F581 18 Markers Help

I've got the resit next week, and I am still struggling on how to work out if I should draw positive externalities or merit goods and negative externalities or demerit goods.

How do you decipher if the question is asking you about the externalities or the actual tangible goods?

You are not supposed to do externality diagrams for F581

Whaaat? what are you supposed to do? what about when the question says something like 'Discuss whether indirect taxation is the most effective policy measure to correct the market failure arising from negative externalities of production' (June 2014)

Look at the mark scheme. D/S diagram with explanation L3 band 1, explanation on how it solves market failure L3 band 2

But then why do we need to know the externality and merit goods diagrams if we don't use them?

So wait a minute, the whole MPC, MSC, MPB and MPB diagrams we don't need to know?!? I've literally spent all of my revision so far on them because that's what I was taught and was struggling to make sense of them. That makes everything so much easier

you can check the specification for clarification. Marginal analysis is for A2, F581 does not require externality diagrams

Wow ok guess I didn't need to memorise them or their explanations

One more question, on some essays it says candidates need to refer to demerit, merit goods or externalities, how to I decipher if I need to refer to demerit goods or negative externalities for example? (I know one is a good but one is effects on wider society but when it actually comes to it I can't apply this rule)

Thank you for helping me out

Posted from TSR Mobile

Demerit goods/negative externalities are similar, same with merit/positive externalities. Which one to use? The extract will provide some indication.

Tips to score in paper 1:
1. Complete past year papers at least back to 5 years from now. Repeated questions are highly possible.
2. Understand the way examiner sets questions. Questions that are being set are highly similar. They will change the question but they still want to test on the same concepts.
3. For Micro, students are required to fully understand PPC, scarcity, how demand and supply curve shift, PED, YED, XED, consumer and producer surplus, function of money.
4. For Macro, students are required to fully understand inflation, unemployment, BOP, max and min price, social benefits and social costs, how fixed and floating exchange rate work, AD and AS.
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