mr.bevan
  • Home
  • IB Economics
    • 01 Microeconomics >
      • 1. The Foundations of Economics
      • 1.1 Demand and Supply
      • 1.2 Elasticities
      • 1.3 Government Intervention
      • 1.4 Market Failure
    • 02 Macroeconomics >
      • 01 Level of Economic Activity
      • 2.2 Aggregate Demand
      • 2.3 Aggregate Supply
      • 2.4 Macroeconomic Equlibruim
      • 2.5 Unemployment
      • 2.6 Inflation
      • 2.7 Economic Growth
      • 2.8 Equity in the distribution of income
    • 03 The Global Economy >
      • 3.1 Free Trade
      • 3.2 Protectionism
      • 3.3 Exchange Rates
      • 3.4 Balance of Payments
      • 3.5 Economic Integration
      • 3.6 Economic Development
      • 3.7 Measuring Development
      • 3.8 Barriers to economic growth and/or development
    • 04 Exam Preparation
  • Individuals & Societies 7
    • 01 Economic Growth and Development
    • 02 Where are all the people?
    • 03 Why do empires fall?
    • 04 How has globalization shaped the world?
  • Individuals & Societies 8
    • 01 Belief systems and their influence on culture
    • 02 How are societies governed?
    • 03 Japan 1603 - 1945: Isolation and then expansion
    • 04 What are natural hazards and how do societies respond to them? Case Study: Japan
  • Individuals & Societies 10
    • 01 Does industrialization improve well-being?
    • 02 The Psychology of Motivation
  • IB Business Management
    • 01 Business Organization and the Environment >
      • 1.1 Introduction to Business Management
      • 1.2 Types of business organizations
      • 1.3 Organizational objectives
      • 1.4 Stakeholders
      • 1.5 External Environment
      • 1.6 Growth and Evolution
      • 1.7 Organizational planning tools
    • 02 Human Resources >
      • 2.1 Human Resource Planning
      • 2.2 Organizational Structure
      • 2.3 Leadership and Management
      • 2.4 Motivation
      • 2.5 Organizational and corporate cultures
      • 2.6 Employer and employee relations
    • 03 Finance and Accounting >
      • 3.1 Sources of finance
      • 3.2 Costs and revenues
      • 3.3 Break-even analysis
      • 3.4 Financial Accounts
      • 3.5 & 3.6 Ratio Analysis
      • 3.7 Cash flow
      • 3.8 Investment appraisal
      • 3.9 Budgets
    • 04 Marketing >
      • 4.1 The Role Marketing
      • 4.2 Marketing Planning
      • 4.3 Sales Forcasting
      • 4.4 Market Research
      • 4.5 Product >
        • 4.5 Price
        • 4.5 Promotion
        • 4.5 Place
      • 4.7 International Marketing and Globalization
    • The Exam
  • AP World History
    • Free Response Questions
    • 10,000 BCE - 600CE
    • 600 - 1450
    • 1450 - 1750
  • AP Human Geo
    • 01 Geography its nature and perspectives
    • 02 Population and Migration
    • 03 Cultural Geography
    • 04 Political Geography
    • 05 Urban Geography
    • 06 Economic Geography
    • 07 Agricultural Geography
    • Exam Review
  • Previously Taught Courses
    • G12 Economics >
      • Basic Economic Ideas
      • Producing and Consuming
      • Financial Capability
      • Managing the Economy
    • G10 World History >
      • 01 Exploration, Scientific Revolution and the Enlightenment
      • 02 The American Revolution
      • 03 France: Absolute Monarchy & Revolution
      • 04 The Industrial Revolution
      • 05 Imperialism and Nationalism
      • 06 WW1
      • 07 Inter-War Period
      • 08 WW2
    • G9 World History >
      • 01 Human beginnings and early civilizations >
        • 03 What can we learn from Classical Civilizations (Greece) >
          • 03 What can we learn from Classical Civilizations?
      • 03 Classical China
      • 04 The Muslim World
      • 05 Interregional Networks and Contacts 500 - 1450
      • 01 The Individuals and Societies Toolbox
      • 06 The Renaissance and Reformation >
        • Oral Presentations
    • G9 Social Studies >
      • History >
        • Analyzing Sources
      • Geography
    • G7 Social Studies >
      • Introduction to Empowerment
      • Economic Empowerment
      • Political Empowerment
      • Cultural Empowerment
      • National Empowerment
      • 04 Resources and the environment
      • Finance and Accounting >
        • 3.1 Sources of finance
        • 3.2 Investment appraisal
        • 3.3 Working capital
        • 3.4 Budgeting
        • 3.5 Financial Accounts
        • 3.6 Ratio Analysis
    • Writing Skills
    • Critical Reading
  • Extended Essay
    • 01 Getting Started
    • 02 Structuring the EE

Managing the Economy

Picture
By the end of this unit you should be able to understand and explain:
  • Different types of business organizations
  • The organization of production
  • How and why firms compete
  • The role of government in an economy
  • Inflation
  • Employment and unemployment

Unit 4 Plan

Your browser does not support viewing this document. Click here to download the document.
economics_unit_4_plan.docx
File Size: 42 kb
File Type: docx
Download File

The Advantages and Disadvantages of Different Types of Business Organization

Your browser does not support viewing this document. Click here to download the document.

The Growth of Firms

Picture
Reasons why firms may wish to grow in size

  • To diversify and spread risk
  • To take advantage of higher levels of demand that exist
  • To tap into emerging markets
  • To take advantage of changing market conditions
  • To take advantage of economies of scale
  • To take advantage of globalisation and expand into overseas markets
  • To increase market share and develop greater monopoly power

Type of Merger

Horizontal Merger






Vertical Merger




Lateral Merger

Potential benefits to the firm

  • Increase market share
  • Reduces competition
  • Increased output means greater economies of scale
  • Can rationalise- take the best bits from the two companies

  • Can take control of the distribution network
  • May contribute to a degree of monopoly power by acting as a barrier to entry for rivals
  • Can take control of suppliers- ensure that they get resources/inputs at cost price
  • Can prevent rivals from having access to resources

  • Spreads risk by diversifying the product range slightly
  • Can take advantage of links between products in marketing campaigns

Economies of Scale

Picture
The concept of economies of Scale is a central area in Economics and provides a clear rationale for why firms grow.

Internal Economies of Scale

Internal economies of scale refers to the reduction in AVERAGE COSTS that a firm experiences as a result of increased output by the firm.  This is shown on the right:

Between 0 and Q2 the firm is encountering economies of scale.  The increase in output has lead to a reduction in Average Costs.

There are a number of types/sources of Economies of Scale:

Type of Economies of Scale

Financial Economies of Scale



Purchasing Economies of Scale


Technical Economies of Scale



Managerial Economies of Scale




Financial Economies of Scale

Explanation

  • Large firms can benefit from cheaper loans and wider sources of cheap finance (investment from shareholders)

  • Big firms benefit significantly from being able to “buy in bulk”

  • These are the advantages that large firms have when it comes to the production process.  Large firms can employ specialist labour and capital which stimulates productivity and reduces average costs

  • Large firms have the money/resources to attract the most productive/efficient/specialist managers who make the most effective business decisions and increase efficiency over time

  • Large firms have stability that allows them to access more cheaper sources of finance than smaller firms.

Diseconomies of Scale

Picture
Diseconomies of Scale is the idea that it is possible for some firms to become TOO large, such that a rise in output begins to lead to an increase in average costs.  This can be shown on the diagram below, where diseconomies of scale set in when output increases above Q2. 

Reasons for Diseconomies of Scale:

  • As the firm increases, factor inputs (resources) become more scarce and hence more expensive
  • As the firm grows, communication and decision making becomes more difficult, contributing to inefficiencies and rising costs
  • As the firm grows, worker morale and motivation declines as they feel like a “small cog in a big wheel”.  This may contribute to reduced productivity and higher average costs


How To Review An Article From The Economist

Your browser does not support viewing this document. Click here to download the document.

Competition and Monopolies 

Your browser does not support viewing this document. Click here to download the document.

Monopoly Basics

What are the Economic Objectives of Government?

There are 4 main macro-economic objectives of Governments.  These are:

(1)   Economic Growth

·       Ideally Economic growth will increase at a steady rate.   The ideal rate is an annual rate of around 2.5%
·       Economic Growth needs to be sustainable.  This means that it is achieved using renewable resources and in a way that is environmentally friendly

(2)   Low inflation/Price Stability

·       There is an acceptance that in a modern, dynamic economy prices are likely to rise over time
·       However high inflation is bad for the economy
·       The Government and the Monetary Policy Committee of the Bank of England set an inflation target of about 2-2.5%.  They intervene (using tools such as interest rates) if inflation looks like it is going above this target level

(3)   High employment/Low unemployment

·       Again, it is reasonable that there will always be a small amount of frictional unemployment as workers move between jobs
·       However, a key aim of government is to keep employment as high as possible

(4)   Balancing imports and exports: avoiding a large  current account deficit

·       The government must ensure that there is not more money leaking out of the economy (to pay from imports) than is coming into the country from the sale of exports

Clashes between economic objectives

It is often very difficult for a government to achieve all 4 economic objectives at once. For example, in a recession, the government may try and stimulate demand.  This will stimulate economic growth and reduce unemployment.  However it may also cause demand pull inflation and “suck in” imports, thus making the current account deficit worse
Your browser does not support viewing this document. Click here to download the document.

Taxation

This part if the unit examines how the government finances public expenditure and the possible effects of different monetary and fiscal policies. 
Your browser does not support viewing this document. Click here to download the document.

Worksheets

Expansionary vs Contractionary
File Size: 13 kb
File Type: docx
Download File

Problems Fiscal Policy
File Size: 125 kb
File Type: docx
Download File

Why have taxes?
File Size: 217 kb
File Type: docx
Download File

Your browser does not support viewing this document. Click here to download the document.

The Basics of Taxation

Your browser does not support viewing this document. Click here to download the document.

Review Materials

Competition & Monopolies
File Size: 14 kb
File Type: docx
Download File

Article Review
File Size: 212 kb
File Type: docx
Download File

Powered by Create your own unique website with customizable templates.
  • Home
  • IB Economics
    • 01 Microeconomics >
      • 1. The Foundations of Economics
      • 1.1 Demand and Supply
      • 1.2 Elasticities
      • 1.3 Government Intervention
      • 1.4 Market Failure
    • 02 Macroeconomics >
      • 01 Level of Economic Activity
      • 2.2 Aggregate Demand
      • 2.3 Aggregate Supply
      • 2.4 Macroeconomic Equlibruim
      • 2.5 Unemployment
      • 2.6 Inflation
      • 2.7 Economic Growth
      • 2.8 Equity in the distribution of income
    • 03 The Global Economy >
      • 3.1 Free Trade
      • 3.2 Protectionism
      • 3.3 Exchange Rates
      • 3.4 Balance of Payments
      • 3.5 Economic Integration
      • 3.6 Economic Development
      • 3.7 Measuring Development
      • 3.8 Barriers to economic growth and/or development
    • 04 Exam Preparation
  • Individuals & Societies 7
    • 01 Economic Growth and Development
    • 02 Where are all the people?
    • 03 Why do empires fall?
    • 04 How has globalization shaped the world?
  • Individuals & Societies 8
    • 01 Belief systems and their influence on culture
    • 02 How are societies governed?
    • 03 Japan 1603 - 1945: Isolation and then expansion
    • 04 What are natural hazards and how do societies respond to them? Case Study: Japan
  • Individuals & Societies 10
    • 01 Does industrialization improve well-being?
    • 02 The Psychology of Motivation
  • IB Business Management
    • 01 Business Organization and the Environment >
      • 1.1 Introduction to Business Management
      • 1.2 Types of business organizations
      • 1.3 Organizational objectives
      • 1.4 Stakeholders
      • 1.5 External Environment
      • 1.6 Growth and Evolution
      • 1.7 Organizational planning tools
    • 02 Human Resources >
      • 2.1 Human Resource Planning
      • 2.2 Organizational Structure
      • 2.3 Leadership and Management
      • 2.4 Motivation
      • 2.5 Organizational and corporate cultures
      • 2.6 Employer and employee relations
    • 03 Finance and Accounting >
      • 3.1 Sources of finance
      • 3.2 Costs and revenues
      • 3.3 Break-even analysis
      • 3.4 Financial Accounts
      • 3.5 & 3.6 Ratio Analysis
      • 3.7 Cash flow
      • 3.8 Investment appraisal
      • 3.9 Budgets
    • 04 Marketing >
      • 4.1 The Role Marketing
      • 4.2 Marketing Planning
      • 4.3 Sales Forcasting
      • 4.4 Market Research
      • 4.5 Product >
        • 4.5 Price
        • 4.5 Promotion
        • 4.5 Place
      • 4.7 International Marketing and Globalization
    • The Exam
  • AP World History
    • Free Response Questions
    • 10,000 BCE - 600CE
    • 600 - 1450
    • 1450 - 1750
  • AP Human Geo
    • 01 Geography its nature and perspectives
    • 02 Population and Migration
    • 03 Cultural Geography
    • 04 Political Geography
    • 05 Urban Geography
    • 06 Economic Geography
    • 07 Agricultural Geography
    • Exam Review
  • Previously Taught Courses
    • G12 Economics >
      • Basic Economic Ideas
      • Producing and Consuming
      • Financial Capability
      • Managing the Economy
    • G10 World History >
      • 01 Exploration, Scientific Revolution and the Enlightenment
      • 02 The American Revolution
      • 03 France: Absolute Monarchy & Revolution
      • 04 The Industrial Revolution
      • 05 Imperialism and Nationalism
      • 06 WW1
      • 07 Inter-War Period
      • 08 WW2
    • G9 World History >
      • 01 Human beginnings and early civilizations >
        • 03 What can we learn from Classical Civilizations (Greece) >
          • 03 What can we learn from Classical Civilizations?
      • 03 Classical China
      • 04 The Muslim World
      • 05 Interregional Networks and Contacts 500 - 1450
      • 01 The Individuals and Societies Toolbox
      • 06 The Renaissance and Reformation >
        • Oral Presentations
    • G9 Social Studies >
      • History >
        • Analyzing Sources
      • Geography
    • G7 Social Studies >
      • Introduction to Empowerment
      • Economic Empowerment
      • Political Empowerment
      • Cultural Empowerment
      • National Empowerment
      • 04 Resources and the environment
      • Finance and Accounting >
        • 3.1 Sources of finance
        • 3.2 Investment appraisal
        • 3.3 Working capital
        • 3.4 Budgeting
        • 3.5 Financial Accounts
        • 3.6 Ratio Analysis
    • Writing Skills
    • Critical Reading
  • Extended Essay
    • 01 Getting Started
    • 02 Structuring the EE