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Edexcel Economics: Unit 3 Business Economics and Economic Efficiency (June 2014) EC03

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Original post by Edmondbeech
For the final 16 marker on question 9, I put
- Potential to collude.
- Advertising
- Limit pricing/ predatory pricing
- Sales maximisation.

Eval.
- Collusion firms may leave to gain short term benefits. (Payoff matrix)
- Advertising, sunk costs, used some of my own data.
- Predatory pricing, illegal face investigation by regulators, lead to fines and bad publicity.
- Sales maximisation, may lead to price wars, put kinked demand curve in.


Enough to get 16 you reckon?


depends on how you develop them, limit pricing is not the same as predatory pricing. Sales max and limit pricing could overlap.
Original post by John_Boi
The question has stirred up lots of confusion. Poorly worded. I'm fairly certain it said something about "professional milk sellers"


it is backwards
hey is any a2 student online? X
Original post by disillusion
hey is any a2 student online? X


What is the query?
Original post by keynes24
What is the query?


can you please help me with this ex? teaching myself a2 finding it hard haha.

Untitled.png40.8KB
Original post by disillusion
can you please help me with this ex? teaching myself a2 finding it hard haha.


i will do the first 4:
a- vertical
b- conglomerate
c- conglomerate
d- vertical

what examination board are you doing? You may also need to know the different types of vertical integration
Original post by keynes24
i will do the first 4:
a- vertical
b- conglomerate
c- conglomerate
d- vertical

what examination board are you doing? You may also need to know the different types of vertical integration


Yay I got that! Is e conglomerate and f horizontal ?

I'm edezcel do I need to know forward and backward then?
Original post by disillusion
Yay I got that! Is e conglomerate and f horizontal ?

I'm edezcel do I need to know forward and backward then?

E seems like conglomerate. Are you just getting ready for next academic year or you want to cover it on your own?
for Edexcel the minimum you need is:
types of integration including backward/forward vertical integration
cost/benefits to consumers/workers/firms of horizontal, vertical and conglomerate
Competition policy and mergers
Original post by keynes24
E seems like conglomerate. Are you just getting ready for next academic year or you want to cover it on your own?
for Edexcel the minimum you need is:
types of integration including backward/forward vertical integration
cost/benefits to consumers/workers/firms of horizontal, vertical and conglomerate
Competition policy and mergers


well my school start work for year 13 straight after exams but my teacher wants us to do something unrelated so yes I am basically teaching myself it!

ok I will look that up thank you:smile:
Original post by disillusion
well my school start work for year 13 straight after exams but my teacher wants us to do something unrelated so yes I am basically teaching myself it!

ok I will look that up thank you:smile:


A very good textbook is "Business Economics" by Robert Nutter, publisher Anforme. The endorsed Edexcel textbook by Anderton is not very good. You can also buy articles from a Anforme that were published on Economics Today. I believe Mrs Cole (chief examiner for Unit 3) wrote one on mergers with a nice summary of advantages/disadvantages to many stakeholders.
Has the forward/backward dispute been settled yet ? :biggrin:


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Original post by Farringtonn
Has the forward/backward dispute been settled yet ? :biggrin:


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The answer is backward vertical integration. British food producer buying a fresh milk seller.
Original post by keynes24
The answer is backward vertical integration. British food producer buying a fresh milk seller.


Yeah that's what I said but I do know a lot of people put forward. Do you think they might accept both?


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Original post by Farringtonn
Yeah that's what I said but I do know a lot of people put forward. Do you think they might accept both?


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There is only one answer. It is B backward, if you got it wrong you can only get 2 marks for explanation assuming you define vertical integration and backwards (unlikely if you got it wrong)
Original post by keynes24
There is only one answer. It is B backward, if you got it wrong you can only get 2 marks for explanation assuming you define vertical integration and backwards (unlikely if you got it wrong)


I put B so I'm ok. Do you know what the football club answer was?


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Original post by Farringtonn
I put B so I'm ok. Do you know what the football club answer was?


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Management is profit satisficing
For the 16 mark question in question 9 would limit pricing still be an appropriate strategy? Cause the question said that the firm had already entered the market and was asking for strategies other firms might adopt.
Original post by RedDevil014
For the 16 mark question in question 9 would limit pricing still be an appropriate strategy? Cause the question said that the firm had already entered the market and was asking for strategies other firms might adopt.


Limit pricing is valid, you should get 1 mark for that strategy. The issue is the development that could be linked to barriers to entry or sales max.
Original post by keynes24
Limit pricing is valid, you should get 1 mark for that strategy. The issue is the development that could be linked to barriers to entry or sales max.


Okay, correct me if I'm wrong but isn't limit pricing a strategy to deter new firms from entering into a market? So if the firms already entered, I don't see how it could be an appropriate strategy.
I myself wrote limit pricing so i'm wondering if i would get marks for it.
Original post by RedDevil014
Okay, correct me if I'm wrong but isn't limit pricing a strategy to deter new firms from entering into a market? So if the firms already entered, I don't see how it could be an appropriate strategy.
I myself wrote limit pricing so i'm wondering if i would get marks for it.

You don't trust me?:smile:
The question refers on how they could react. One way of reacting is to use limit pricing to prevent further firms from entering. This question has been asked before and limit pricing was correctly included in mark schemes.

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