tndunganh Posted November 9, 2010 Report Share Posted November 9, 2010 I have a few questions that I don't know how to answer regarding my upcoming test about Development Economics:Indicate the importance of price in allocating scarce resourcesEvaluate possible consequences of implementing maximium and minimum price controlsCan you guys please help me to answer these 2 questions?Thank you very much! Reply Link to post Share on other sites More sharing options...
Matthew Sinclair Posted November 9, 2010 Report Share Posted November 9, 2010 (edited) That sounds more like an introduction to economics question and a micro question ?Price and scarce resources:In a free market, the price mechanism (interaction of supply and demand) set the price. This price should be the equilibrium/market-clearing price for the good/service. The free market price I think would give a good allocation of scare resources depending on supply and demand. However, price alone may not be the BEST way to allocate scarce resources. Therefore, government's might intervene in the market to change the resource allocation to make it better (subsidies etc). This is because the free market may cause some goods to be under-provided (merit goods) and others over-provided (demerit goods) and public goods won't be provide at all as they have the characteristics of non-rivalry and non-diminish-ability or something like that. Price as a means of allocating scarce resources is quite important therefore in free markets, and mixed market structures. (most economies are mixed free market economies) so thus it's a very important and relevant means of allocating goods, but the apportionment of the good may not be optimal. Maximum prices (ie, price ceiling, like on rent control) - cause an excess demand. Smaller quantity supplied and sold. Under-allocation of resources to the good and allocative inefficiency. Non-price rationing (intervention in the market). Could cause underground or informal/black markets. Minimum prices (ie, price floor, like on agricultural products/wages) - cause an excess supply (surpluses). Smaller quantity demanded and produced. Firm inefficiency as they might be less inclined to cut costs and become more competitive. Over-allocation of resources to the production of the good (lacking efficiency - not good!!). Illegal sales of excess stock at a price below the floor.p.s: with evaluation questions, make sure that you do some of these:benefits/disadvantageseffects on different stakeholders (producers, consumers, gov't, foreign sector, financial sector etc)Prioritisation of argumentsShort-run/long-runMake sure that you come to a conclusion at the end based on the points you've made. It needs to be a reasoned conclusion! =) Edited November 9, 2010 by Matthew Sinclair 1 Reply Link to post Share on other sites More sharing options...
tndunganh Posted November 9, 2010 Author Report Share Posted November 9, 2010 That sounds more like an introduction to economics question and a micro question ?Price and scarce resources:In a free market, the price mechanism (interaction of supply and demand) set the price. This price should be the equilibrium/market-clearing price for the good/service. The free market price I think would give a good allocation of scare resources depending on supply and demand. However, price alone may not be the BEST way to allocate scarce resources. Therefore, government's might intervene in the market to change the resource allocation to make it better (subsidies etc). This is because the free market may cause some goods to be under-provided (merit goods) and others over-provided (demerit goods) and public goods won't be provide at all as they have the characteristics of non-rivalry and non-diminish-ability or something like that. Price as a means of allocating scarce resources is quite important therefore in free markets, and mixed market structures. (most economies are mixed free market economies) so thus it's a very important and relevant means of allocating goods, but the apportionment of the good may not be optimal. Maximum prices (ie, price ceiling, like on rent control) - cause an excess demand. Smaller quantity supplied and sold. Under-allocation of resources to the good and allocative inefficiency. Non-price rationing (intervention in the market). Could cause underground or informal/black markets. Minimum prices (ie, price floor, like on agricultural products/wages) - cause an excess supply (surpluses). Smaller quantity demanded and produced. Firm inefficiency as they might be less inclined to cut costs and become more competitive. Over-allocation of resources to the production of the good (lacking efficiency - not good!!). Illegal sales of excess stock at a price below the floor.p.s: with evaluation questions, make sure that you do some of these:benefits/disadvantageseffects on different stakeholders (producers, consumers, gov't, foreign sector, financial sector etc)Prioritisation of argumentsShort-run/long-runMake sure that you come to a conclusion at the end based on the points you've made. It needs to be a reasoned conclusion! =)Hey thank you very much! What else do I have to learn for development economics? Reply Link to post Share on other sites More sharing options...
Matthew Sinclair Posted November 9, 2010 Report Share Posted November 9, 2010 Try and have a look at your syllabus There's too much for me to write.The two questions you asked weren't really even development questions in my opinion. Maybe I'm in the old syllabus? (did it change recently? i dunno haha)Bascially it's things to do with Economic Growth, Economic Development. Barriers to these things and ways to promote/encourage them. Also there's a rather large emphasis on FDI (Foreign Direct Investment) and MNCs (Multi National Corporations). Development Economics is section 5 of the syllabus and basically combines all the others and adds some more. Some people don't bother studying it, which is A HUGE MISTAKE! As it will always be on exams and it's quite easy if you're prepared Have you not got a textbook? If not, have a look on this site/the internet/your library for textbooks to tell you what you need to know Reply Link to post Share on other sites More sharing options...
dessskris Posted November 9, 2010 Report Share Posted November 9, 2010 I have a few questions that I don't know how to answer regarding my upcoming test about Development Economics:they are microeconomics questions, I just finished studying chapter 2 and can answer them already, which means they are microecons questions. and these are SL questions.haha anyways,Explain the importance of price in allocating scarce resources.define scarce resourcesdefine demand & supply, state the laws of demand & supplydraw the demand&supply curves -- explain a bit about equilibrium priceprice is determined by supply and demandprice acts as a signal to producers and consumersprice acts as an incentive to producers to reallocate resourcesEvaluate the possible consequences of implementing maximum and minimum price controls.define maximum price -- set by the govt, below equilibrium price, to protect poor consumersdefine minimum price -- set by the govt, above equilibrium price, to protect poor producers (farmers, maids)draw 2 diagrams -- one about maximum price, one about minimum pricediscussion of price controls as forms of government interventiondiscussion of the problems associated with the shortages that develop due to the setting of maximum prices:• queues • waiting lists • rationing • black marketsand their solutions -- govt intervention again -- subsidise product, release buffer stocks, produce the good by themselves, increase supply of substitute products (if possible) so consumers will deviate from consuming this productdiscussion of the problems associated with the surpluses that develop due to the setting of minimum prices: • producers can ignore price controls and cut their prices • firms can become productively inefficient • firms are discouraged from producing alternative goods which can be produced more efficiently but which may have a lower free-market price. • signaling role of prices is distorted and there is a misallocation of resources. • discussion of who "suffers" from price controlsand their solutions -- govt intervention again -- bulk buying (to be buffer stocks, so they can be released when there is a shortage haha), tax the product (although not rational to do this) Reply Link to post Share on other sites More sharing options...
tndunganh Posted November 10, 2010 Author Report Share Posted November 10, 2010 Try and have a look at your syllabus There's too much for me to write.The two questions you asked weren't really even development questions in my opinion. Maybe I'm in the old syllabus? (did it change recently? i dunno haha)Bascially it's things to do with Economic Growth, Economic Development. Barriers to these things and ways to promote/encourage them. Also there's a rather large emphasis on FDI (Foreign Direct Investment) and MNCs (Multi National Corporations). Development Economics is section 5 of the syllabus and basically combines all the others and adds some more. Some people don't bother studying it, which is A HUGE MISTAKE! As it will always be on exams and it's quite easy if you're prepared Have you not got a textbook? If not, have a look on this site/the internet/your library for textbooks to tell you what you need to knowHey thank you sooo much That was very informative Hey I have more questions State 2 barriers of development and evaluate strategies to overcome these problemsDraw a digram to show how an imporvement in literacy rate would lead to economic growth Reply Link to post Share on other sites More sharing options...
Matthew Sinclair Posted November 10, 2010 Report Share Posted November 10, 2010 (edited) I'm sure if you use your textbook/studyguide/google you should be able to come up with a few dot points at least. Making us do all of it for you is not going to help you come your exams. Ask specific questions, not just the exam question. For the second one, just draw a PPC and say that human labour (one of the factors of production) has been increased, therefore the PPC moves out etc, potential growth and actual growth etc. Your textbook is there to help you, so use it! and ask specific questions here about what you don't get etc. Use my above 4-5 points for evaluation (the ones I already posted). IB = Individual Brain.Also, you may get in trouble from the administrators/moderators of this site for being a leech so make sure you're at least contributing back to the IBSurvival community with either files or good answers Edited November 10, 2010 by Matthew Sinclair 2 Reply Link to post Share on other sites More sharing options...
dessskris Posted November 10, 2010 Report Share Posted November 10, 2010 1. You have asked 2x2 questions which are likely to be past paper questions, which means they can be answered by referring to your textbook, notes, internet and asking your teacher.2. We are all people who are voluntarily willing to help IB students to survive here. In other words, we do not get paid.3. I just did your first two questions as a topic test and got 23/25. I outlined what to say when you want to answer them. You replied to this thread and not even show gratefulness to me in any form (eg. rep, saying it). Well this is not a really big deal but it pisses me off. I answered after Matthew answered, anyway.4. Now you posted 2 other questions without showing any effort. You did not give any comment about the questions and you did not specify what you are asking (which means you expected us to fully answer the questions for you).Don't you have a textbook and notes? Is your teacher not willing nor able to help/guide you to answer these? Thank you very much, Matthew, for pointing those out.At least if you have tried to answer them but not understand, we could explain to you and help you to understand. You did not put in any effort but you wanted us to put a lot of effort in to answer these questions. 2 Reply Link to post Share on other sites More sharing options...
tndunganh Posted November 10, 2010 Author Report Share Posted November 10, 2010 Hey thanks a lot guys I really appreciate it Yeah I know I'm not asking you guys to do my work for me it's just there are some questions that I don't understand how to get the right answer My test is tomorrow so I created another topic just to get attention so I'm sorry and it wont happen again Thank you guys so much thou Reply Link to post Share on other sites More sharing options...
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