A2 AQA Economics Unit 3 (ECON3) 11th June 2015
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Original post by stardude8
Most of the evaluation points seem to be about two things:
-the different efficiencies, which you can use to compared, say, perfect competition with monopoly, and
-the effects on producer and consumer surplus, and from that the overall effect on economic welfare.
Perfect competition
-Productively efficient (producing at the lowest point of ATC curve, where MC=ATC)
-Allocatively efficient (where Price(which is the same as AR)=MC)
-Other efficiencies, such as X-efficiency.
-The suitability of the assumptions made for perfect competition for real markets- for example the absence of barriers to entry.
-Relative to monopoly, perfect competition maximises overall economic welfare(consumer surplus+producer surplus)
-The existence of profit depends on whether you are in the short run or long run.
-Firms can only increase profits by cost-cutting, but with perfect information, firms may not have much incentive to cut costs, unless other firms cut costs.
-The fact that products are exactly the same means consumer actually has very little choice.
Monopoly
-Productively inefficient
-Allocatively inefficient
-Other efficiencies (X-inefficiency)
-But monopoly may be more efficient than competition if there are large economies of scale for the firm in a monopoly.
-May be dynamically more efficient than monopolies, as large profits can be invested back into R&D, but may not be more dynamically efficient because profit maximisation may not occur.
-Loss of consumer surplus and producer surplus leads to deadweight loss.
-The size of these effects depends on the amount of monopoly power a firm holds.
Oligopoly
-As above, look at the different efficiencies.
-Collusion - leads to welfare loss.
-Kinked demand curve model criticism (does not show price determination, and that there will be price changes due to demand and supply shocks at least)
-Size of effects depends on concentration ratios.
Writing this out has actually been good for my revision haha. Hope this helps
-the different efficiencies, which you can use to compared, say, perfect competition with monopoly, and
-the effects on producer and consumer surplus, and from that the overall effect on economic welfare.
Perfect competition
-Productively efficient (producing at the lowest point of ATC curve, where MC=ATC)
-Allocatively efficient (where Price(which is the same as AR)=MC)
-Other efficiencies, such as X-efficiency.
-The suitability of the assumptions made for perfect competition for real markets- for example the absence of barriers to entry.
-Relative to monopoly, perfect competition maximises overall economic welfare(consumer surplus+producer surplus)
-The existence of profit depends on whether you are in the short run or long run.
-Firms can only increase profits by cost-cutting, but with perfect information, firms may not have much incentive to cut costs, unless other firms cut costs.
-The fact that products are exactly the same means consumer actually has very little choice.
Monopoly
-Productively inefficient
-Allocatively inefficient
-Other efficiencies (X-inefficiency)
-But monopoly may be more efficient than competition if there are large economies of scale for the firm in a monopoly.
-May be dynamically more efficient than monopolies, as large profits can be invested back into R&D, but may not be more dynamically efficient because profit maximisation may not occur.
-Loss of consumer surplus and producer surplus leads to deadweight loss.
-The size of these effects depends on the amount of monopoly power a firm holds.
Oligopoly
-As above, look at the different efficiencies.
-Collusion - leads to welfare loss.
-Kinked demand curve model criticism (does not show price determination, and that there will be price changes due to demand and supply shocks at least)
-Size of effects depends on concentration ratios.
Writing this out has actually been good for my revision haha. Hope this helps
Good list but a monopoly wouldn't lead to a loss in producer surplus, it would increase producer surplus and extract consumer surplus.
Original post by Schmitzel
Des anybody know whether it's actually necessary to distinguish between all the different views of the various economists, I'm pretty sure you can still get level 5 answers without going into detail about the different views of the various economists, right?
You don't need to, you can bring in viewpoints if appropriate but great evaluation is the key to level 5
Original post by 789tom789
Good list but a monopoly wouldn't lead to a loss in producer surplus, it would increase producer surplus and extract consumer surplus.
You are right, I phrased it incorrectly. Producer surplus increases and consumer surplus decreases in a monopoly. But there is deadweight loss, made up of consumer surplus loss and producer surplus loss(although there is a net gain in producer surplus). Is this correct?
Original post by ridirahman
Why is the answer D?
Why is the answer D?
The key word is index, a different index may be used for each firm so the only thing we can say with certainty is that the rate of labour productivity fell faster at firm X than firm Y, hope this helps
Original post by stardude8
You are right, I phrased it incorrectly. Producer surplus increases and consumer surplus decreases in a monopoly. But there is deadweight loss, made up of consumer surplus loss and producer surplus loss(although there is a net gain in producer surplus). Is this correct?
Deadweight loss occurs in a monopoly only due to the loss in consumer surplus. There is no loss in producer surplus in a monopoly.
Original post by 789tom789
Deadweight loss occurs in a monopoly only due to the loss in consumer surplus. There is no loss in producer surplus in a monopoly.
No net loss of producer surplus, as I said the overall level of producer surplus increases. But the deadweight loss is made up of two triangles, one of which was previously consumer surplus, and the other previously being producer surplus. So while producer surplus increases, part of the previous producer surplus is lost on the diagram.
Original post by stardude8
No net loss of producer surplus, as I said the overall level of producer surplus increases. But the deadweight loss is made up of two triangles, one of which was previously consumer surplus, and the other previously being producer surplus. So while producer surplus increases, part of the previous producer surplus is lost on the diagram.
Ah that's correct
Original post by ridirahman
Why is the answer D and not C,B or A?
Why is the answer D and not C,B or A?
Please stop spamming this thread with Unit 1 content when this is a unit 3 thread, if you want to discuss the content in the Unit 1 exam start a thread on it....
Original post by stardude8
Most of the evaluation points seem to be about two things:
-the different efficiencies, which you can use to compared, say, perfect competition with monopoly, and
-the effects on producer and consumer surplus, and from that the overall effect on economic welfare.
Perfect competition
-Productively efficient (producing at the lowest point of ATC curve, where MC=ATC)
-Allocatively efficient (where Price(which is the same as AR)=MC)
-Other efficiencies, such as X-efficiency.
-The suitability of the assumptions made for perfect competition for real markets- for example the absence of barriers to entry.
-Relative to monopoly, perfect competition maximises overall economic welfare(consumer surplus+producer surplus)
-The existence of profit depends on whether you are in the short run or long run.
-Firms can only increase profits by cost-cutting, but with perfect information, firms may not have much incentive to cut costs, unless other firms cut costs.
-The fact that products are exactly the same means consumer actually has very little choice.
Monopoly
-Productively inefficient
-Allocatively inefficient
-Other efficiencies (X-inefficiency)
-But monopoly may be more efficient than competition if there are large economies of scale for the firm in a monopoly.
-May be dynamically more efficient than monopolies, as large profits can be invested back into R&D, but may not be more dynamically efficient because profit maximisation may not occur.
-Loss of consumer surplus and producer surplus leads to deadweight loss.
-The size of these effects depends on the amount of monopoly power a firm holds.
Oligopoly
-As above, look at the different efficiencies.
-Collusion - leads to welfare loss.
-Kinked demand curve model criticism (does not show price determination, and that there will be price changes due to demand and supply shocks at least)
-Size of effects depends on concentration ratios.
Writing this out has actually been good for my revision haha. Hope this helps
-the different efficiencies, which you can use to compared, say, perfect competition with monopoly, and
-the effects on producer and consumer surplus, and from that the overall effect on economic welfare.
Perfect competition
-Productively efficient (producing at the lowest point of ATC curve, where MC=ATC)
-Allocatively efficient (where Price(which is the same as AR)=MC)
-Other efficiencies, such as X-efficiency.
-The suitability of the assumptions made for perfect competition for real markets- for example the absence of barriers to entry.
-Relative to monopoly, perfect competition maximises overall economic welfare(consumer surplus+producer surplus)
-The existence of profit depends on whether you are in the short run or long run.
-Firms can only increase profits by cost-cutting, but with perfect information, firms may not have much incentive to cut costs, unless other firms cut costs.
-The fact that products are exactly the same means consumer actually has very little choice.
Monopoly
-Productively inefficient
-Allocatively inefficient
-Other efficiencies (X-inefficiency)
-But monopoly may be more efficient than competition if there are large economies of scale for the firm in a monopoly.
-May be dynamically more efficient than monopolies, as large profits can be invested back into R&D, but may not be more dynamically efficient because profit maximisation may not occur.
-Loss of consumer surplus and producer surplus leads to deadweight loss.
-The size of these effects depends on the amount of monopoly power a firm holds.
Oligopoly
-As above, look at the different efficiencies.
-Collusion - leads to welfare loss.
-Kinked demand curve model criticism (does not show price determination, and that there will be price changes due to demand and supply shocks at least)
-Size of effects depends on concentration ratios.
Writing this out has actually been good for my revision haha. Hope this helps
thankyouuu, really good list, my teacher keeps advising to develop my answer more and apply it to the extract, as its a synoptic paper. really hoping to get an A in this paper
My advice would be to download the exemplar work off the AQA website and analyse what the top answers do that the middle ground answers don't. Easy way to find little things that can add a few marks, or to completely change the structure of your answers to suit the exam
(edited 9 years ago)
Original post by leinad2012
My advice would be to download the exemplar work off the edexcel website and analyse what the top answers do that the middle ground answers don't. Easy way to find little things that can add a few marks, or to completely change the structure of your answers to suit the exam
This paper is for AQA so using edexcel material is not wise and mostly irrelevant in terms of marking since AQA is levels and 6EC03 is still based on individual marks
Original post by Schmitzel
Des anybody know whether it's actually necessary to distinguish between all the different views of the various economists, I'm pretty sure you can still get level 5 answers without going into detail about the different views of the various economists, right?
That count as knowledge which is not essential if you are able to show knowledge in other areas. Remember it is not a history paper so you need to show strong economic analysis
Original post by keynes24
This paper is for AQA so using edexcel material is not wise and mostly irrelevant in terms of marking since AQA is levels and 6EC03 is still based on individual marks
Yes sorry, I meant off AQA, no idea why I put edexcel
, use exemplar essays from teh AQA website, I found them really helpful last yearOriginal post by stardude8
Most of the evaluation points seem to be about two things:
-the different efficiencies, which you can use to compared, say, perfect competition with monopoly, and
-the effects on producer and consumer surplus, and from that the overall effect on economic welfare.
Perfect competition
-Productively efficient (producing at the lowest point of ATC curve, where MC=ATC)
-Allocatively efficient (where Price(which is the same as AR)=MC)
-Other efficiencies, such as X-efficiency.
-The suitability of the assumptions made for perfect competition for real markets- for example the absence of barriers to entry.
-Relative to monopoly, perfect competition maximises overall economic welfare(consumer surplus+producer surplus)
-The existence of profit depends on whether you are in the short run or long run.
-Firms can only increase profits by cost-cutting, but with perfect information, firms may not have much incentive to cut costs, unless other firms cut costs.
-The fact that products are exactly the same means consumer actually has very little choice.
Monopoly
-Productively inefficient
-Allocatively inefficient
-Other efficiencies (X-inefficiency)
-But monopoly may be more efficient than competition if there are large economies of scale for the firm in a monopoly.
-May be dynamically more efficient than monopolies, as large profits can be invested back into R&D, but may not be more dynamically efficient because profit maximisation may not occur.
-Loss of consumer surplus and producer surplus leads to deadweight loss.
-The size of these effects depends on the amount of monopoly power a firm holds.
Oligopoly
-As above, look at the different efficiencies.
-Collusion - leads to welfare loss.
-Kinked demand curve model criticism (does not show price determination, and that there will be price changes due to demand and supply shocks at least)
-Size of effects depends on concentration ratios.
Writing this out has actually been good for my revision haha. Hope this helps
-the different efficiencies, which you can use to compared, say, perfect competition with monopoly, and
-the effects on producer and consumer surplus, and from that the overall effect on economic welfare.
Perfect competition
-Productively efficient (producing at the lowest point of ATC curve, where MC=ATC)
-Allocatively efficient (where Price(which is the same as AR)=MC)
-Other efficiencies, such as X-efficiency.
-The suitability of the assumptions made for perfect competition for real markets- for example the absence of barriers to entry.
-Relative to monopoly, perfect competition maximises overall economic welfare(consumer surplus+producer surplus)
-The existence of profit depends on whether you are in the short run or long run.
-Firms can only increase profits by cost-cutting, but with perfect information, firms may not have much incentive to cut costs, unless other firms cut costs.
-The fact that products are exactly the same means consumer actually has very little choice.
Monopoly
-Productively inefficient
-Allocatively inefficient
-Other efficiencies (X-inefficiency)
-But monopoly may be more efficient than competition if there are large economies of scale for the firm in a monopoly.
-May be dynamically more efficient than monopolies, as large profits can be invested back into R&D, but may not be more dynamically efficient because profit maximisation may not occur.
-Loss of consumer surplus and producer surplus leads to deadweight loss.
-The size of these effects depends on the amount of monopoly power a firm holds.
Oligopoly
-As above, look at the different efficiencies.
-Collusion - leads to welfare loss.
-Kinked demand curve model criticism (does not show price determination, and that there will be price changes due to demand and supply shocks at least)
-Size of effects depends on concentration ratios.
Writing this out has actually been good for my revision haha. Hope this helps
Cheers
Original post by UkeHarvey
Any advice on writing a 25 mark question? Anything...
I just try to make sure I cover all the four main areas mentioned in the mark scheme of knowledge(definitions), application(use of text and real-life data), analysis(diagrams, chains of reasoning) and evaluation (for and against, it depends on, use of real-life data/text to evaluate, final judgement and evaluative diagrams).
Original post by stardude8
I just try to make sure I cover all the four main areas mentioned in the mark scheme of knowledge(definitions), application(use of text and real-life data), analysis(diagrams, chains of reasoning) and evaluation (for and against, it depends on, use of real-life data/text to evaluate, final judgement and evaluative diagrams).
i struggle when it comes to making final judgements...any advice?
Original post by lucy-ox
i struggle when it comes to making final judgements...any advice?
It's definitely a difficult part of the essay - here is a guide for what to do to get a good conclusion, although I'm sure there are ways you could improve on my suggestions.
For a conclusion, begin by directly answering the initial question, by repeating the initial wording in a sentence with your decision.
Then give a reason for the decision - this can be done by saying the advantages outweigh the disadvantages and briefly mentioning what those are again in one sentence, and/or by saying that the current circumstances of the UK economy (use statistics) mean that his should/shouldn't happen (negative output gap, low inflation, spare capacity in the labour market etc.)
After that, give two evaluative comments using the phrase 'depends on' (e.g. short/long run, size of effect, global economic conditions, etc.).
I'll give an example conclusion to this question - 'should the UK Government be running a budget deficit?'
To conclude, the UK Government should be running a budget deficit, because the UK economy is currently in a negative output gap (give statistic), so there is insufficient aggregate demand with lower consumption and investment which must be made up for with a budget deficit, increasing the government spending part of the AD equation. Having high amounts of spare capacity in the economy and with inflation at 0% CPI, a budget deficit is unlikely to result in a high rate of inflation. However there must be other considerations when deciding whether running a budget deficit is viable. It depends on the size of the deficit - too large a budget deficit might lead to excessive debt levels. The effect of a budget deficit on the UK economy also depends on whether it is allowed to continue in the long run, in which case crowding out is more likely to occur, or the deficit only remains in the short term.
This is the way I do it most of the time and it seems to work well, but by no means is it perfect - hopefully there are others who can help us improve these final judgements. Hope this helps
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