of supply and demand from operating.”

Memo plan:

1. What is shortage

2. Why will there be shortage

3. Diagram

4. Explanation (Equalibrium, Price, Quantity)

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How the Law of Supply Impacts Markets

Supply shows how much the market can offer. The law of supply demonstrates the amount of goods (quantities) that will be sold at a certain price. The supply shows an upward slope on the diagram, which means the higher the quantity supplied, the higher the price and and the lower the price, the less will be the quantity supplied.

Main article

According to the country’s Air Transport Association (ATA), the price of the Colombian flights has dropped 11% in August compared to the same month last year. The ATA group says, “The drop in prices is due to an increase in the quantity of flights.” It is said that there are 38.5% increase in the number of passengers who is taking domestic flights in the first half of 2010 compared to the same period last year.

Figure 1 shows the shift in demand for airplane tickets. P stands for price and Q stands for quantity. As the price decreases from P2 to P1, the quantity increases from Q1 to Q2 (green arrow). The price decreases from P2 to P1 because they want to increase the consumer level.  This diagram shows the change in quantity demanded.

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Change in Demand: Fake Brands

Main Article

The article talks about the change in demand for fake brands (hangbags, shoes, wallets etc.) Due to the economic crisis, the consumers are choosing to buy fake brands instead of the real ones. This is because the fake brands are very cheap compared to the actual brands.
Figure 1:
According to wikipedia, demand is the desire to own anything and the ability to pay for it and willingness to pay. This would cause a change in demand which would be shown on Figure 1 above as a shift towards the right. Rightward shift means increase in demand. Prices of the actual brand become more expensive, so the consumer switches demand from one product to the other one (fake brands). The price of good P rises, the demand for Q falls. The demand for good Q increases,the price of good P decreases and vice versa. In Dubai, consumers are satisfied with low price brand name and they have wide varieties of choosing the (fake) products. D1-D2 represents the change in the demand.

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Assessment Reflection #1

1. What have you learnt about IB Economics style?

2. How is the formative/summative assessment system working for you?

IB Economics style is very different from any kind of grading systems. To get full mark, we need to write in the correct format and use diagrams, the grading style is very picky. When it comes to diagrams, IB grading system is very strict. We need to use labels, units and lines to score full mark. When it comes to writing, we need to write in pen and the way we write articles are different from writing English articles. Economic terms must be written on the paper in order to get high mark.

In my opinion, I like the assessment system since we just need to follow the system and we’ll able to get high grade.It might be a little strict but I think it works really well for students.

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Discovery of Gold

“Using a production possibility curve, explain how the discovery of gold would effect an economy.”

Potential growth achieved by changes in the quantity or quality of factors of production. In nineteenth century, Australia discovered gold. More than 370,000 immigrants arrived in Australia and economy of nation boomed. The gold bullion that was shipped to United Kingdom each year bought a huge flow of imports. The economy was expanding and thriving. The discovery of gold increases a country’s GDP and more goods can be sold.

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