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

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Can someone explain in simple terms, the business significance of each of the elasticities? Please :smile:
Reply 201
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Dose
Was wondering if anyone had any sort of cues on what to talk about in an explain question, I can do the comment questions fairly well, and the define one's are simple, but the random 4-8 mark explain questions always throw me though
Anyone know any set format to responding to "comment on" questions?


Thanks
Reply 203
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ss504
5
anyone know how a subsidy can be an alternative to Tradable Pollution Permits?
Original post by ss504
anyone know how a subsidy can be an alternative to Tradable Pollution Permits?


The only way I can think is providing subsidies to companies' Research & Development into cleaner technology. Encourage them to purchase greener technology which in turn can reduce the levels of CO2 emissions. However it will involve having to regulate whether the firms use it accordingly as there may be great misuse.


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Reply 205
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mackayg
Anyone learnt much about European Union emission trading scheme ?
Reply 206
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ss504
5
Original post by Shaadi Baba
The only way I can think is providing subsidies to companies' Research & Development into cleaner technology. Encourage them to purchase greener technology which in turn can reduce the levels of CO2 emissions. However it will involve having to regulate whether the firms use it accordingly as there may be great misuse.


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Thanks! would you say that regulation would be a better alternative to Tradable pollution permits then?
Original post by EdwardsEconomics
On page 5 I have gone through all the types of government intervention for quick revision. The diagram has inelastic S curves in case you need a memory jog :smile:

Here is a copy/paste of the tradable permits:

Tradable Permits

Advantages of Tradable Permits
+ Fairly easy to implement.
+ Allows the market to help solve the problem and gives firms the incentive to reduce negative externalities.
+ From government’s perspective, achieves desired environmental outcome.

Disadvantages of Tradable Permits
Expensive to monitor, so opportunity cost.
Does not compensate victims of pollution.
Problems of calculating and distributing permits to polluters.

Evaluation: Opportunity cost means money may be better spent on subsides; permits may be set at a too high level; so depends upon the level and how enforced.




Hi do you mind expanding those points particularly the opportunity cost and easy implementation one?
Original post by EdwardsEconomics
Feel free to believe your own teacher, I do go to OCR examiners meetings, mark F581 papers as well as teach this subject however. Look at the mark schemes available on the OCR website and see what they say, you'll find that the L1-L3 way of marking is very clear.

Without meaning to be disrespectful to your teacher, they are not correct in this case and will instead be making you write far more than you mean to and not really answer the question effectively.

You will not lose marks doing it your teacher's way and among all the extra you write will pick up marks. But you will be productively inefficient.

Regards,

Mr. E


Screen Shot 2014-05-12 at 22.16.24.jpgScreen Shot 2014-05-12 at 22.16.53.jpgScreen Shot 2014-05-12 at 22.17.07.jpg
I would massively appreciate it if everyone could take a look at my essay and give me feedback, it's in the post above.
Original post by tomble123
Can someone explain in simple terms, the business significance of each of the elasticities? Please :smile:


I'm not sure if I'm correct or not, but this is what I would put in my work.

PED:
_ firm could use the result to price their product, ex: if their goods/services are price inelastic thus they should increase the price of this goods/services in order to maximise their revenue. The opposite would go for the elastic demand.

PES:
_ firms could use the result to know whether their supply are responsive to the change in price, if their PES are inelastic then they could increase the stocks of product to make it more elastic. But PES are becoming more and more elastic in the long run, as factor of production can be altered, especially labour and capital.
*im not pretty sure about this part, please feel free to correct me if I have gone wrong.

XED:
_ firm could use the result to see whether their products are substituted/complemented to another products, and they could price their products according to this. If substitute, they should decrease their price to gain more consumers thus maximise their profit. Not sure about the complementary part though :/

YED:
_ think about when there is recession or economic boom. Recession, there is a good business prospect for firms who provide inferior good (neg. YED). During the boom, firms who provide normal goods (positive YED) would expect demand for their product to increase, healthier business.


As I said, I'm not sure about all these, but this is what to my knowledge. If I've written sth incorrect here, please correct me. :biggrin: good luck everyone !!!! I hope I could break the B barrier this time....


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bloody hope i get an A this time! what do we think 18 mark essay will be on? im putting bets on trade-able permits
Anyone at all, could you please draw a negative externality and positive externality diagram please? I'm getting confused of where I should shade.


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Someone please tell me the bare minimum I need to know for a C
My teachers basically didn't teach for the entire year and I've been just reading the book
First time taking the exam, worried about not being able to pass
Help?!

I'm assuming understanding and knowing the key words and graphs are the basics but what else is essential?
Also, what do you reckon will come up
Original post by MarieHermosa
Someone please tell me the bare minimum I need to know for a C
My teachers basically didn't teach for the entire year and I've been just reading the book
First time taking the exam, worried about not being able to pass
Help?!

I'm assuming understanding and knowing the key words and graphs are the basics but what else is essential?
Also, what do you reckon will come up


Make sure about the PED PES YED and XED, as I notice from past papers they always come up in exams. As long as you understand the policies to tackle market failure and the linking between each section such as demerit goods public goods merit good and externalities to market failure. I think u should be fine. :smile: if u have time now, check Econplusdel on YouTube, he has got awesome tuition specifically on OCR paper. I wish you good luck! :smile:


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Here some easy marks.

Definition
Economics problem/Scarcity
Demand
Supply
Consumer surplus
Producer surplus
Information failure
Negative externality
Positive externality
Demerit good
Merit good
Information failure
Market failure
Allocate efficiency
(1-2marks)

Understand the elasticity (2-8marks)
Pes
Yed
Ced
Ped
Greater than 1 elastic I.e. responsive (1)
Less than 1 inelastic irresponsive(1)
Comment - estimates so it's inaccurate(1). Can change over time (1)


Determinant of demand and supply (4-6 marks)


That's all I can think of but these r like basic so yeah
Original post by May-o2q
Make sure about the PED PES YED and XED, as I notice from past papers they always come up in exams. As long as you understand the policies to tackle market failure and the linking between each section such as demerit goods public goods merit good and externalities to market failure. I think u should be fine. :smile: if u have time now, check Econplusdel on YouTube, he has got awesome tuition specifically on OCR paper. I wish you good luck! :smile:


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Usually these come up:

Question (and marks usually seen from past papers):
1) Economic Problem/Scarcity/Opportunity Cost or Factors of Production (around 2 - 4 marks)
2) Opportunity Cost (PPCs) (around 4 marks)
3) Supply+Demand diagram/Consumer or Producer surplus (around 6-8)
4) Elasticities (PED, YED, XED, PES) (around 6-8)
5) Externalities/Public Goods/Merit or Demerit Goods (around 2-6)
6) Market Failure, and solutions to it (18)

Might give a small insight into what you can expect
Original post by May-o2q
Make sure about the PED PES YED and XED, as I notice from past papers they always come up in exams. As long as you understand the policies to tackle market failure and the linking between each section such as demerit goods public goods merit good and externalities to market failure. I think u should be fine. :smile: if u have time now, check Econplusdel on YouTube, he has got awesome tuition specifically on OCR paper. I wish you good luck! :smile:


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Oh god thank you :adore:
Sadly, elasticity always ****s me over I get so confused so I'm running over that now
I'm decent at demerit goods, public goods and such
Fair dos on externalities though I need to work on the graphs tonight
Is everything related to market failure for a reason? I've noticed it pop up pretty much every past paper
I'll check him out now, thanks!
Also what on earth is tradeable permits or whatever some people are talking about?? :confused:
Original post by itsn0b0dy
Screen Shot 2014-05-12 at 22.16.24.jpgScreen Shot 2014-05-12 at 22.16.53.jpgScreen Shot 2014-05-12 at 22.17.07.jpg


Apologies, there has been a flood of questions and I didn't have the time to answer everyones on here, however with your essay here is my feedback.

Your L1, L2 and L3 (band1 and 2) are excellent, only keyword you could try and introduce as well is the notion that welfare is being increased by the decrease in Q to the socially optimal point.

L4 was great and you had all 3 of your L4 stamps before the 3rd page, which therefore rendered your whole paragraph and half a page on information provision superfluous. While it was not incorrect, it added no real value to your essay as you cannot get more than 3 L4 stamps.

Your judgement and justification needed some work, this is the area that let you down. For OCR (for better or worse) they want you to answer the question in no uncertain terms. You need to say that "IT IS" or "IT IS NOT" the most effective solution. Then you should justify your opinion. The bit on short run and long run doesn't really fit as you offer no real context as to why it is there. Then you introduce the idea that the tax would eventually be removed, which seems contrary to your assessment in the essay that it is the thing that is reducing the market failure. In essence I would award you based on the mark scheme 15/18. With some tweaking it would easily score 16 (with a direct, non-clever judgement statement), but you need to work on delivering a clear, in depth justification to secure marks 17 and 18.

Regards,

Mr. E
Original post by MarieHermosa
Oh god thank you :adore:
Sadly, elasticity always ****s me over I get so confused so I'm running over that now
I'm decent at demerit goods, public goods and such
Fair dos on externalities though I need to work on the graphs tonight
Is everything related to market failure for a reason? I've noticed it pop up pretty much every past paper
I'll check him out now, thanks!
Also what on earth is tradeable permits or whatever some people are talking about?? :confused:


You do not need to learn the externalities diagrams, see my previous post (if you can find it, for the reasoning behind that and how you only need D&S analysis for the 18 mark questions.

You obviously also need to know PPC and consumer/producer surplus diagrams as well.

Other sure fire topics to read are the definition of the economic problem, allocative efficiency, PED/XED/YED/PES, consumer/producer surplus as they always turn up. Also make sure you know the factors of production. Take a hunt through my previous posts on exam tips, things people always get wrong and brief notes on the ways to solve market failure (pros/cons/evaluation).

Good luck,

Mr. E

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