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It depends which degree price discrimination you are looking at. Disadvantages will vary from one to the other so discussing each of the 3 types would be more useful to whoever.

Reply 181

tanusha-tomsk

beesa

hi i need u help plz
i need some links or text books dealing with quality issue from accounting point of view if u can do this for me i would be thankful
cheers any way

Sorry I don't know any good sources for accounting, but try Tutor2u accounting section - it's good for economics so it may help you too :smile:

Reply 182

SUPERJES

hello out there... i want some help to do my IB economics portfolio. Its one interest rates and am really struggling on it. If u dnt mind, please help in doing it - just tell me in note form what are the ideas in this article that i can develop. u'll find attached the article... Thank you for your help.... in fact there are two articles - choose one...Japan scraps zero interest rates.doc

Japan price rise ends deflation.doc

Please reply on [email protected]

Thank you in advance - ur really an angle - a life saver...

Bye

Jessen (superjes)

Reply 183

MandaJR86

shaunskjw

I know its not like me to ask questions :p:

, but does anyone know some good resources for how earnings are affected by gender, qualifications, industry and any european comparisons?

a very good place to look for that is the national office of statistics :smile:

i had to do a presentation on that very topic!
ONS

Reply 184

tanusha-tomsk

Hi people! The thread is back to life as I am ready to tackle more economic questions :smile:

Feel free to post here! Read the first post for general rules and Boards.

Reply 185

rocky_k

What Is Meant By Gnp At Factor Cost (8 Marks)

Reply 186

lil one

Hey guys, I'm new to this forum and stuck on an AS econ question I've tried to do.

Would a country achieve an optimal growth path if decisions regarding the allocation of resources were left to private individuals and firms?

I know the answer is no, and I think its vaguely to do with the idea that private individuals and firms would cater for their needs only, and not as societys as a whole.

Reply 187

tanusha-tomsk

lil_one

Hi,

Firstly (as a good economist) you need to think about the terms of the Q: what is the "optimal" path for growth. Presumably, it is the one where the needs of the people are satisfied (= there's variety and choice, and low prices), where the enviroment is safe, and where people have access to things which can raise their quality of life like healthcare etc.

Back to the question, well that depends really; financial incentive is the single biggest instrument that drives the economy. If the decisions are made by private individuals and firms, then the firms are going to produce exactly what people need (because high demand for red shoes will drive their price up and the shoe manufacturers will be in a rush to produce more of those red shoes because the profit will be marginally bigger; of course, in the long run there will be a price at which the number of pairs of shoes supplied = the number of pairs of shoes demanded: the forces of AS/AD will have managed perfectly).

However, the "invisible hands" (Adam Smith named the forces of AS/AD the "invisible hands" in 1840-something) aren't good at dealing with:

(a) merit goods (the ones that should be supplied in greater Q, like education, healthcare etc): at the AS/AD equillibrium too few people will go to university (because the tuition fees would have been around £13K per year and very few people would be prepared to pay that much. This is a classic case of overlooking long-term benefit of getting a higher education because of short-term / immediate costs/sacrifices. The way the government corrects this equillibrium is by subsidising the cost of the tuition fees etc. Some of the merit goods produce postitive externalities (i.e. neither a producer nor a consumer of HE [=higher education] benefits from the extra consumption: e.g. the secondary school students benefit from being educated by a graduate (err not a very good example actually - perhaps a situation where a firm benefits from employing a graduate?)
(b) demerit goods (the ones that should be supplied in smaller quantities). Alcohol is extremely cheap to make, a pint of lager would only cost about 17p if the price was set at equillibrium (I'm pretty sure I've read this somewhere!). Obviously, too many people would overlook long-term damage and opt for short-term "benefit". The government taxes alcohol and tabacco products heavily to avoid such situation. Demerit goods are often associated with negative externalities (i.e. someone who is neither the producer nor the consumer of the cigarette is harmed - e.g. passive smoking) but you shouldn't mix them up.
(c) public goods (& semi-public goods): such as lampposts etc. No driver would pay for the new lamp posts to be installed because they'd hope that someone else would pay for it. And if no one pays, no company is going to produce the good/service. Public goods are characterised by non-excudability (once you put the lapm posts in place, you can't stop anyone from enjoying the light :rolleyes:

) and non-diminishebility (if you drink a bottle of coke then no one else can have it, but with the lamp post situation you standing under a lamp post is not going to deprive the 101st driver of the light).
(d) enviromental effects etc: a large factory (the one which produced the red shoes :biggrin:

) isn't going to install a £5000 filter to protect the enviroment unless it is forced to. So in the quest for higher production, lower prices and lower market share (and red shoes) inreversible damage will be caused to the enviroment.

So, as you can see, the decions of the profit-motivated firms and individuals are vital to a healthy economy, but so is the governmental control regarding the above issues. Luckily, most countries have a mixed economy in which the government intervenes in some markets (free NHS and lower tuition fees and lower carbon dioxide emissions) but not the others (the production of red shoes, unless it harms the enviroment).

I am really sorry about all the weird metaphoras like red shoes, I just think that easy examples can really help you understand the theory. And also, I've tried not to over-complicate this (with the merit goods and externalities) because you have only started doing economics, but if you find it a bit hard let me know ad I'll break it down for you. Okay? :smile:

Reply 188

Googloo

Q: How do you find the optimal population?

Reply 189

tanusha-tomsk

rocky_k

What Is Meant By Gnp At Factor Cost (8 Marks)

Hey, sorry it took ages to reply :redface:

Well let's start with GDP. GDP can be described as total expenditure on the goods and services produced in the country (so C+I+G+X), but some of these factors include spending on foreign goods, so we need to take away M, spending on Imports.

GDP (at market prices) = C[onsumprion]+I[nvestment]+G[overnment spending]+X[ports]-M[ports]

Then, GDP at market prices (so spending on goods and services) includes indirect taxes (the value of goods and services is lower than the amount that the consumers+government+businesses have spent - at least 17.5% as VAT tax added and other indirect taxes) but doesn't include subsidies (because they are not classed as Government spending; e.g. the bus ride may cost you £1.50 but it's actual cost is 1.80 with the gvnt subsidy of 30 p., made up numbers :p:

). So to get GDP at factor cost we do the following:

GDP at factor cost = GDP (at market prices) + subsidies - indirect taxes

To get GNP at factor cost, we need to consider another factor - net property income from abroad. Tupically, developed economies will have a +ve net income and developing countries will have a -ve net income (do you want to me to explain this further?). Net income = inflows of money from assets abroad which are owned by British indiv/ businesses/govnts - outflows of payments on the assets in the Uk owned by businesses, indiv, govnt's of foreign countries.

GNP at factor cost = GDP at factor cost + net property income from abroad.

Hope that helps.

Reply 190

tanusha-tomsk

Googloo

Q: How do you find the optimal population?

I hope you're not looking for a maths reply! :p:

I'd say that in economics, optimal population would be such that each person has access to basic needs like safe water, nutritious diet, shelter and basic healthcare. One where ... oh this can take a while :rolleyes:

Let's move this to the TSR Economics Society.

Reply 191

CorpusNinja

from my A2 course i remember optimal population being something like the population where the marginal product is 0. The diminishing returns of overpopulation have not yet set it i.e. if you were to have one more person, you would produce less as an economy. obviously its near impossible to accurate determine the optimal population for any given country and even if you did you couldn't keep population constant.
also, the progress in technology improves productivity continually, so the optimal population tends to keep increasing with time, thus overcoming the Malthusian pessimism of not enough food to keep pace and all that shindig.

Reply 192

ellejaytee

Help Please!!!
I am stuck already....
"Discuss the advantages and disadvantages of the government charging nhs patients for the services they receive."

Reply 193

tanusha-tomsk

Hi,

There are a few advantages to such approach, which is why it is used in some market economies (USA, for example). Charging NHS patients ensures that you only pay for the services you, personally, receive. Else the cost of all NHS treatments is spread more or less equally (at least within a group of txpayers who have the same income tax level) and those who don't require services that often (like younger people) effectively pay for the treatements of others (older people, invalids and people with chronic deseases). Second advantage is that NHS will never be short of money - currently, the tax revenue that goes to NHS is not nearly enough to pay for all the medical services that NHS provides. This is due to the political side of the question - raising income and corporation tax levels (direct taxation) may well help NHS but it won't help the political party win the next election because it is a common perception that even if the level of tax will rise the quality of NHS services will not rise, and the tax payers refuse to elect a party which will take their money away. This is a part of the third advantage - NHS will be free of political influence, and the party will have an easier task (at the moment, it's "damned if you do, damned it you don't" because not raising tax will lead to massive job cuts, which isn't exactly popular either). The quantity of nurses will be supplied on demand and the price of their services will be suitable to satisfy both demand and supply.

However, there are very serious disadvantages to such approach which have led many countries to evolve as mized economies, with government's intervention in some of the sectors, NHS in particular. Some proportion of the population will simply not be able to afford the visit to the doctor, thus early detection will become harder. A Larger proportion of people won't afford the treatement once they have been diagnosed - single mothers, unemplyed, pensioners and all those at the lower end of income distribution. Furthermore, some people who could potentially afford a procedure will chose not to receive it because short-term costs involved will outweigh (in their mind) the long-term benfits of receiving the treatement. That will most probably lead to a higher rate of complications on easily curable deseases. None of the above is considered "fair" (not a good term to use in economics, btw) in the modern society where easy access to healthcare is considered a necessity rather than a luxury. Apart from that, this will lead to lower productivity within the workers (so lower GDP over time, lower aggregate demand as the incomes are diminishing, and definitely lower tax revenue) which can easily become the responsibility of the businesses and the government (the sick pay, unemployment related benefits if the person is too sick to work, larger pensions as various NGO's and charities will demand pesion rise). None of that is desirable nor acceptable, particularly socially. Since those people at the lower end of income distribution (i.e. poorer) will probably need more medical care (due to poor diet, poor living conditions e.g. lack of central heating) their incomes will fall further, and the gap between "the rich and the poor" will rise. You can see the implications of that!

It's obvious really that while the charge for services approach has it's good sides, it has too many faults that cannot be ignored. This is why the government opted for the most suitable approach for this country - NHS is financed through taxation (however poorly) but those people who would prefer to pay for better (quicker?) services have access to prive medical centres like Bupa. The better off are happy because they can get the higher quality of services, and those worse off are happy because they have access to those services.

Hope that helps, if anything is unclear just ask :smile:

Reply 194

tanusha-tomsk

blue_hamster

hey, i need some help with a couple of A2 Economics questions

examples of where the government has tried to liberalise the market have been in gas and electricity supply, and also telecommunications.

1. Describe for one of these makets why the government has tried to liberalise the market

2. What have been the advantages and dissadvantages for the consumers of this liberalisation

3. What have been the advantages and dissadvantages for the producers liberalisation

Help would be much appreciated,
Jon

Hi,

Telecommunications - the main reason behind liberalisation of the market was the sudden appearance of a strong and constantly growing mobile phone networks. Suddenly, BT has found that it cannot compete with mobile phone operators on the price level, and this is really the only way it would have a chance to stay in the market: Mobile phones are becoming ever cheaper, and offer clear advantage over the traditional landline phones (as well as the "style" factor!). Liberalisation is opening the market to competition, which forces all existing and new businesses to become more effective. So effective, that in fact they would be able to compete with mobile phone providers.

Such actions by the Ofcom (?) as allowing all businesses in the market to set their own price and offer various packages (e.g. free internet, or free weekend calls, or free calls to those on the same landline network) have been of a great advantage to the consumers. Not only did the average price go down, but also a wide variety has appeared as the businesses are fighting for their market share. In theory, every consumer can pick a package that suites them, or pay a price that they can afford (or both!). However, there is a disadvantage - even though information is readily available (particularly through the internet) and the assymetry has been minimised, many consumers prefer not to change their operator or simply don't see the point. That means that some consumers offer businesses the opportunity to exploit them. For example, because BT is a sort of comfort zone for many people (especially older generation which is more resistant to change) it can charge higher price and get away with it. Other companies may fool consumers by offering "free" bonuses which the consumers have to claim separately, knowing full well that only few of them actually will.

The advantage for the operators is the most obvious one - the market survived and they can still make thier profit margin. The market wouldn't have dried out instantly, but in the long run it would have shrinked significantly. Disadvantages are fairly obvious too - heavy promotion campaigns are costly and at the same time prices have to be keep at their minimum for the companies to keep their market share. The market can be described as oligopoly, so consumer loyalty and promotion are extremely important because the companies are limited in how far they can go as far as the extra bonuses / services are conserned, because of the tight price range limits.

That's all I can think of at the moment; do you need this kind of thing for every market you mentioned? :smile:

Reply 195

zoopy

Hi, i was reading one of the threads and i was wondering if you would help me on these questions?

1. Examine the economics implications for both consumers and producers of beer of the ownership of public houses by brewing companies?

2. How might you account for the continued existence of many small brewing companies in the UK?

Thanks

Reply 196

tanusha-tomsk

Hi,

1) If a brewing company decided to acquire a pub that would be called forward vertical integration, in which a business in one stage of production takes over a business which is one step closer to consumers. If this happened on a large scale (as the question suggests) there would be implications on both the consumers and the producers.

Firstly, the producers. They would benefit from such an arrangement because they would be able to exploit greater economies of scale, including transport, managerial, production, advertising etc (do you want me to exlain it further?). That means that the average price at which a unit can be supplied will go down while the profit margin will be retained. Lowering the price will gain the company a greater market share. Of course the brewing company doesn't have to lower the price, if it is satiesfied with its current market share it can simply enjoy the higher profits. Either way, the brewing company benefits. Secondly, the brewing company can now enjoy a more stable demand, because obviously it is going to supply it's product through it's own chain of pubs. More stable revenue, more confident investment as a result.
The customers, on the other hand, may or may not benefit from such arrangement. firstly while the prices are liekly to be driven down, the cost of lower prices will be restriced choice as the variety of bewerages will most likely be limited by what the brewing company offers. Secondly, loyal customers may be put off by the new way in which the pub chain may be run - take overs are often complimented by managerial cuts and other efficiency improvements which may reflect negatively on the quality of the service. Thirdly, the economies of scale may force the competitors out of the business. This means that soon there will be a few Goosefeathers and olny 1 or 2 other pubs in each area (think of Tesco's). So not only the choice of drinks will be restricted but also the coice of the atmosphere as "family pubs" will be forced out of the competition. The lower prices aren't likely to offset the above incoveniences, although they will be welcomed by those at the lower end of the distribution of income.

Reply 197

tanusha-tomsk

Right, I'm going away until January (read my signature in the above post) so this thread will be quiet for a while. Good luck with economics everyone and check out the list of useful websites in the Economics Society! And remember... Think Like An Economist! :biggrin:

See ya

Reply 198

fuchsiasky

Hi, this is my first time on the site and I'm so glad I found it, but I can't believe you'll be gone until January. :frown:

I need help with the following question:

Appalachian Coal Mining believes it can increase labor production and, therefore, net revenue by reducing air pollution in its mines. It estimates the marginal cost function for reducing pollution by installing capital equipment is

MC = 40P

when P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction the marginal increase in revenue is

MR = 1,000 – 10P

I created a table with columns for: Activity, Total Benefit, Total Cost, Net Benefit, Marginal Benefit, Marginal Cost, and Average Unit Cost. But the figures I got don't seem correct. Please help!

thanks!

-sky

Reply 199

CorpusNinja

okay so as P increases, MC increases in a linear fashion and MR increases at a slower and slower rate until it starts falling again (curve). seems right so far but i failed to see the question?! what are you trying to show?

but my guess is that the answer is when MR=MC...