Edexcel A Level Economics A Paper 3 (9ECO 03) - 5th June 2023 [Exam Chat]

Original post by Philipp459

.... Not really. Because due to falling house prices it create negative equity, and mortgages are higher than what the house is worth. Therefore worse geographical mobility due to not being able to pay back the house by selling mortgage, so not able to accept jobs in other cities since you can't get rid of your house due to too high mortgage

That's wrong, people who will move can now get a cheaper mortgage than before, so it's improved

Reply 83

Clameron

I thought the J curve was only after a depreciation of currency

Original post by gogetter2k19

For the 2nd 25 marker I did labour shortages

My points were

P1) macro worsened current account as output falls LRAS shifts in prices increase more expensive exports -> less competitive -> worsened current account of balance of payments

E1) J curve as this will only have a long term effect for example foreign firms may be in contracts with UK firms and cannot switch, exports inelastic in short run however elastic in long run, which means current account may not worsen in the short run

P2) higher prices for consumers as production falls due to a shortage of labour -> higher output per unit cost -> causing firms like Maryland (biscuit company) to ration prices and as excess demand -> therefore higher prices for consumers

E2) however most processes are automated by machinery and Mary land may be exploiting technical economies of scale meaning labour shortage may not cause prices to increase. I also used current news such as AI advancements and how BT is cutting down over 20% of jobs as they are going to be automated meaning labour may not have an effect on prices anymore.

Reply 84

EleaB

Original post by Philipp459

.... Not really. Because due to falling house prices it create negative equity, and mortgages are higher than what the house is worth. Therefore worse geographical mobility due to not being able to pay back the house by selling mortgage, so not able to accept jobs in other cities since you can't get rid of your house due to too high mortgage

This is advanced stuff. But I think they might be just talking about how falling house prices will mean better access of housing for those who were previously unable to buy their preferred houses due to high prices. Since they can now purchase houses that might be closer to their jobs, this improves geographical mobility as they can now travel easily to jobs?

Reply 85

Original post by kostj111111

That's wrong, people who will move can now get a cheaper mortgage than before, so it's improved

I think both point hold merit. Because the people who bought a house before the housing market bubble burst, are stuck with high mortgages

Reply 86

kostj111111

Original post by Philipp459

I think both point hold merit. Because the people who bought a house before the housing market bubble burst, are stuck with high mortgages

How does that affect labour immobility then

Reply 87

AXAMBY

9

What 25 markers did everyone choose?

Reply 88

Original post by EleaB

This is advanced stuff. But I think they might be just talking about how falling house prices will mean better access of housing for those who were previously unable to buy their preferred houses due to high prices. Since they can now purchase houses that might be closer to their jobs, this improves geographical mobility as they can now travel easily to jobs?

Alright I understand you argument and thats true aswell. Will my point still be awarded?

Reply 89

s4mm1d3

Original post by Philipp459

.... Not really. Because due to falling house prices it create negative equity, and mortgages are higher than what the house is worth. Therefore worse geographical mobility due to not being able to pay back the house by selling mortgage, so not able to accept jobs in other cities since you can't get rid of your house due to too high mortgage

It depends on the context, because for young workers who don’t already own a home, moving to the city is more accessible for them due to lower house prices

Reply 90

IRCC_222

8

Original post by Philipp459

I think both point hold merit. Because the people who bought a house before the housing market bubble burst, are stuck with high mortgages

If housing prices fall people are more likely to afford housing and move to areas where there are high vacancies

Reply 91

s4mm1d3

Original post by Philipp459

I think both point hold merit. Because the people who bought a house before the housing market bubble burst, are stuck with high mortgages

I agree I think both are correct and can be justified 👌

Reply 92

IRCC_222

8

Original post by Philipp459

Alright I understand you argument and thats true aswell. Will my point still be awarded?

Both apply there's no negative marking along as ur point Is justified

Reply 93

Original post by kostj111111

How does that affect labour immobility then

individual homeowners could suffer from negative equity. This is where the
mortgage debt exceeds the value of the property and thus, homeowners
would not be able to sell their house without owing money to their mortgage
lender. When the housing bubble popped, it resulted in a dramatic fall in
house prices – this meant that if an individual had borrowed £240,000 for a
property that was initially valued at £300,000, if the value of that house fell to
£100,000, they could not walk away from the property without owing money to
the lender. Given this, it could create geographical immobility, as workers
would not be able to move from one area to another to take up a job as they
could not sell their property without incurring enormous losses. As such, the
collapse of the housing market and resulting market failure would have
resulted in significant geographical immobility of labour – creating further
market failure in the labour market.

Reply 94

EleaB

Original post by Philipp459

Alright I understand you argument and thats true aswell. Will my point still be awarded?

of course, economics always go both ways, ur definitely getting marks as long as you explained your point correctly

Reply 95

gogetter2k19

5

Original post by Clameron

I thought the J curve was only after a depreciation of currency

It’s used when prices of exports increase

Reply 96

EleaB

Original post by AXAMBY

What 25 markers did everyone choose?

Tax cuts and housing prices

Reply 97

kostj111111

Original post by Philipp459

individual homeowners could suffer from negative equity. This is where the
mortgage debt exceeds the value of the property and thus, homeowners
would not be able to sell their house without owing money to their mortgage
lender. When the housing bubble popped, it resulted in a dramatic fall in
house prices – this meant that if an individual had borrowed £240,000 for a
property that was initially valued at £300,000, if the value of that house fell to
£100,000, they could not walk away from the property without owing money to
the lender. Given this, it could create geographical immobility, as workers
would not be able to move from one area to another to take up a job as they
could not sell their property without incurring enormous losses. As such, the
collapse of the housing market and resulting market failure would have
resulted in significant geographical immobility of labour – creating further
market failure in the labour market.

All you did is made your life harder as you had to write so much more to explain it, the point that mobility improved is more clear

Reply 98

AXAMBY

9

Original post by gogetter2k19

Please tell me if I messed up or not for the second 12 marker

P1) limit pricing + I also draw a cost/rev diagram
E1) however illegal firms can get fined up to 10% and worsen their brand image damaging sales

P2) Loyalty cards (used Tesco as application and how cafe can implement the same strategy)

E2) however high street retailers suggest a monopolistic competition therefore they may not be able to maintain this in the long run ( I also did a long run monopolistic competition diagram)

I also talked about colluding for limit pricing but evaluated with their inability to set prices in monopolistic competition.

Also did loyalty but through experiences in store with product differentiation and evaluated with most products cant be significantly differentiated its not as effective as price.

Your answers seem fine to me

Reply 99