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AQA A2 Economics Unit 3 (ECON3) 20th June 2016 OFFICIAL THREAD

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Reply 160
Original post by Paddyyyy
The process by which inefficient firms - monopolies being productively inefficient (X-inefficient) and allocatively inefficient - will be replaced by more efficient firms

Coined by Joseph Schumpeter


wait monopolies arent productively efficient aswell
Hi everyone, really dreading this exam, just wondering if anyone could give me a couple of really key topics to understand and focus my revision on for tomorrow? Mainly the ones that will help massively in the 25 markers? Thank you, and good luck!!
Reply 162
Original post by LiberalLad
Hi everyone, really dreading this exam, just wondering if anyone could give me a couple of really key topics to understand and focus my revision on for tomorrow? Mainly the ones that will help massively in the 25 markers? Thank you, and good luck!!


same please im really confused
Original post by Jamyes
wait monopolies arent productively efficient aswell


A monopoly has no incentive to cut costs due to no competition. Therefore output does not occur at the lowest point on the AC curve.
Original post by LiberalLad
Hi everyone, really dreading this exam, just wondering if anyone could give me a couple of really key topics to understand and focus my revision on for tomorrow? Mainly the ones that will help massively in the 25 markers? Thank you, and good luck!!


IF you have time, learn the CBA
Original post by Paddyyyy
The process by which inefficient firms - monopolies being productively inefficient (X-inefficient) and allocatively inefficient - will be replaced by more efficient firms

Coined by Joseph Schumpeter


oooh okay! but surely, if they're a monopoly, another firm will hardly be able to get in? and if they can easily get in like that, then monopolies would begin to act against them e..g limit price/predatory pricing surely?
Original post by LiberalLad
Hi everyone, really dreading this exam, just wondering if anyone could give me a couple of really key topics to understand and focus my revision on for tomorrow? Mainly the ones that will help massively in the 25 markers? Thank you, and good luck!!



- Monopolies / perfect comp comparisons
- size and efficiency
- labour markets usual inequality in labour
- price discrimination
- Cba
- gov intervention


:smile: pretty sure 2 of those AT LEAST should come up . Let's hope so😂😅


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Original post by BirdIsWord
IF you have time, learn the CBA
I don't mean to sound really stupid but what do you mean by this? The stuff regarding pollution such as permits and stuff?
Original post by LiberalLad
Hi everyone, really dreading this exam, just wondering if anyone could give me a couple of really key topics to understand and focus my revision on for tomorrow? Mainly the ones that will help massively in the 25 markers? Thank you, and good luck!!


Market failure and government intervention to cure it.
Original post by Kitkat5
oooh okay! but surely, if they're a monopoly, another firm will hardly be able to get in? and if they can easily get in like that, then monopolies would begin to act against them e..g limit price/predatory pricing surely?


Correct. Creative destruction assumes the market has at least some degree of contestability
Original post by Kitkat5
oooh okay! but surely, if they're a monopoly, another firm will hardly be able to get in? and if they can easily get in like that, then monopolies would begin to act against them e..g limit price/predatory pricing surely?


It is a theory, not necessarily true. It is a good eval point though.
Original post by Anymorefor123
- Monopolies / perfect comp comparisons
- size and efficiency
- labour markets usual inequality in labour
- price discrimination
- Cba
- gov intervention


:smile: pretty sure 2 of those AT LEAST should come up . Let's hope so😂😅


Posted from TSR Mobile
Thank you so much!! I hope so too :smile:
Original post by LiberalLad
I don't mean to sound really stupid but what do you mean by this? The stuff regarding pollution such as permits and stuff?


Cost-benefit analysis??
You know..
Original post by Paddyyyy
Market failure and government intervention to cure it.
Thank you, a lot of people have said that so I'll make sure to get that one covered!
I thought I was screwed for this exam...
Original post by BirdIsWord
Cost-benefit analysis??
You know..
Sorry, I can see how that did sound stupid haha! I meant to ask like what sort of questions could come up regarding CBA?
Reply 176
Original post by Kitkat5
Evaluate the view that competition policy is never necessary because, in the long run,market forces will ensure that monopolies cannot abuse their power and will not last.

how can market forces stop monopolies abusing their power though?


You have to talk about the fact that technology has been introduced to a lot of markets e.g. amazon and ebay have made some entry barriers lower so technically you could argue that contestability is increased thus allowing firms to compete against monopolies and taking away their market share.

however, creative destruction, (where R&D/innovation takes over the existing industry e.g. itunes... but then illegal downloads ****ed it) so essentially monopolies investing in R&D as they are argued to do so are screwing themselves over by allowing these newer technologies and firms to replace them hence not lasting (in accordance to the question)

Also you can say that if a monopoly isn't efficient it may simply collapse because consumers will find it undesirable and find alternatives

this is then evaluated on the basis that often monopolies produce necessities and people have inelastic demand

so usually competition policy is needed, depending on the nature of the monopoly


i keep answering your questions but it is kind of aiding my revision haha cheers
Hey, I've been revising and think I can handle the generic CBA essay, the only problem I've got right now is with the diagrams, could someone tell me what 2-3 would be relevant to a CBA answer?
Reply 178
Original post by Kotomine
Hey, I've been revising and think I can handle the generic CBA essay, the only problem I've got right now is with the diagrams, could someone tell me what 2-3 would be relevant to a CBA answer?


MSC/MPC externalities diagrams for the social costs of an infrastructure project

or MSB/MPB if it's a positive externality

not sure on a third... maybe the state provision diagram showing excess demand without government provision (e.g. to show excess demand if Heathrow doesn't get an extra runway)
Original post by LiberalLad
Sorry, I can see how that did sound stupid haha! I meant to ask like what sort of questions could come up regarding CBA?


Evaluate whether a CBA should be used for X investment project

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