OCR F581 Markets in Action - 11 May 2015 Watch

Tommehh
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#901
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If 18 marker is on Trade-able pollution permits can you incorporate a negative externalities diagram into it, and if so would it be the negative production one or consumption? thanks
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clara16
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(Original post by Tommehh)
If 18 marker is on Trade-able pollution permits can you incorporate a negative externalities diagram into it, and if so would it be the negative production one or consumption? thanks
Production one and use it to show the size of externality which is internalised by the permit


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BigFreakyGinger
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Yes if the government reduces the amount of permits in the market, as the gov. controls the quantity traded of permits. They may reduce the amount gradually over time to encourage firms to invest in greener technology.
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Tommehh
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(Original post by clara16)
Production one and use it to show the size of externality which is internalised by the permit


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thanks for clearing that up!
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freyalawrence
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Anyone got any idea what they think might come up this year, especially for the essay?
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KhamZ_98
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(Original post by luk3miller)
Sorry if it's been posted before, but does anybody have a link to the F581 January 2014 question paper?
There are no more january papers. lol but you can find a link to the june 2014 paper in the google docs which has been made
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BigFreakyGinger
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Another Question. Can allocative efficiency, defined as when 'consumer satisfaction is maximised', be applied to negative externalities considering they effect third parties and not the 'consumer' directly and so in reducing a Neg.Ext. the private costs to the consumer are not applicable. ??? (another terribly constructed question... I hope someone understands what I am on about!)
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aoxa
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(Original post by azo)
Can someone please tell me the diagram for merit/demerit goods? Is it just pos/neg externality arising from consumption diagrams?
Thanks
There are different diagrams depending on what solution you're using to correct the externality
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keynes24
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(Original post by clara16)
Production one and use it to show the size of externality which is internalised by the permit


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you don't need to do a negative externality diagram, not expected from candidates if the question refers to tradable pollution permits
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clara16
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(Original post by keynes24)
you don't need to do a negative externality diagram, not expected from candidates if the question refers to tradable pollution permits
Surely it would help gain L3 marks as the whole point of a pollution permit is to internalise an externality?


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JYNE
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Keynes, what diagrams would we need to draw to get all the marks? (for a TP essay)
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aoxa
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(Original post by BigFreakyGinger)
Another Question. Can allocative efficiency, defined as when 'consumer satisfaction is maximised', be applied to negative externalities considering they effect third parties and not the 'consumer' directly and so in reducing a Neg.Ext. the private costs to the consumer are not applicable. ??? (another terribly constructed question... I hope someone understands what I am on about!)
I'm not entirely sure what you're asking, but if you use one of the solutions to correct a negative externality - e.g. indirect tax, this pushes up the price, so demand will fall to the socially efficient level, thus making the market more allocatively efficient?

I don't know if that helps, but...
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keynes24
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(Original post by clara16)
Surely it would help gain L3 marks as the whole point of a pollution permit is to internalise an externality?


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it is not needed, the expected diagram is D/S. Whether you do more is another thing. Explaining that negative externalities would be internalise or lowering overconsumption and reaching allocative efficiency would help you reach L3 Band 2. Check the latest mark scheme to get my point.
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luk3miller
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(Original post by KhamZ_98)
There are no more january papers. lol but you can find a link to the june 2014 paper in the google docs which has been made
Oh my bad, thanks
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azo
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(Original post by aoxa)
There are different diagrams depending on what solution you're using to correct the externality
The diagram showcasing a demerit/merit good.
And what's the diagram if it's corrected by information provision ?
Thanks
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_Fergo
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(Original post by Egg1)
Has it ever been an essay topic before? If so can you link the markscheme/ tell me the year?
Wrong wording, sorry. It's only been proposed as an alternative policy, but they haven't actually included any info for it.

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aoxa
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(Original post by azo)
The diagram showcasing a demerit/merit good.
And what's the diagram if it's corrected by information provision ?
Thanks
Well there is no diagram specifically for a (de)merit good, but if a question came up on the exam for it, as (de)merit goods cause externalities, we've been taught to do a negative externality diagram for a demerit, and positive externality diagram for a merit good.

For provision of information, it's a basic price/quantity on the axises, and normal demand (D1)/supply and the equilibrium. For a demerit good, this causes a left shift in demand (D2), as quantity demanded has fallen. For a merit good, it causes a right shift in demand (D2), as quantity demanded has risen as a result of information provision.

Hope this helped
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BigFreakyGinger
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Business significance of XED?
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azo
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(Original post by aoxa)
Well there is no diagram specifically for a (de)merit good, but if a question came up on the exam for it, as (de)merit goods cause externalities, we've been taught to do a negative externality diagram for a demerit, and positive externality diagram for a merit good.

For provision of information, it's a basic price/quantity on the axises, and normal demand (D1)/supply and the equilibrium. For a demerit good, this causes a left shift in demand (D2), as quantity demanded has fallen. For a merit good, it causes a right shift in demand (D2), as quantity demanded has risen as a result of information provision.

Hope this helped
Nice thanks, this is what I thought but better to be safe than sorry!
Good luck for the exam, hope it goes well!
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justfly
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(Original post by keynes24)
it is not needed, the expected diagram is D/S. Whether you do more is another thing. Explaining that negative externalities would be internalise or lowering overconsumption and reaching allocative efficiency would help you reach L3 Band 2. Check the latest mark scheme to get my point.
please put me out of my misery , im stressed about the TP diagram! My teacher said just draw a vertical supply curve and normal D curve and explain how it works - no need for shifts
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