AQA A-level Economics new 7136 - 06, 13 & 19 Jun 2017 [Exam Discussion]

Hey! Just a question; for the 15 mark question about sugary drinks, do you think it's alright if I talked about behavioural economics and mainly bounded rationality and utility and then added a market failure and consumption diagram?
Also, did anyone run out of time for the last question or was I the only one??

In my 25 marker on sugary foods and drinks I spoke about tax and strengths and weakeness of this like the regressive effects and the effectivenI ess of the tax being dependent on the elasticity of the food and drink, but then I went on to speak about alternative policy's the government could use like subsidising alternatives and minimum price on healthy food and drink, was I wrong to talk about alternative policy's???

In my 25 marker on sugary foods and drinks I spoke about tax and strengths and weakeness of this like the regressive effects and the effectiveness of the tax being dependent on the elasticity of the food and drink, but then I went on to speak about alternative policy's the government could use like subsidising alternatives and minimum price on healthy food and drink, was I wrong to talk about alternative policy's???

I did and everyone at my school did so I sure you are fine, as long as you came to a conclusion about the effectiveness of tax, and wrote 1 or 2 paragraphs on it.

How did people answer the 25 marker for Context 1 - I am semi worried. This is what I did, see if you can impart wisdom, I would just like to know if I was on the right lines:

- I said there is a market failure in the allocative inefficiency of the firm
- then drew a diagram to show the point of allocative efficiency, the welfare loss caused by the monopoly from restricting output/ increasing prices, and pointed out the consumer surplus lost in favour of company profits; indication of exploitation of consumers
- talked about how privatisation reduces x-inefficiency, and forces firms to be efficient
- talked about how PFIs enable less tax in the short run, and how they enable the construction of good facilities as the gov do not have to pay it back immediately
- then said that the PFIs result in higher taxes for future generations, privatisation can result in privatised monopolies which can be expensive to regulate, and how the PFIs lead to higher costs in the long run as the gov will eventually have to pay it back
- Evaluation being that it is good in a short run but bad in the long run
- mentioned deregulation as something you can use with privatisation - and then deaded that idea by mentioning the disadvantages; firms have no incentive to be productively efficient again

Was this on the right lines?

Essay 3

15 marker
Explain sugary drinks are a demerit good
Draw negative externalities diagram
Points included:
Bounded self control
Imperfect information
Low price
Habitual nature of drinks
Comparison to substitutes

25 marker
Define points, tax, market failure etc.
Outline argument

Tax on consumers
Lower demand and thus consumption
Depends on elasticity of demand
Depends on level of tax
Government failure
Manipulation of price mechanism


Tax on producers
Less profit incentive
Fall in supply
Depends on market type e.g in an oligopoly there is still brand loyalty
Considered whether it actually solved the issue of consumption

Behavioural economic policies as alternative
Nudges
Choice architecture
Provision of information
Argued that it can be seen as manipulative
Humans are always going to be irrational

Conclusion
Tax is dependent on elasticity
Believe behavioural economics is better if it is balanced between being effective and manipulative


This is what I put, hope it's ok

That is similar to what I wrote, I mainly focussed on Choice Architecture, nudges and herding behavior for the behavioral economics side.

Any grade boundary predictions?


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Guys for the Essay 3, 25 marker with externalities could u have one of the solutions as choice architecture by firms? Like framing and stuff of menus and putting up pics of healthy food etc.

I done context 1 (Privitisation) and Essay 2 on Price discrimination

What was context 2 on ? The 25 marker ?

Yeah that'd be fine. I wrote about how people have bounded rationality and so a tax wouldn't work in part because of inelastic PED. But also classical economic theory suggests than an increase in price of unhealthy food should lead to a decrease in the demand for unhealthy food, however bounded rationality may mean this isn't the case and people may just continue buying unhealthy food as they would've done without a tax. It is assumed people are rational all the time when they likely are not. I also said stuff like unhealthy snacks in vending machines found in hospitals and schools have become a sort of 'social norm' and that in order for this to change the government should replace these unhealthy vending machines with healthy ones to make healthy snacks a more 'default option' by making unhealthy food more difficult to access. I said there needed to be a shift in social attitudes and that "Junk food" needs to stop being viewed as the quick, easy option. I think anything like that would be fine?