Competition - post a photo you've taken of nature >>

F581/ F582 Economics June 2013

Scroll to see replies

This is probably a stupid question but surely when demand goes up and, as a result, price goes up there will be an increase in supply which means the price will go back down?

In theory yes look on page 39 in the ocr textbook. However the exam wont ask you this. It may ask for determinants of supply.

And no question is stupid dude. your only stupid when your afraid to ask a question

Reply 781

mrdan

Original post by iggyDash

Okay thanks man, so when demand or supply changes the disequilibrium will eventually change back to an equilibrium? Would there be any point in slipping this into an 8 mark question about supply and demand?

Well said man

Reply 782

iggyDash

Yeah definitely if you have time, it wont hurt and they may give you a mark

Here is a video on answering 8 markers if you haven't already watched it - http://www.youtube.com/watch?v=38oY3XUH5sI

He also has other videos as well on this unit

Hope it helps man

Reply 783

Jsavidge

can someone help? for the indirect taxation/subsidy graphs do you need to show the 'consumers share of the tax burden' etc

Reply 784

shaggyk

Original post by Fas

theyre not likely to ask about allocative efficiency in the essay are they ? i thought it was just government intervention into market failure stuff :/

yeah they wouldn't ask about it in the essay, i wouldn't worry about it too much, just learn the definition of allocative efficiency and what it is generally, i'd also recommend learning about allocative inefficiency briefly.

Reply 785

iggyDash

Original post by Jsavidge

can someone help? for the indirect taxation/subsidy graphs do you need to show the 'consumers share of the tax burden' etc

I tend to show it just in case , i mean youre only sacrificing a couple of seconds and it also not hard to learn. I've only just learnt this diagram a couple of minutes ago and i already have a B from january's f581 exam

Reply 786

mrdan

Business relevance of price elasticity of supply anyone?

Reply 787

Minchains

ped
determinants :
number of producers
spare capacity
ease of storing stocks
factor mobility
length of production time

From this you can see that businesses can use this to determine whether it is a viable option to invest(planning),
- Allows a firm to predict the change in revenue with the change in price
- Firms can charge different prices in different markets if elasticities differ in income groups
- Allows a firm to decide how much tax to pass on to a consumer
- Enables the government to predict the impact of taxation policies on products
Source: here

(edited 10 years ago)

Reply 788

mandem2k11

Original post by mrdan

Business relevance of price elasticity of supply anyone?

Helps to influence their stock policies however it is not as useful as others, as most firms will try to keep as Elastic as possible to respond to market conditions

Reply 789

mrdan

Original post by mandem2k11

Helps to influence their stock policies however it is not as useful as others, as most firms will try to keep as Elastic as possible to respond to market conditions

Okay thanks

Reply 790

username963570

Original post by Jsavidge

can someone help? for the indirect taxation/subsidy graphs do you need to show the 'consumers share of the tax burden' etc

if you showed it , then it links in with a potentially evaluative point that the producer doesn't pay the full cost. So yeah i would :smile:

Reply 791

Jsavidge

Original post by Fas

if you showed it , then it links in with a potentially evaluative point that the producer doesn't pay the full cost. So yeah i would :smile:

Thanks, I get the indirect taxation diagram but the subsidy is a bit more complicated i find. Can someone explain a subsidy diagram?

Reply 792

mandem2k11

Original post by Jsavidge

Thanks, I get the indirect taxation diagram but the subsidy is a bit more complicated i find. Can someone explain a subsidy diagram?

Subsidy diagram is just your standard supply shifting outwards diagram

Subsidy = lower cost of production = increase in supply = fall in price = increase in quantity demanded

Reply 793

Minchains

Tax and subsidy diagrams, (subsidy not likely as Positive externalities were done in Jan)

Reply 794

Jsavidge

Original post by Minchains

Tax and subsidy diagrams, (subsidy not likely as Positive externalities were done in Jan)

thank ya

Reply 795

shaggyk

Original post by Jsavidge

Thanks, I get the indirect taxation diagram but the subsidy is a bit more complicated i find. Can someone explain a subsidy diagram?

Draw the subsidy diagram by a simple demand and supply diagram, show the supply increasing by a shift to the right.

Explanation: By introducing a subsidy the cost of production of the firm is decreased (cost of raw materials falls indirectly or unit labour costs fall etc..), this is an incentive for producers to increase supply (shown by a shift of the supply curve to the right) , as a result the prices fall leading to an increase in the quantity demanded, hence consumption increases.

Reply 796

Jsavidge

Original post by shaggyk

bingo! thanks

Reply 797

iggyDash

pros and cons of government intervention methods to correct market failure?

Reply 798

Mpstang

I'm really clueless into how to answer an 18 mark question on regulation or government intervention and somebody help me on this? I've looked in the OCR textbook and I also can't really find disadvantages to subsidies.
Can someone guide me in the right direction?