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

Hi, I did context 2 on the gender pay gap and the essay 2 on poverty.

For the first 25 marker I wrote about how trade unions/ the NMW and progressive taxation and benefits could be used to reduce the gao in the economy and how successful each policy was that a government could use.

For the second 25 marker I wrote about how the trickle down effect/economic growth could be used by the market forces to reduce poverty, and the NMW/progressive taxation and benefits for government intervention,

Does this sound about right to you on the whole, especially on the one you did? Found the paper fairly good. Your answers seem to be very good, think I left out some good points looking at yours.

Literally was thinking on the spot as this wasn't my favourite topic but I wrote

That left to the free market there would be profit motives and incentives which in theory could lead to an outcome close to perfect competition. If firms strived for efficiency. This would benefit consumers, justify privatisation

But it depended on whether it not it had just caused a natural monopoly or in the case an oligopolistic market

Talked about how that it could lead to inefficiencies mentioned the data, reverse the good.Perhaps even market failure as firms do not care about consumer welfare unlike government's they want to make profit. Said this could cause government failure? And it was wrong to privatise idek.

Then said it depended on the threat of contestability, talked about the potential threat of innovation from the data and the behaviour of a firm depending on what it did with abnormal profits

I think I even talked about even though they may be no long term investments as it's not run by the goverment, but the possibility of r&d by firms could be good. I don't know If that was relevant

Yep, i did the poverty question. I also focussed heavily on market forces saying why they could theoretically help to reduce poverty through incentives and trickle down effects. Although, I evaluated this by saying perhaps incentives fail to work all the time since the poorest may not have the skills to actually advance in their careers so therefore there is a need for education etc. but this is clearly under-consumed by free market due to imperfect info and stuff so then there's the need for govt intervention. Also discussed why trickle down can sometimes fail to work due to the high-income earners having lower marginal propensity to consume which may not result in the expected extent of trickle down also there is something called the 'savings glut' which prevents trickle down from properly working. Then I said the kinda stuff the government can do to reduce poverty like NMW and benefits. Discussed why these may work but then may fail to properly address the issues of poverty such as failing to get people into the workforce via the poverty trap and actually the NMW raises tend to benefit the middle class rather than the poor. Overall concluded saying market forces work to an extent but the govt needs to intervene to help solve the issues of long-run poverty and especially child poverty since the theoretical free market principles may not actually work in real life. Although, the govt has to be careful about how it uses policy since it can lead to government failure if not executed properly. does this sound alright? - the bulk of my work was on market forces with some stuff on govt intervention so i answered the question

I wrote about similar stuff. My main points focussed on the case for and against privatization from the government's perspective. I talked a lot about how the government is a welfare maximizing state and clearly, such privatization can lead to efficiency but not necessarily equity since the people in rural areas seemed to suffer. I also said the government has to consider the use of obligations and how these may affect the firms it privatizes. The Royal Mail had the obligation which clearly is making its profit margins fall. This means that it perhaps doesn't have the resources to invest like its competitors such as DPD who seemed to be aceing it in terms of dynamic efficiency. Therefore, the desired efficiency outcomes may not occur due to the need of following obligations. I also mentioned some stuff about how the free market fails to consider the social costs of production and therefore there are problems relating to negative production externalities and this clearly isn't desirable since the government wants to maximize economic welfare and therefore such privatization may not lead to a socially efficient allocation of resources. I then concluded saying the SR it seems like Royal Mail privatization hasn't been the best due to its lagging in terms of dynamic efficiency and poor service quality. But then I said in the LR, market forces will determine its outcome. It is operating in a market that is becoming increasingly competitive and if it doesn't manage to figure out its inefficiencies it may lose market share. Therefore, this will put it under discipline to become more efficient. So I said the SR privatization perhaps isn't the best policy but in the longer run it will provide the discipline to ensure efficient outcomes for society and the efficiency that the govt desired.

I think this may be correct but i dont think that i followed the typical structure lol. What do you think?

The beauty of economics! It's so interesting to see other people's perspectives. your points seem pretty well thought out, plus good use of the data! I'm no examiner but it seems pretty good. Wish I had thought of some of those ideas

Yeah my essay was similar to yours. But after I spoke about the trickle down effect/economic growth I suggested that government intervention may be more successful instead, and then evaluated the interventionist approaches with free market theory (such as incentives being reduced when progressive taxation is used). But I concluded intervention was more successful due to the MPC issue with the trickle down effect and high earners. I also used some traditional economic theory about consumer rationality, and people spending more at the bottom end with an increase in income due to increased confidence, but don't know if that was right? But I think we both did good then.😊

The beauty of economics! It's so interesting to see other people's perspectives. your points seem pretty well thought out, plus good use of the data! I'm no examiner but it seems pretty good. Wish I had thought of some of those ideas

man I hope so. i was stressin in the exam since privatisation is a broad topic. theres so much to talk about and therefore i felt like my answer could have given off some unstructured vibes lol. i made sure to have a huge conclusion at the end haha. you going to do econ at uni?

I think the fact that we both did a lot of talking about market forces is very convincing since that was the bulk of the question. i can imagine a lot just going on and on about policies which wont really answer the question. I didnt use that traditional model and rationality at all - it might be right, i dont know. Anyway sounds like it was successful then I concluded in a similar way to you, i said we need both the free market and govt intervention since we need incentives but at the same time need govt intervention to ensure the poor to get a fair chance at life in terms of education etc.

did you shift the AC and MC curve up in the 9 marker? I basically said their fixed costs and variables rise if they have complete coverage of UK since they need to have distribution centres all over the country (fixed costs) and then longer journeys to uneconomically feasible places (variable costs). This therefore shifts up MC and AC, leaving Royal mail with higher costs and lower supernormal?

i did not explain my nine marker very well at all, I didnt even consider shifting ac/mc I thought it was just a simple If costs would increase, abnormal profits would decrease and the likely scenario would be a firm making normal profits if they were forced to continue with this, although I think I just said like they would end up making normal profits kind of a disaster for me

I did the exact same, dw. Lots of people really struggled with that. I drew a diagram showing abnormal profit from producing where MR=MC and then drew another diagram showing the long-run position for monopolistic competition where only normal profit is being made. Wasn't my finest moment in the exam

Ah okay, I think it was such a weird question. I just marked another point of normal profits on my diagram but I marked it wrong whoops. I'm sure they'll have to consider this when marking

I'm not sure whether my argument was flawed, but I argued that because Royal Mail are obligated to deliver 6 days a week this would increase their costs and therefore make them less competitive than rival delivery firms. Demand for Royal Mail parcel delivery would therefore decrease. Showed the shift in the MR and AR until the AR curve is tangential with the AC curve and said that at this point only normal profit is made. Did a couple of definitions too and drew a correct monopoly diagram so hopefully I get at least a few marks :/

I dont even know what I was thinking xD surely we can't get marked too lowly, because who knows what the actual answer is like and as long as we explained it right (I hope)