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

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For the 25 markers would you write 2 definitions in the intro then not define for the rest and focus on theory or would you define as a knowledge point in each paragraph?

Reply 781

AgentWindy

Original post by KnoVolt

Well monopoly is single/dominant seller in market. Monopsonist is single/dominant buyer in market (in this case labour).

Talk about how monopsony offers lower wage and lower employment. They do not offer higher wage to attract more later our because by increasing the next employer's wage, they have to increase wage for all existing employees (hence the MC curve above the AC curve).
But with trade union they can help increase both wage and employment.

Draw excess supply of labour diagram if needed.
Draw monopsony diagram if needed.

Watch this
www.youtu.be/9TnuhpzhlsQ

thank you!! that really helped

Reply 782

ridirahman

Original post by AgentWindy

i think thats only if they mention an improvement to the current market situation. you may be able to bring it in, only if you're confident though (im not)

It's because I might run out of things to write when talking about market failure so I thought I could write about cba also.. ahh okayy and what other diagrams except of MSC/MPC could you draw for an enviromental market failure question??

Reply 783

KnoVolt

Original post by Jayqwe

For the 25 markers would you write 2 definitions in the intro then not define for the rest and focus on theory or would you define as a knowledge point in each paragraph?

Personally I would define 2 at start. Then define just 2 more somewhere in my essay. This will be easy as you will need to introduce new points anyways.

Reply 784

AgentWindy

Original post by Jayqwe

For the 25 markers would you write 2 definitions in the intro then not define for the rest and focus on theory or would you define as a knowledge point in each paragraph?

yeah so, in the intro write your definitions and then add extra info like examples or measurement instruments if you can, also bring in your arguements/points that you intend to use later on.
heres what i do

if its a for/against

FOR:
2 for arguements
1 against

AGAINST:
2 against
1 for

Reply 785

AgentWindy

Original post by kiesh123

Anybody?

i think the market supply of labour would be like availability of training, location, etc and the individual would be the people that are willing to work in the particular industry.

so unemployment would be a good link. affecting both supplies

Reply 786

marco cb

Hi guys, what are the bare essential graphs that we should know for U3?! Thanks.

edit: Woops, wrong thread - thought this was edexcel. No wonder I was getting confused by some of these conversations.

(edited 8 years ago)

Reply 787

KnoVolt

Original post by ridirahman

I'm sure you can fit a DWL diagram in there somehow as soon as you start the ball rolling.

Also... Whatever this is lol
https://drive.google.com/file/d/1SHVPDycs1xqq9WfWOZMBsyTaxT2uhWWKKQ/view?usp=sharing

(edited 8 years ago)

Reply 788

AgentWindy

Original post by marco cb

Hi guys, what are the bare essential graphs that we should know for U3?! Thanks.

the monopoly output is quite important.
showing MC=MR profit maximisng output
MR=0 revenue maximisng output
AR=MC marginal cost pricing (allocative efficiency and welfare maximisation)
AR=ATC average cost pricing (productive efficiency)

Reply 789

Artur96

What's the difference between equity and equality in economic sense?

Reply 790

AgentWindy

Original post by KnoVolt

I'm sure you can fit a DWL diagram in there somehow as soon as you start the ball rolling.

Also... Whatever this is lol

whats DWL?

Reply 791

KnoVolt

Original post by AgentWindy

whats DWL?

Dead Weight Loss.
Oh and also here's that diagram I forgot to add...see what you can make out of it
https://drive.google.com/file/d/1SHVPDycs1xqq9WfWOZMBsyTaxT2uhWWKKQ/view?usp=sharing

Reply 792

alicehtl

it's too late to scroll through 40 pages now, what are predicted questions if any please!

Reply 793

Artur96

Original post by alicehtl

it's too late to scroll through 40 pages now, what are predicted questions if any please!

Anything on labour markets and trade unions :biggrin:

Reply 794

ridirahman

Original post by KnoVolt

Dead Weight Loss.
Oh and also here's that diagram I forgot to add...see what you can make out of it
https://drive.google.com/file/d/1SHVPDycs1xqq9WfWOZMBsyTaxT2uhWWKKQ/view?usp=sharing

I swear that's buffer stocks or something? lool thanks anywayss

Reply 795

KnoVolt

Original post by ridirahman

I swear that's buffer stocks or something? lool thanks anywayss

From the notes on the right it's got to do with environment, pollution permits and externalities. So yeah... I know nothing on market failure anyways, gonna skip it

Reply 796

ridirahman

What's 'extended property rights' ? someone explain please?

Reply 797

AgentWindy

i dont mind if income and wealth comes up. or technical progress :smile:

Reply 798

aramen105

monopolies (Some Notes with evaluative points)

Disadvantages + Evaluation:

Monopolies operate at profit max (MC = MR) making supernormal profits in the long, and at least in the short term this bad consumers who lose some economic welfare (consumer surplus) as the market isn't allocativley and productively efficient (statically efficient). furthermore monopolies reduce out put increasing unemployment and this make the economy less competitive. To make the market operate more in the short term interests of consumers the government could intervene by introducing a regulator. While this may make the market more statically efficient the problem of 'regulatory capture may arise', this is where the industry who is being regulated influences the regulator to the point where it doesn't operate in the public interest. Regulation while it can have its problems may be better than a completely deregulated market though as monopoly will be free to exploit consumers and we may get even more dominant monopolies (e.g. a merger between sainsburys and tesco).

Monopolies restrict choice and consumer sovereignty while having prices higher than that of a competitive market. However how the monopoly is able to exploit consumers will be dependant on the nature of the market. If the monopolist has the benefit of large barriers to entry such as patent laws, ownership of scarce resources and high sunk and fixed costs they will be best positioned to exploit consumers as the market lacks contest-ability (its difficult for new entrants to enter the market). however if the opposite is the case and the market has high contest-ability then its unlikely that a monopoly will be able to fully exploit its position, it will have to behave in a more competitive way because otherwise it will not be able to survive in the long term (new entrants will enter the market and take its customers).

A natural monopoly is where duplication wastes scarce resources and amplifies costs, consequently competition would be inefficient. just like a normal monopoly and natural monopoly isn't statically efficient either and because its the sole provider to a market its best positioned to exploit consumers, this is because it part they often provide services and goods whose demand is very inelastic (water supply). Furthermore a natural monopoly cannot be (even if it wanted to) allocativley efficient (where MC = D (D = AR)) because it would make loses. to compensate for this the government would need to provide a subsidy or allow the monopolist to be price discriminatory. For example the government could allow a monopoly to be discriminatory in the 1st class. This is where a monopoly will sell a product at its maximum price to each individual consumer wiping out the consumer surplus, but this allows all people of all different incomes to purchase the same product.

Monopolies may be better off being broken up, contestable markets (with many different firms) are more likely to be more responsive to consumer demands, feature lower prices (in at least the short run) and be more cost efficient. in a monopoly because of the lack of competition the ATC is likely to float upwards. Having to regulate monopolies is costly and can be difficult to prove wrong doing and may reduce innovation levels, and all of this comes at a greater cost to consumers.

Advantages + Evaluation:

A monopoly can be dynamically efficient in the long run, unlike a perfectly competitive firm and this can bring consumers significant benefits. by lowering its MC curve a monopoly can result in a an output greater and price lower than in a competitive market scenario. however a a firms willingness to be dynamically effcient will depend on its market circumstances, is the market is less competitive and has lower contest-ability there is a solid argument that the market will be more dynamically efficient. this is because if a company innovates in a market without competitors it will be able to better placed to protect and profit off of its investment. However the're may still need to be regulation to insure that the firm is dynamically efficient and doesn't simply pass on all of its profits to shareholders.

For innovation to happen a firm needs to to make large profits (especially in industries like pharmaceuticals) and so be a dominant position, other wise in may not be able to take on the risks of innovation. Some economists such as Joseph Schrumter believe in the idea of creative destruction which suggests that firms who aren't dynamically efficient will eventually be replaced by firms which are more effective and efficient. however some economists would question that idea, is a natural monopoly suddenly going to be replaced? or will it be due to government intervention? will the economy be efficient if an electricity supplier behaves in a monopolistic way for decades?

Because a monopoly will often serve a huge proportion of a market it will be able to exploit the benefits of economies of scale and so benefit consumers, furthermore if the monopoly is dominant at home it may be able to penetrate foreign markets and so help the BOP (earn export revenues). monopolies make large profits which lot of its goes to just a few people (e.g the ceo) and monopolies can be seen to increase the levels of income inequality.

hope this helps..

Reply 799

Browns97

Original post by ridirahman

What's 'extended property rights' ? someone explain please?

i think they're a method of internalising the externality by given private firms responsibility for natural resources. An example being a chemical company dumping waste in the river, creating negative externalities in production. Extended property rights make the chemical company responsible for cleaning the river whereas in the absence of extended property rights the tax payer would pay to clean the river.