AQA A2 Economics Unit 3 - 12th June 2012 PM

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YOU sir are amazing (+rep).

One question though: With regards to price discrimination, I find it difficult to evaluate why it won't achieve allocative efficiency.
Also, you've listed the difference between 1st, 2nd and 3rd degree but can you please give real life exams where it happens in pratice? 3rd degree is easy to understand because it's between different countries; 2nd is like different bus fares for students and pensioners, right? But then what is 1st degree?
Thank you so much :biggrin:

Because price doesn't equal marginal cost.

1st is where each consumer is charged the maximum they are willing to pay, the closest you can get to it is like a sealed bid or an auction but it's not very realistic.

2nd Is where a firm will profit maximise, and then sell what is left over where AR=MC, so this could be last minute flights, you are selling it to two different groups at different time periods.

3rd is where two portions of the market have different elasticities of demand, for example peak and off peak train tickets, or telephone calls. Firms then exploit this difference in elasticity by profit maximising in each market separately, because the revenue curves are different but the cost curves are constant the firm can make a higher profit.

Reply 381

rocknrollnerd

What is carbon trading? Is it just selling pollution permits?

This was posted from The Student Room's iPhone/iPad App

Reply 382

Tateco

I think price discrimination may come up, haven't seen it in a while if I remember correctly.

Reply 383

Tateco

Original post by rocknrollnerd

What is carbon trading? Is it just selling pollution permits?

This was posted from The Student Room's iPhone/iPad App

Yes, it's basically the market that is created due to the introduction of pollution permits. It is good to use specific examples like that instead of just saying "pollution permits", shows you have done your research.

Reply 384

ohTS

Original post by Jorgeyy

P =/= MC in each and every market.

Ohh right ok thanks again! Anything I can help you with? haha

Reply 385

Mathematix

Original post by ohTS

Ohh right ok thanks again! Anything I can help you with? haha

You can buy me a drink if we end up at the same uni :biggrin:

I'm tired of this now, I wish I had just slept in until like 12 and casually drove to college instead of worrying :rolleyes:

Reply 386

Mizz_S

Original post by sweetascandy

an example of first degree is like an auction, or when you go to a car boot sale (you haggle - you get low prices)

Original post by ohTS

Why is allocative efficiency not achieved with price discrimination? Thanks for the notes :smile:

Oh hahha just seen the reply above, sorry

as for allocative efficiency. I really have no clue, I saw it on this sheet and was like 'ooh that sounds interesting' went back to look on it, and I have no absolute clue!! Sorrry :frown:

Reply 387

arz15

Original post by Mizz_S

an example of first degree is like an auction, or when you go to a car boot sale (you haggle - you get low prices)

as for allocative efficiency. I really have no clue, I saw it on this sheet and was like 'ooh that sounds interesting' went back to look on it, and I have no absolute clue!! Sorrry :frown:

As P doesn't = mc

Reply 388

Mizz_S

Original post by arz15

As P doesn't = mc

thanks ... i was just about to go back to say that, lol :colondollar:

Reply 389

Tateco

Original post by Jorgeyy

You can buy me a drink if we end up at the same uni :biggrin:

I'm tired of this now, I wish I had just slept in until like 12 and casually drove to college instead of worrying :rolleyes:

Same

I'm going to go in at 1 otherwise I'll just be worrying there instead...

Reply 390

Mathematix

Original post by Tateco

Same

I'm going to go in at 1 otherwise I'll just be worrying there instead...

I'm at college, and they are doing building work with massive drills in the "quiet area" of the library... resulting in the best spot to do work at the computers with noisy AS kiddies who have finished their exams chatting around me.

I'm glad this is one of the few pm exams I have :frown:

Reply 391

Thriller1983

Anyone think that cost benefit analysis essay question will come up? It came up once if I can remember correctly in the jan 2010 paper. Good Luck everyone! You'll all do well!

Reply 392

ohTS

Original post by Jorgeyy

You can buy me a drink if we end up at the same uni :biggrin:

I'm tired of this now, I wish I had just slept in until like 12 and casually drove to college instead of worrying :rolleyes:

Ok deal. Where you (hopefully) going?
I know, all exams should be in the morning

Reply 393

Mathematix

Original post by ohTS

Ok deal. Where you (hopefully) going?
I know, all exams should be in the morning

I have firmed Bath at A*AA and insured Nottingham at AAB

The A* is far from guaranteed, but hopefully Bath :biggrin:

(For maths, econ can die haha)

Reply 394

ohTS

Original post by Jorgeyy

I have firmed Bath at A*AA and insured Nottingham at AAB

The A* is far from guaranteed, but hopefully Bath :biggrin:

(For maths, econ can die haha)

Ouuch A*. I've firmed Nottingham at AAA for econ haha so if you don't get your A*, just remember you'll get a drink off me in Sept !

Reply 395

Mathematix

Original post by ohTS

Ouuch A*. I've firmed Nottingham at AAA for econ haha so if you don't get your A*, just remember you'll get a drink off me in Sept !

I might just purposely flunk it now :wink:

Reply 396

JulietheCat

Original post by Jorgeyy

A contestable market is costless to enter or exit, right?

All firms have costs on entering or exiting an industry. There are no sunk costs when entering a contestable market, which means that the firms would recover all costs when entering the contestable industry.