AQA Economics 18th May 2012 Unit 1 Exam

just a quick question: for the five mark definition how much are we supposed to write because five marks is a lot.

for example if it says define externalities

would it be enough to say the cost or impact of either consumption or production on a third party individual who is not involved in the neither the production or consumption of a good or service.

thanks

also does everyone else find macroeconomics easier than micro?

Hi guys, what exactly is evaluation? Would you just say fir each paragraph in the 25 marker your just writing something relevant to the question e.g taxation for the demerit good, explain the diagram explain positives and negatives of using taxation? would that be all for each paragraph and then in the least paragraph conclude which policy works best etc ? Thanks everyone

Hi guys, what exactly is evaluation? Would you just say fir each paragraph in the 25 marker your just writing something relevant to the question e.g taxation for the demerit good, explain the diagram explain positives and negatives of using taxation? would that be all for each paragraph and then in the least paragraph conclude which policy works best etc ? Thanks everyone

hey could someone please help me on the multipe choice questions from jan 11 Econ 2 paper.

i got questions 16 and 18 wrong but i dont understand why the correct answer is correct.

for question 16 i got the answer as A but the correct answer is B but why would short run aggregate supply decrease from AD1 to AD2 as shown on diagram B

for 18 i thought the answer was B.

could someone please shed some light

Can someone explain the Functions of Price to me - Micro
I know you use them when talking about against government Intervention..
But can you only bring in the functions of price when there is excess Demand?

In agricultural goods, prices tend to fluctuate more due to conditions such as weather. But such variations are not good:
-lowers consumer confidence
-lowers farmers standards of living in high supply
-leads to wastage in high supply
-prevents investment due to lack of confidence
-makes country dependent on imports at times.

This is the best graph to use for buffer stock schemes.

The Supply curves are vertical as fixed in the short run (crops take time to grow).
S1 represents a good harvest (due to favorable weather conditions etc) and the high supply has forced market price down to below the min price and outside the ideal zone between max and min.
S2 represents a poor harvest (bad weather cond etc) and the low supply pushes market price up so it is above the max price and outside the ideal zone.

The government intervenes by artifically stimulating demand by buying up extra stocks - the D curve shifts out (the dashed D curve on the graph) which pushes the market price up to within the ideal zone.
And when there is a poor harvest the government will release stocks onto the market that have been held in storage to increase supply - S2 shifts out to the right (the dashed S curve) which lowers the market price to the acceptable zone.

In theory this should work. But perishable goods can expire before opportunity to release them on the market arises (wastage). High transport, administration and storage costs.

Hope that helps

Which parts exactly do they buy up? Do they buy up everything below/above the min/max price or just a small section?

Is government failure a huge part of unit 1 or is it more of unit 2???

For 16 consider what the question says.
Firstly there is a rise in wage rates - this is AS. A rise in wage rates means that costs of production will rise and so suppliers cannot produce as much with current resources, therefore AS will decrease (shift in to left).

Then there is a fall in interest rates - this is AD as it affects consumer spending. A fall in interest rates means there is less incentive for people to save, so more people will go out and spent, thus AD will increase (shift out to right). Therefore the answer must be B. Remember, movement along only occurs when the price changes - all other changes in factors results in shifts. You can eliminate graphs as soon as you know if there is a shift out in AD to try and narrow it down.

For 18, I think that this is one of the more difficult questions.
D should be ruled out immediately, it's nonsense and you cannot determine that from the data provided.
C will be wrong as productive capacity will only decrease if the RNI growth is negative.
B is not wrong, however the question states what is more likely. You could argue this but there is ultimately only one answer. It is not as likely as you cannot determine that accurately from the data, it could have been AS affecting the RNI not AD.
So you are left with A - it is the most likely to have happened - a fall in growth of RNI will lead to an increase in unemployment due to reduced growth.

Hope that helps.

Ad = c + i + g + (x - i)

Usually, he functions of price would be rationing, signalling, etc. However, keeping your question in mind, you can talk about Government Intervention using Maximum Prices to cause an excess demand; for example, an economy wants to overcome the shortage of rented accomodation - they set a maximum price so that more people can afford the rent, and also now that everyone else wants to rent a house at a lower price, an excess demand arises. (You could, depending on the nature of the question, connect this to rationing.)

To answer your initial question as to where else the "function of prices" can be used, I think this should help. http://tutor2u.net/economics/revision-notes/as-markets-price-mechanism.html

Hope that makes more sense