The Student Room Group

A2 Edexcel Unit 3 12th June 2012 Megathread

Scroll to see replies

Reply 80
Original post by heyquickquestion
Paper 3. Do I get a mark if I knock out a wrong multiple choice option with reasoning?


"If an incorrect key has been chosen, the maximum score is 2 out of 4.
Incorrect options can be knocked out, if relevant economic reasoning is given. If
more than one key is knocked out for the same reason this will earn one mark only.
There must be different reasons for each knock out. Marks are not awarded if the
rational is that ‘it’s not A because it is B’ there must be some valid economic
rationale.
Up to two knock out marks can be awarded for each supported choice question."

- (Almost) every Econ unit 3 markscheme.
Reply 81
That diagram was very helpful, thanks :smile: so with these types of questions you should describe the immediate effect of the change rather than what the firm should do in the fututre to correct the issue and regain profits?
Reply 82
Original post by mike_17590
That diagram was very helpful, thanks :smile: so with these types of questions you should describe the immediate effect of the change rather than what the firm should do in the fututre to correct the issue and regain profits?


As far as I know, marks are awarded whenever you show your knowledge, given that the point is related to the question in some way. So you will gain some marks for describing what the firm can do in the future.

But I always write why "it" is so, then explain why one distractor is incorrect, and if I have time, give some further explanation.
Original post by ezioaudi77
As the question says there were constant average costs, AC will increase at a constant rate, or by the same amount as the earlier output. So AC will be horizontal. If AC is horizontal, MC will be horizontal as well and therefore AC and MC overlap.

As this is a monopolist and the sole supplier, it will be supplying to the whole industry. Therefore, average revenue will be downward sloping and MR twice as steeply.



When the industry was perfectly competitive, all the small firms had to be price takers, and so nobody could earn profits because consumers could easily shift to another supplier. Therefore, all small firms produced where, AC=AR ie output Q1 and price P1. But now that, it is a monopoly, there is no such fear that customers will shift to another supplier, because the monopolist is the sole supplier. So it can profit maximise, and there will produce where MC=MR ie output Q2 and Price P2.

So this will increase price(from P1 to P2) and reduce output(from Q1 to Q2). Option E.


I get it! thanks a lot!
One thing I just want to confirm though is that if it says "constant average costs" it always means a horizontal line showing MC=AC and not that the AC and MC curves stay unchanged? Is that correct?

Thanks again that really helped.
Anyone have the Jan 2012 paper?
Reply 85
Original post by heyquickquestion
Anyone have the Jan 2012 paper?


On this thread

http://www.thestudentroom.co.uk/showthread.php?t=1922640
Reply 86
Anyone got any ideas which markets are likely to come up in section B? Supermarkets hasn't appeared for yonks and they seem to be quite fond of petrol retail...
Reply 87
Does AR = demand and MC = supply curve in all circumstances?
Reply 88
Original post by bhavikrajani
I get it! thanks a lot!
One thing I just want to confirm though is that if it says "constant average costs" it always means a horizontal line showing MC=AC and not that the AC and MC curves stay unchanged? Is that correct?

Thanks again that really helped.


No problem :smile:

Constant average costs means that AC is horizontal, which means MC will be the same.
Even if MC and AC are horizontal, a rise in costs can raise the AC and therefore MC as well, but this is unlikely to come up, so don't worry :smile:
Reply 89
Contestability has a very high chance of coming up
Reply 90
Is contestability just that there are no barriers to entry/exit? Firms can enter the market if the price is high and earn 'hit and run' profits before exiting the market when the price subsequently decreases to the normal level
Reply 91
Original post by mike_17590
Is contestability just that there are no barriers to entry/exit? Firms can enter the market if the price is high and earn 'hit and run' profits before exiting the market when the price subsequently decreases to the normal level


Pretty much. If a market is contestable, there should be low sunk costs. Also factors such as high cost of technology, higher brand loyalty through advertising, legal barriers such as patents and limit pricing will all make a market less contestable.
Reply 92
Got to go do some serious last minute revision. Hope to see you all 24 hours after the day of the exam :smile:
Hey can anyone help me out with some info on "monitoring prices" or even just a definition, as it’s on the spec but I can’t find notes anywhere. Also how would anyone go about a "diagrammatic explanation to compare a monopoly and perfect competition" there seems to be so many?

Thanks a lot and good luck for tomorrow :smile:
Reply 94
Could anyone explain to me why the industry supply curve in perfect competition is the horizontal summation of the marginal cost curve? :s-smilie:
Original post by emmaaa88
the horizontal summation


In English...
Reply 96
Original post by bhavikrajani
Hey can anyone help me out with some info on "monitoring prices" or even just a definition, as it’s on the spec but I can’t find notes anywhere. Also how would anyone go about a "diagrammatic explanation to compare a monopoly and perfect competition" there seems to be so many?

Thanks a lot and good luck for tomorrow :smile:


Not sure what monitoring prices means, probably something to do with the governemnt keeping track of prices to ensure that they do not go above certain levels. Its unlikely to come up though...

The diagrammatic explanation, I think the key points, is the difference in MR and AR, so how one is a price taker the other a price setter. Compare effciencies through the diagrams etc. Basically just compare the two through diagrams :smile:
Reply 97
Haven't been able to revise for this properly as it's always been one of my better topics and I've had other exams.

Probably just going to skim through every past paper since 2009 (because I think that's when this new spec started), no time to do every single one.

....Unless someone has some new amazingly good resource/revision material that will drastically improve my grade and they'd be willing to share it with me :tongue:.

Either way, good luck everyone. And don't forget, half the marks in the comprehension (except for the 4 marker) are evaluation!
Reply 98
Original post by Tsunami2011
In English...


That's just what my notes say.

"The Market Supply curve in perfect competition is the horizontal summation of the firm's marginal cost curves above AVC."

I don't understand what it's talking about. :confused:
Reply 99
Original post by emmaaa88
That's just what my notes say.

"The Market Supply curve in perfect competition is the horizontal summation of the firm's marginal cost curves above AVC."

I don't understand what it's talking about. :confused:


The MC curve acts as the supply curve above AVC, below it the firm exits. As AR=MR is horizontal, and it is profit maximizing. Wherever AR=MR intersects the MC curve is the level of output, therefore the MC curve is effectively the supply curve.

Quick Reply

Latest