Edexcel Economics Unit 1 28th May 2010 Post Exam Discussion

Hey quick question. For Question 9 one of the questions was about minimum pricing and the possible economic effects. I drew a minimum price diagram and then shaded the area of excess supply. I also explained that it would encourage more people to farm and to supply more etc To evaluate that I said that it may not be sustainable in the long run because it may require large government funds to uphold (Opp cost). Also, it would depend on how high the minimum price was in comparison to the equilibrium cost and also consumers would face higher prices for their products... would this be correct?

Hey guys, quick question. My friend did the Eco paper but she doesnt have a TSR account. She would like to know this:

There was this MCQ about gold prices and no shift in the demand curve. Does anybody remember their answer to that?

Thanks

What did you get for the one with with the shift in demand and supply for i think question 6. I thought was computer games and software. But alot of people said it was the leather and beef becauseof the composite demand. And yeah i never finish edexcel exams, but I done section 2 first then section 1 i think that helped.

I found it really hard to be honest. I mucked up the multi choice, and Q 9 seemed like a disaster....

For all you guys who did Q9, can you rate my answer(s):
the q about min prices here is what i did:

1. Define Min price
2. Draw diagram, with min price, and labels
3. Explain how that means the government buy everything at a setprice
4. thus supply increases, and there is excess supply
5. revenues rise, and so agricultural firms can absorb more workers - since they now have higher profits.
Eval: If PED for food is price inelastic however, since supply has increased in the market, and thus prce has fallen, then firms will in fact lose revenue.
Eval: The extent of the icrease in employment depends on the size of the min price - if it is only fractionally above the normal market price, then they will only get a small profit, and so employment will rise fractionally
6. They will increase nvestment, due to higher higher prfits, and since investment is part of AD, then growth will rise.
Eval: the min price scheme is expensive for the gov't, and thus there is an opportunity cost - perhaps the money shuld be spent on education or healthcare.



Q about private and external costs of GM crops etc..:

1. Give examples of private costs, and external costs
2. Draw negative externality diagram.
3. Say that the external costs are represented by the welfare loss triangle, which is shaded, and that these include a lack of biodiversity etc.
4. Mention the socially optimal position, as well as the free market equilbrium.
Evalard to quantify external costs, and thus attach a monetary value to it - so we do not know how big they are.
5. Gm Crops and pesticides are expensive, and so the private costs of the company will rise. This will shift the (Marginal) Private Cost curve towards the (Marginal) Social cost curve.
Eval: The reduction in welfare loss, from this,, depends on the price of the goods - if they are not so expensive, then the curve will shift marginally, and so there will still exist a negative externality
6. As farms increase their revenue, they can hire more workers
Eval: Since PED for food is prce inelastic, then a fall in the price will in fact reduce revenue, and so they may evenn have to sack workers.

Anyone actually do Q10, or was it just me?

If so.. for the first explanation question, did you guys shift both the supply curve (due to fall in costs of production as wages and employees were cut) and the demand curve (fell due to economic downturn) or just the deman curve?

Thanks

What did you get for the one with with the shift in demand and supply for i think question 6. I thought was computer games and software. But alot of people said it was the leather and beef becauseof the composite demand. And yeah i never finish edexcel exams, but I done section 2 first then section 1 i think that helped.