I’ve been hard at work the last two weeks creating new tools for the Introductory Economics students preparing for their AP, IB, or other exams this month. My latest addition to my website, Econclassroom.com, is Flashcards for all the key terms in the AP and IB Econ syllabuses. The flashcards also work very well on mobile devices (Android, iPhone, iPad), and can be easily accessed from my new Mobile App, available for various devices here: EconClassroom.com – the Mobile App.
You can study flashcards from the entire syllabus or from one unit at a time. You’re presented with ten flashcards at a time, which you should try and master before clicking the “shuffle” button to get ten new flashcards from the unit you’re studying. The cards always appear in random order. If you wish to review key terms in alphabetical order, you are best served by another recent addition to Econclassroom.com, the dictionary.
If there are any key terms or concepts you think could be added to the dictionary or the flashcards, please log in and leave a comment on the page for the unit you think a term should be added to, I will respond to all comments quickly with the addition of the terms requested!
Visit my new site, The Economics Classroom, for review videos, an Economics glossary, worksheets and practice activities and countless other resources to help you prepare for your exams in Introductory, AP or IB Economics. Or go straight to the Economics Exam Review page.
In my original “Golden Balls” blog post (see below), written almost three years ago after I saw a clip of the finale in an episode of the British game show, Golden Balls, I analyzed the actions of Sarah and Steve, who had to decide whether they would split or steal a jackpot of 100,000 British pounds. The contestants had one minute to try to convince one another that they would split the money; but when it came down to it Sarah stole and Steve split, meaning Sarah got to keep the whole jackpot and Steve went home with nothing.
In that original post, I proposed that Steve’s best chances for going home with any money would have been “for him to use the one minute of discussion time to convince Sarah that he would choose SPLIT, yet be willing to go home with something LESS THAN $50,000 and accept that Sarah was going to choose STEAL. He could have threatened to chose steal if she did not agree to share her winnings with him to some extent.”
In a recent episode of the same game show, a contestant followed a similar strategy to that I suggested Steve should have taken. Watch the clip below, from a February 2012 episode of Golden Balls.
In this episode, Nick immediately takes control of the negotiations by insisting that he is going to steal, which is a very unorthodox approach to this game, in which the traditional strategy is to try and convince your opponent that you are going to split. By establishing a credible threat to steal, Nick puts all the pressure on Ibraham to decide only one of two things:
Does Ibraham trust that Nick will split the money with him after he has stolen the full jackpot, and
Would Ibraham rather both of them go home without any money at all than Nick win the jackpot and possibly not split it with him later on?
Nick’s strategy is brilliant. By the end of the negotiation, Nick has convinced Ibraham 100% that he is going to steal the money. Ibraham may only have had a confidence level of 50% that Nick was honest about splitting the money with him after the show, but with a 50% confidence level, Ibrahim’s possible payoffs are:
Choose steal and go home with nothing.
Choose split and have a 50/50 chance of going home with half the jackpot (based on his level of confidence in Nick’s promise to split the money after the show).
In other words, with a jackpot of 14,000 pounds, the payoffs for Ibrahim became:
If he splits: 0 pounds or 0.5(14,000) = 7,000 pounds
If he steals: 0 pounds or 0 pounds (assuming his confidence level in Nick’s intention to steal is 100%).
Clearly Ibraham now has a dominant strategy: to split. In the typical version of this game, a player’s dominant strategy is always to steal (as explained below), since the possible payoffs are:
If you split: 0 pounds or half the jackpot
If you steal: 0 pounds or the whole jackpot.
But because Nick has convinced his opponent that he will steal, and then split the winnings, Ibraham’s dominant strategy shifted to split, since the possible payoffs have changed. Ultimately, Ibraham does what is most rational given his confidence in Nick’s threat to steal, and that is to split. Ibraham then chooses split (as he should), but then to everyone’s surprise, Nick chooses split, not steal as he had threatened to do throughout the negotiation. This a surprising twist, since from Nick’s perspective stealing is clearly now a dominant strategy! Nick had convinved Ibraham to split, which means Nick faced a greater payoff by stealing. But by splitting, Nick shows that he had intended to split all along, but first needed to convince Ibraham otherwise to establish splitting as Ibraham’s dominant strategy.
-
What a thrilling game! I won’t even bother getting into how this relates to economics today, I’m still shaking with excitement over the outcome!
Rarely does such a perfect illustration of the Prisoner’s Dilemma come along for Econ teachers to use in their classroom:
The payoffs are clear:
Each player has a weakly dominant strategy, which is to choose to steal.By choosing to steal, the player has a chance at maximizing his own payoff, but will do no worse than he would if his opponent also chooses to steal and at least will have the satisfaction of thwarting his opponent’s attempt to steal the money.
There are three Nash equilibria in the game, which are outcomes at which a player can not do better on his or her own by changing his or her strategy. The outcome Steve was hoping for by chosing “split” (50/50) was not a Nash equilibrium because Sarah knows she can do better if she chooses steal when Steve chooses split. Steve doomed himself by choosing split because he should know that Sarah’s dominant strategy is to choose steal. However, Sarah would also have doomed herself by choosing split because she should assume that Steve would also chose steal since steal is a dominant strategy for him too.
John Nash, who pioneered the field of Game Theory, assumed that humans were coldly rational, self-interested, deceptive creatures that would not hesitate to stab one another in the back to get what was best for themselves. His theory of human behavior is only partially proven correct in this game, in which Steve is shown to be the sucker and Sarah the coldly rational self-interested player. The best chance for Steve to go home with any money would have been for him to use the one minute of discussion time to convince Sarah that he would choose SPLIT, yet be willing to go home with something LESS THAN $50,000 and accept that Sarah was going to choose STEAL. He could have threatened to chose steal if she did not agree to share her winnings with him to some extent. Then again, any promise Sarah makes she could later break, thus further empowering the players to choose steal.
Discussion questions:
What in the world is going on here? Why did Sarah choose steal rather than collaborate with Steve and share the $100,000?
Was Steve totally wrong to choose split? What would you have done in his situation?
How do the choices faced by Steve and Sarah relate to the choices faced by firms in oligopolitic markets? Now that you’ve seen this video, can you explain why collusive agreements between oligopolists often fall apart? Why do cartels such as OPEC often fail to achieve the high price targets agreed upon in meetings of their leaders?
Since September 2011 I have been producing and publishing around three video lessons per week covering the topics I’m teaching in my three Economics classes at any given time. With an AP Macro class, a year 1 and year 2 class going on all at the same time, this means I’ve been making videos covering everything from linear supply functions to protectionist quotas to monetary policy.
This week I posted my 50th video lesson. Since I began producing lessons on my YouTube channel, they’ve been viewed over 35,000 times and nearly 200 people have subscribed to my YouTube feed.
If you haven’t checked out my new website, The Economics Classroom, consider subscribing to the weekly newsletter from that site. You’ll receive one email a week with links to the latest videos covering Micro, Macro and International concepts. In addition, I’ve been creating and posting free worksheets, practice activities and even unit quizzes and tests to the resource page.
If you’re wondering what my videos are like, check out the one I posted tonight to introduce the new IB Year 1 unit on Theory of the Firm, which I’ll start teaching on Tuesday this week!
If you’re a regular visitor to this blog, you’ll notice that over the last month or so, I have begun posting many video lectures to YouTube and including them in lessons and activities on this blog. My adventures in the “flipped classroom” model of instruction has proven extremely successful, as I have heard much positive feedback from students who have found the videos useful reinforcement for our regular class activities and a helpful tool for revision.
As this project has developed, however, I have begun to notice that this blog has turned into more of a video hosting site and less of what it has always been, which is a written journal of economic analysis targeted at the high school economic student. While I have begun making video lectures, I do not want to neglect the traditional form of blogging that has guided my activities on this site for almost five years.
Therefore, I have decided to add a new site to the selection of resources already available through Welker’s Wikinomics. As of tonight, I have created The Economics Classroom, a website built exclusively for my video lectures. From now on, all video lectures uploaded to YouTube will be published on the new site, at www.econclassroom.com.
Videos will be organized in categories based on the five units of the IB Economics syllabus: Intro, Micro, Macro, International and Development Economics. Much like blog posts on this blog, videos posted to the Economics Classroom will include discussion questions or in-class activities for students to complete on their own or during class with their peers and their teacher’s help.
Please visit the Economics Classroom and enjoy the videos that are there. Currently, only about 17 video lectures have been posted, but I am recording on average three per week, and by the end of this year I anticipate there will be around 100 lectures available on the site. Over the next two years, I will record over 150 lectures covering every topic from the IB and AP Economics syllabuses.
Leave your feedback on the posts. Join the discussions that are already going on on some of the posts. Tell your friends, your teachers, and your students about the site! The more people who use it, the better it will become!
The activity below is to introduce Economics students to the three primary Macroeconomic objectives of any government or policy making body. These are :
Full employment of the nations work force: This means that nearly everyone who wants to work in the country is able to find a job. It does not mean that there is no unemployment, rather that the unemployment that does prevail in the economy is voluntary, i.e. it exists because workers are simply not willing to work at the prevailing wage rate. If there is involuntary unemployment in the economy, then the country is not meeting its macroeconomic objective, and there is likely a recession caused by a lack of overall demand (aggregate demand) for the nation’s goods and services.
Resources for learning about Full Employment:
Textbook (Welker’s IB Economics for the IB Diploma) pages 286 – 288, 295-299.
Price level stability: Changes in the average price level of goods and services in the nation are measured by calculating inflation, commonly using a consumer price index to do so. Low and stable inflation is one of the macroeconomic objectives since price level volatility (high inflation or deflation) has several harmful effects on a nation’s households and business firms. Keeping inflation low and stable promotes a healthy environment for achieving business investment, full employment and economic growth
Resources for learning about Price level stability:
Economic growth: The third macroeconomic objective is to increase the output of the nation’s goods and services year after year. Economic growth refers to the increase in real Gross Domestic Product (GDP) and can be measured by finding the total value of a nation’s output one year, comparing it to the previous year, and adjusting it for any changes in the price level between the years. Economic growth is a desirable goal because it generally means that incomes are rising and people’s lives are getting better. Of course, GDP only measures the physical output of goods and services, and does not include many non-economic variables that also should be considered when measuring people’s well-being. But rising incomes and output are deemed worthy goals since they are associated with rising living standards.
Assignment: Complete the readings and online activities above. Then use the data in the table linked below to answer the quesitons that follow.
Questions:
Calculate the unemployment rates for each of the years in the table. Describe what happened to unemployment over the years displayed.
Calculate the inflation rates between each of the years in the table. Describe what happened to inflation over the years displayed.
Calculate the Real GDP for each of the years in the table.
Calculate the Real GDP growth rates between each of the years in the table. Describe what happened to real GDP from one year to the next in the years displayed.
Describe the relationship between the inflation and unemployment rates you calculated for each of the years. Is there any correlation in how the figures change from year to year?
Based on your analysis of the data above, to what extent has the United States succeeded in achieving its three macroeconomic objectives of:
It’s been a long road to this day, September 8, on which what I truly believe is the best IB – specific Economics textbook ships from Pearson’s warehouses in the UK. Pearson Baccalaureate’s Economics ships today, so if you haven’t already, order yourself an evaluation copy from the Pearson website. If you like what you see, consider ordering a set for your classes!
From the Pearson website:
An exciting new textbook with integrated online learning resources. For students and teachers of the International Baccalaureate Diploma, written and developed by practising IB teachers.
Specifically written for the new 2011 syllabus
Makes clear connections to real world eventsto build conceptual understanding
Provides analysis of economic concepts in light of recent global economic data
Extra student practice questions for new HL quantitative methods
Lively writing to stimulate interest, with clearexplanations to promote understanding
Suitable for use with both SL and HL courses
Gives clear links to TOK throughout
Enables exam-style assessment opportunities
Provides guidance on Internal Assessmentand the Extended Essay
And if you’re and AP teacher and feeling left out, please don’t, because my other new book, REA’s AP Macroeconomics Crash Course, also ships out this month!
REA’s AP Macroeconomics Crash Course is the first book of its kind for the last-minute studier or any AP student who wants a quick refresher on the course. The Crash Course is based on a careful analysis of the AP Macroeconomics Course Description outline and actual AP test questions released by the College Board.
Written by an AP teacher, our easy-to-read format gives students a crash course in Macroeconomics. This review will prepare you for test day by focusing on important topics frequently seen on the AP Macroeconomics exam.
Unlike other test preps, REA’s AP Macroeconomics Crash Course gives you a review specifically focused on what you really need to study in order to ace the exam. The introduction discusses the keys for success and includes a list of terms all AP Macroeconomics students must know.
The targeted review chapters are grouped by topics, offering you a concise way to learn all the important ideas, facts, and terms before exam day. The author gives you expert test-taking strategies to conquer the multiple-choice and free-response questions on the exam. No matter how or when you prepare for the AP exam, REA’s AP Macroeconomics Crash Course will show you how to study efficiently and strategically, so you can boost your score!
To check your test readiness for the AP Macroeconomics exam, either before or after studying this Crash Course, take our online practice exam. To access your free practice exam, visit www.rea.com/crashcourse and follow the on-screen instructions. This true-to-format test features automatic scoring of the multiple-choice questions and detailed explanations of all answers. Our diagnostic analysis will help you identify your strengths and weaknesses, so you’ll be ready on exam day!
The following lesson is a great way to start an IB or AP Economics class for the year. I just tried it this morning for the first time and it went great!
Instructions:
Before your Econ students arrive for their first full class meeting, remove chairs until there are only half as many as you will have students. I stuck mine in the library, well out of view of the students coming to my class.
Tell students that the custodian removed the chairs for repairs, or they were taken to another room for a presentation or something. Anyway, you don’t know when they’ll come back and it may be a couple of weeks.
For now, we are stuck with this many chairs, and we have to figure out a way to resolve this problem!
Tell the students it’s up to them to decide how our limited number of chairs will be allocated. Have them brainstorm solutions out loud while you write their suggestions on the board.
Try to come up with 6-10 possible solutions, then have the students vote on the one they would like to see enacted. They can only vote once! Write the tallies next to each option on the board.
If there is a tie for #1, have the whole class vote between the two or three options you’ve narrowed it down to until there is one clear winner.
The Economist’s Solution:
Once the students have voted on their favorite solution, share with them theeconomist’s favorite solution. It is known as a sealed-bid auction.
Give each student a slip of scrap paper and have him write two things: 1) His name, and 2) the maximum price he would be willing and able to pay each class period to have a chair to sit on.
Collect the results, and in front of the students, organize their bids from highest to lowest. If there is a tie on the margin, have the students whose bids were identical bid again, writing their highest price on the back of the same slip of paper, then re-rank.
The students with the highest bids will get a chair! For example, I had 17 students, and only 8 chairs. The highest bid was $10, while three students were not willing to pay anything. Four kids were willing to pay $1, but there were only two chair left at that point. When they re-bid, one was willing to pay $2, one $1.75, $1.25 and $1.20. Therefore, the two remaining chairs went to the students willing to pay $2 and $1.75.
Finally, tell the winners that they can take a seat, and that everyone else must stand! At this point, of course, you can send the lowest bidders out to fetch the missing chairs and begin your debrief.
Economic concepts illustrated by the Scarce Chairs exercise:
When faced with scarcity, a system must be decided upon to ration the scarce items.
The systems we decided upon ranged from a lottery to first come first serve to a merit-based system.
Something that is scarce has value:
Everyone wanted a chair, yet they were limited. Because the chairs provide us with benefit, we value them, and are therefore willing to pay to have one.
Value is a function of scarcity. The scarcer something is, the more valuable it becomes (gold), while less scarce items are less valuable (drinking water).
Equity means fairness, while efficiency requires that resources go towards their most socially optimal use, so that those who value something most end up getting that which they value.
The tradeoff between equity and efficiency is a major theme of the IB Economics course.
What is most efficient (an auction to determine who is willing to pay the most for the chairs) may not be equitable (or fair).
When the richest students end up in the chairs, those with lesser ability to pay feel that they’ve been treated unfairly.
A lottery in which names would be drawn from a hat to determine who gets a chair is certainly more equitable, but is actually less efficient, since those who get the chairs may not be those who place the greatest value on having a chair.
Auctioning the chairs assures that those who value them the most will end up getting them, therefore resources are allocated most efficiently.
It has been quite some time since I have posted regularly to this blog, but that has been for good a reason. Over the last 15 months I have been working hard on two major projects, one IB Economics textbook and one AP Macroeconomics textbook. Both books will be published at the end of the summer and ready for students and teachers to use during the new school year.
With these exciting and exhausting projects now coming to an end, I have begun to turn my attention once again to this blog and the other online resources that presented me with the amazing opportunities to write two textbooks in the last year. You will notice right away that this blog, and my home page, have a new look to them. This is my attempt to improve this site’s “brand” and bring the design into the new decade!
In addition to re-designing the blog and the homepage, I have also begun to re-design the very popular Lecture Note / Study Guide sets that so many students and teachers have ordered over the last couple of years. The IB Economists out there will know that starting this fall, the IB will launch its new curriculum for the incoming 11th graders, who will sit for the new IB Economics exam for the first time in May of 2013. The text I am just finishing up, Pearson Baccalaureate’s Economics for the IB Diploma, is written specifically based on the new IB syllabus. With its launch, of course, my old lecture notes and study guides will be out of date, so my next project is to bring those popular resources up to speed with the new IB curriculum. The new bundle will include 24 separate PowerPoint Lecture Notes (also available in pdf format for students). I expect these resources to be ready by September or early October, so please stay tuned. Below is a preview of the new slide designs, from Unit 1.1 “Introduction to Economics”.
In addition to a new website design, updated PowerPoint Lecture Note / Study Guides, and two textbooks coming out, I have also recently created a new Facebook profile specifically for readers of Welker’s Wikinomics. If you’re like me, you probably get most of the important information in your life off of either Facebook or Twitter these days, and you can’t be bothered to go to some dude’s blog every day to see what he’s writing about. Now you follow Economics in Plain English through either Facebook, Twitter, or RSS. In addition to the weekly posts on the blog, I will also post many other articles and links to the Facebook page as I stumble upon them in my own online activity. Please friend Welker’s Wikinomics on Facebook, and if you’re not already, consider following me on Twitter too (jasonwelker).
In the mean time, enjoy your summer! I am looking forward to meeting my own group of new IB and AP Econ students in the fall, and also anyone else who happens upon the blog during the upcoming semester!
All IB schools who are part of the the May examination session are now in the last week of class, before the study sessions and final examination period begins. Exam strategy is now perhaps even more important than actual study and can lift your marks. These comments refer to SL – Paper 2 and HL Paper 3 commonly known as the Data Response papers. These hints are obviously of my own opinion and reflections and not those of the IB Organization.
Here is my top 10 hints…
Before the exam…
Revision. As for all of the other papers, make sure you have been through the syllabus and have throughly checked and know that you understand each part of the curriculum. I encourage my students to create bit size revision notes on the essentials of each subtopic throughtout the duration of the course.
Definitions. Consider what key words are required to explain the definition. Try rote learn the 10 most important definitions for each big topic, and ask you teacher to for a list of what concepts might be covered in each section of the course. Make sure you consult a good textbook for clarification on definitions.
Practise reading articles: Ask your teacher for some practice data response questions. Practise reading the questions and then searching the article for some supporting data to help explain your answer. The articles have been chosen because they highlight certain events. You need to find the piece of data or a quote that could pick.
During the exam…
Manage your time: In the data response examination you have to complete three questions, each worth 20 marks. Therefore you have 60 marks in total over 120 minutes. Therefore try not spend more than 2 mins per mark. So for the evaluation question d, try to allow about 16 minutes, but not too much more. Remember this exam requires lots of reading time, so factor this in to your time management.
Pick the questions early: You need to obviously choose 3 of the 5 options to answer. I encourage my students to read the part d question of each paper first, and then gauge if you can answer the question. If you are less confident in the question d questions available then perhaps choose a different question. These questions are worth 8/20 and therefore carry a slightly higher importance.
Read each question carefully: Within the question there are always trigger words. If the question is about currency then you probably need to analyse the foreign exchange market. If the question mentions recession then consider drawing a NeoClassical diagram with a recessionary gap. The command word will usually be explain which means examine and describe the component parts of the concept.
Labeling Graphs: Graphs are a crucical part of questions b and c. You need clearly label graphs to ensure that they relate specifically to the material in the extract. Remember each graph has a particular set of labels. Try revise the difference between, exchange rate graphs, AD/AS graphs, Labour Market diagrams or a Lorenz Curve.
Explaining Graphs: Question B and C are always worth four marks and follow an standard format. Two of these four marks will be attributed to the graph and two to the explanation. Therefore check that you have explained the graph by identifying the related causes that have lead to the change. For instance… the demand for exports has fallen, leading to a fall of the demand of the currency, leading to a shift of the Demand for Euro to the left, which ceteris paribus, will lead to an appreciation of the Euro against the Yen as illustrated on the graph. The explanation does not need to be long but precise and use appropriate terminology.
Evaluation: Question D will always ask you to evaluate a statement or policy that is mentioned in the extract. The question will be graded according to criteria levels. To attain Level 1 you need to have recognized the concepts in the question and perhaps attempted a definition, or discussed the idea. To attain Level 2 you need to explained these concepts in some depth and have tried to apply the concept to material presented in the extract. Evaluate means that you have to go further than purely explaining the concept this is required for a Level 3 response. For instance if the question is about “evaluating the introduction of tariffs into Malaysia” you will need to explain the effects of the decision on stakeholders such as consumers and domestic producers, perhaps consider the long run and short run impacts and consider the advantages or disadvantages. Finally to attain the highest grade to need to make some judgement on what the main point of arguement is. All of these aspects are considered effective evaluation. Given the time constraints of the exam you will be rewarded for using one or more of these approaches, but I think the final judgement and using material from the extract is most important. Without references to the data you wont attain higher than Level 2.
Proofread: If time permits try go back and double check your graphs for any obvious glaring errors and fix labels and arrows. Try to fix any common mistakes such as suggesting that the curve shifts to the right instead of the left.
If you have any further comments, questions or other hints please add them below
economist’s favorite solution. It is known as a sealed-bid auction.
