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Economics AS AQA exam tomorrow 16/05/2016

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Reply 20

rosemondtan

Original post by Kushal_C

The + and - is only for income elasticity of demand I swear?? (Well that's what I've learn't doing AQA)

Yes, and cross elasticity. PED is always negative and PES is always positive

Reply 21

pinkpanther101

Is this the resits for the econ 1 paper tomorrow, or is this new spec AS exam

Reply 22

Nim_123

Original post by guyr

NASBIT framework from uplearn.co.uk

Thanks

Reply 23

pinkpanther101

guys any tips for 12 markers?

Reply 24

Kushal_C

Original post by pinkpanther101

Is this the resits for the econ 1 paper tomorrow, or is this new spec AS exam

new spec for me I think for everyone else too

Reply 25

Kushal_C

Everyone watch the first 13 videos in this playlist it will really help its tips for the exam
https://www.youtube.com/playlist?list=PLWeicFreBUYDTBxILneSnPxUqxKUb3xGz

Reply 26

theD0N

Wait what's the diagram for composite and derived demand?

Reply 27

physicsamor

I know but they are the easiest to evaluate xD any thing to do with demerit and merit goods. As long as its a question with an easy market failure that I can use my externalities diagrams for then I'm good.

Reply 28

Luiswright31

Original post by Karan8298

Anyone have a good way of remembering the externality diagrams? I always seem to forget them :frown:

What is it about them that you struggle to remember? Happy to help... :biggrin:

Tax Diagram?

Thanks a lot!!! But for tax diagrams does that shift supply curve to the left? Or does it affect demand too?

Reply 31

EmmaWoodley

If anyone wants to join the economics whats app chat pm me, ill add you- ask any questions there

Reply 32

theD0N

So where would the tax revenue be?

Reply 33

physicsamor

Exactly, at least have one good context. But pray no buffer stocks come up.

Oh thank god.

OMg my teacher taught me it for no reason XD

Reply 36

karwash99

Original post by Nik12

It depends if you are talking in terms of what it looks like on the graph. For example if the Demand curve is steep it will be fairly Inelastic. And if the demand curve is quite shallow it will be fairly elastic. An easy way to remember it is that a steep curve looks like an I (which is the first letter of Inelastic). And then you'll know the other one is elastic.

But if you are talking in terms of numbers after calculations then if the number is <1 it will be inelastic. If it's >1 then its elastic. And a (+) will mean its a normal good, therefore a (-) is a inferior good. Hope that helps, i'm just revising elasticity now xD

The normal/inferior goods are only for income elasticity (YED), for PED the vast majority of goods have a negative value because as price falls, demand increases, but theres a few with positive values for which a price increase causes a demand increase. The two on the spec are veblen goods (snob value), and giffen goods.

Reply 37

Luiswright31

[QUOTE="Karan8298;64814979"]I always mix up the labeling of the demand/supply curves however I think I've got it now.

Negative externality: Social Costs > Private Costs

Positive externality: Social Benefits > Private Benefits[/QUOTE

If we are talking consumption, then we consider the benefits curve, (demand) we can have positive and negative externalities of consumption.

If we are talking production, then we consider the costs curve, (supply) we can also have both positive and negative externalities in production.

MSB/MSC, is where we want to be, where social welfare is optimised.
MPB/MPC, is where the free market mechanism operates, where supply meets demand.

A positive externality in consumption would mean MSB exceeds MPB, and we operate at MPB=MPC, therefore we under consume the good and don't receive the positive externalities that we would if we operated at MSB. The government may give incentives to the consumer to consume these goods, perhaps a subsidy on consumption, which would shift supply out to the MSB curve, where welfare is optimised and positive externalities are gained.

A negative externality in consumption would mean MPB exceeds MSB, and we operate at MPB=MPC therefore we over consume that good and create negative externalities whilst doing so. The government would try to reduce demand for these goods perhaps by introducing a tax on consumers which could shift demand inwards to the MSB curve, where negative externalities are limited.

A positive externality in production would mean that MSC exceeds MPC, and we operate at MPB=MPC therefore we under produce that good and do not receive the positive externalities that we would if we operated at MSC. To help gain these positive externalities the government could subsidise production of these goods to help shift supply outwards to the MSC curve, where social welfare in optimised.

A negative externality in production would mean that MPC exceeds MSC, and we operate at MPB=MPC therefore we over produce the good and cause negative externalities whilst doing so. To get rid of these negative externalities, the government could tax the producers, to try and shift supply inwards to the MSC curve, where negative externalities are taken into account and social welfare is optimised.

Hope this helps, if you're still confused and have any questions please ask.