[Perseverance]

(Original post by al_miller)
Thanks so much for sharing your exam technique. It's much more detailed than mine

How does everyone manage their time during the exam? I've always ran out of time to check over my answers and in some cases to even complete the questions

No worries, I always run out of time so I will start the exam doing the 30 marker, then 20 marker and in high to low order, that way I would only miss out on a low mark question if it is the case.

[Perseverance]

Some notes I found:
Why the rail market is not contestable:
- high set up/start up costs (including cost of meeting health and
safety laws)
 economies of scale of established firms
 imperfect information.
 a lack of slots at many main line London stations
 restrictions on where passengers can be picked up/dropped off
 limited availability of rolling stock
 a shortage of trained drivers for companies to employ
 On some routes there is not a pool of potential entrants
 Possible predatory pricing/limit pricing

Why they are contestable:
Legally, in theory, firms have the right to compete for franchises
(in other words, certain legal barriers have been removed).
Accept simple reference to “legal barriers have been removed”
OR “firms are able to bid/compete for franchises” OR “lower legal
barriers”
 ‘Open Access’ operators are able to compete in the market
(against franchise holding firms) eg Grand Central and Hull trains.
 Accept a general comment that privatisation has removed
barriers to entry (and hence increased contestability)
 Leasing of trains has increased contestability due to lower
barriers (lower start up costs)
 As brand loyalty is not an issue in the train passenger market this
is one barrier which does not exist–hence the market is
contestable (except in the case of Open Access market)
 There are a number of competing firms (a pool of potential
entrants) wanting to enter the market

Why the use of cars have increased over time:

 Lower prices of cars in real terms/increased
competition between car manufacturers
 Lower running costs in real terms
 Increased price of substitute modes of transport
(eg buses/trains)
 Perceived unreliability of alternative modes of
transport. (eg uncertainty of timetables for
public transport OR lack of substitutability)
 Increased real incomes (with cars seen as a
‘normal good’ with positive income elasticity of
demand) OR increased disposable incomes
 Shifts in tastes and fashion
 Higher levels of car ownership
 Increased population/number of households
 Growth of the road network in the UK (accept
analysis of this in terms of increased supply)
 Increased travelling and spending on social and
holiday events. As such, car use may be seen
as a ‘derived’ demand.

Road pricing and alternatives:
Road pricing (L1). Such a policy would charge
people per mile driven every mile which they drive
(L2). This means that individuals will be forced to
pay a price which more accurately reflects the true
social costs of their actions and, therefore, the
polluter pays. As such, the motorist faces a clear
disincentive from making the marginal journey and
may consider switching to bus/train (L3).

Subsidies may also be seen as a sustainable policy
(L1). These are payments made by central/local
government which have the effect of lower fares on
public transport (L2). By lowering the fares charged
on trains and buses (and also by improving the
rolling stock through the provision of capital
subsidies), passengers will have a greater incentive
to switch to the cheaper subsitute (L3).


Air Passenger Duty/APD (L1) is a tax on plane
tickets and is paid by consumers (L2). This makes
consumers more aware of the true costs of their
actions and will provide them with a clear incentive
to change behaviour – reducing the demand for air
flights and inefficient use of scarce resources (L3).


Tradeable pollution permits (L1) are issued to firms
to cover an identifiable level of emissions. Issued
annually (and free) by govt. (L2). If firms don’t need
these they are able to sell them on the free market –
hence low polluting firms are rewarded and high
polluting firms have an incentive to reduce pollution
levels. Hence reducing overconsumption. (L3).

[mujahid_e3]

(Original post by al_miller)
http://www.mediafire.com/?i502059thfguj



Our college purchased it but I don't think we're allowed to share it due to license reasons. I'd highly recommend you to persuade your teachers to get it and give you a copy because it's very detailed.

thanks but dont think it will even arrive in time for the exam

[politics_student]

(Original post by Perseverance)
Yes it was.
I'm exactly the same as you and kinda struggled with the first few units in that I'd write a lot more than what was needed/complicate the answers more than they actually are. My main target has actually been to be more concise, less detailed and get straight to the point which I did find hard, although I managed to do it quite well for unit 3.
I also used to always run out of the time, in the first unit I missed two of the big markers out because of this. So I tend now to start from the last question/highest marker and go reverse order - that way if I run out of time I'll only be missing a low mark question.

Best way to write in context is to have this lead everything. What I mean by this is every point/economic concept is used when talked about a specific detail about transport. So no generalisations, for example, if the question was about supply side policies (which doesn't seem so relevant to transport and thus makes it more important to link it to context)

I'd say: Supply side policies have been used both in the deregulation of buses as in the case of outside London, the privatisation of British Rail brought about by Thatcher's government in the 1980s and in the form of subsidies with the Bus Service Operators Grant'
This would be instead of saying - 'the government uses supply side policies such as deregulation, privatisation and subsidies in the transport industry'

That's good, I will try that when I'm making plans to practice questions.

I've missed questions out as well, and as the grade boundaries are narrow, it can be very costly. I start with the first few questions so I'm warmed up as I tend to be nervous before exams, then after a few I do the question with the highest amount of marks.

Likewise I improved by unit 3, before I would re-write the question in my own words as a way of introduction as I was used to it for History/Politics. I just used the mark-schemes to write answers, then do a different question in timed conditions.

How are you revising for this exam?

[Kiweefruit]

(Original post by al_miller)
Made a thread just for Edexcel Economics & Business Studies Unit 4B: Wider Environment and Change since the other thread 'Edexcel unit 4 economics and unit 4 business' was confusing

So for those who did the exam in January, how did you find it and how did you prepare for it?

I attempted to do the January paper but Section B didn't go very well

Thank you for the thread. I've been meaning to start one because I was finding it frustrating to end up in the wrong thread..lol

Thanks for sharing your questions. This is going to be funny..
um what extra research did you do? for example?
I went onto all the source links for the various evidence for a start..

Also was wondering if you could help me figure out graphs?
I suck at them, because I have no idea how to make one of my own for a question..
Any advice or tips on how to approach graphs (when making one of your own)?

Thanks a ton.

[Kiweefruit]

Also..does anyone know how to gain access to the Feb 2012 pre-release material?

This might be a late realization but um it looks like Feb and the upcoming exam have a lot of similarities..as they have both used Uptown Oil in their evidence and both are on the transport industry...

Also how do you solve past Unit 4 papers without pre-release? O.o

[politics_student]

(Original post by Kiweefruit)
Also..does anyone know how to gain access to the Feb 2012 pre-release material?

This might be a late realization but um it looks like Feb and the upcoming exam have a lot of similarities..as they have both used Uptown Oil in their evidence and both are on the transport industry...

Also how do you solve past Unit 4 papers without pre-release? O.o

This is the case study (it was released in June 2011): http://web.brimsham.com/_includes/at...6EB04%2001.pdf

In the exam they give you an extra piece of evidence, "J". In February it was based on a Workplace Parking Levy in Nottingham.

[HippoFarm]

A question is likely to come up about bus pass subsidies probably a ten marker, can anybody give me some good and bad points about bus pass subsidies and what would happen if the government reduces the subside.

Thanks

[Noggster]

(Original post by HippoFarm)
A question is likely to come up about bus pass subsidies probably a ten marker, can anybody give me some good and bad points about bus pass subsidies and what would happen if the government reduces the subside.

Thanks

The government have recently planned on reducing the bus subsidy so in fairness the extra evidence could definitely be something to do with that.

I agree that bus subsidies didn't come up in the first paper so theres a chance that they could come up in this one.

Positives
- Subsidies are a negative tax therefore reduce the running costs of the business. The government expects that the disposable income created from these reduced costs will be used by the bus operators to reduce the prices of their services, increase the frequency of their services or improve the quality of their buses. This arguably will make a more valuable alternative to private road transport as bus travel will be cheaper, better quality and therefore when considering a trade off between car travel and bus travel is probably the better option.

- this will then shift demand from private car travel to bus travel and will limit the externalities of road travel. This is because less cars will be on the road and therefore congestion, pollution and traffic accidents will be reduced (however still present as buses will still be on the road).

Negatives
- Subsidies reduce government income and over a long period of time may not be sustainable. (you could talk also about opportunity cost here. whats better a bus subsidy or other investment?)
- Subsidies make business inefficient. It may be that if the subsidies have been provided for a long time that the bus operators will have developed their business operations around the subsidies. The subsidies themselves will act as profit cushions that will allow for the business to develop in such a way that may not be sustainable if their profits were guaranteed organically. Therefore if they're removed it may cause the bus operators to become unsustainable.
- Equally it can be argued that in fact the use of bus subsidies will not actually shift demand. You could suggest that bus travel is widely seen as an inferior good in comparison to car transport. If an individual has the ability to purchase and use a car with its peripheral costs they are more likely to do so as it offers the freedom of movement and relative comfort, (not to mention providing the benefits as stated in evidence e+f). Therefore the actual implementation of bus subsidies may not actually shift demand.

Hope this helps

[HippoFarm]

Thanks helped a lot , what about interest rates positive and negative points about them rising and falling and the effect they have on inflation and exchange rates?

[ECONMATHSMATHSMATH]

Geniuses of Economics and Business, please can you answer these questions?
1. To what extent are externalities acceptable?
2. What do u guys think is synoptical theme?
3. How does the government restrict anti-competitive practices?
4. Why does the government intervene?
5. How does that affect businesses?
6. How does providing subsidies to bus operators result in equity?

[Noggster]

Basically you can have two types of interest rate policy. Expansionary and contractionary. Expansionary policy is when interest rates are low and contractionary are when interest rates are high. What must be remembered about interest rates is that they cannot just be increased over night. They have to be phased in to ensure economic stability. Therefore they cannot be used as a quick fix.

The main macroeconomic objectives of the government are to have sustainable growth, low inflation, low unemployment and a positive balance of payments.

In many cases these objectives don't work with each other in the slightest, but i'll come back to that.

So if the MPC uses expansionary interest rates (or monetary policy) they'll reduce the overall interest rates within Britain. This will have two impacts upon the economy.

One factor is that the ROI (return on investment) on saving with banks will be lower. Therefore the opportunity cost of saving will be lower than that of spending. This will create an incentive for both businesses and consumers to increase spending. If we look at the aggregate demand formula C+I+G+(X-M) this means that investment (i) will increase and consumption (c) will increase. Therefore aggregate demand within the economy will increase.

Equally low interest rates will also mean that the interest that must be repaid on bank loans and mortgages will decrease. This will mean that business and consumers will be better off taking out financial agreements. This will again increase disposable incomes and capital for business which will therefore increase aggregate demand.

For growth and employment expansionary interest rates are extremely good. Increases in aggregate demand mean that demand for products will increase and therefore business sales and profits which can be used for investment will increase. This will most likely lead to businesses expanding their operations and therefore increasing their overall workforces. Obviously this will increase employment levels and stimulate growth as disposable incomes will increase within the economy (leading to more spending + demand).

However for inflation the increase of interest rates will actually be negative. As aggregate demand increases (through an increase in disposable incomes and more business investment) it could exceed aggregate supply. If this occurs demand pull inflation will occur as overheating begins in the economy. In this case the use of expansionary monetary policy will be negative on inflation.

The trade balance may also be damaged by the development of low interest rates. If growth develops and employment increases the overall disposable incomes of consumers within the economy will increase. This means that they are more likely to be able to purchase imports from foreign countries. This increase in demand for imports could lead to imports outweighing exports and therefore there will be a negative balance of payments within the economy.

Equally low interest rates will actually lead to a reduction in the price of the pound and therefore exchange rates will fall. This is because if the ROI on savings decrease in many cases foreign investors will remove their capital from British banks and invest it in different countries. In this case the development of low interest rates would not increase exchange rates and would in fact decrease them. (but this could be good for keeping trade balances positive as exports would be cheaper)

Contractionary interest rates are basically the opposite to expansionary. This means that interest rates are high.

The use of high interest rates will increase the ROI that consumers and businesses can gain when saving. This will increase the opportunity cost of saving over spending and therefore the amount of spending within the economy will decrease significantly. Consumption and investment will decrease which will lead to a decrease in aggregate demand.

Equally the interest rates that are required to be paid back upon financial lending agreements will also increase. This will de-incentivize people and businesses from taking out loans and mortgages and therefore will lower the disposable incomes and capital of business and consumers who already have taken them out. This will mean that spending will reduce and therefore aggregate demand will decrease.

In one way this would be beneficial to the level of inflation. As aggregate demand decreases the overall cost of products (according to demand and supply) will decrease as well. In this case it very much could be argued that the use of contractionary monetary policy will reduce the extent to which demand pull inflation can develop within the economy. However we have to remember that at present much of the inflation within the economy is due to cost push rather than demand pull. Cost push inflation is where the cost of supply increases rather than demand increasing. Arguably the MPC cannot manage the extent to which cost push inflation manifests itself within the British economy as the actual rise in prices are as a result of increasing oil, wheat and other commodity prices. (something to bare in mind).

Exchange rates will arguably increase if interest rates are increased. If the ROI on investment increases in many cases foreign investors will choose to invest their capital in British banks rather than foreign institutions. This means that there will be a larger amount of foreign investors purchasing British pounds which will lead to an increase in the price of the pound. This will increase the exchange rate.

Further to this the extent to which growth and employment will be developed as a result of contractionary interest rates will be limited. As aggregate demand decreases the overall amount of business sales and profits will decrease. This may mean that some businesses have to downscale their production efforts which would lead to a reduction in growth. Equally if businesses begin to reduce their production assets and workforces it is more than likely that unemployment will increase (as demand will not stimulate an increase in production). This therefore suggests that contractionary interest rates would reduce growth and reduce employment levels.


As you can see the macroeconomic objectives as mentioned above don't work well with each other. Inflation arguably is caused (in its demand pull form) by growth and therefore while having one you will sacrifice the other. Equally employment is dependent on growth.

So managing the macroeconomic objectives is difficult for the government. However this is not to say that there isn't an order of precedence over the objectives. It could be argued that growth and employment are more important than a positive balance of payments and low inflation at present time due to the recession and equally considering that inflation is cost push.

There's lots of things that can be added onto this to give it your own twist. You could discuss quantitative easing if needs be or equally add the parts about cost push. Anything just to supplement the revision guide will be good.

[Noggster]

sorry i forgot to add the part about balance of payments for contractionary. I'll let you work that one out :P

[Tommysiu0]

(Original post by HippoFarm)
Thanks helped a lot , what about interest rates positive and negative points about them rising and falling and the effect they have on inflation and exchange rates?

Increase Interest Rate basically means the cost of borrowing is more expensive

Positive : - The government will increase the interest rate when trying to tackle inflation. Inflation is when price of goods rise, either from cost-push inflation and demand-push inflation. So if interest rates goes up, it is more expensive to borrow money from the bank, so it discourage consumers to spend their money. As demand decreases for goods, so will prices and thus inflation goes down. However, in terms of our case study, by increasing interest rates , there is also a chance of deflation. (hence the 'deflationary forces'). So hopefully it will tackle the problems caused by inflation. Such as uncertainty, business's on variable loans, etc

- In terms of exchange rates,high interest rates offer lenders in an economy a higher return relative to other countries. Therefore, higher interest rates attract foreign capital and cause the exchange rate to rise. But this might damage UK export competitiveness.

- In short, the lenders gain from high interest and lendees lose from low interest.

Negatives : - On the other hand, although inflation will hopefully decrease, it discourages people to spend money (i.e. credit cards will be more expensive). Mortgages may also be high! So as people spend less money, less products and services are paid for, and so businesses don't do well with sales revenue.

-As interest rates are high, it also discourages businesses to invest their money and grow because it's costly and damages the cash flow. Businesses may also be damaged from leasing, bank loans ,etc As a result, economic growth may decline.

A Decrease in interest rates would basically be the opposite of what i wrote up there

Hope that helps!

[Noggster]

This exam will be ok. They could try asking us about competition however they did that in the Jan paper. maybe they'll go down the government intervention route . How did everyone do in unit 3?

[Trollolollol]

(Original post by Noggster)
This exam will be ok. They could try asking us about competition however they did that in the Jan paper. maybe they'll go down the government intervention route . How did everyone do in unit 3?

I got 100 what about you?


This was posted from The Student Room's iPhone/iPad App

[Trollolollol]

But yeah I hope a huge question on equity and inequality comes up


This was posted from The Student Room's iPhone/iPad App

[Trollolollol]

(Original post by Noggster)
This exam will be ok. They could try asking us about competition however they did that in the Jan paper. maybe they'll go down the government intervention route . How did everyone do in unit 3?

How did you do?


This was posted from The Student Room's iPhone/iPad App

[Noggster]

i got 100 as well. small world, what were the grade boundaries like?

[Noggster]

(Original post by Trollolollol)
But yeah I hope a huge question on equity and inequality comes up


This was posted from The Student Room's iPhone/iPad App

shhh peasant < Full-UMS!'s choice of face