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    (Original post by BasicMistake)
    MC below AC does not mean that there is a natural monopoly. Every firm has MC below AC at some point (see your normal cost curves) but natural monopolies have falling AC at levels of output far beyond normal firms.
    Okay, I guess it is trying to say only one firm can enjoy the economics of scale and therefore only that firm can teach the lowest point on the LRAC.

    Thanks for the help , it has improved my understanding!


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    Hi guys, in limit and predatory pricing - do the established and larger firms reduce the price of a good just above and below their average cost or the new firms (smaller firms) average cost?


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    (Original post by Chittesh14)
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    Hi guys, in limit and predatory pricing - do the established and larger firms reduce the price of a good just above and below their average cost or the new firms (smaller firms) average cost?


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    I think I understand this. Can someone please help me illustrate this on a diagram for a monopoly. I can illustrate it using the economies of scale diagram but find it hard to show using the full monopoly diagram where MC, MR, AR is there etc.


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    Avoiding wasteful duplication
    The best way to ensure competition, without the need to duplicate the infrastructure, is to allow new train operators to use the existing track; hence, competition has been introduced, without duplication of costs. This is called opening-up the infrastructure.

    This approach is frequently adopted to deal with the problem of privatising natural monopolies and encouraging more competition, such as:

    Telecoms, the network is provided by BT

    Gas, the network is provided by National Grid (previously Transco)

    Can someone please explain how the two examples adopt this method ?


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    (Original post by Chittesh14)
    Avoiding wasteful duplication
    The best way to ensure competition, without the need to duplicate the infrastructure, is to allow new train operators to use the existing track; hence, competition has been introduced, without duplication of costs. This is called opening-up the infrastructure.

    This approach is frequently adopted to deal with the problem of privatising natural monopolies and encouraging more competition, such as:

    Telecoms, the network is provided by BT

    Gas, the network is provided by National Grid (previously Transco)

    Can someone please explain how the two examples adopt this method ?


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    Both Bt and National Gas were originally nationalised. This means that they were state funded monopolies and therefore were funded by the government and the infrastructure was set up to help the residents of the country.
    Over time this mean that the government helped to fund railway lines, telephone cables or even gas exploration sites. Now, they want to privatise these companies so they are now owned by shareholders not government and this will introduce competition as they will now compete with other private companies to tender for business.
    However, all the infrastructure built over the years still exists and if this could not be used, not used for anything else atm, companies will have to spend money building infrastructure. this is costly and so many companies may not enter the market otherwise, which could again then create a monopoly which is what the government is trying to avoid. So the open infrastructure is better.
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    (Original post by samiz20891)
    Both Bt and National Gas were originally nationalised. This means that they were state funded monopolies and therefore were funded by the government and the infrastructure was set up to help the residents of the country.
    Over time this mean that the government helped to fund railway lines, telephone cables or even gas exploration sites. Now, they want to privatise these companies so they are now owned by shareholders not government and this will introduce competition as they will now compete with other private companies to tender for business.
    However, all the infrastructure built over the years still exists and if this could not be used, not used for anything else atm, companies will have to spend money building infrastructure. this is costly and so many companies may not enter the market otherwise, which could again then create a monopoly which is what the government is trying to avoid. So the open infrastructure is better.
    Sorry, I just realised that I forgot to reply to this lol. This helped a lot and I understood the topic and case studies afterwards ! Thanks a lot.
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    Can someone please explain the secondary income part of the current account of the BoP to me please?
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    (Original post by Chittesh14)
    Can someone please explain the secondary income part of the current account of the BoP to me please?
    Balance of Payments = Current Account + Capital Account + Financial Account (+ Balancing Tool) = 0

    Current Account = Trade Balance + Primary Income + Secondary Income

    Secondary income is the total of transfer payments made between countries. These include the UK's payments to the EU (but not for much longer) and overseas international aid for disaster relief or development purposes. Essentially just countries giving money to other countries.
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    (Original post by BasicMistake)
    Balance of Payments = Current Account + Capital Account + Financial Account (+ Balancing Tool) = 0

    Current Account = Trade Balance + Primary Income + Secondary Income

    Secondary income is the total of transfer payments made between countries. These include the UK's payments to the EU (but not for much longer) and overseas international aid for disaster relief or development purposes. Essentially just countries giving money to other countries.
    (Original post by Chittesh14)
    Can someone please explain the secondary income part of the current account of the BoP to me please?
    (Original post by samiz20891)
    Both Bt and National Gas were originally nationalised. This means that they were state funded monopolies and therefore were funded by the government and the infrastructure was set up to help the residents of the country.
    Over time this mean that the government helped to fund railway lines, telephone cables or even gas exploration sites. Now, they want to privatise these companies so they are now owned by shareholders not government and this will introduce competition as they will now compete with other private companies to tender for business.
    However, all the infrastructure built over the years still exists and if this could not be used, not used for anything else atm, companies will have to spend money building infrastructure. this is costly and so many companies may not enter the market otherwise, which could again then create a monopoly which is what the government is trying to avoid. So the open infrastructure is better.
    Hi guys, I was just wondering for anyone taking Edexcel Economics A which textbook do you use and how useful is it exactly (i.e. is most of your revision, notes from there or not)? Please, I really need to know since our school is saying the old spec textbook is enough, but I don't think so and need to order quickly. Thank you
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    (Original post by mathcon)
    Hi guys, I was just wondering for anyone taking Edexcel Economics A which textbook do you use and how useful is it exactly (i.e. is most of your revision, notes from there or not)? Please, I really need to know since our school is saying the old spec textbook is enough, but I don't think so and need to order quickly. Thank you
    Sorry, I can't be of much help here as I did my economics a level in 2009 and an Economics degree thereafter.
    Iirc I did Aqa as well. what I would say is the content is very similar across economics board if I remember correctly so there shouldn't be too much to worry about.
    Also, have you looked at the edexcel website for the syllabus as they often make recommendations on what books are best suited, start there to find what they recommend.
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    Hello, i'm relatively new in economics so can you please help me with these questions? thank you

    2) If there is a technology improvement to good A, what happens to the amount of good B that can be produced? (Must discuss all of the different output possible for good B, define PPF, what each element represents and show the changes with Diagram) (5 marks)

    3) Explain with your own example how it is possible to consumer outside your production possibility frontier as an individual. (5 marks)



    my problems with the questions:

    2) i know the diagrams but how do i actually explain "what happens to the amount of good B that can be produced?" and "discuss diff outputs of good B". do i have to give examples as in my own datas and then plot the diagram using my example data?

    3) my worries are the same. do i give my own datas in order to answer this? or could it be answered in a different way.
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    (Original post by BasicMistake)
    Balance of Payments = Current Account + Capital Account + Financial Account (+ Balancing Tool) = 0

    Current Account = Trade Balance + Primary Income + Secondary Income

    Secondary income is the total of transfer payments made between countries. These include the UK's payments to the EU (but not for much longer) and overseas international aid for disaster relief or development purposes. Essentially just countries giving money to other countries.
    Thanks, I don't understand why some of my posts don't send lol -_-.....
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    (Original post by flyingpegasi)
    Hello, i'm relatively new in economics so can you please help me with these questions? thank you

    2) If there is a technology improvement to good A, what happens to the amount of good B that can be produced? (Must discuss all of the different output possible for good B, define PPF, what each element represents and show the changes with Diagram) (5 marks)

    3) Explain with your own example how it is possible to consumer outside your production possibility frontier as an individual. (5 marks)



    my problems with the questions:

    2) i know the diagrams but how do i actually explain "what happens to the amount of good B that can be produced?" and "discuss diff outputs of good B". do i have to give examples as in my own datas and then plot the diagram using my example data?

    3) my worries are the same. do i give my own datas in order to answer this? or could it be answered in a different way.
    2. It's probably best to give a numerical example to help explain your answer here. At any given output of good A, you can now produce more of good B (show this using a PPF diagram), aside from both extremes (i.e. when A = 0 and B = 0).

    3. Essentially, this question comes down to borrowing: if you can borrow extra 'income', then you can consume beyond your PPF. Once again, a numerical example would help.
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    Anyone know of any good examples of government intervention in order to address market failure?
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    (Original post by goldenusername)
    Anyone know of any good examples of government intervention in order to address market failure?
    Public goods and free rider problem.

    My favorite though is regulation, which Trump wants to cut again. These are vital to protect the environment and the consumer who might otherwise make very uninformed choices. E.g. he has no or very limited knowledge about safety of some products, government regulation ensures the consumer can rely on a certain level of standards enforced by the government.

    If you need specific examples, they usually love current events - monopoly/cartel is one type of market failure, you could find articles about the big lorry producers forming a cartel.
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    Motor oil and gasoline are complements. If the price of motor oil increases, consumer surplus in the gasoline market
    a. decreases.
    b. is unchanged.
    c. increases.
    d. may increase, decrease, or remain unchanged.
    ANS: D
    Why not A? Supply would have to shift for the answer to be D, right? What would make supply shift right?
    Thank you!
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    Hey everyone, AQA A2 student here


    What are you guys using to revise multiple choice questions, any good resources for this out there? It would be even better if anyone has a resource focused on multiple choice questions for the new spec.

    I'm also having a hard time understanding what the AO's (assessment objectives) are, I know what the spec says about them but does anyone mind breaking them down for me. Every essay you write should try and deliver on the AO's in order to be successful so it's crucial I understand them before the exam.
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    (Original post by tykhim)
    Motor oil and gasoline are complements. If the price of motor oil increases, consumer surplus in the gasoline market
    a. decreases.
    b. is unchanged.
    c. increases.
    d. may increase, decrease, or remain unchanged.
    ANS: D
    Why not A? Supply would have to shift for the answer to be D, right? What would make supply shift right?
    Thank you!
    Price rises for motor oil. As gasoline is a complement, its D curve shifts left (decreases). Whether or not consumer surplus falls, rises or remains unchanged depends on the elasticity.
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    evaluate measures to reduce a fiscal deficit.

    can you talk about monetary policy, or just fiscal and supply side?
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    If this thread is still open please help.
    My question is which diagram is most appropriate to use when asked about PED?
 
 
 
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