OCR F581 Markets in Action - 11 May 2015

Dont you have to talk also about supply decreasing in that essay as well because the regulations affect both consumers and producers..

We have always been taught regulations reduce supply, why is that? Don't they also reduce demand? Eg you must be 18 to buy alcohol, reducing demand not supply?

Depends on the regulation. I tend to not mention the specific regulation and then just go onto say that they tend to increase a firms cost of production. This would happen if they had to put health warning labels on the alcohol or something.

Health warnings could also be considered as a factor affecting demand in terms of solving imperfect information. In cases where you are unsure whether is demand or supply when in doubt I would apply both and/or read the extract for some hints on the type of intervention

I was looking at this specification point: 'explain why the over-consumption of demeritgoods and the under-consumption of meritgoods lead to market failure' .

Is this along the right lines...

Merit goods lead to market failure because:
They are the result of information failure- less is demanded in the free market than would be if full information was available
They generate positive externalities ( the external gains are unlikely to be recognised at the point of consumption)
Both of the above results in underprovision, which is market failure since the socially optimum output is not achieved

Demerit goods lead to market failure because:
They are the result of information failure- more is demanded in the free market than would be if full information was available
They generate negative externalities ( the external gains are unlikely to be recognised at the point of consumption)
Both of the above results in overprovision, which is market failure since the socially optimum output is not achieved.

How long are we meant to spend on the 18marker?

90 minutes for 60 marks
27 minutes for 18 marks

The first 42 marks can be easily finished in 35-40 mins, if not less. I'd personally leave at least 50 mins on the essay.

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50 minutes is a lot, we time students for 30 minutes max. I just did a rough estimate and considering you also need time to read the question you will have less time and compensate with the easy marks. 6 markers should be done carefully, wouldn't rush on those. If you spend 50 minutes in the essay it seems unusual rather that the norm.

Well, I'm usually writing a lot more than the 6 or 8-mark questions require, and have still never ran past 40 mins for the exercises.

I've actually heard of people preparing students to do the essay in an hour, and allocate 30 mins on the exercises (someone said he aimed at 20 mins for the exercises, which is of course not something to be recommended, though he did get almost full marks on the questions).

It's whatever suits the individual, but 30 mins for the essay wouldn't work for me, at all.

50 minutes is a lot, we time students for 30 minutes max. I just did a rough estimate and considering you also need time to read the question you will have less time and compensate with the easy marks. 6 markers should be done carefully, wouldn't rush on those. If you spend 50 minutes in the essay it seems unusual rather that the norm.

are you a teacher?

Well, I'm usually writing a lot more than the 6 or 8-mark questions require, and have still never ran past 40 mins for the exercises.

I've actually heard of people preparing students to do the essay in an hour, and allocate 30 mins on the exercises (someone said he aimed at 20 mins for the exercises, which is of course not something to be recommended, though he did get almost full marks on the questions).

It's whatever suits the individual, but 30 mins for the essay wouldn't work for me, at all.

yes

When talking about an alternative policy does it always have to be more effective than the one in the question asked or can you just state another solution and come to the conclusion that the original policy was more effective?