WORKSHOP PARTICIPANTS TASK

1. Record changes to the current IA guidelines to relect the new IA guidelines in the
rectangles below.

2. Complete the exercise in writing economics commentaries 2013.

3. Assess a commentary using the new criteria.

PORTFOLIO OF ECONOMIC COMMENTARIES (2010-2011)

Introduction

During your study of IB economics you are required to complete four economic commentaries over the
course of two years.

2013 First examinations changes

________________________________________________________________________________________

Requirements

 Each commentary must be between 650 – 750 words each.

 The commentary must be based on extracts from a newspaper, a journal, the World Wide Web – but
must not be from television or radio broadcasts.

 Extracts must be drawn from 4 different sources and must relate to current events (i.e. may include
material published up to 6 months before the start of the course).

 Length of article should not be more than 2 pages; the shorter the better for easy identification of key
issue. For long articles, it is better to highlight the relevant section for easy reference of your
analysis.

 Students must select their own articles and cannot be given the article by a teacher.

 Explain the linkages between the extract and an economic theory taken from the section of the syllabus
on which the commentary is based.

 Demonstrate economic insights into the implications of the extract (should provide evidence of your
ability to evaluate current events from the point of view of an economist).

 3 of the 4 commentaries must have their focus on a different area of the syllabus.

 A commentary must not be completed collaboratively.

 Teachers can give advice to students on a First Draft of each portfolio commentary. The advice can be
verbal or written and can indicate how the work could be improved. If the advice is written the teacher
must not extensively annotate or edit the student’s draft. Students may rewrite their work in line with
the teacher’s suggestions but cannot rewrite their work more than once. The second draft handed to the
teacher must be the final one.
2013 first examination changes

_______________________________________________________________________________________
Current Assessment Criteria

Assessment criteria Very high

a) Rubric requirements (0 – Each commentary meets the word limit of 650 to 750 words and covers the
2 marks)* nominated section of the syllabus

b) Organisation and The extract is chosen from an appropriate source AND the commentary
presentation (0-4 marks) piece is well organized and presented. The student makes effective use of
diagrams in the commentary piece.

c) Use of economic The commentary consistently demonstrates appropriate use of economic

terminology (0-5 marks) terminology. Terms requiring definitions are correctly defined.

d) Application and analysis Relevant concepts and theories have been identified and have been applied
of economic concepts and and analysed well.
theories (0-5 marks)

e) Evaluation, judgment, In the commentary, the student demonstrates evaluation of the economic
critical awareness (0-4 theories and concepts applied to the extracts throughout the commentary in
marks) a consistent and integrated manner.

*All words are included in the word-count including headings, references, diagram labels and direct
quotations from the extracts. Footnotes are included in the word count.
 In all cases, the source and publication date of the extract must be indicated as follows:

Author’s Name, (date), Title, Journal Title, Pages

 If the Internet is used to select the extract then the above referencing system must be used to identify the
original source.
 Any reference to the Internet should cite the Uniform Resource Locator (URL).
For example, http://curia.ucc.ie/info/net/acronyms/acro.html
 The extract MUST be included in the commentary word file. If your article is not downloadable from the
internet then you must scan your article. When scanning use giff or jpg file types to reduce the electronic
size of the article. An abstract of the extract is only required where the extract is not in the candidate’s
registered IB language (i.e. where it is in any language other than English).
2013 first examination changes
 EXERCISE IN WRITING ECONOMIC COMMENTARIES (2011)

The following formula will help you to analyse your media extract and to write a coherent economic
commentary.

Criterion a - Have I met the word limit for each commentary is met along with the portfolio covering at
least three sections of the course?

Criterion b - Background (40-80 words) - a short paragraph to summarize the key issue of the article. Is
the article appropriate and what diagram or diagrams can I effectively use? (Or extract a section of the
article and focus on it).

Criterion c – Find at least 2 but no more than 4 key terms and define them. Are you accurately using them
in your commentary?

Criterion d – What is the specific theory or theories that applies to the events in the article?

Criterion d – Analysis - Apply the specific theory to the article

 Application of concepts/principles/theories to the key issue (200 words) - Explanation with diagrams,
any alternative explanations?
 Implications and economic insights (100 words) - Any change in economic variables; any problems
caused; possible solutions; effects or costs of the problems
 Use at least one diagram.

Criterion e – Evaluate the events and the theory in the extract

 This is by far the hardest part. When you evaluate you are doing the following things:

 Debating the pros and cons of the articles key premise.

 Assessing short term impacts versus long term impacts
 Discussing the effects on stakeholders (producers, consumers, unions,
shareholders, government etc)
 Prioritise the arguments
 Does the theory hold true – if not why not

 Evaluation (200-300 words) – Your own justified viewpoint (Conclusion); what are the underlying
assumptions of the author? Any alternative explanation or other reasons for the problems besides those
mentioned by the author? Did the author make any conclusion/argument that is unsound or not
convincing? Critically evaluate the solutions offered by the author; did the solutions work?

Task – 20 Marks

Using your answers to the questions posed above, put your answers together to form a completed economic
commentary.
EXERCISE IN WRITING ECONOMIC COMMENTARIES (2013)

The following formula will help you to analyse your media extract and to write a coherent economic
commentary.

Criterion a -

Criterion b -

Criterion c –

Criterion d –

Criterion e- Evaluate the events and the theory in the extract (4 marks)

 This is by far the hardest part. When you evaluate you are doing the following things:

 Debating the pros and cons of the articles key premise.

 Assessing short term impacts versus long term impacts
 Discussing the effects on stakeholders (producers, consumers, unions,
shareholders, government etc)
 Prioritise the arguments
 Does the theory hold true – if not why not
 Is my conclusion balanced?

 Evaluation (200-300 words) – Your own justified viewpoint or conclusion; what are the underlying
assumptions of the author? Any alternative explanation or other reasons for the problems besides those
mentioned by the author? Did the author make any conclusion/argument that is unsound or not
convincing? Critically evaluate the solutions offered by the author; did the solutions work?

Criterion f-

Task – 14 Marks
Rising petrol costs making us carless
By Bridie Smith
The Age March 8, 2006
Motorists are changing their driving habits as
rising petrol prices continue to bite into the
household budget, according to a global survey
released yesterday.
The online survey conducted by ACNielsen polled
more than 23,000 people in 42 countries on the
impact of rising fuel prices.
Of the more than 500 Australian respondents,
more than 60 per cent said they were using their
vehicle less, and just under 30 per cent reported
they were cutting down on other non-essential
living expenses to accommodate petrol costs.
Some motorists reported more drastic measures,
with 8 per cent of Australians opting to buy a
more fuel-efficient car, and 1 per cent getting rid
of their car all together.
Nicole Torkar, executive director of Customised
Research at ACNielsen, said the shift in motorist
behaviour was revealing.
"The proportion of people shifting their behaviour
is significant," she said. "It shows people are
trying to cope with the impact by monitoring their
behaviour, and you would anticipate that if prices
continue to rise, then car pooling and public
transport usage would increase."
But despite the hit to the hip pocket, the survey
showed that more Australian motorists were
changing their driving habits rather than turning to
public transport.
"Our opting for public transport is actually lower
than the global average," she said.
The survey showed that 19 per cent of Australian
motorists said they were using public transport
more, compared with the global average of 24 per
cent.
The survey, conducted last November, also found
that more than half of Australian motorists were
trying to be more economical with their car use by
combining trips.
Yesterday the average price of unleaded petrol in
Melbourne was $1.18 a litre, with the highest
bowser price $1.29, according to the RACV.
RACV spokesman David Cumming said he was
not surprised that drivers were trying to rely less
on the car.
"It clearly is having an impact," he said.
"The public hasn't accepted higher prices. They
don't like it, and they do want something done
about it."
But despite the petrol price rises late last year, Mr.
Cumming said there was virtually no evidence of
a downturn in fuel sales last year.
Profit picture sharper as flat-panel TV sales boom

Vanda Carson
The Age June 7, 2007

(have one) so we have at least four years of sales

ahead of us." He also attributed the sales growth
STRONG demand for flat-panel televisions is to the increase in people living alone.
boosting sales and profit for electrical retailers,
including Harvey Norman and JB Hi-Fi.

Figures show flat-panel TV sales rose 55 per cent

in the first five months of the year, compared with
last year.

The higher price of the televisions compared with

traditional sets guarantees higher profit margins.

According to market research company GFK,

retailers sold 357,000 flat-panel TVs worth $700
million in the first five months of the year,
compared with 240,000 conventional sets worth
just $60 million.

The average price of a flat-panel TV is $1900,

compared with $250 for an older-style television.

Sales of these so-called "box" TV sets are down

41 per cent on last year, and they are expected to
slump further.

The figures were compiled from sales submitted

by mass-market retail stores including
Retravision, the Good Guys, Bing Lee, Myer,
Dick Smith and specialist audio-visual stores.

Sales are expected to peak again before the rugby

World Cup in France in August.

JB Hi-Fi chief executive Richard Uechtritz said

TV purchases were vital to his company because
they were part of the biggest product category in
terms of value. And they produced a better profit
margin than DVDs, CDs and computer games.
Sales were continuing because prices were
coming down as new technology was released, he
said.

"We had a good (first) six months of the year,

we've traded strongly over that period in flat-
screen TVs," he said yesterday.

He said there were plenty of opportunities to

increase the number of households with the latest
technology. "Only 20 per cent of household's
Commentary Number 1

Price elasticity of supply (PES) is the responsiveness of quantity supplied to the changes in
the price given. Two major factors that affect the PES of a good are time and availability of
producer substitutes. Time influences PES of a good, as the shorter the time period, the more firms are faced
with difficulties in controlling the production of the good. For example, assuming surfing suddenly becomes
"in thing" which implies demand for surfboards would relatively rise, the shorter the time period the harder
the firms will find to expand the production of surfboards. As a result the quantity supplied becomes
insensitive to a price change, which is to say the PES of surfboards is inelastic. In the longer term, new firms
come into the market, and the existing firms manage to expand production to an adequate level, which
consequently makes the PES of surfboards elastic. Availability of producer substitutes (goods that a producer
can easily produce as alternatives) also affects the PES of a good. If a product has many substitutes then
producers can quickly and easily alter the pattern of production regarding to the price changes. The theory
also applies for when a product has fewer or no substitute available. If a good has no producer substitute, the
producer has to carry on producing at the same price or withdraws from the market when a price changes,
since he would find it difficult to respond flexibly to the variation of prices. In this case, PES of such a good
is very inelastic.

The price elasticities of both demand and supply of oil, in this case, tend to be very inelastic. Firstly, there
isn't any consumer/producer substitute available for the production of oil. Producers and consumers would
find it hard to switch to any alternative, due to the large use of oil in many different industries. Furthermore,
the price affecting factors such as the snowstorms and the strike are influencing the oil industry in the short
run, which contributes to the PES of the oil being inelastic. The US demands heating fuels instantly after the
snowstorms regardless of its price, as it is a necessity during the cold weather. Necessities are generally
bought at whatever price, as they tend to have very inelastic price elasticity of demand. Therefore an
immediate increase in the oil price would barely reduce the quantity demanded, due to its low elasticity.

The price rise is mainly because of disturbance by the strike in refining and shipping
operation, and of snowstorms in the United States. As seen in Fig.2, the strike has shifted the supply curve to
the left reducing the general supply level, because of disruption to the oil suppliers. The snowstorms in the
US contributed to a sharp increase in the demand for heating fuel, which lead the demand curve to shift to its
right.

As a result of these changes, the equilibrium price has gone up from p1 to p2, and the quantity supplied has
decreased from ql to q2; meaning that less of the product is being bought at a higher price. However, these
on-going changes are only in the short run, therefore after a certain period of time, for example in this case,
after the impact of the snowstorms fades away and the strike is over, the curves will eventually find a new
equilibrium.

At the moment, because of the present political situation, the market is very cautious. The oil prices could
fluctuate at anytime. If the US should declare war on Iraq, there would be
procurement demand for oil, which could boost up the price of oil extremely higher than it has
usual level because more oil is being demanded and the PES of oil is very inelastic due to the short time
period. The current situation, where Venezuela might increase its crude oil output and the cartel is continuing
to supply above the official production limit whilst the demand for the oil escalates, could depreciate the price
of oil, and such overproduction is alarming as it could also lead to depletion of the resource itself.
Oil prices shoot up
From correspondents in New York
July 28, 2006 06:16am
OIL prices shot higher overnight as jitters
about supply disruptions in Nigeria added to
concerns about the Middle East and US
gasoline reserve levels.
New York's main contract, light sweet crude for
delivery in September, climbed 60 cents to 74.54
dollars per barrel in closing trades.
In London, Brent North Sea crude for September
delivery won $US1.01 to settle at $US75.01 per
barrel.
"The market is concerned about what's happening
in Nigeria," said Phil Flynn at Alaron Trading.
"The threat is driving the prices up."
Crude production in Nigeria has been slashed by a
total of 675,000 barrels per day, or 26 per cent of
the country's normal daily output, a source close
to the oil sector said overnight.
Nigeria produces 2.6 million barrels of oil per day
under normal conditions, but a series of attacks by
separatist rebels on oil companies in the Niger
Delta region has hit the industry hard since the
start of 2006.
The attacks, coupled with a recent leak in a
pipeline run by Royal Dutch Shell, has slashed
output.
The situation in the Middle East remained a worry
as well, Mr. Flynn said.
"In Iran, the oil minister said that Iran would not
cut exports if Syria was attacked but the market
does not seem to be very convinced," he said.
Other factors included strong demand for petrol in
the US, Sucden analyst Michael Davies said.
Over the past four weeks, US demand for petrol
has risen by 1.8 per cent from the same period in
2005, the US Department of Energy said
yesterday.
This showed "once again that high pump prices
are not hurting demand", Mr. Davies said.
Petrol statistics are under heightened scrutiny
because of peak US demand as many Americans
hit the roads for their summer vacations.
The DoE said yesterday that petrol stocks dropped
by 3.2 million barrels to 211 million in the week
to July 21, while the market had expected no
change.
US crude oil inventories were stable at 335.5
million barrels. Analysts had forecast a fall of
500,000 barrels.
"Product demand is the key to the fundamentals of
this (oil) market, which is underpinned by tight
spare capacity for complex refining and light
sweet crude," Calyon analyst Mike Wittner said.
Market watchers were assessing the latest
developments surrounding the military conflict
between Israel and Hezbollah guerrillas in
Lebanon.
The fighting in Lebanon showed little sign of
abating overnight after Israel lost nine soldiers in
its biggest one-day toll so far, with world powers
still at odds over a conflict now in its 16th day.
Concerns that the violence could spread to major
crude-producing nations in the Middle East, such
as Iran, saw oil prices soar to all-time highs above
$US78 per barrel earlier this month.
The price of oil is increasing, due to supply disruptions in Nigeria, the situation in the Middle East
and high demand for petrol in the US. However, the high oil prices have had no effect on the
demand of petrol.

The increase in oil prices has taken place primarily because of decreased supply. Supply is the
amount of a product that a producer is willing and able to put on the market. This was caused by
changes in the determinants of supply, which are factors that, when changed, result in a shift in the
supply curve. The determinant of supply relevant in this situation is the 26% reduction in Nigeria’s
capacity to supply the market.

Oil has become scarcer because of attacks on oil companies in the Niger Delta region, and a recent
leak in an oil pipeline. These are changes in a determinant of supply, because they are force
majeures: unexpected, uncontrolled events. The conditions in the Middle East represent another
such change. The market believes that if Syria is attacked, it is likely that Iran will cut oil exports.
This means that there will probably be a decrease in the supply of oil.

Changes in the determinants of supply have shifted the supply curve left [figure 1]. There has been a
decrease in supply (S0 to S1), resulting in an increase of price (P0 to P1) and a contraction in quantity
demanded (Q0 to Q1).

These increased prices have a large impact on our economy. Oil is used in most parts of the
production process; for example transport, machinery, and to make goods like plastic. An increase
in the price of oil will mean higher production costs. These high input costs are unsustainable in the
long term and could cause reduced profits for firms or business failures if the increased costs are
not passed on through higher prices. As the price of oil continues to rise, most firms’ supply will
decline because of the unsustainable input costs, and therefore the SRAS curve will shift leftwards
[figure 2]. Our GDP would move from YFE to GDP1: a decrease in our nation’s productivity. It is
possible that there will be inflation in general prices caused by increasing oil prices.
To counter this, alternatives to oil need to be found, such as ethanol or hydroelectric power. The
benefits of this are that they are sustainable sources of energy that are more environmentally
friendly. If these forms of energy are introduced early and encouraged by the government, then the
effects of future oil shocks would not be so severe. However, to put these alternatives into practice,
there needs to be dramatic changes made to our infrastructure, which is currently based entirely
around using oil for most activities. The government would need to build a new infrastructure to
support these alternative fuels. As this is a long term solution with many practical difficulties, the
issue is whether the benefits of introducing a new kind of energy into the economy outweigh the
costs. The government could also invest in developing more fuel efficient machinery so that if an oil
shock does occur and no alternative energy has been implemented, it would affect the economy less.

The article suggests that high petrol prices, caused by increasing oil prices, are not affecting demand
for the commodity. This shows that petrol is an inelastic good, meaning that a percentage increase
in price of petrol results in a smaller percentage decrease in the quantity demanded [figure 3].
There is a large increase in price (P0 to P1), yet only a small contraction in demand (Q0 to Q1).

Although petrol is apparently an inelastic good, demand for a good is more elastic in the long term
compared with the short term. Therefore, in the future it is possible that the demand for petrol will
become more elastic [figure 4], where a small increase in price results in a large decrease in
demand.

As prices of petrol continue to increase, there will be increased demand for substitutes to driving
such as public transport. This has environmental benefits, but changes may need to be made to the
public transport system so that it can operate with maximum efficiency. There should be more
services in outer suburbs, or the city layout could be changed to make it more suitable for people
choosing not to drive. Incentives could be introduced by the government, such as offering subsidies
or free public transport.
 Year 12 IB ECONOMICS – INTERNAL ASSESSMENT CRITERIA

NAME: _____________________________ Current portfolio rubric

Criteria Description Level 0 Level 1 Level 2 Level 3 Level 4 Level 5 Total

A Rubric Level 1 is Each commentary meets the Each commentary meets - - -
requirements not word limit the word limit and covers /2
achieved the nominated section of
the syllabus
B Organisation and Level 1 is The extract is chosen from The extract is chosen from The extract is chosen from The extract is chosen from an -
presentation not an appropriate source OR an appropriate source AND an appropriate source AND appropriate source AND the /4
achieved the commentary piece is the commentary piece is the commentary piece is well commentary piece is well
well organized and well organized and organized and presented. The organized and presented. The
presented presented student includes appropriate student makes effective use of
diagrams diagrams in the commentary
piece.
C Use of economic Level 1 is The commentary The commentary The commentary The commentary demonstrates The commentary
terminology not demonstrates minimal use demonstrates minimal use demonstrates appropriate use appropriate use of economic consistently demonstrates
achieved of appropriate economic of appropriate economic of economic terminology. terminology. Terms requiring appropriate use of
terminology and there are terminology and there are However, terms are not definitions are correctly defined. economic terminology.
no attempts to define terms. only limited attempts to always defined, or they are Terms requiring definitions
define terms. incorrectly defined. are correctly defined.

/5
D Application and Level 1 is Little application or analysis The application or analysis Relevant concepts and Relevant concepts and theories Relevant concepts and
analysis of not of relevant concepts and of relevant concepts and theories have been identified have been identified and theories have been
economic achieved. theories has been attempted. theories has been but have been applied in a suitably applied or analysed identified and have been
concepts and attempted but the linkages superficial or incomplete applied and analysed well.
theories to the extract are not way
always appropriate /5
E Evaluation Level 1 is In the commentary the In the commentary, the In the commentary, the In the commentary, the student -
not student attempts to evaluate student attempts to student demonstrates demonstrates evaluation of the
achieved economic theories and evaluate economic theory evaluation of the economic economic theories and concepts
concepts applied to the and concepts applied to the theories and concepts applied to the extracts
extract but the evaluation is extract but the evaluation applied to the extract and throughout the commentary in a
inappropriate. is limited. this evaluation is competent. consistent and integrated
manner.
/4
TOTAL
120
marks

These criteria have been adapted from the Internal Assessment Criteria published by the IBO. Your final folio will be marked as a whole. Your final
mark will not necessarily be the sum of the individual marks. The individual marks should be used a s a guide to areas for improvement only.
NAME: _____________________________ First examinations 2013 individual commentary rubric

Criteria Description Level 0 Level 1 Level 2 Level 3 Level 4 Total

A Diagrams Level 1 is Each commentary includes relevant Each commentary includes relevant, Each commentary includes fully -
not diagrams are included but not accurate and correctly labelled explained relevant, accurate and /3
achieved explained or the explanations are diagrams but with limited correctly labelled diagrams.
incorrect. explanations.
B Terminology Level 1 is The commentary includes The commentary includes
not terminology relevant to the article terminology relevant to the article
achieved and the terminology is used
appropriately throughout the
commentary.
/2
C Application of Level 1 is The application of relevant concepts Relevant concepts and theories have
economic not and theories has been attempted but been identified and suitably applied. /2
concepts and achieved the linkages to the extract are not
theories always appropriate
D Analysis of Level 1 is The analysis of relevant concepts Relevant concepts and theories have Relevant concepts and theories
economic not and theories has been attempted but been identified and suitably have been identified and have been
concepts and achieved. the linkages to the extract are not analysed. effectively analysed.
theories. always appropriate

/3
E Evaluation Level 1 is In the commentary the student In the commentary the student In the commentary the student In the commentary the student
not attempts to evaluate economic attempts to evaluate economic attempts to evaluate economic attempts to evaluate economic
achieved theories and concepts applied to the theories and concepts applied to the theories and concepts applied to the theories and concepts applied to the
extract but the evaluation is lacking extract and the evaluation is based extract and the evaluation is based extract and the evaluation is based on
in evidence or is based on incorrect on evidence but with limited on evidence with appropriate evidence with effective and balanced
reasoning. reasoning. reasoning. reasoning. /4
TOTAL
/14

Criterion Rubrics requirements Level 1 is

F not Three rubrics requirements are met Four rubrics requirements are met Five rubrics requirements are met
achieved