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Economics HL TZ2 P1, P2

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    How was it? What questions did you choose? I found both papers extremely easy. P1 I chose the first question (oligopolistic/perfect/monopolistic competition), and P2 I chose questions 1, 2 and 3. Although I'd have to admit Q1 of P2 (difference between economies of scale and law of diminishing returns) I struggled on, even though I shouldn't have, because I did not read up on it before the exam. I thought it was too basic that it won't even be tested! Oh well.
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    Shhush, you're not allowed to talk about it till 24 hours later. For now talk only about P1, barely a few hours have passed since P2.
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    (Original post by saachi)
    Shhush, you're not allowed to talk about it till 24 hours later. For now talk only about P1, barely a few hours have passed since P2.
    Sorry! I wasn't aware. We're just shy of a few hours before I finished P2 24 hours ago :P
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    (Original post by mintaltoids)
    Sorry! I wasn't aware. We're just shy of a few hours before I finished P2 24 hours ago :P
    just be careful! I'm in TZ2 as well and my best friend is in his eco exam right now!
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    (Original post by saachi)
    just be careful! I'm in TZ2 as well and my best friend is in his eco exam right now!
    Of course he's only taking P3 now right? Because I think everyone in TZ2 are done with P1-2. What did you think of P1?
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    I didn't do too well on P2 and 3, completely missed the unemployment one (confused cyclical with real-wage) on 2, and ran out of time to finish 3 properly....now can only hope that my P1 and IA can still pull me over the line.
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    All the papers were great. I just had some problems organizing all my sheets............. its painful to think about. For P1 I did question 1 on the theory of the firm, for P2 I did Q2, Q3 and Q5. For P3 (can't discuss yet). Anyone do similar questions?
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    The demand curve exception question was good and the Marshall Lerner/ J curve (Q5) was good. For the cyclical unemployment I got the diagram right but I forgot to mention that wages were stick downwards.

    What approach did you guys take to HL P1 Q1b?

    The one on the quote "market structures with few firm tend to be inefficient and charge higher prices" or something. I basically mentioned all the market structures and drew three diagrams Monopolistic competition, perfect competition in (long run equilibrium) and the one showing monopoly economics of scale compared to perfect competition/monopolistic competition.
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    I did Q1 on theory of the firm paper 1 - found it confusing at first but then i realized it wasn't that bad. I talked to my teacher who's a senior examiner and once the 24 hrs are over i will menton what he thoiught i should've mentioned.
    Paper 2 was brutal I think, my teacher also agreed he said they were testing really hard concepts. I did question 1, 2, 5 and screwed up 2 questions - depreciation one and unemployment one but my teacher said its only 25% of the grade so its fine - paper 3 is the most important one.
    Any people here planning on studying econ in uni?
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    24 hours are over mate. At least for those two papers.

    I'm doing economics and economic history if I got to LSE or pure econ otherwise (US).
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    Aren't over in my timezone. 2 hrs and a half until its been 24 hrs.
    Economic history sounds really interesting!
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    (Original post by Hyaline)
    The demand curve exception question was good and the Marshall Lerner/ J curve (Q5) was good. For the cyclical unemployment I got the diagram right but I forgot to mention that wages were stick downwards.

    What approach did you guys take to HL P1 Q1b?

    The one on the quote "market structures with few firm tend to be inefficient and charge higher prices" or something. I basically mentioned all the market structures and drew three diagrams Monopolistic competition, perfect competition in (long run equilibrium) and the one showing monopoly economics of scale compared to perfect competition/monopolistic competition.
    I put market structures with few firms include oligopolies and monopolies. They tend to be inefficient because they don't produce at the socially optimal level (where price equals marginal cost) and instead produce at a higher price (find MR=MC, go up to the demand curve and you'll find that the price is higher than P=MC). In contrast to this, market structures with many firms include perfectly competitive firms. Because they produce homogeneous products, they have to accept the market price (i.e. are price takers). That's why they will produce where P=AR=MC, which is at the socially optimal level, allowing it to be more 'efficient' than oligopolies/monopolies/monopolistic competition. You could also talk about the deadweight loss/loss of welfare that's generated by the increase in prices and also about the negative demand schedule because of differentiated (lesser quantity of substitutes) products, leading to brand loyalty etc. I reckon there was much to talk about for 1b.
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    Did #1 as well on P1, found it super broad... a lot of stuff to mention, reckon you'll be fine if you just mention some of it.

    P2 was nice I thought, did #1, #2, #3. They were all pretty broad as well, though. Could talk about a lot.
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    I did #1 on P1. I focused only on two aspects for the first question. Because barriers to entry and supernormal profits exist it is unlikely that many firms enter and leave the market often, hence shifts in supply and rarer and the price is less likely to fluctuate as a result of supply shock.

    I mentioned that in Oligopoly there is interdependence and the kinked model allows there to be shifts in costs of production without changes in price because of the sticky MR or whatever.

    In part B I talked about a crap ton of stuff -- wrote all in all like 14 pages (28 sides). Focused mostly on economies of scale, underproduction, price discrimination, increased choices in monopolistic, and research and development in monopoly/oligopoly.

    For Paper 2, I did the exceptions to law of demand, unemployment, and international trade. Found it extremely easy, but for exceptions I only mentioned veblen goods, giffen goods, and speculation, though I feel there are more.
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    Didn't anyone mention collusion as a source of price stability?!
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    (Original post by Hyaline)
    Didn't anyone mention collusion as a source of price stability?!
    Yes I did, but not because I necessarily felt that it was but more because I felt they wanted us to say it. Though I did say that if a formal cartel is formed it will usually be treated as a regulated monopoly (perhaps natural) and hence government regulation will maintain price stability.
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    Are bandwagon goods an exception to the law of demand, by the way? To me it makes no sense. Veblen goods yes, but bandwagon goods are as such because "everyone else is buying them". It's precisely the opposite of veblen goods. They are intended for the "mass affluent", and remind me of things like the iPhone or Playstation 3, which are luxury goods by any definition but derive their status because "everyone" has them.

    Thus if the price decreases, the size of "everyone" increases, increasing the bandwagon effect further exacerbating the increase in quantity demanded. Therefore if anything demand is just more sensitive to downward changes in price...

    My personal favorite is the giffen good, because you talk specifically about the income and substitution effects. It's the most theoretical of them all which I like, but I struggled finding real world examples (though I ended up talking about rice and meat in China).

    Oh an offshoot of the Veblen good I briefly mentioned (and cited myself as evidence :/, hope its ok) is "consumer ignorance" I don't know if that's the term. I said even at a common, non "veblen" type restaurant, higher prices imply "better" things, and consumers have psychological ignorance and are predisposed to think that quality correlates with price. And I said I myself have done this at shoe stores, but I kept the writing pretty professional and dry and all.
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    (Original post by arra)
    Are bandwagon goods an exception to the law of demand, by the way? To me it makes no sense. Veblen goods yes, but bandwagon goods are as such because "everyone else is buying them". It's precisely the opposite of veblen goods. They are intended for the "mass affluent", and remind me of things like the iPhone or Playstation 3, which are luxury goods by any definition but derive their status because "everyone" has them.

    Thus if the price decreases, the size of "everyone" increases, increasing the bandwagon effect further exacerbating the increase in quantity demanded. Therefore if anything demand is just more sensitive to downward changes in price...
    I'm not quite sure how 'bandwagon goods' are an exception to the law of demand at all.
    http://en.wikipedia.org/wiki/Law_of_..._law_of_demand
    I used these, and I'm pleased to see that it's mentioned speculation as not technically being an exception to the law of demand due to it violating the ceteris paribus assumption... as that's exactly what I put.

    (Original post by Hyaline)
    The demand curve exception question was good and the Marshall Lerner/ J curve (Q5) was good. For the cyclical unemployment I got the diagram right but I forgot to mention that wages were stick downwards.

    What approach did you guys take to HL P1 Q1b?

    The one on the quote "market structures with few firm tend to be inefficient and charge higher prices" or something. I basically mentioned all the market structures and drew three diagrams Monopolistic competition, perfect competition in (long run equilibrium) and the one showing monopoly economics of scale compared to perfect competition/monopolistic competition.
    I did questions 3, 4, 5 (I think) - the depreciation/devaluation question was indeed good. The cyclical unemployment one was question 2 right? I was put off by that question as I remember it mentioning there needing to be more than one diagram or something. I wouldn't have been sure whether to use a monetarist + Keynesian diagrams, or just a business cycle + Keynesian diagram, and I wouldn't have had time to use all three. I loved paper 2: it's one of four IB papers I've done so far that I'd be vaguely surprised not to have got a 7! I can't actually remember what question 4 was about, though; my head is filled with Biology!

    I did question 1 on P1. It was good but not very good: there was far too much to write on part B! I could have talked about X inefficiency, economies of scale, evaluated how realistic monopolies and perfect competition are relative to monopolistic and oligopolistic competition, the 'anomaly' of contestable markets, lots of "depends upon" phrases, real life examples... Alas I had no time for them. I did manage consumer and producer surplus, technical, productive, allocative and dynamic efficiency and prices. My game theory explanation in part A was a bit sloppy too. Hopefully it's still a fairly good 6.

    Paper 3 was very good though: I can't believe there were two questions on market failure! The Greek macroeconomic question was also remarkably apt given this morning's and yesterday's news. I'm glad we only needed to do three questions as the Venezuelan "two-tiered exchange rate" one looked a bit iffy, and Developmental Economics is almost always easy to stumble over, so I almost always avoid those.

    It's the one subject that I've came out of the exam hall thinking "I've got a good chance of a 7 here". (not that a 6 would be at all be surprising)
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    Did anyone do the cyclical/demand deficient unemployment question? Im curious what you wrote I totally screwed mine up.
    Harve - your points for part B are really good I actually didn't have too much to write. I'd be shocked if you don't get a 6/7
    And for question 1 theory of the firm I wrote about oligopolies, didn't mention monopolies because monopoly is one dominating firm, and I talked about collusion, kinked demand curve and non-price competition.
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    (Original post by meittarn)
    Did anyone do the cyclical/demand deficient unemployment question? Im curious what you wrote I totally screwed mine up.
    Harve - your points for part B are really good I actually didn't have too much to write. I'd be shocked if you don't get a 6/7
    And for question 1 theory of the firm I wrote about oligopolies, didn't mention monopolies because monopoly is one dominating firm, and I talked about collusion, kinked demand curve and non-price competition.
    Yeah I did it. I basically drew the business cycle and wrote about how there are constant fluctuations in GDP that lead to recessions. During recessions people get laid off by firms (drew AS AD shift) and wrote about cyclical unemployment I wrote a good 2.5 pages for it though so this is really a rough summary!

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