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style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35118/unit-2111-market-power-theory-of-production-and-costs-hl.html" title="Unit 2.11(1) Market power - Theory of production and costs (HL)">Unit 2.11(1) Market power - Theory of production and costs (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35125/unit-2112-market-power-perfect-competitionhl.html" title="Unit 2.11(2) Market power - Perfect competition(HL)">Unit 2.11(2) Market power - Perfect competition(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35147/unit-2113-market-power-monopolyhl.html" title="Unit 2.11(3) Market power - Monopoly(HL)">Unit 2.11(3) Market power - Monopoly(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35151/unit-2114-market-power-monopolistic-competitionhl.html" title="Unit 2.11(4) Market power - Monopolistic competition(HL)">Unit 2.11(4) Market power - Monopolistic competition(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35153/unit-2115-market-power-oligopolyhl.html" title="Unit 2.11(5) Market power - Oligopoly(HL)">Unit 2.11(5) Market power - Oligopoly(HL)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../41603/economics-real-world-examples-and-extension-material-.html" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43378/opportunity-cost-and-production-possibility-curves.html" title="Opportunity cost and production possibility curves">Opportunity cost and production possibility curves</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42559/demand-theory.html" title="Demand theory">Demand theory</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../41886/the-price-mechanism.html" title="The price mechanism">The price mechanism</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43188/market-demand-and-supply.html" title="Market demand and supply">Market demand and supply</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../41705/demerit-goods.html" title="Demerit goods">Demerit goods</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42275/market-failure-and-climate-change.html" title="Market failure and climate change">Market failure and climate change</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42925/market-power.html" title="Market power">Market power</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42099/applying-game-theory.html" title="Applying game theory">Applying game theory</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../34407/chapter-3-macroeconomics.html" title="Chapter 3: Macroeconomics">Chapter 3: Macroeconomics</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34355/unit-311-measuring-the-level-of-economic-activity.html" title="Unit 3.1(1): Measuring the level of economic activity">Unit 3.1(1): Measuring the level of economic activity</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34432/unit-312-measuring-economic-development.html" title="Unit 3.1(2): Measuring Economic Development">Unit 3.1(2): Measuring Economic Development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34485/unit-321-variations-in-economic-activity-aggregate-demand-ad-.html" title="Unit 3.2(1): Variations in economic activity - aggregate demand (AD) ">Unit 3.2(1): Variations in economic activity - aggregate demand (AD) </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34487/unit-322-variations-in-economic-activity-aggregate-supplyas.html" title="Unit 3.2(2): Variations in economic activity - aggregate supply(AS)">Unit 3.2(2): Variations in economic activity - aggregate supply(AS)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34758/unit-331-macroeconomic-objectives-economic-growth.html" title="Unit 3.3(1) Macroeconomic objectives: economic growth">Unit 3.3(1) Macroeconomic objectives: economic growth</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34771/unit-332-macroeconomic-objectives-unemployment-.html" title="Unit 3.3(2) Macroeconomic objectives: unemployment ">Unit 3.3(2) Macroeconomic objectives: unemployment </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34778/unit-333-macroeconomic-objectives-inflation-and-deflation--1.html" title="Unit 3.3(3) Macroeconomic objectives: inflation and deflation ">Unit 3.3(3) Macroeconomic objectives: inflation and deflation </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34925/unit-341-economics-of-inequality-and-poverty-1.html" title="Unit 3.4(1) Economics of inequality and poverty">Unit 3.4(1) Economics of inequality and poverty</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34946/unit-342-policies-to-improve-equality-equity-and-poverty.html" title="Unit 3.4(2) Policies to improve equality, equity and poverty">Unit 3.4(2) Policies to improve equality, equity and poverty</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34993/unit-35-government-management-of-the-economy-monetary-policy-1.html" title="Unit 3.5 Government management of the economy – monetary policy">Unit 3.5 Government management of the economy – monetary policy</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34962/unit-36-government-management-of-the-economy-fiscal-policy-1.html" title="Unit 3.6 Government management of the economy – fiscal policy">Unit 3.6 Government management of the economy – fiscal policy</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35017/unit-371-market-based-supply-side-policies--1.html" title="Unit 3.7(1) Market based supply-side policies ">Unit 3.7(1) Market based supply-side policies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35018/unit-372-interventionist-supply-side-policies-.html" title="Unit 3.7(2) Interventionist supply-side policies ">Unit 3.7(2) Interventionist supply-side policies </a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45803/economics-real-world-examples-and-extension-material--1.html" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42639/measuring-economic-well-being-1.html" title="Measuring economic well-being">Measuring economic well-being</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43044/inflation.html" title="Inflation">Inflation</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42350/inequality.html" title="Inequality">Inequality</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../41639/inequity-1.html" title="Inequity">Inequity</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../35414/chapter-4-the-global-economy.html" title="Chapter 4: The Global Economy">Chapter 4: The Global Economy</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35346/unit-41-benefits-of-international-trade-1.html" title="Unit 4.1 Benefits of international trade">Unit 4.1 Benefits of international trade</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35348/unit-4243-trade-protectionism-1.html" title="Unit 4.2/4.3 Trade protectionism">Unit 4.2/4.3 Trade protectionism</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35407/unit-44-economic-integration-.html" title="Unit 4.4 Economic integration ">Unit 4.4 Economic integration </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35409/unit-45-exchange-rates-1.html" title="Unit 4.5 Exchange rates">Unit 4.5 Exchange rates</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35413/unit-46-balance-of-payments--1.html" title="Unit 4.6 Balance of payments ">Unit 4.6 Balance of payments </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35675/unit-47-sustainable-development.html" title="Unit 4.7 Sustainable development">Unit 4.7 Sustainable development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35685/unit-48-measuring-development--1.html" title="Unit 4.8 Measuring development ">Unit 4.8 Measuring development </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35687/unit-49-barriers-to-economic-development-1.html" title="Unit 4.9 Barriers to economic development">Unit 4.9 Barriers to economic development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35702/unit-410-economic-growth-and-economic-development-strategies.html" title="Unit 4.10: Economic growth and economic development strategies">Unit 4.10: Economic growth and economic development strategies</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45804/economics-real-world-examples-and-extension-material-.html" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../41927/foreign-currency-1.html" title="Foreign currency">Foreign currency</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43532/exchange-rates-1.html" title="Exchange rates">Exchange rates</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43804/balance-of-payments.html" title="Balance of payments">Balance of payments</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../41796/economic-development-1.html" title="Economic development">Economic development</a></li></ul></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../20132/units-1-2-microeconomics.html" title="Units 1-2: Microeconomics">Units 1-2: Microeconomics</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Unit 1: Introduction to economics">Unit 1: Introduction to economics</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20091/introductory-activity-1.html" title="Introductory activity">Introductory activity</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20093/unit-11-scarcity-choice-and-opportunity-cost.html" title="Unit 1.1: Scarcity, choice and opportunity cost">Unit 1.1: Scarcity, choice and opportunity cost</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21647/factors-of-production-1.html" title="Factors of production">Factors of production</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20114/economic-systems.html" title="Economic systems">Economic systems</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20134/public-and-private-sectors-1.html" title="Public and private sectors">Public and private sectors</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../28055/unit-12-economics-as-a-social-science-1.html" title="Unit 1.2: Economics as a social science">Unit 1.2: Economics as a social science</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29921/circular-flow-of-national-income.html" title="Circular flow of national income">Circular flow of national income</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29829/unit-1-review-terms-1.html" title="Unit 1: Review terms">Unit 1: Review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../41600/introduction-to-economics-crossword-1.html" title="Introduction to economics crossword">Introduction to economics crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../4331/unit-1-multiple-choice-quiz.html" title="Unit 1: Multiple choice quiz">Unit 1: Multiple choice quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20177/unit-21-23-competitive-markets-demand-and-supply-1.html" title="Unit 2.1-2.3: Competitive markets - demand and supply">Unit 2.1-2.3: Competitive markets - demand and supply</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../28517/unit-21-demand-1.html" title="Unit 2.1: Demand">Unit 2.1: Demand</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22349/determinants-of-demand-1.html" title="Determinants of demand">Determinants of demand</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29949/unit-22-supply-.html" title="Unit 2.2: Supply ">Unit 2.2: Supply </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20184/changes-to-supply-and-demand-.html" title="Changes to supply and demand ">Changes to supply and demand </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21992/practise-exercises-1.html" title="Practise exercises">Practise exercises</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../26112/gold-exchange-game-demand-and-supply-1.html" title="Gold exchange game: Demand and supply">Gold exchange game: Demand and supply</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20194/unit-23-competitive-market-equilibrium-1.html" title="Unit 2.3: Competitive market equilibrium">Unit 2.3: Competitive market equilibrium</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20144/producer-and-consumer-surplus-1.html" title="Producer and consumer surplus">Producer and consumer surplus</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../22351/veblen-goods-and-super-luxury-goods-1.html" title="Veblen goods and super luxury goods">Veblen goods and super luxury goods</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25677/are-cryptocurrencies-the-new-tulipmania.html" title="Are Cryptocurrencies the new Tulipmania?">Are Cryptocurrencies the new Tulipmania?</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20472/unit-21-23-multiple-choice-quiz.html" title="Unit 2.1-2.3: Multiple choice quiz">Unit 2.1-2.3: Multiple choice quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20113/unit-24-consumer-and-producer-behaviour-hl-only-1.html" title="Unit 2.4: Consumer and producer behaviour (HL only)">Unit 2.4: Consumer and producer behaviour (HL only)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../36073/behavioural-economics-consumer-biases-nudge-theory-hl-only-1.html" title="Behavioural economics: Consumer biases / nudge theory (HL only)">Behavioural economics: Consumer biases / nudge theory (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20378/business-objectives-hl-only.html" title="Business objectives (HL only)">Business objectives (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../28741/unit-21-24-review-terms--1.html" title="Unit 2.1-2.4: Review terms ">Unit 2.1-2.4: Review terms </a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20195/unit-25-26-elasticity-1.html" title="Unit 2.5-2.6: Elasticity">Unit 2.5-2.6: Elasticity</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../28713/unit-25-price-elasticity-of-demand-1.html" title="Unit 2.5: Price elasticity of demand">Unit 2.5: Price elasticity of demand</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21545/determinants-of-price-elasticity-.html" title="Determinants of price elasticity ">Determinants of price elasticity </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21532/ped-elasticity-and-sales-revenue.html" title="PED elasticity and sales revenue?">PED elasticity and sales revenue?</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21259/unit-25-income-elasticity-of-demand-yed.html" title="Unit 2.5: Income elasticity of demand (YED)">Unit 2.5: Income elasticity of demand (YED)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21200/unit-26-price-elasticity-of-supply.html" title="Unit 2.6: Price elasticity of supply">Unit 2.6: Price elasticity of supply</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20207/perfectly-elastic-inelastic-supply-curves.html" title="Perfectly elastic / inelastic supply curves">Perfectly elastic / inelastic supply curves</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20230/a-mathematical-note-about-elasticity-.html" title="A mathematical note about elasticity ">A mathematical note about elasticity </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../39037/demand-and-supply-crossword.html" title="Demand and supply crossword">Demand and supply crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29021/unit-25-26-review-terms-1.html" title="Unit 2.5-2.6: Review terms">Unit 2.5-2.6: Review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20474/unit-25-26-multiple-choice-quiz--1.html" title="Unit 2.5-2.6: Multiple choice quiz ">Unit 2.5-2.6: Multiple choice quiz </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44474/unit-21-25-competitive-markets-quiz-1.html" title="Unit 2.1- 2.5: Competitive markets quiz">Unit 2.1- 2.5: Competitive markets quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20243/unit-27-the-role-of-government-in-microeconomics--1.html" title="Unit 2.7: The role of government in microeconomics ">Unit 2.7: The role of government in microeconomics </a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../26590/indirect-taxation.html" title="Indirect taxation">Indirect taxation</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20246/ped-and-the-burden-of-tax-hl-only-.html" title="PED and the burden of tax (HL only) ">PED and the burden of tax (HL only) </a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20277/government-subsidies--1.html" title="Government subsidies ">Government subsidies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29117/unit-27-indirect-tax-and-subsidy-review-terms-1.html" title="Unit 2.7: Indirect tax and subsidy review terms">Unit 2.7: Indirect tax and subsidy review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20287/price-controls-maximum-price--1.html" title="Price controls − maximum price ">Price controls − maximum price </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20288/minimum-price-.html" title="Minimum price ">Minimum price </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21540/minimum-wage-.html" title="Minimum wage ">Minimum wage </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../38849/labour-market-crossword-1.html" title="Labour market crossword">Labour market crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29260/unit-27-price-controls-review-terms-1.html" title="Unit 2.7: Price controls review terms">Unit 2.7: Price controls review terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20303/unit-28-210-market-failure--1.html" title="Unit 2.8-2.10: Market failure ">Unit 2.8-2.10: Market failure </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21543/unit-28-merit-goods--1.html" title="Unit 2.8: Merit goods ">Unit 2.8: Merit goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../23123/unit-28-demerit-goods-negative-externalities-1.html" title="Unit 2.8: Demerit goods / negative externalities">Unit 2.8: Demerit goods / negative externalities</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../38850/market-failure-crossword-1.html" title="Market failure crossword">Market failure crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29262/unit-29-economics-of-the-environment-and-public-goods--1.html" title="Unit 2.9: Economics of the environment and public goods ">Unit 2.9: Economics of the environment and public goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20332/unit-210-asymmetric-information-hl-only-1.html" title="Unit 2.10: Asymmetric information (HL only)">Unit 2.10: Asymmetric information (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29828/unit-28-210-market-failure-review-sheet.html" title="Unit 2.8-2.10: Market failure review sheet">Unit 2.8-2.10: Market failure review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29827/unit-28-210-market-failure-review-terms.html" title="Unit 2.8-2.10: Market failure review terms">Unit 2.8-2.10: Market failure review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20479/unit-27-210-multiple-choice-quiz--1.html" title="Unit 2.7-2.10: Multiple choice quiz ">Unit 2.7-2.10: Multiple choice quiz </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44501/unit-27-210-government-failure-revision-quiz-1.html" title="Unit 2.7-2.10 Government failure revision quiz">Unit 2.7-2.10 Government failure revision quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20330/unit-211-market-power-hl-only-1.html" title="Unit 2.11: Market power (HL only)">Unit 2.11: Market power (HL only)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29835/assessment-map.html" title="Assessment map">Assessment map</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21528/production-hl-only.html" title="Production (HL only)">Production (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29978/revenue-theory-hl-only.html" title="Revenue theory (HL only)">Revenue theory (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20357/costs-of-production-hl-only.html" title="Costs of production (HL only)">Costs of production (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21286/economies-and-diseconomies-of-scale-hl-only.html" title="Economies and diseconomies of scale (HL only)">Economies and diseconomies of scale (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22494/long-run-average-cost-curves-hl-only.html" title="Long run average cost curves (HL only)">Long run average cost curves (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../29838/breakeven-hl-only.html" title="Breakeven (HL only)">Breakeven (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20340/economic-profit-hl-only.html" title="Economic profit (HL only)">Economic profit (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../39082/market-power-crossword.html" title="Market power crossword">Market power crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../22495/revision-exercise-on-cost-and-revenue-hl-only.html" title="Revision exercise on cost and revenue (HL only)">Revision exercise on cost and revenue (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29845/unit-211-costs-revenue-and-profit-review-sheet-hl-only.html" title="Unit 2.11: Costs, revenue and profit review sheet (HL only)">Unit 2.11: Costs, revenue and profit review sheet (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44484/unit-211-multiple-choice-quiz-sl-units-1.html" title="Unit 2.11: Multiple choice quiz (SL units)">Unit 2.11: Multiple choice quiz (SL units)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29846/market-structures-hl-only-1.html" title="Market structures (HL only)">Market structures (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29981/perfect-competition-hl-only-1.html" title="Perfect competition (HL only)">Perfect competition (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../24486/profit-in-perfect-competition-hl-only-1.html" title="Profit in perfect competition (HL only)">Profit in perfect competition (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21302/efficiency-in-perfect-competition-hl-only.html" title="Efficiency in perfect competition (HL only)">Efficiency in perfect competition (HL only)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20430/monopoly-hl-only-1.html" title="Monopoly (HL only)">Monopoly (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../24529/profit-and-revenue-maximisation-in-monopoly-hl-only-1.html" title="Profit and revenue maximisation in monopoly (HL only)">Profit and revenue maximisation in monopoly (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21306/a-comparison-of-monopoly-and-perfect-competition-hl-only-1.html" title="A comparison of monopoly and perfect competition? (HL only)">A comparison of monopoly and perfect competition? (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20435/monopolistic-competition-hl-only-1.html" title="Monopolistic competition (HL only)">Monopolistic competition (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20436/oligopoly-hl-only-1.html" title="Oligopoly (HL only)">Oligopoly (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22310/game-theory-hl-only-1.html" title="Game theory (HL only)">Game theory (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29918/unit-211-market-structures-review-sheet-hl-only-1.html" title="Unit 2.11: Market structures review sheet (HL only)">Unit 2.11: Market structures review sheet (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../32337/unit-211-diagram-revision-.html" title="Unit 2.11: Diagram revision ">Unit 2.11: Diagram revision </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20480/unit-211-multiple-choice-quiz-hl-only-1.html" title="Unit 2.11: Multiple choice quiz (HL only)">Unit 2.11: Multiple choice quiz (HL only)</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../32425/unit-212-the-markets-inability-to-achieve-equity-hl-only-1.html" title="Unit 2.12: The market’s inability to achieve equity (HL only)">Unit 2.12: The market’s inability to achieve equity (HL only)</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../21842/unit-3-macroeconomics-.html" title="Unit 3: Macroeconomics ">Unit 3: Macroeconomics </a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../3942/unit-31-measuring-economic-activity-and-illustrating-its-variati-1.html" title="Unit 3.1: Measuring economic activity and illustrating its variations">Unit 3.1: Measuring economic activity and illustrating its variations</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20558/calculating-national-income-1.html" title="Calculating national income">Calculating national income</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21297/gdp-gni-as-a-measure-of-living-standards.html" title="GDP / GNI as a measure of living standards">GDP / GNI as a measure of living standards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20567/national-income-statistics-1.html" title="National income statistics">National income statistics</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21580/the-business-cycle-1.html" title="The business cycle">The business cycle</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29931/unit-31-economic-activity-review-sheet-1.html" title="Unit 3.1: Economic activity review sheet">Unit 3.1: Economic activity review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20592/unit-32-variations-in-economic-activityaggregate-demand-and-aggr-1.html" title="Unit 3.2: Variations in economic activity—aggregate demand and aggregate supply">Unit 3.2: Variations in economic activity—aggregate demand and aggregate supply</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29933/aggregate-demand-and-supply.html" title="Aggregate demand and supply">Aggregate demand and supply</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21582/components-of-aggregate-demand-1.html" title="Components of aggregate demand">Components of aggregate demand</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20634/equilibrium-in-macroeconomics-neo-classical-perspective-1.html" title="Equilibrium in macroeconomics (neo-classical perspective)">Equilibrium in macroeconomics (neo-classical perspective)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20439/equilibrium-in-macroeconomics-keynesian-perspective-1.html" title="Equilibrium in macroeconomics (keynesian perspective)">Equilibrium in macroeconomics (keynesian perspective)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21349/john-maynard-keynes-1.html" title="John Maynard Keynes">John Maynard Keynes</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20650/keynesian-v-free-market-debate--1.html" title="Keynesian v free market debate ">Keynesian v free market debate </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21342/changes-in-the-long-run-aggregate-supply-1.html" title="Changes in the long run aggregate supply">Changes in the long run aggregate supply</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30055/unit-32-aggregate-demand-and-supply-review-sheet-1.html" title="Unit 3.2: Aggregate demand and supply review sheet">Unit 3.2: Aggregate demand and supply review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20610/unit-35-and-36-demand-management-fiscal-and-monetary-policy-1.html" title="Unit 3.5 and 3.6: Demand management - fiscal and monetary policy">Unit 3.5 and 3.6: Demand management - fiscal and monetary policy</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30058/government-budget.html" title="Government budget">Government budget</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21585/fiscal-policy--1.html" title="Fiscal policy ">Fiscal policy </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21343/multiplier-hl-only.html" title="Multiplier (HL only)">Multiplier (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21795/monetary-policy--1.html" title="Monetary policy ">Monetary policy </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30071/independent-central-banks-1.html" title="Independent central banks">Independent central banks</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30083/unit-35-and-36-review-sheet.html" title="Unit 3.5 and 3.6 review sheet">Unit 3.5 and 3.6 review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20615/unit-37-supply-side-policies-1.html" title="Unit 3.7: Supply side policies">Unit 3.7: Supply side policies</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20651/the-role-of-supply-side-policies-1.html" title="The role of supply side policies">The role of supply side policies</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20622/market-based-and-interventionist-supply-side-policies--1.html" title="Market based and interventionist supply side policies ">Market based and interventionist supply side policies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../39129/aggregate-demand-and-supply-crossword-1.html" title="Aggregate demand and supply crossword">Aggregate demand and supply crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30086/unit-37-review-sheet-1.html" title="Unit 3.7: Review sheet">Unit 3.7: Review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20755/unit-31-32-and-35-37-multiple-choice-quiz--1.html" title="Unit 3.1-3.2 and 3.5-3.7: Multiple choice quiz ">Unit 3.1-3.2 and 3.5-3.7: Multiple choice quiz </a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44522/unit-31-32-and-35-37-revision-quiz-1.html" title="Unit 3.1-3.2 and 3.5-3.7: Revision quiz">Unit 3.1-3.2 and 3.5-3.7: Revision quiz</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20686/unit-33-macroeconomic-objectives.html" title="Unit 3.3: Macroeconomic objectives">Unit 3.3: Macroeconomic objectives</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30118/unemployment.html" title="Unemployment">Unemployment</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21351/types-of-unemployment.html" title="Types of unemployment?">Types of unemployment?</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21593/equilibrium-unemployment-.html" title="Equilibrium unemployment ">Equilibrium unemployment </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21594/disequilibrium-unemployment-1.html" title="Disequilibrium unemployment">Disequilibrium unemployment</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../30458/unemployment-review-sheet-1.html" title="Unemployment review sheet">Unemployment review sheet</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20713/inflation--1.html" title="Inflation ">Inflation </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20712/measuring-inflation-hl-only-1.html" title="Measuring inflation (HL only)">Measuring inflation (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20685/costs-of-inflation-and-deflation-1.html" title="Costs of inflation and deflation">Costs of inflation and deflation</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../30465/inflation-review-sheet.html" title="Inflation review sheet">Inflation review sheet</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20716/unemployment-v-inflation-trade-off-hl-only-1.html" title="Unemployment v inflation trade off (HL only)">Unemployment v inflation trade off (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../39133/macroeconomic-objectives-crossword-1.html" title="Macroeconomic objectives crossword">Macroeconomic objectives crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44511/unit-33-macroeconomic-indicators-revision-quiz-1.html" title="Unit 3.3: Macroeconomic indicators revision quiz">Unit 3.3: Macroeconomic indicators revision quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20741/unit-34-economics-of-inequality-and-poverty-1.html" title="Unit 3.4: Economics of inequality and poverty">Unit 3.4: Economics of inequality and poverty</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../32398/inequality-1.html" title="Inequality">Inequality</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21356/the-role-of-spending-and-taxation-on-inequality--1.html" title="The role of spending and taxation on inequality ">The role of spending and taxation on inequality </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21313/consequences-of-economic-growth-1.html" title="Consequences of economic growth">Consequences of economic growth</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30257/economic-growth-and-inequality-review-sheet-1.html" title="Economic growth and inequality review sheet">Economic growth and inequality review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20756/unit-33-34-multiple-choice-.html" title="Unit 3.3-3.4: Multiple choice ">Unit 3.3-3.4: Multiple choice </a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../21844/unit-4-global-economy.html" title="Unit 4: Global economy">Unit 4: Global economy</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../21367/unit-41-benefits-of-international-trade.html" title="Unit 4.1: Benefits of international trade">Unit 4.1: Benefits of international trade</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30529/benefits-of-international-trade.html" title="Benefits of international trade">Benefits of international trade</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20823/absolute-and-comparative-advantage-hl-only-1.html" title="Absolute and comparative advantage (HL only)">Absolute and comparative advantage (HL only)</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20845/unit-42-43-trade-protection-1.html" title="Unit 4.2-4.3: Trade protection">Unit 4.2-4.3: Trade protection</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../32419/barriers-to-trade-calculations-are-hl-only-1.html" title="Barriers to trade (calculations are HL only)">Barriers to trade (calculations are HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21610/case-study-on-tata-steel-1.html" title="Case study on Tata Steel">Case study on Tata Steel</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../23455/the-defence-industry-1.html" title="The Defence industry">The Defence industry</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30610/unit-41-43-review-sheet-1.html" title="Unit 4.1-4.3: Review sheet">Unit 4.1-4.3: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20894/unit-44-economic-integration--1.html" title="Unit 4.4: Economic integration ">Unit 4.4: Economic integration </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30634/economic-integration-some-hl-tasks-1.html" title="Economic integration (some HL tasks)">Economic integration (some HL tasks)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20840/world-trade-organisation-wto-1.html" title="World trade organisation (WTO)">World trade organisation (WTO)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30635/unit-44-review-sheet-1.html" title="Unit 4.4: Review sheet">Unit 4.4: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20853/unit-45-exchange-rates-1.html" title="Unit 4.5: Exchange rates">Unit 4.5: Exchange rates</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30611/floating-exchange-rates-1.html" title="Floating exchange rates">Floating exchange rates</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../31824/fixed-managed-exchange-rate-systems-some-hl-tasks-1.html" title="Fixed / managed exchange rate systems (some HL tasks)">Fixed / managed exchange rate systems (some HL tasks)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21624/the-market-for-foreign-exchange-1.html" title="The market for foreign exchange">The market for foreign exchange</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30614/unit-45-review-sheet-1.html" title="Unit 4.5: Review sheet">Unit 4.5: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20859/unit-46-balance-of-payments-1.html" title="Unit 4.6: Balance of payments">Unit 4.6: Balance of payments</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30624/balance-of-payments--1.html" title="Balance of payments ">Balance of payments </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21386/current-account-hl-only-1.html" title="Current account (HL only)">Current account (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20872/the-marshall-lerner-condition-j-curve-hl-only-1.html" title="The Marshall-Lerner condition / J curve (HL only)">The Marshall-Lerner condition / J curve (HL only)</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20899/units-41-46-multiple-choice-quiz--1.html" title="Units 4.1-4.6: Multiple choice quiz ">Units 4.1-4.6: Multiple choice quiz </a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42989/unit-41-46-multiple-choice-quiz-ii-1.html" title="Unit 4.1-4.6: Multiple choice quiz II">Unit 4.1-4.6: Multiple choice quiz II</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../39438/unit-41-46-international-trade-crossword-1.html" title="Unit 4.1-4.6: International trade crossword">Unit 4.1-4.6: International trade crossword</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../32423/unit-47-sustainable-development--1.html" title="Unit 4.7: Sustainable development ">Unit 4.7: Sustainable development </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../26092/water-scarcity-activity-1.html" title="Water scarcity activity">Water scarcity activity</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../32426/sustainable-development.html" title="Sustainable development">Sustainable development</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20928/unit-48-measuring-development--1.html" title="Unit 4.8: Measuring development ">Unit 4.8: Measuring development </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30686/measuring-development-1.html" title="Measuring development">Measuring development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21627/economic-development--1.html" title="Economic development ">Economic development </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30679/unit-47-48-review-sheet.html" title="Unit 4.7-4.8: Review sheet">Unit 4.7-4.8: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Unit 4.9: Barriers to development">Unit 4.9: Barriers to development</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30727/barriers-to-development-in-international-trade-1.html" title="Barriers to development in International trade">Barriers to development in International trade</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../32430/unit-410-economic-growth-andor-economic-development-strategies-1.html" title="Unit 4.10: Economic growth and/or economic development strategies">Unit 4.10: Economic growth and/or economic development strategies</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30687/the-role-of-domestic-factors-1.html" title="The role of domestic factors">The role of domestic factors</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30688/the-role-of-international-trade-and-development-1.html" title="The role of international trade and development">The role of international trade and development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30689/the-role-of-foreign-direct-investment-fdi-1.html" title="The role of foreign direct investment (FDI)">The role of foreign direct investment (FDI)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../25240/the-role-of-foreign-aid--1.html" title="The role of foreign aid ">The role of foreign aid </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30819/multilateral-development-assistance-1.html" title="Multilateral development assistance">Multilateral development assistance</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21632/the-role-of-international-debt-1.html" title="The role of international debt">The role of international debt</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../25242/the-balance-between-markets-and-intervention-1.html" title="The balance between markets and intervention">The balance between markets and intervention</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30926/unit-49-410-review-sheet.html" title="Unit 4.9 - 4.10: Review sheet">Unit 4.9 - 4.10: Review sheet</a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../21380/assessment.html" title="Assessment">Assessment</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Internal assessment ">Internal assessment </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20608/how-to-write-your-ia-student-handout.html" title="How to write your IA? (student handout)">How to write your IA? (student handout)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21428/how-to-interpret-the-assessment-criteria-1.html" title="How to interpret the assessment criteria?">How to interpret the assessment criteria?</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Grading practise ">Grading practise </a></li><ul class="level-3 "><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Sample 3a">Sample 3a</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../32083/sample-3b-1.html" title="Sample 3b">Sample 3b</a></li></ul></ul></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../32022/assessment-markbands-1.html" title="Assessment markbands">Assessment markbands</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../4332/exam-style-questions.html" title="Exam style questions">Exam style questions</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Paper 1 style examination questions">Paper 1 style examination questions</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../40100/unit-211-212-questions.html" title="Unit 2.11-2.12 questions">Unit 2.11-2.12 questions</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../45102/paper-1-guidance-on-essay-writing-1.html" title="Paper 1 guidance on essay writing">Paper 1 guidance on essay writing</a></li></ul></ul></nav> </div> </div> </div> </div><div style="margin-top: 20px;"><style type="text/css">
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<div id="main-column" class="span9"> <article id="unit-284-common-access-pool-resources" style="margin-top: 16px;">
<h1 class="section-title">Unit 2.8(4): Common access (pool) resources</h1>
<ul class="breadcrumb"><li><a title="Home" href="../../../economics.html"><i class="fa fa-home"></i></a><span class="divider">/</span></li><li><span class="gray">Textbook</span><span class="divider">/</span></li><li><span class="gray">Chapter 2: Microeconomics</span><span class="divider">/</span></li><li><span class="active">Unit 2.8(4): Common access (pool) resources</span></li></ul>
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<div class="intro-card"><div class="bg-cover" style="background-image: url("/media/ib/economics/images/textbook/market-failure/peruvian-gold-mine.jpg");"></div><img src="../../../ib/economics/images/textbook/market-failure/peruvian-gold-mine.jpg" style="display: none"><div class="content"><p class="text">This section of the book looks in detail at the impact common access resources have on environmental economics. The chapter considers how government policy and international agreements look to correct the market failures associated with common access resources and make economic activity more sustainable.</p></div></div><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h3><strong>What you should know by the end of this chapter:</strong></h3></div></div></div><p>Common access resources<img alt="" height="332" src="../../../ib/economics/images/textbook/market-failure/extinction-rebellion.jpg" style="float: right;" title="https://www.imdb.com/title/tt11561248/mediaviewer/rm3745349889" width="294"></p><p>Tragedy of the commons</p><p>Managing common access resources through:</p><ul><li>Property rights</li><li>Command and control regulation</li><li>Collective self-governance</li><li>Porter hypothesis</li><li>Carbon taxes </li><li>Tradeable permits </li><li>International agreements</li></ul><hr class="hidden"><div class="greyBg"><h3>Revision material</h3><p><img alt="" src="../../../ib/economics/images/textbook/revision-material/logo.jpg" style="width: 200px; height: 95px; float: left;">The link to the attached pdf is revision material from <strong>Unit 2.8(4): Common access (pool) resources. </strong>The revision material can be downloaded as a student handout.</p><p><a href="../../../media/ib/economics/images/textbook/market-failure/common-access-resources-1/common-pool-resources-revision-notes.pdf.html" target="_blank" title="Revision"><img class="ico" src="../../../thinkib/icons/revision.png"> Revision notes</a></p></div><div class="blueBg"><h3><strong>What is environmental economics?</strong></h3><p>If economics is the study of how society allocates scarce resources to satisfy human wants, then environmental economics considers this statement in light of how economic activity impacts the environment. We know from our study of market failure, that the external costs resulting from consumption and production in free, unregulated markets have a negative effect on the environment and that governments along with international organisations have an important role in correcting these failures. </p><p>This section of the textbook looks in detail at the impact common pool resources have on environmental economics. It considers how government policy and international agreements look to correct the market failures associated with common access resources and make economic activity more sustainable.</p><h3><strong>Common pool (access) resources and sustainability</strong></h3><h4><strong>What is a common pool resource?</strong></h4><p>Common pool resources are natural resources that firms and individuals can access in society without restriction. Common pool applies to resources like forests for timber, the sea for fish and areas of land for mineral deposits. </p><h4><strong>Characteristics of common pool resources</strong></h4><p>Common pool resources are associated with two characteristics:</p><ul><li>Common pool resources are <strong>non-excludable</strong> because they occur naturally in the environment, and without government intervention, it is very difficult to limit access to them. Anyone can access fish in the sea and cut down trees in a forest if there is no legal system to prevent people from doing this</li></ul><ul><li>Common pool resources are <strong>rivalrous</strong> because the consumption of them by one individual does reduce their availability to others. If someone takes fish from the sea or cuts down a tree it is not available for someone else.</li></ul></div><div class="pinkBg"><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4><strong>Inquiry case example - Gold in the forest</strong></h4></div></div></div><p><strong>Adapted: </strong><a href="https://www.smithsonianmag.com/travel/the-devastating-costs-of-the-amazon-gold-rush-19365506/"><strong>https://www.smithsonianmag.com</strong></a></p><p>I<strong><img alt="" src="../../../ib/economics/images/textbook/market-failure/peruvian-gold-mine.jpg" style="float: left; width: 400px; height: 328px;" title=" https://www.smithsonianmag.com"></strong>t’s a few hours before dawn in the Peruvian rainforest, and five bare light bulbs hang from a wire above a 40-foot-deep pit. Gold miners, operating illegally, have worked in this chasm since 11 am yesterday. Standing waist-deep in muddy water, they chew coca leaves to stave off exhaustion and hunger.</p><hr class="hidden"><p>This gaping cavity is one of the thousands being gouged today in the state of Madre de <span data-scayt-word="Dios" data-wsc-id="k9r76opyf2sf1gaa1" data-wsc-lang="en_US">Dios</span> at the base of the Andes—a region that is among the most <span data-scayt-word="biodiverse" data-wsc-id="k9r76opum5zcnn3hr" data-wsc-lang="en_US">biodiverse</span> and, until recently, pristine environments in the world. No one knows for certain the total acreage that has been ravaged by illegal gold mining. At the same time, miners are contaminating rivers and streams, as mercury, used in separating gold, leaches into the watershed. Ultimately, the potent toxin, taken up by fish, enters the food chain.</p><p>Gold today commands a staggering $2,000 an ounce, more than six times the price of a decade ago. The surge is attributable to demand by individual and institutional investors seeking a hedge against losses and also the insatiable appetite for luxury goods made from the precious metal.</p><p>“Who is going to stop a poor man from Cuzco or <span data-scayt-word="Juliaca" data-wsc-id="k9r76owj4ds1b3ja0" data-wsc-lang="en_US">Juliaca</span> or <span data-scayt-word="Puno" data-wsc-id="k9r76owi0h5dt6g76" data-wsc-lang="en_US">Puno</span> who earns $30 a month from going to Madre de <span data-scayt-word="Dios" data-wsc-id="k9r76owhs4lhk56dd" data-wsc-lang="en_US">Dios</span> and starting to dig?” asks Antonio <span data-scayt-word="Brack" data-wsc-id="k9r76owgj5v7qxe5c" data-wsc-lang="en_US">Brack</span> Egg, formerly Peru’s minister of the environment.</p><p>Whilst it is illegal to mine for gold in Peru it is very difficult for an over-stretched and under-resourced government to limit access to the Amazon rainforest. Corruption probably plays a part as well.</p><p><a href="../../../media/ib/economics/images/textbook/market-failure/common-access-resources-1/gold-mining.pdf.html" target="_blank" title="Questions"><img class="ico" src="../../../thinkib/icons/question.png"> Worksheet questions</a></p><h5><strong>Questions</strong></h5><p><strong>a. Define the term common pool resource. [2]</strong></p><section class="tib-hiddenbox"><p>Common pool resources are resources that firms and individuals can access in society without restriction.</p></section><p><strong>b. Outline the two characteristics of illegal gold mining as a common pool resource. [4] </strong></p><section class="tib-hiddenbox"><p>Illegal gold mining as a common pool resource is <strong>non-excludable</strong> because it occurs naturally in the environment, and without government intervention, gold mining cannot be restricted.</p><p>Illegal gold mining is <strong>rivalrous </strong>because the mining of gold by one individual does reduce the availability to others.</p></section><p><strong>c. Using a demand and supply diagram, explain how an increase in the price of gold has led to an increase in illegal gold mining. [4]</strong></p><section class="tib-hiddenbox"><p><img alt="" src="../../../ib/economics/images/textbook/market-failure/common-access-resources-1/gold.jpg" style="float: right; width: 400px; height: 281px;">The diagram shows how an increase in the demand for gold leads to an increase in its price from P to P1. The higher price of gold is an incentive for gold miners to increase the amount of gold they produce through illegal mining. </p><hr class="hidden"></section><h5><strong>Investigation</strong></h5><p><strong>Look into the illegal gold mining in Peru and think about the reasons why it exists and the problems it causes. </strong></p></div><div class="blueBg"><h4><strong>Property rights</strong></h4><p>Property rights exist when an individual or a firm has ownership of a resource. When a farmer owns a field they have property rights over that field and have the legal right to control its use. They can put a fence around it and other people cannot legally use the field. Common pool resources do not have property rights assigned to them and nobody owns them. For example, there are no property rights on the open sea. The lack of property rights makes common pool resources non-excludable.</p><h4><strong>Sustainability</strong></h4><p>This is where the use of resources in the economy meets the needs of the present generation without adversely affecting the needs of future generations. Unsustainable economic activity is often associated with the over-consumption of common pool resources which reduces their availability to people in future. They are also often associated with external costs which have a negative impact on people in the present and also people in the future. The way the burning of fossil fuels impact the atmosphere as a common pool resource is an important example of this.</p><h3><strong>Common pool resources and market failure</strong></h3><h4><strong>Non-excludability and zero price</strong><img alt="" height="269" src="../../../ib/economics/images/textbook/market-failure/fishing-common-access-resource.jpg" style="float: right;" title="https://fineartamerica.com/featured/small-fishing-boat-with-lobster-pods-and-seagulls-on-calm-atlantic-in-front-of-the-hebride-islands-andreas-berthold.html" width="318"></h4><p>The non-excludable nature of common pool resources means there is no price attached to their consumption. In many cases common pool resources are also used in production, so free access to them at zero price means they are a zero cost to producers who use them. This leads to their exploitation. If an area of land can be freely accessed to cut down trees, people will clear a forest in an unrestricted way until significant deforestation has taken place and there is no forest for future generations to benefit from. The exploitation of common pool resources means they are being used in an unsustainable way.</p><hr class="hidden"><hr class="hidden"><h4><strong>External costs</strong></h4><p>When common pool resources are over-consumed there will often be significant external costs as well. Deforestation negatively affects third parties because it adds to climate change and reduces biodiversity. You can also make the externality argument when the use of common access resources now reduces their availability to future generations. Over-fishing now means fish will not be available to people in the future who would be considered a third party. </p><hr class="hidden"><p><img alt="" src="../../../ib/economics/images/textbook/market-failure/fishing-common-access-resource(1).jpg" style="float: left; width: 400px; height: 280px;">Diagram 2.51 illustrates the external costs of overfishing the sea. The market output is at Q which is above the socially efficient output of Q*. There is an over-allocation of resources and the yellow shaded area represents the welfare loss to society.</p><hr class="hidden"><h4><strong>Developing countries</strong></h4><p>The exploitation of common pool resources often takes place in less developed countries where property rights are not established effectively. People in poverty are often forced to exploit cheap resources available to them. Lots of deforestation takes place in developing countries when people are involved in illegal logging and mining to make enough income to survive.</p><h4><strong>Tragedy of the commons</strong></h4><div class="polaroid-right"><img src="../../../ib/economics/images/textbook/market-failure/garrett-hardin.jpg" style="margin: 8px 0px; width: 215px; height: 281px;" title="https://www.garretthardinsociety.org/gh/garrett-hardin-photo-back-yard.html"><div class="caption">Garrett Hardin: Tragedy of the Commons</div></div><p>The theory of the tragedy of the commons was put forward by an ecologist called Garrett Hardin. He argued that the use of common pool resources leads to a ‘shared-resource system’ where people over-produce goods using common pool resources because it is in their self-interest to do so. If a resource can be accessed at zero price then it is in the producer’s self-interest to make as much profit as they can from using a zero priced resource. People are likely to over-fish the sea or cut down a rain forest because of the profit they can make doing this. The tragedy of the commons shows how common pool resources are a market failure and are not sustainable.</p><hr class="hidden"><p><strong>Free rider problem</strong></p><p>The free-rider problem also applies to common pool resources where some people choose to benefit from other people’s actions. All people in the fishing industry might accept there is a need to reduce fishing in the present to preserve stocks for the future and agree to cut current fishing. But as a voluntary agreement, some producers might keep fishing at the same level and free ride off the reduced fishing of others.</p><h3><strong>Policy approach to common access resources</strong></h3><p>Common access resources need government intervention because their use leads to an over-allocation of resources. This depletes resources for the future which is unsustainable and the over-use of common pool resources leads to negative externalities.</p><p><strong>Assigning property rights</strong></p><p>Economists often look at the problem of common pool resources as a property rights issue. A property right is an individual’s right to control what they own and to be compensated when that right has been infringed. If someone takes flowers from your garden, you can take legal action against the person who has taken them. The use of common pool resources is un-controlled because there are no property rights assigned to them. Anyone can access a piece of common land, a river or a lake and extra resources without any legal restriction. By assigning property rights to a forest people who cut down trees have to pay the owner who can use the income to plant new trees. Without property rights, people will cut down trees and not replant them which means deforestation will take place.</p></div><div class="pinkBg"><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4><strong>Inquiry case example - The Coase Theorem </strong></h4></div></div></div><p>Th<strong><img alt="" src="../../../ib/economics/images/textbook/market-failure/coase-theorem.jpg" style="float: left; width: 317px; height: 400px;"></strong>e Coase Theorem was developed by economist Ronald Coase. It can be looked at in the context of air as a common pool resource because its use is rivalrous and non-excludable. Coase believed that bargaining between two parties could resolve a negative externality that arises when there is air pollution. For example, consider a dispute between a coffee shop and local resident about noise from the coffee shop which disturbs the residents. The residents have to put up with the noise pollution of the coffee shop and the business does not want to adversely affect its reputation. Coase believed the situation could be settled by a low-cost negotiation between the coffee shop and the residents. The coffee shop could make an agreement with the resident to put in place a noise reduction policy where people are not allowed to consume coffee outside the shop before 10 am and after 5 pm and residents agree to allow the shop to put tables and chairs outside the shop during those hours.</p><hr class="hidden"><h5><a href="../../../media/ib/economics/images/textbook/market-failure/common-access-resources-1/coase-theory.pdf.html" target="_blank" title="Questions"><img class="ico" src="../../../thinkib/icons/question.png"> Worksheet questions</a></h5><h5>Question</h5><p><strong>a. Explain how common pool resources are over-exploited by a lack of property rights. [4]</strong></p><section class="tib-hiddenbox"><p>Property rights exist when an individual or a firm has ownership of a resource. Without government intervention, common pool resources do not have property rights and they can be exploited in an unrestricted way which leads to their over-use. This makes their production and consumption unsustainable.</p></section><p><strong>b. Explain how common pool resources are an example of market failure. [10]</strong></p><section class="tib-hiddenbox"><p>Answers might include:<img alt="" src="../../../ib/economics/images/textbook/inquiry-case-example-questions/car-diagram.jpg" style="float: right; width: 400px; height: 279px;"></p><ul><li>Definitions of common pool resources and market failure.</li><li>A diagram to show the market failure of common pool resources. The diagram show illustrates how the market output Q is above the socially efficient output Q*<hr class="hidden"></li><li>An explanation that the over-exploitation of common pool resources because they are non-excludable and rivalrous leads to market failure because the market output is greater than the socially efficient output. This makes the use over-use of common access resources unsustainable and leads to a welfare loss in society.</li></ul></section><h5><strong>Investigation</strong></h5><p><strong>You can see these examples of these informal agreements taking place across the economy but what do you do with a business that refuses to compromise and how does the Coase Theorem work at a global level with CO2 emissions?</strong></p></div><div class="blueBg"><p><strong>Advantages of property rights:</strong></p><ul><li>Property rights provide a market solution to the common pool resources problem. By allocating property rights common pool resources now have owners and can be made excludable.</li><li>Owners of common pool resources have an incentive to manage them sustainably or there will not be a long-term source of income from them.</li><li>Allocating property rights is a relatively low-cost way of dealing with the common pool resource problem.</li></ul><p><strong>Disadvantages of property rights</strong>:</p><ul><li>The owner might not have social efficiency as an objective of their ownership of a common pool resource. An owner of a forest might allow deforestation.</li><li>Some common pool resources are areas of natural beauty that society wants to be maintained in a particular way. National parks, for example, are owned and controlled by governments.</li><li>The legal costs associated with the resolution of property rights disputes can be significant.</li><li>It is not always practical to assign property rights. Many external costs are ‘air-borne' and it is not possible for people to own the airspace around them.</li></ul><h4><strong>Command-and-control regulation</strong></h4><div class="polaroid-right"><img height="202" src="../../../ib/economics/endangered-species-act.jpg" style="margin: 8px 0px;" width="234"><p class="caption"><span style="display: inline !important; float: none; background-color: rgb(255, 255, 255); color: rgb(64, 64, 64); font-family: inherit; font-size: 1rem; font-size-adjust: none; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: bold; letter-spacing: inherit; line-height: 1.375; orphans: 2; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; -webkit-text-stroke-width: 0px; white-space: normal; word-spacing: 0px;">Endangered Species Act (ESA)</span></p></div><p>The aim of command-and-control regulations is for government to set specific limits on environmental pollution. The regulations also set out how technology can be used to control pollution. Examples of command and control regulations come from the US in the form of The Clean Water Act, Endangered Species Act and The Clean Air Act. For example, the US has government-imposed regulations on power plants to use cleaning technology in their smokestacks that removed pollutants like sulphur dioxide. There is also an Endangered Species Act that prevents the hunting of certain wild animals.</p><hr class="hidden"><p><strong>Advantages of command and control regulation</strong></p><ul><li>By using the law, it forces firms to take action that reduces the negative externalities of production that occur with the exploitation of common pool resources</li><li>It provides a set of regulations to form a national framework that reduces the environmental costs that are associated with common pool resources</li><li>Strict command and control regulations can induce firms to develop technology that allows them to meet the regulations set. This is known as the Porter Hypothesis, named after the economist, Michael Porter.</li></ul><p><strong>Disadvantages of command and control regulation</strong></p><ul><li>There are no incentives for businesses to improve the quality of the environment beyond the standard set by the law. Firms do not need to improve their production methods if they are within the regulations set.</li><li>The regulations do not distinguish between firms that find it easy to meet the standards set and those that do not. For those that find it difficult, the regulations will come with a significant cost and those firms may even go out of business which will lead to unemployment.</li><li>Like any regulation, they will increase production costs which could cause unemployment and lead to higher prices for consumers.</li></ul><h4><strong>Collective self-governance</strong></h4><p>The collective self-governance approach to the negative environmental consequences of common pool resources is based on the work of Nobel Prize-winning Economist, Elinor Ostrom. Her theory viewed government-directed regulation as bureaucratic and less effective at achieving their environmental aims as ordinary citizens working together to solve environmental problems.</p><p>Ostrom found evidence across the world of local people working together to solve the environmental costs associated with the tragedy of the commons. Left to themselves the local population would find solutions to environmental problems that met their own needs rather than those of a detached government imposing them from some distance away.</p><p><img alt="" height="206" src="../../../ib/economics/images/textbook/market-failure/lobster.jpg" style="float: left;" width="254">An example of self-governance is Maine’s fishing community that specialises in lobster. In Main’s fishing towns the local people make and monitor their own rules and have their own set of punishments for people who break the rules. The fishing territory for lobster is broken up into set boundaries decided on by the fishing community and groups known as ‘harbour gangs’ are only allowed to fish in their allocated area. This approach to dealing with common pool resources is backed by formal government regulation on catching lobsters.</p><hr class="hidden"><p><strong>Advantages of collective self-governance</strong></p><ul><li>This approach allows for the needs of local communities who know and understand the specific issues they face from common pool resources and are more likely to follow their own regulations rather than those imposed on them.</li><li>By working at a local level, the negative externalities associated with the common access resources can be targeted specifically rather than a ‘one size fits all’ national approach.</li><li>Collective agreements are more flexible than national regulations and can change as the environmental situation changes. If the lobster population suddenly declines the catch regulations can be tightened quickly.</li></ul><p><strong>Disadvantages of collective self-governance</strong></p><ul><li>Without legal backing, the enforcement of rules relating to common pool resources relies on the goodwill of participants and this may not always be present. What happens if one business in Maine decides to catch lobsters outside of its area and refuses to follow local rules?</li><li>Collective self-governance might work in the present but may not consider the future in the same way. If the incomes of people in the lobster industry start to fall, there would be pressure to catch more now which reduces the sustainability of the industry</li><li>Many common pool resource issues are global and cannot the effectively managed at a local level. </li></ul><h4><strong>Carbon tax</strong></h4><p>Carbon taxes are imposed on the use of fossil fuels such as coal, oil and gas. Carbon taxes focus precisely on one of the most significant causes of climate change by directly trying to reduce CO2 emissions from the use of fossil fuels. The tax is levied on firms based on the amount of carbon they use to produce their good or service. The tax aims to get businesses and consumers to switch to energy generated by renewable sources such as solar and wind power. Some of the taxes levied on businesses would increase the price the consumer pays, but this could be repaid to consumers through a tax credit paid from the tax revenue collected by the government.</p><hr class="hidden"><p><img alt="" src="../../../ib/economics/images/textbook/inquiry-case-example-questions/carbon-tax-on-electricity.jpg" style="float: right; width: 400px; height: 278px;">Diagram 2.52 illustrates how a carbon tax affects the market for electricity. The tax causes the supply curve to shift to the left and cause the market price to rise to P1 and output Q to shift to Q1 which is closer to the socially efficient output at Q*. The welfare loss triangle is reduced from the yellow shaded triangle to the smaller green triangle.</p><hr class="hidden"><p><strong>Advantages of a carbon tax</strong></p><ul><li>The tax focuses on a major source of climate change and acts as an incentive for firms to switch to renewable sources of energy.</li><li>Revenue raised by the tax can be used to subsidise innovation in the development of renewable energy.</li></ul><p><strong>Disadvantages of a carbon tax</strong></p><ul><li>A tax will increase the price of energy to consumers if producers pass on the tax increase. This could have a significant impact on low-income households.</li><li>As business costs are increased by the tax it reduces their profits which leaves businesses less money to invest in developing low-emission technology.</li><li>Higher production costs resulting from the tax could lead to a reduction in output and cause unemployment.</li></ul><p><strong>Tradeable permits</strong></p><p>The use of tradeable permits or carbon training is seen as an important ‘incentive based’ method for businesses to reduce CO2 carbon emissions. Air is a common access resource and tradeable permits create a market that introduces a limit to the amount of CO2 pollution that can be emitted into the air.</p><p>For detailed coverage of this policy see chapter 2.8(2) on policies to deal with external costs.</p></div><div class="pinkBg"><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4><strong>Inquiry case example - International agreement </strong></h4></div></div></div><p>The Paris climate agreement w<strong><img alt="" height="225" src="../../../ib/economics/images/textbook/market-failure/paris-agreement.jpg" style="float: left;" width="423"></strong>as finally sealed on 12 December 2015 and became effective on 4 November 2016. This is an agreement that was set to replace the Kyoto Protocol with improved measures to combat the increasing threat of global warming. It was signed by 197 countries and ratified by 187 in November 2019.</p><hr class="hidden"><p>The main components of the Paris climate agreement are:</p><ul><li>Aim to maintain global temperatures below 2.0C above pre-industrial levels and try to achieve a temperature rise of only 1.5C.</li><li>To limit greenhouse gas emissions by human activity to the level the natural environment (trees, soil and seas) can absorb.</li><li>A commitment from more developed countries to support help less developed countries by giving them financial support to reduce CO2 emissions and to adopt renewable energy.</li><li>An assessment every five years of each country's contribution to reducing CO2 emissions.</li></ul><p>The Paris agreement has been hailed as a significant move in the fight against climate change, but it was dealt a blow in June 2017 when President Trump announced the US withdrawal from the agreement.</p><p><a href="../../../media/ib/economics/images/textbook/market-failure/common-access-resources-1/climate-change.pdf.html" target="_blank" title="Questions"><img class="ico" src="../../../thinkib/icons/question.png"> Worksheet questions</a></p><h5><strong>Questions</strong></h5><p><strong>Using a real-world example, evaluate the effectiveness of using taxation to reduce the market failure of air as a common access resource. [15]</strong></p><section class="tib-hiddenbox"><p>Answers might include:<img alt="" src="../../../ib/economics/images/textbook/inquiry-case-example-questions/tax-on-electricity.jpg" style="float: right; width: 400px; height: 278px;"></p><ul><li>Definitions of common access resources and market failure.</li><li>A diagram to show how taxation can be used to reduce air pollution. This is shown in the diagram where the tax reduces the market output Q to the socially efficient level at Q*.<hr class="hidden"></li><li>An explanation of the use of taxation on fossil fuels and other methods of production that pollute the air because it is a common pool resource reduces output towards the socially efficient level and helps correct the market failure.</li><li>Examples of countries that use tax on fossil fuels and other pollutants.</li><li>Evaluation and synthesis might include the problems of using taxation to reduce the market failure of air as a common access resource such as increased energy prices for low-income households, unemployment in the energy industry and increased inflation. Answers may also include a discussion of alternative policies such as tradeable permits and regulations. </li></ul></section><h5>Investigation</h5><p><strong>With your class investigate the Paris Agreement and discuss the chances this agreement has of successfully reducing CO2 emissions and combating climate change.</strong></p></div><div class="panel" style="box-shadow: rgba(38, 0, 0, 0.3) 0px 10px 30px -15px; border-color: rgb(124, 7, 21);"><div class="panel-heading" style="background-color: rgb(124, 7, 21);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p>Thinking about a key concept - Scarcity</p></div></div><div class="panel-body" style="background-color: inherit;"><div><p><img alt="" height="197" src="../../../ib/economics/images/textbook/market-failure/private-beach.jpg" style="float: left;" width="220">The unrestricted access to common access resources means they do not display the same scarcity characteristics of other resources whose access can be controlled. The oceans, for example, do not seem to be scarce because they can be used relatively freely. In most places, people can go to the beach and swim in the sea as a non-excludable common access resource. The beach does not seem to be a particularly scarce resource. However, if you travel to some parts of the world where exclusive beach clubs, resorts and hotels have the property right over the beaches they control you can see how a former common access resource can be made much more scarce. </p></div></div><div class="panel-footer" style="background-color: rgba(124, 7, 21, 0.1);"><div><p>text</p></div></div></div><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h3>Now test yourself</h3></div></div></div><div class="tib-quiz" data-quiz-id="1049" data-structure="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" data-score-answers="6d4a526a457a48584f763758344a7649472f76324c53614b78524c393439595570496d5a5971374b38686f3d"><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is not a characteristic of common pool/access resources?</p></div><div class="q-answer"><p><label class="radio" data-answer="59417092d4b3d508b6553fff7d614c02"><input type="radio"><span> Non-excludability</span></label></p><p><label class="radio" data-answer="36c0dc07760b3ec365c44c2c13601e59"><input type="radio"><span> Increased consumption by one person reduces the availability to others</span></label></p><p><label class="radio" data-answer="40307b8c20c83463bdf0e2ae1d8ea863"><input type="radio"><span> Associated with market failure</span></label></p><p><label class="radio" data-answer="84572e312f78ebdcdc28fd8d1b7e5816"><input type="radio"><span> Non-rivalrous</span></label></p></div><div class="q-explanation"><p>Common access resources are rivalrous because increased consumption by one person reduces the availability to others.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is the best definition of sustainability?</p></div><div class="q-answer"><p><label class="radio" data-answer="c3deb02a61113481d22195a65faabb22"><input type="radio"><span> Where the use of resources in the economy meets the needs of the present generation without adversely affecting the needs of future generations</span></label></p><p><label class="radio" data-answer="06901c8836b212a1fa311ec099044f56"><input type="radio"><span> Where the use of resources in the economy meets the needs of the present generation and adversely affects the needs of future generations</span></label></p><p><label class="radio" data-answer="f6fbdb9072c437dc6b73f02389e325e3"><input type="radio"><span> Where the use of resources in the economy fails to meet the needs of the present generation and adversely affects the needs of future generations</span></label></p><p><label class="radio" data-answer="0bcc3382497c68689aad918a823ed27a"><input type="radio"><span> Where the use of resources in the economy fails to meet the needs of the present generation without adversely affecting the needs of future generations</span></label></p></div><div class="q-explanation"><p> </p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is the least likely explanation of why common pool/access resources are a market failure?</p></div><div class="q-answer"><p><label class="radio" data-answer="11c4539a9bbe04477ee82db7e2e51da0"><input type="radio"><span> Their exploitation is unsustainable </span></label></p><p><label class="radio" data-answer="ba9b88019796d6880fadfbfbc5803676"><input type="radio"><span> They are excludable </span></label></p><p><label class="radio" data-answer="abda363ea56a7e95eba63c5c97c3a536"><input type="radio"><span> Lack of property rights<span class="radio"></span></span></label></p><p><label class="radio" data-answer="d38b37eaa090e08dffac727288d6f15c"><input type="radio"><span> Their use is associated with significant external costs</span></label></p></div><div class="q-explanation"><p>Common pool/access resources are non-excludable.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following options best describes the situation where a fishing fleet does not conserve fish stocks because they believe other fleets will conserve stocks and reduce the sustainability problem of fishing?</p></div><div class="q-answer"><p><label class="radio" data-answer="09c138aa384172680eb37c64bd9c1e9e"><input type="radio"><span> Free rider problem</span></label></p><p><label class="radio" data-answer="087448d5662373a3e3e34431e4e086f2"><input type="radio"><span> Property rights</span></label></p><p><label class="radio" data-answer="e8f1ea6f264a270728028ccf9cc612d8"><input type="radio"><span> Negative externalities</span></label></p><p><label class="radio" data-answer="5050ef47d469f825ce8bdd3cf5d76826"><input type="radio"><span> Tragedy of the commons</span></label></p></div><div class="q-explanation"><p>The fishing fleet believes other fleets will solve the sustainability of the fish stocks problem and free ride on the actions of the other fleets.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is not a policy to reduce the market failure associated with common pool/access resources?</p></div><div class="q-answer"><p><label class="radio" data-answer="2e4d6de6d30c9801f49326589777a5a0"><input type="radio"><span> Tradeable permits</span></label></p><p><label class="radio" data-answer="c93b7f862af1beaa1316031445414fa6"><input type="radio"><span> Positive advertising</span></label></p><p><label class="radio" data-answer="753d84839af6e9d2572a3499a9a1af18"><input type="radio"><span> Carbon tax</span></label></p><p><label class="radio" data-answer="230de1bc2e6e0348810d20470936f582"><input type="radio"><span> Command and control regulation</span></label></p></div><div class="q-explanation"><p>Positive advertising would increase the consumption of common access resources so it is not an effective policy.</p><p> </p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is most likely to be an example of a common pool/access resource?</p></div><div class="q-answer"><p><label class="radio" data-answer="9ded7a769c14a4e73c9565057ee5826f"><input type="radio"><span> Free bus service</span></label></p><p><label class="radio" data-answer="0119ced5370c87d0246fee3be8debb6d"><input type="radio"><span> Fish in a lake</span></label></p><p><label class="radio" data-answer="e5e76b3dafe978b0d295adbf0f2df022"><input type="radio"><span> Streetlighting</span></label></p><p><label class="radio" data-answer="aa46012fe1a0724323701d7ee86723e2"><input type="radio"><span> Free healthcare check</span></label></p></div><div class="q-explanation"><p>The fish in a lake is a common pool/access resource because they are non-excludable and rivalrous.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is least likely to be a common pool/access resource?</p></div><div class="q-answer"><p><label class="radio" data-answer="8c299cb88b3dca7a0fb11f5126a2351a"><input type="radio"><span> Timber in a forest</span></label></p><p><label class="radio" data-answer="ed2113b3a0870495e45f7a903998529b"><input type="radio"><span> Water in a lake</span></label></p><p><label class="radio" data-answer="0dc7134f5a3773a376ac1d6e405113a8"><input type="radio"><span> Wifi service</span></label></p><p><label class="radio" data-answer="1e7f72cb01415f5e800f3e1e32f91ee9"><input type="radio"><span> Beach</span></label></p></div><div class="q-explanation"><p>The provider of a wifi service can make it excludable. </p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="totals"><span class="score">Total Score: 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