1. 1 The BIG ideas! Exchange Rates: summary I.b Syllabus 3.2: Macroeconomic Objectives: Exchange Rates Syllabus 34 – 41 (39-41 = HL only) Webnotes 140 – 150

2. Webnote 330 2 hhhh tttt tttt pppp :::: //// //// wwww wwww wwww.... yyyy eeee llll llll oooo wwww ssss uuuu bbbb mmmm aaaa rrrr iiii nnnn eeee rrrr.... cccc oooo mmmm webnote 140 Syllabus reference: items 34 - 41 Market fails to allocate resources efficiently to the the best benefit of society: 1. Externalities 2. Monopoly (HL) 3. Public/merit goods 4. Immobility of factors of production ( poor resource allocation)

3. Webnote 330 3 hhhh tttt tttt pppp :::: //// //// wwww wwww wwww.... yyyy eeee llll llll oooo wwww ssss uuuu bbbb mmmm aaaa rrrr iiii nnnn eeee rrrr.... cccc oooo mmmm Webnote 140 Syllabus reference: items 34 -41See Webnote 143

4. How to draw? Use ‘blue box’ Webnote 3304 See Webnote 143 Webnote 140

5. Supply and Demand for a currency Webnote 3305  Evaluate solutions See Webnote 144 Webnote 140

6. Zero pollution? Webnote 3306 See Webnote 144 Webnote 140

7. Monopoly Power…HL only Webnote 3307 See Webnote 146 Webnote 140

8. Alternative diagram… Webnote 3308  Where smc > pmc = emc Where e is external mc See Webnote 147 Webnote 140

9. Welfare loss + gain Webnote 3309 See Webnote 149 Webnote 140

10. Long run…markets must grow Webnote 33010 See Webnote 149 Webnote 140

11. The Exam question…  May 2014 syllabus 1.2 HL   1a) Analyse the private and external benefits associated with the consumption of university education. (10 marks)   1b) Evaluate the policies a government might use to increase the consumption of university education.  (15 marks) Webnote 33011 See Webnote 145 Webnote 140

12. Examples….you need to find some! Webnote 33012 Solutions to market failure: Do you have an example? Government interventionIndirect tax Government interventionTradeable permit scheme. This one is notable because it is a maket based solution. The firm has to buy the permit to pollute i.e. a quota or limit to the level of carbon emissions Government intervention Smoking ban, or a subsidy to alternative (clean) energy producers International agreement e.g. Kyoto Government interventionExtending property rights e.g. restricting large scale fishing by large factory ships by setting ‘no fishing zones Webnote 140

13. http://www.yellowsubmariner.com  Reading:  See Blink pp 139-154  AAA  But more importantly….  Your dictionary +  Your notes  End Webnote 33013 Webnote 140