AQA A-level Economics new 7136 - 06, 13 & 19 Jun 2017 [Exam Discussion]
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Original post by Bobunitrd
Is cost theory in the spec?
Yeah, it's like one of the most important things in business economics but it's not that difficult, you probably know most of it already shouldn't be a problem.
Original post by physicsamor
As demand for fuel (which causes pollution) continues to increase eventually the price becomes too high, so consumers look for the next best thing. This is likely going to be greener energy fuel, so in the long run the problem of environmental problems cause by polluting firms are eroded as people switch to alternatives due to high inevitable prices
Also consumers are becoming aware of the need to be green so might prepare to be more environmentally friendly the change in consumer preference might force firms to change the way of production, then again you might need a sort of nudge policy to achieve this
Also there are firms that don't want to be reliant on non renewable few sources they are innovators in the market and might be able to break through into the market with new greener technology wiping out inefficient firms
I'm probably wrong but this is what I thought
Of course it doesn't address the problem in the short run but it's the free market approach
Idk xD I'm taking a guess here
Also consumers are becoming aware of the need to be green so might prepare to be more environmentally friendly the change in consumer preference might force firms to change the way of production, then again you might need a sort of nudge policy to achieve this
Also there are firms that don't want to be reliant on non renewable few sources they are innovators in the market and might be able to break through into the market with new greener technology wiping out inefficient firms
I'm probably wrong but this is what I thought
Of course it doesn't address the problem in the short run but it's the free market approach
Idk xD I'm taking a guess here
You could also mention Tesla. This is a company which has attempted to solve issues of environmental pollution without any help from the government. This is mainly due to Elon Musk's altruistic behaviour but also the technological changes such as better batteries that have made electric cars more attractive than fuel cars, even with the low world price of oil. Elon himself has taken it upon himself to use product differentiation (all the added extra stuff that comes with a tesla such as autopilot) to make the demand for his, electric cars, more than for fuel cars. The result of this has been that Teslas stock is currently valued higher than Ford's.
(edited 6 years ago)
Original post by tommartin29
You could also mention Tesla. This is a company which has attempted to solve issues of environmental pollution without any help from the government. This is mainly due to Elon Musk's altruistic behaviour but also the technological changes such as better batteries that have made electric cars more attractive than fuel cars, even with the low world price of oil. Elon himself has taken it upon himself to use product differentiation (all the added extra stuff that comes with a tesla such as autopilot) to make the demand for his, electric cars, more than for fuel cars. The result of this has been that Teslas stock is currently valued higher than Ford's.
That is an amazing example omgggg
Original post by cathartic
do you think its possible for me to memorise all of a2 econ in time??
If you're starting now then no. If you have a good grasp of the topics then probably
Some one ask me anything on the spec? Somert hard plz?
Original post by cascbsjcacsac
Some one ask me anything on the spec? Somert hard plz?
Just give a point to each of these
how does uncertainty affect oligpolies?
Why are nudge policies (behav econ..) more effective at reducing market failure?
Why do cartels break down?
Evaluate one advantage of collusive behaviour?
Is monopolistic market in the lr better than a monopoly?
How does price discrimination benefit consumers?
If there is a threat of contestability should governments intervene?
Is the internet good for consumers?
Why is there price stability in an oligiply?
Why does inequality benefit society?
Should we nationalise public transport?
Are these hard?? XD
How necessary is application in the last 10 and 25 markers wheres no data? If so how do we show it
Original post by cathartic
Am i the only person still memorising content??? I still need to revise cost theory, market structures and labour demand pray for me!!
No? I've seemed to have forgotten everything
I'm sure the exam won't be too bad
Original post by 777ella
Some one please help!!!!!!!!!!!!!!!!!
just a quick question as i am panicking i have a level economics exam tomorrow what is the main currency used in the england
just a quick question as i am panicking i have a level economics exam tomorrow what is the main currency used in the england
Thank you for making me laugh as I revise for tomorrow's exam
Original post by physicsamor
Define market failure
Draw + explain market failure
Policy(s) effect to correct + eval
Market forces as an alternative
Government failure
Like we did last year
Though it depends there's been some weird environmental market questions xD
Draw + explain market failure
Policy(s) effect to correct + eval
Market forces as an alternative
Government failure
Like we did last year
Though it depends there's been some weird environmental market questions xD
Could you use this structure for a normal market failure, gov intervention essay?
Thanks!
Original post by musicangel
Could you use this structure for a normal market failure, gov intervention essay?
Thanks!
Thanks!
Yeah that's how I normally write them
Original post by danboulton99
How necessary is application in the last 10 and 25 markers wheres no data? If so how do we show it
Quite necessary. The best way is probably through examples.
https://www.youtube.com/watch?v=ogLBBBKcBCY
(edited 6 years ago)
Original post by physicsamor
how does uncertainty affect oligpolies?
Why are nudge policies (behav econ..) more effective at reducing market failure?
Why do cartels break down?
Evaluate one advantage of collusive behaviour?
Is monopolistic market in the lr better than a monopoly?
How does price discrimination benefit consumers?
If there is a threat of contestability should governments intervene?
Is the internet good for consumers?
Why is there price stability in an oligiply?
Why does inequality benefit society?
Should we nationalise public transport?
Are these hard?? XD
how does uncertainty affect oligpolies?
Why are nudge policies (behav econ..) more effective at reducing market failure?
Why do cartels break down?
Evaluate one advantage of collusive behaviour?
Is monopolistic market in the lr better than a monopoly?
How does price discrimination benefit consumers?
If there is a threat of contestability should governments intervene?
Is the internet good for consumers?
Why is there price stability in an oligiply?
Why does inequality benefit society?
Should we nationalise public transport?
Are these hard?? XD
Uncertainty and Oligopolies: Since firms in an oligopoly, e.g. Big 6 energy firms (UK) aren't always aware of future events that could occur they may be more reluctant to invest in new technologies - so less productive efficiency, or perhaps they'll use collusion to minimise the risk of profit maximization being lost in the future
Nudge policies reducing Market Failure: They're less intrusive, so gradual changes won't be necessarily noticeable (which otherwise may prevent people from changing), thus making them more effective than a Shove (e.g. Tax) which may cause retaliation
Why Cartels break down: A cartel (e.g. OPEC) will eventually succumb to enough regulation that ensures it operates efficiently, that it will lose its market power- e.g. if the Natural barriers to entry are broken down and firms enter (minimising the sunk costs), allowing these Cartels to be broken down
One Advantage of collusive behaviour: They profit maximise, which can (doesn't always) get redistributed through higher wages
Monopolistic market in the lr better than a monopoly:
The market is more efficient and also dynamically efficient, innovative in terms of new production processes or new products which a Monopoly may not have motive to persue
Price discrimination benefit consumer:
The elderly/young may be able to use transport at a lower price, encouraging more use of them instead of more polluting cars?
Threat of contestability and intervention:
Depends who the stakeholder is? if it threatens a naturally allocative efficient market then intervention may be favourable to protect this. On the other hand, if a market has opportunities for contestability it will benefit consumers who get more choice/lower prices- hence Laissez-faire "let it be"
Is the internet good for consumers?Some may say that whilst there is hostility from e-tail and globalisation, i'd say the internet is perhaps a merit good- it has helped solve info failure, assymetric information and developed an 'altruism' approach (behavioural econ) where we are more aware of issue, e.g. poverty and so charitable websites has helped ease poverty abroad
Why is there price stability in an oligiply?
They act with rigid prices, whereby it won't change too considerably to ensure they don't undercut and reduce the profitability of each other- despite their ability to do so (especially the market leaders, e.g. Tesco could easily force Morrisons out of the market). As a result, prices tend to be stable as a result of firms' motives
Why does inequality benefit society?
It may lead to motivation of some workers, e.g. those in poverty will want to get out of that poverty trap, which is only done through working hard and developing themselves in terms of skills, as a result it will have a positive (unintended) consequence of greater economic production (GDP-dont get too much into Macro)
Should we nationalise public transport?
Bringing transport back into government control may see a fall in services (depends on budget), but on the contrary they may be more willing to subsidise the failing/unused routes (moral hazard)- e.g. in the Lake District where only a few elders use it, which private firms wouldn't. It will mean less is spent by the CMA (Competition market authority) and so this can be reallocated, e.g. back into providing training of new drivers, though this is unlikely as the finance will be limited
Hopefully the OP can take a look and compare answers
(edited 6 years ago)
Original post by AindowJ
Uncertainty and Oligopolies: Since firms in an oligopoly, e.g. Big 6 energy firms (UK) aren't always aware of future events that could occur they may be more reluctant to invest in new technologies - so less productive efficiency, or perhaps they'll use collusion to minimise the risk of profit maximization being lost in the future
Nudge policies reducing Market Failure: They're less intrusive, so gradual changes won't be necessarily noticeable (which otherwise may prevent people from changing), thus making them more effective than a Shove (e.g. Tax) which may cause retaliation
Why Cartels break down: A cartel (e.g. OPEC) will eventually succumb to enough regulation that ensures it operates efficiently, that it will lose its market power- e.g. if the Natural barriers to entry are broken down and firms enter (minimising the sunk costs), allowing these Cartels to be broken down
One Advantage of collusive behaviour: They profit maximise, which can (doesn't always) get redistributed through higher wages
Monopolistic market in the lr better than a monopoly:
The market is more efficient and also dynamically efficient, innovative in terms of new production processes or new products which a Monopoly may not have motive to persue
Price discrimination benefit consumer:
The elderly/young may be able to use transport at a lower price, encouraging more use of them instead of more polluting cars?
Threat of contestability and intervention:
Depends who the stakeholder is? if it threatens a naturally allocative efficient market then intervention may be favourable to protect this. On the other hand, if a market has opportunities for contestability it will benefit consumers who get more choice/lower prices- hence Laissez-faire "let it be"
Is the internet good for consumers?Some may say that whilst there is hostility from e-tail and globalisation, i'd say the internet is perhaps a merit good- it has helped solve info failure, assymetric information and developed an 'altruism' approach (behavioural econ) where we are more aware of issue, e.g. poverty and so charitable websites has helped ease poverty abroad
Why is there price stability in an oligiply?
They act with rigid prices, whereby it won't change too considerably to ensure they don't undercut and reduce the profitability of each other- despite their ability to do so (especially the market leaders, e.g. Tesco could easily force Morrisons out of the market). As a result, prices tend to be stable as a result of firms' motives
Why does inequality benefit society?
It may lead to motivation of some workers, e.g. those in poverty will want to get out of that poverty trap, which is only done through working hard and developing themselves in terms of skills, as a result it will have a positive (unintended) consequence of greater economic production (GDP-dont get too much into Macro)
Should we nationalise public transport?
Bringing transport back into government control may see a fall in services (depends on budget), but on the contrary they may be more willing to subsidise the failing/unused routes (moral hazard)- e.g. in the Lake District where only a few elders use it, which private firms wouldn't. It will mean less is spent by the CMA (Competition market authority) and so this can be reallocated, e.g. back into providing training of new drivers, though this is unlikely as the finance will be limited
Hopefully the OP can take a look and compare answers
Nudge policies reducing Market Failure: They're less intrusive, so gradual changes won't be necessarily noticeable (which otherwise may prevent people from changing), thus making them more effective than a Shove (e.g. Tax) which may cause retaliation
Why Cartels break down: A cartel (e.g. OPEC) will eventually succumb to enough regulation that ensures it operates efficiently, that it will lose its market power- e.g. if the Natural barriers to entry are broken down and firms enter (minimising the sunk costs), allowing these Cartels to be broken down
One Advantage of collusive behaviour: They profit maximise, which can (doesn't always) get redistributed through higher wages
Monopolistic market in the lr better than a monopoly:
The market is more efficient and also dynamically efficient, innovative in terms of new production processes or new products which a Monopoly may not have motive to persue
Price discrimination benefit consumer:
The elderly/young may be able to use transport at a lower price, encouraging more use of them instead of more polluting cars?
Threat of contestability and intervention:
Depends who the stakeholder is? if it threatens a naturally allocative efficient market then intervention may be favourable to protect this. On the other hand, if a market has opportunities for contestability it will benefit consumers who get more choice/lower prices- hence Laissez-faire "let it be"
Is the internet good for consumers?Some may say that whilst there is hostility from e-tail and globalisation, i'd say the internet is perhaps a merit good- it has helped solve info failure, assymetric information and developed an 'altruism' approach (behavioural econ) where we are more aware of issue, e.g. poverty and so charitable websites has helped ease poverty abroad
Why is there price stability in an oligiply?
They act with rigid prices, whereby it won't change too considerably to ensure they don't undercut and reduce the profitability of each other- despite their ability to do so (especially the market leaders, e.g. Tesco could easily force Morrisons out of the market). As a result, prices tend to be stable as a result of firms' motives
Why does inequality benefit society?
It may lead to motivation of some workers, e.g. those in poverty will want to get out of that poverty trap, which is only done through working hard and developing themselves in terms of skills, as a result it will have a positive (unintended) consequence of greater economic production (GDP-dont get too much into Macro)
Should we nationalise public transport?
Bringing transport back into government control may see a fall in services (depends on budget), but on the contrary they may be more willing to subsidise the failing/unused routes (moral hazard)- e.g. in the Lake District where only a few elders use it, which private firms wouldn't. It will mean less is spent by the CMA (Competition market authority) and so this can be reallocated, e.g. back into providing training of new drivers, though this is unlikely as the finance will be limited
Hopefully the OP can take a look and compare answers
These are some really good responses
Here are my thoughts
1. Why does uncertainty occur in an oligopoly?
Firms are unsure of the impact to their own profit/revenues may be due change in prices, this is because mutual interdependence between rival firms, for example if one form cuts price others are likely to follow, to avoid this situation firms are more likely to fix prices and collude to reduce the uncertainty because they know it is of mutual benefit to all participating firms.
2. Nudge policies
- nudge policies are often preferred to traditional forms of goverment intervention as they do not Iead to market distortions. Given that for example consumers tend to not have symmetric information and follow rules of thumb patterns they are unlikely to take into account the true externalties in consumption. Nudge policies are effective because they nudge the consumer to make the right choices by altering their behaviour. Changes in consumer preference to the more efficient/healthier product utilises the price mechanism so is preferred.
3. Why do cartels break down?
External shocks such as the global recession means that falling demand for the cartels product may cause excess capacity. This lead to rising tensions for OPEC because it essentialIy might destroy the cartel price if demand fell significantly.
4. One advantage of collusive behaviour?
Joint profits are maximised meaning that supermormal profits are Iikely to be made. These profits could be reinvested into new innovative products for example new medicine. Which would benefit consumers through better quality products.
5.Monopolistic vs monopoly in LR
Prices are likely to be lower in a monopolistic market but in the long run monopolies that benefit from economies of scale (which a monopolistic firm cannot do) could lead to cost savings and thus lower prices.
5. Price discrimination benefits consumers:
3rd degree price discrimination, I.e separated by elasticity, they are likely to charge higher prices for higher income countries and lower prices for lower income countries for medicines for example due to varying elasticity so more equitable as it brings more consumers to the market who wouldn't be able to pay at the higher price.
6. Is the threat of contestability enough?
If there is a threat of contestability firms are Iikely to try their best to be the most efficient to protect their market share and power so In theory the threat is enough to deter abuse of monopoly power. However firms can easily avoid this threat through predatory pricing tactics, hence actually making the more anti-competive in the Iong run. Governments must ensure that firms arent adopting anti competive prices.
7. Is the internet good for consumers?
It brings markets to a more perfectly competitive outcome as it has erroded barriers to entry and exit, this means that there is fresh competition between online retailers so prices may remain low. Consumers may also have more information as information is freely available and can make well informed rational decisions.
8. Why is their price stability ?
Interdependence exists within an oligopoly market which means firms have to consider likely reactions of other firms. This often leads to price wars, which is not favourable to a firm and it leads to falling profits. Hence there tends to be a sticky price to avoid this.
9. Why does inequality benefit society?
Inequality rewards hard work, if workers learn harder skills, they may find better paid jobs, higher wages increase productivity!
10. Should we nationalise public transport?
Goverments are Iikely to consider long term investment into better quality of services, in the train industry individuals are often faced with delays, private Firms arent likely to be interested in consumer welfare but rather max profits whereas the goverment may have different objectives to protect consumer sovereignty
(edited 6 years ago)
Can someone tell me exam technique tips, or the structure for 9,10,15,25 markers xx
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Original post by Soulgeass
How to people elaborate on the economic theory stuff (i.e. explain the shape of MRP/MC/etc curve) for those 9 or 15 mark questions?
Looking at the mark scheme, sometimes it seems like they award marks for waffling for those types of questions? Or at least they've included statements that I would have never thought about since it's not a point made in the textbook anywhere.
Looking at the mark scheme, sometimes it seems like they award marks for waffling for those types of questions? Or at least they've included statements that I would have never thought about since it's not a point made in the textbook anywhere.
it really depends on the question, may be post the ones? I know that you can explain marginal cost through the law of diminishing returns
Original post by physicsamor
it really depends on the question, may be post the ones? I know that you can explain marginal cost through the law of diminishing returns
So one of the question goes:
Explain why the average and marginal revenue curves of a perfectly competitive firm are horizontal, while those of a monopoly slope downwards.
And the mark scheme mentions (my comments regarding several bits are in bold):
Perfect competition: the firm is small compared to the industry (1 mark) with no entry/exit barriers (1 mark) and is therefore a price taker (1 mark) [I get how this shows your knowledge on perfect competition but I never thought it would be worth 3 marks already since it does not yet answer the question] it can clear its production lines if it sells at the current market price (1 mark). Since it can clear production lines at the current market price it would be irrational (assuming profit maximisation) to sell below that price (1 mark). If the seller tries to sell above the market price, demand will disappear (or price elasticity of demand is infinity) (1 mark), because of perfect knowledge (1 mark) and homogeneous products (or products being perfect substitutes (1 mark). While the market demand curve is downward sloping (1 mark) the seller-perceived demand curve (demand curve for the output of the firm) is horizontal (1 mark) and therefore AR = MR (1 mark).
Monopoly: the firm is the industry and the firm has some control over price; the downward sloping market demand curve is the firm’s average revenue line. Because the firm reduces price to increase quantity demanded or increases price to reduce quantity demanded MR also slopes downwards and MR is less than AR at each level of quantity. [Tbh, I was expecting this last statement to be more of an explanation but it seems like it was just stating a relationship of MR and AR]
I can see how marginal cost can be explained through law of diminishing returns but often my explanation for those topics seem rather short (in my opinion, I felt like I was just being concise in my writing except it ends up being too simplified). Just wondering how you would have elaborated on the answer for the question about marginal cost?
I feel like I don't know anything I'm so stressed and keep having break downs 
!!!
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