OCR F581 Markets in Action - 11 May 2015

I wrote Habit forming goods and Degree of necessity. I probably should have chosen substitute though!

I wrote that it depends on the closeness and number of available substitutes and the Relative expense in relation to income.

For the 18 marker I gave a description on why market failure occurs due to merit goods being under consumed and demerit goods being over consumes etc

I then went on to draw a diagram and showed how a subsidy would shift out supply etc

I then spoke about if PED was inelastic it would need a large subsidy

Then opportunity cost of the subsidy, could be spent elsewhere

Diagram showing the marginal social benefit

Then how much would go to consumers and producers


Then a conclusion which was pretty weak and didn't compare to other methods

Thoughts?


Posted from TSR Mobile

For the 4 marker when it is talking about why price elasticity is increasing for some agricultural goods and explain 2 reasons for this would TIME be an acceptable reason with an example? I also put changes in fashion/tastes with an example?

Guys omg I think I did the producer surplus rather than consumer. I think I've failed horribly I might cry. Was it producer or consumer???? Ugh

That's basically what I wrote as well but then I used indirect tax as an alternative and said to tax pollution and fossil fuel emitting companies? The revenue gained from indirect tax could be then used for hypothecation and fund the subsidies? Not sure if its right tho

It increased welfare, reduced under-production and then added that it increased consumer surplus (not to do directly with allocative efficiency)

Posted from TSR Mobile

Did anyone notice that there was an extra question this year? Most papers only have 7 questions but this one had 8? I completely ran out of time!!

Indirect taxation as an alternative policy (ONLY if it's reduced) was a good one in my opinion -it's what I did as well.

I believe you should have used indirect taxation as a means of funding subsidies. The question asked whether it could reduce market failure, so that's what it should be focused on.

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but but but
biofuels have negaative externalities! :c
so i put it didnt
omfg