Aqa AS Economics Unit 1 11th May 2015

WTF i thought u had to do both contexts, i did both 1 paragraph each, noooooooooooooooooooooooooooooooooooooooooooooooooooo **** me

Did the question actually explicitly demand percentages? I just literally made a couple of points of comparison about the relative positions of the lines on the graph at the start and end, which line was generally higher than the other etc.

According to the jan 09 paper, It was B . Really disappointed with the Econ exam structure. How can they set it up for one mark a minute, when surely you need at least 3-4 minutes to comprehend and analyse the data and and at least 10 minutes extra to put all your ideas together for the 25 marker. Then they moan about handwriting and spelling being of a poor standard by students in exams when it's these stupid timings that put us in a rush with little chance to take care of neatness and grammar.

4. 25 marker was alright but some people say that its a demerit good? I put that cars and energy are merit good since cars make us save time etc.

multiple choice had a few questions which repeated from past papers, and section B, have you ever seen a paper where they give you a 3 part structure for the essay?
a lot easier in comparison to some in the past, i did unit 1 last year and that paper was relatively difficult, trust me unit 2 will be a difficult paper this year

WTF i thought u had to do both contexts, i did both 1 paragraph each, noooooooooooooooooooooooooooooooooooooooooooooooooooo **** me

thanks for low grade boundaries comrade!

This was a retake for me. I got a high C last year in econ1 but suffered from the high grade boundaries. But this year's exam was horrible. I predict the grade boundaries should hopefully be low.


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Any speculation as to what the grade boundaries are going to be like? Judging by the general reaction on here I think/hope they'll be lower than usual?

Sorry if this has already been asked

Mmmmh maybe for some evaluative comments later, but even then it would have been a bit of a stretch. Cars produce negative externalities in both production and consumption: a merit good is a good which is believed to generate positive externalities, especially in consumption (the spill-over effect in production is a marginal topic in AQA). That's why you had the defibrillators example. Energy would have been a better option probably, would have opened a lot of space for evaluation on opportunity cost for renewable energy.

Anyway I went for context 2 as well. This is how, if my memory doesn't betray me:


5 marks: defined technical economies of scale as "internal cost advantages that a firm can use when expanding production in the long run by using high-valued capital". And then some baffling on the LRAC being spread over a larger quantity of output. Referring to the LRAC relation, the internal nature of technical economies of scol, the long run idea, and the application to capital should be enough to get you all the 5 AO1 marks.

You can also have 4 AO1 and AO2 if you bring an example I suppose, or a diagram (but who does diagrams on 5 marks question? Even if there are precedents in some mark schemes)


8 marks: nothing to declare here

12 marks: defined productivity as the efficiency of an economic agent in producing output with fixed factors on production (1 AO1 mark), formula of output/unit of input (1 AO1 mark maybe), defined specialisation of labour as workers being selected to carry out specific task where they have specific skills which are superior to the average worker. Link this to the division of labour theory of Smith (one or two AO2 marks).

Explained why specialisation increases productivity as workers become more efficient when specialising on a specific task -> the rise in labour productivity -> workers produces more with the same wage -> c.b. leads to higher productivity. This approach should get you 3-4 AO3

Then linked this to the competitive advantage -> the fact that through a productivity gain from specialisation the firm produces more but at the same ATC -> can afford to lower prices to consumers -> depending on elasticity can sell a higher quantity at a lower price and c.b. be more price-competitive on the market, and makes more profits. 3-4 AO3 here as well

Then D/S diagram with supply switching to the right as a result of increased productivity. Drawing + breakdown of the diagram with switch from P1 to P2 and Q1 to Q2 should give around 5-6 AO3, considering how diagrams as weighed in the marks scheme.

This approach should bring in at least 11 I guess

25 marker: this was a relatively messy question in the way it was presented, but in hindsight offered a lot of flexibility. Plenty of options for application and evaluation between the two extract. Rather than being a question based on subsidies alone as I initially thought it was more about financial government intervention in general and the stance that firms should be "left alone" and regulated by market forces. I guess the idea of the examiner was to push for a

Intro
Pro free market paragraph (cars, blockbuster, energy, others)
Pro government intervention (defibrillators, others)
Evaluation

kind of structure. And build your application on that. That's how I went through it:

Relatively poor intro, just throwing some knowledge around on the subject on markets system and allocation of resources. An evaluative comment at the end arguing that the nature of the good in terms of externalities was probably the true discriminant. 2-3 marks here.

First paragraph: ignore cars and energy and referred to extract F and the blockbuster example. Context on Blockbuster suffering during mid 2000s because of lack of entreprenurial vision and innovation. Chain of reasoning on allocative efficiency, scarsce resources, price mechanism, signalign functions, incentives, competition, substitutes (AO2 for the WHM and Netflix examples). Generally, pushed the idea that a service market for leisure like films & music should be left to the forces of demand and supply because in the long run this will lead to better allocatively and dynamically efficient firms. If the government intervenes, it can actually worsen the situation and worsen the market failure as by saving an inefficient firm (for whatever reason) the government distorts the market and kills the incentives to innovate/make the market more allocatively efficienct.

Advantage of this approach: maximization of welfare for both producers and consumers as the market forces will ultimately lead to more efficient markets

Disadvantage: unemployment, evaluative comment on the opportunity cost for the government to intervene and save the firm at the cost of taxpayers if the trade off in terms of job losess is high or the firm is vital for the economy (not the case of Blockbuster)

This should have brought home around 6-7-8 marks between AO2 AO3 and maybe AO4


Second paragraph: financial support such as subsidies are an excellent idea when talking about a merit good like defibrillators, which creates almost incalculable positive externalities in consumption. Refer to the extract where they say the goods has been "poorly subsidised".

Then subsidy diagram with the marginal cost curve moving to the right, with information failure with MSB > MPB showed as well. Chain of reasoning on the subsidy reducing the market failure and the underprovision -> price goes down, quantity goes up -> welfare gain and welfare losses. Linked this concept to the idea that subsidies in this example could also be used together with policies affecting the demand side to maximize efficiency: with subsidies, there could still be market failure in consumption as there's information failure and the goods is not underprovided, but still underconsumed -> government intervention with polices such as awareness campaigns to sensitize consumers on the real value of saving-life equipments such as defibrillators -> correct the informations failure, MPB = MSB, higher output and higher money value placed by the consumer on the good.

This should be around 8-9 marks including the diagram I suppose.

Final evaluative paragraph with 4-5 evaluation points:

- Government failure: lobbying by production industries might make government provide them higher funding than they actually need
- Elasticity
- Opportunity cost of making defibrillators public goods, CBA
- Opportunity cost of using alternative methods to correct the "problem", e.g. prevention on heart-related disease, CBA
- Final evaluative comment on whether market forces could allocate resources efficiently, depending on the healthcare system - e.g. American one, which is heavily privatized

This should catch 4-5 AO4 if everything goes according to plans.

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