**********OFFICIAL OCR ECONOMICS F581 13th MAY 2014 THREAD************

A couple of *facepalm* errors are as follows:

1. Not labeling the D or S curve on consumer/producer surplus diagrams. This renders all the marks (normally 4) void, even if everything else makes sense.

2. Using AD/AS anywhere in the paper.

3. In PED/XED/YED/PES definitions pupils write "the responsiveness of a change in demand/supply to a change in *price/income/price of good A*.

The highlighted red word should not be included, some pupils continue to put "change" in twice.

4. Not putting comments (for examples see one of my earlier posts) in comment questions, just analysing. Discussion questions should be balanced in positives and negatives.

5. When describing factors of production and giving examples pupils regularly get Land and Enterprise examples wrong. When giving an example of land it is the SITE of whatever is being discussed (or you can go for beaches/mountains/oil). Use the word site though, shortcut to success. Note: fuel is not land, it has been processed by man and is capital. For Enterprise/Entrepreneurship the example should be the risk taking of the managers. The managers themselves are not examples, they are labour.

6. Shifting Demand for any reason if there is a tax.

7. Not understanding what positive and negative values mean for XED/YED

8. saying ceteris paribus does not hold for a comment question and failing to give an example of what else could affect the situation.

9. If a question says "using the figures in part b" or something similar, you NEED to do just that. You can't just write the correct theory and expect to get full marks, application is needed when instructed to do so.

10. Positive and negative externalities are not the same as external costs and benefits. There is no market failure (negative externality) if there is an external cost to a third party which is fully paid for by the 'polluter'. I.e. Supposing I charge the perfect tax on carbon pollution so that it covers the full external cost, it does not eliminate the fact that it does affect a third party, just now they are completely compensated.

That's without even talking about the fun ways to get the 18 mark essay wrong. I'm sure there's more but I'm off for a cuppa for a few minutes.

A negative externality is when the marginal social cost is greater than the marginal private cost.
You have stated that the marginal social benefit is lower than the marginal private benefit, i don't believe this statement exists for anything in this course.

I think what you've tried to do is draw the opposite of a positive externality but it doesn't work like that

How does the government providing public goods solve market failure?


Posted from TSR Mobile

Private firms will have little incentive to provide them (low revenue, lower profits). Therefore, the government provide them using tax revenues provided from firms and consumers, correcting the market failure (free rider problem)

A negative externality is when the marginal social cost is greater than the marginal private cost.
You have stated that the marginal social benefit is lower than the marginal private benefit, i don't believe this statement exists for anything in this course.

I think what you've tried to do is draw the opposite of a positive externality but it doesn't work like that

The guy is right, the negative externalities arising from consumption are when the marginal social benefit are lesser than the marginal private benefit.

See this is where I am quite correct, and you (and perhaps OCR) are quite wrong. We are talking about consumption, thus we ought to be looking at the benefits.
"



The guy from tutor2u also confirmed to me over twitter that
MPB > MSB is a correct way of showing a negative externality in consumption.

hey i was wondering if anyone could help me with understanding the essay question, i'm having difficultly understanding the difference between Level 2 and Level 3, I have read this entire forum and all the posts regarding it, and i'm still confused, like what do you need to talk about and where in your essay to get level 2 and what and where do you need to talk about for Level 3 and where in your essay?

This is pretty much a last ditch attempt to understand it, I have difficultly with it for quite some time, so any help is much appreciated.

Basically for level 2 you have to apply L1 to the case study or give an example. Whereas for level 3 you have to analyse the question explaining why the given policy does what it does.

anyone got any advice on negative and positive externalities diagrams (S and D)? confused

So bare with me on this, a general essay will look something like this?

Introduction

- Level 1 knowledge e.g. definitions

First paragraph

- Level 2 application of knowledge from level one (use a diagram if you want, and if you do then explain the diagram directly underneath)

Second Paragraph

- Level 3, which is analysis of the question can either be positive or negative
- Level 4 evaluate the analysis stated

Third Paragraph

- Level 3, which is analysis of the question can either be positive or negative or at this point an alternative
- Level 4 evaluate the analysis stated

Fourth Paragraph

- Level 3, which is analysis of the question can either be positive or negative or at this point an alternative
- Level 4 evaluate the analysis stated

Conclusion

- Level 4 here just reaching an over judgment from the the points you made in the previous paragraphs


I know you cant have one plan for every essay, but i'm just asking if im along the right lines here of this being a very general approach to the 18 marker?

kind of, I would do it more like this:

Introduction

- Level 1 knowledge e.g. definitions

First paragraph

- Level 2 application of knowledge from level one (use a diagram if you want, no need to explain or analyse your diagram gere)

Second Paragraph

- Level 3, Use diagram to show effect of the policy, ie: demand and supply graph showing subsidy will have S curve shifting to the right.
Then state the change in quantity and price. Comment on whether the allocative efficiency, market failure has been solved. Whether negative externality has been removed or positive externality secured.

Third Paragraph

- Level 4 evaluate the analysis stated giving positive/negative

Fourth Paragraph

- Level 4 evaluate the analysis stated giving positive/negative ie: if positive in 3rd paragraph then give negatives here

Conclusion

- Level 4 here just reaching an over judgment from the the points you made in the previous paragraphs

hope this helps