Unit 2.12: The market’s inability to achieve equity (HL only)
Lesson time: 70 minutes
Understand whether a free market economy may result in an unequal distribution of income, wealth and opportunity.
Recognise that high rates of economic growth does not always bring benefits to a nation.
The following two videos paint a very different picture of free market capitalism. Watch both and then discuss which of the two arguments you find most convincing.
The following video highlights the importance of strong institutions in regulating the excesses of the free market and promoting development. After watching the video highlight the institutions required to help a nation develop.
Watch the following videos and then decide:
The following video focuses on some of the negative externalities of unrestrained economic growth in China. After the following video answer the questions that follow:
(a) Explain why the high rates of air and water pollution in many Chinese cities represent a negative externality to unregulated free market growth.
(b) Illustrate the negative externality on a suitable diagram, showing the size of the welfare loss.(c) How does the video highlight the merits of the argument that the most effective method of improving living standards in an economy is through a mixture of free market and government interventionist methods.