A2 AQA Economics Unit 3 (ECON3) 11th June 2015

I know what returns to scale are, but how does it relate to anything?

Economies of scale has nothing to do with returns to scale btw. And returns to scale has nothing to do with diminishing returns, so what's the point of it?

Who else aiming for an A* here?


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I need at least a B... I got an A last year, and an A would make my life easier because I need ABB for uni, but I have 2 subjects where an A is quite possible, so as long as I get one A, the B in economics will be satisfactory.

1.Demand for Labour

Perhaps you could add the idea that the demand for labour depends on their marginal revenue product (MRP), the change in total output from hiring one more worker, and how this combines the demand for the product and the productivity of labour.

Also, 'the productivity of the factor' could lead you to think about the productivity of other factors. For example, what is the effect of lower productivity of capital equipment on the demand for labour?

Another point is the relation between productivity, output growth and the demand for labour. When there is growth in the economy, the demand for labour will increase provided that the level of output increases faster than labour productivity. You could argue that relatively low UK unemployment is in part down to weak growth in labour productivity(the level of output is increasing much faster than labour productivity), hence George Osborne's focus in the upcoming budget on productivity.



2.Non-monetary factors affecting labour supply:

-Working conditions.
-Job security.
-Opportunities for promotion.
-Opportunities to work abroad.
-Employer-funded leisure facilities.
-Other sources of job satisfaction (working with people - teachers and nurses).

Overall, any increase in work satisfaction makes that type of work more attractive leads to an increase in labour supply.

Hope this is helpful

Hey that was really helpful! ^
Please could you explain to me the bit in bold because I don't quite understand it?

Thank you!

So as the economy grows, the total output of the nation is increasing, and because the demand for labour has derived demand, the demand for labour increases. This increasing demand for labour can be met in two ways: employing more workers, and/or increasing productivity(more output per unit of input).

So the UK economy is growing, so labour demand is increasing. But,UK productivity growth is weak (http://www.bbc.co.uk/news/business-32143552). The argument some make is that in order to to absorb the extra demand for labour, unemployment must fall much faster. If productivity had been increasing at a faster rate, then unemployment would not have fallen by as much.

I hope I've explained it well enough to you

Hi,

In the June 2014 paper, Context 2-question 05, http://filestore.aqa.org.uk/subjects/AQA-ECON3-QP-JUN14.PDF
I know you would have to define monopsony/oligopoly, but I'm finding it difficult to actually answer the question!-(how the market power of supermarkets can affect the profitability of dairy farms?)
Also would you recommend drawing the Kinked Demand curve relating to oligopoly rather than monopsony in this question?

Also, I don't understand how you would realise that you have to talk about perfect competition?

Thanks

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I found this question sooo difficult. It will depend on the question but the marks available for diagrams always vary from 2-4 depending on how many you draw. I always draw 2 or even 3 if i can think of three that are related because this banks those marks already so i would draw kinked and monopsony if you find the question hard. Also if you define and explain monopsony and oligopoly properly then you have 7 marks before you even get round to the question.

You don't have to talk about perfect competition in this question at all. It would be hard to argue that supermarkets are in perfect comp.
You would have to say how monopsony power can lead to the price falling as they have market power leading to reduced profitability. And then explain how oligopoly affected it as well

Hope this helped

As government intervention vs market forces discussion is a common DRQ question, what do you think the main arguments are?

For Govt intervention
- if markets are left to their own there may be misallocation of resources
- market may produce negative externalities as they do not consider the external costs ie there will be a market failure
- they have available tools to correct the market ie encourage firms to produce more merit goods through subsidies, etc

For Market forces
- if the government were to intervene, it will most likely result in government failure
- markets operate better on their own through the price mechanism (rationing, signalling and incentives)
- may distort efficiencies of individual firms

That is all I can think of atm. Is there anything else or?

could someone please help me out, I'm really confused as to why when you have a monopsony employer in a labour market, how a trade union minimum wage would increase the number of people they employ? I understand that it brings the wage rate up to the equilibrium but why would they employ more people?

thanks

Who else aiming for an A* here?


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