Summary IB Economics, Real World Examples Unit 3 (Macroeconomics) for Paper 1
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Course
IB Economics
Institution
Complete list of real world examples covering the whole unit 3 of the IB HL Economics course. Excellent to use in Paper 1, for the 15-mark question, that requires to include examples from the real world. The document offers examples for all topics. The document was written in 2022, so most example...
Monopoly The costs of laying tracks and building networks coupled with that of buying or leasing
the trains prohibits or deters the entry of any competitor. Rail transport also fits other
characteristics of a natural monopoly because it is assumed to be an industry with
significant long run economies of scale
2. Telecommunication:
The costs of building telecommunication poles and growing a cell network would just
be too exhausting for other competitors to exist. Electricity requires grids and cables
whilst water services and gas both require pipelines whose costs are just too high to be
able to have existing competitors in the public market. However, natural monopolies are
usually regulated, and they face increasing competition from private networks and
specialty carriers.
Government Legislation and regulation:
intervention in - In response to a large public outcry to check the price-fixing abuses of these
response to monopolies, the Sherman Antitrust Act was passed in 1890. This act banned trusts and
abuse of monopolistic combinations that placed "unreasonable" restrictions on interstate and
significant international trade. Violations against the Sherman Anti-Trust Act can have severe
market power consequences, with fines of up to $100 million for corporations and $1 million for
individuals, as well as prison terms up to 10 years
- UK: CMA has the power to investigate a merger if turnover of the new firm exceeds
£70 million or the new firm has over 25% market share. The CMA (the Competition and
Markets Authority) has blocked the Sainsbury's / Asda merger after finding it would
lead to increased prices in stores, online and at many petrol stations across the UK.
- 44 US states filed a lawsuit in 2019 against 20 pharmaceutical firms for fixing prices
of over 100 common medicinal -> after 5-years investigation, they have been accused of
illegal conspiracies to raise prices (even of 1000%)
Government ownership:
- In Finland, Iceland, Norway and Sweden, government-owned companies have
monopolies for selling alcoholic beverages
- Casinos and other institutions for gambling might also be monopolized. In Finland, the
government has a monopoly to operate slot machine
- Many postal services around the world
Fines:
- China fined Alibaba record $2.75 bln for anti-monopoly violations (April 10, 2021).
The e-commerce giant had abused its dominant market position for several years
Unit 3: Macroeconomics
GDP / GNI - GDP per capita Switzerland (2021): 93,457.44 USD VS GDP per capita Nepal (2021):
1222.88 USD
- Analysts estimate that underground economic transactions account for one-third of the
total economy in developing countries and slightly more than 10% of the total economy
in developed countries
- Some estimate underground economies at 11% to 12% of US GDP in 2018
- 60 percent of the world's population participates in the informal sector
AD and AS (and - Covid-19 has caused a drop in consumer and business confidence → decrease in AD
its determinants) - Household debt has risen by 15% in Germany during 2020 (pandemic)
- Change in trade policy: Brexit
- Supply shock: 1970s OPEC placed an oil embargo on some Western nation, causing a
supply shock in such countries
- R&D by Samsung in South Korea shifted LRAS to the right
- Italy: In 2019, business confidence fell to the lowest in 4 years, consumer confidence
also fell = recession
Unemployment - Unemployment rate – Qatar: 0.1%, Niger: 0.5%, Italy: 9.8%, Japan: 2.3%, US: 3.9%,
Brazil; 12%, South Africa: 28.5%
- Inefficiency: share of involuntary part-timers in labor force: Italy – 10.8% in 2020
- gender wage gap at median – Japan: 22.5% in 2020, Korea: 31.5 % in 2020
Structural - Change in structure of economy during Covid-19 → digital economy
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