Econ3 HELP Watch

Alex-Torres
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Why would there be uncertainty in an oligopolistic market?
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Mav455
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Uncertainty exists because of the interdependence between firms, which means that each firm must take the likely reactions of other firms in the market into account when making decision. They dont know how others will react when they raise or lower prices, thus there is uncertainty. Game Theory is used to illustrate this

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Mav455
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Uncertainty exists because of the interdependence between firms, which means that each firm must take the likely reactions of other firms in the market into account when making decision. They dont know how others will react when they raise or lower prices, thus there is uncertainty. Game Theory is used to illustrate this

Hope that helps
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Alex-Torres
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(Original post by Mav455)
Uncertainty exists because of the interdependence between firms, which means that each firm must take the likely reactions of other firms in the market into account when making decision. They dont know how others will react when they raise or lower prices, thus there is uncertainty. Game Theory is used to illustrate this

Hope that helps
But interdependence leads to sticky prices, so why would that mean there is uncertainty if everyone keeps their prices sticky?
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Mav455
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(Original post by Alex-Torres)
But interdependence leads to sticky prices, so why would that mean there is uncertainty if everyone keeps their prices sticky?
I meant Uncertainty as in they dont know how other firms will react to their price changes. They may lower their prices to attract consumers OR might raise them, they dont know
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Mav455
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(Original post by Mav455)
I meant Uncertainty as in they dont know how other firms will react to their price changes. They may lower their prices to attract consumers OR might raise them, they dont know
Interdependence will lead to sticky prices because its better to keep the price stable, But firms may change prices to attract more consumers by offering a lower price, which will spark a price war where the other firms lower THEIR prices to try to maintain profits

Tutor2u is a great website for Economics, I`d advise you to check there for a more detailed explanation
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mahatma ghandi
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Kinked demand curve theory suggests Oligopolistic markets experience price rigidity. This suggests prices remain at a stable level, so there isn't uncertainty. What makes you ask the question? Has it come up in a past paper?
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gr8wizard10
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(Original post by mahatma ghandi)
Kinked demand curve theory suggests Oligopolistic markets experience price rigidity. This suggests prices remain at a stable level, so there isn't uncertainty. What makes you ask the question? Has it come up in a past paper?
There is uncertainty due to firms not knowing reactions of competitors. The Kinked Demand theory is a flawed system that assumes certain reactions.
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mahatma ghandi
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(Original post by Abdul-Karim)
There is uncertainty due to firms not knowing reactions of competitors. The Kinked Demand theory is a flawed system that assumes certain reactions.
Yeah but we're talking Econ 3 here, the examiners love a bit of the kinked demand curve, just read the examiners reports
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Pulse.
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(Original post by mahatma ghandi)
Yeah but we're talking Econ 3 here, the examiners love a bit of the kinked demand curve, just read the examiners reports
Really? I always thought it was quite low level compared to some of the other graphs.

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mahatma ghandi
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(Original post by Pulse.)
Really? I always thought it was quite low level compared to some of the other graphs.

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I think kinked demand analysis is considered pretty top end, it opens up the opportunity for evaluation too as you can point out the flaws in the theory. What graphs do you consider to be higher level than kinked demand?
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Pulse.
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(Original post by mahatma ghandi)
I think kinked demand analysis is considered pretty top end, it opens up the opportunity for evaluation too as you can point out the flaws in the theory. What graphs do you consider to be higher level than kinked demand?
Well for Oligopoly; its pretty much the only graph you could use to max marks but Ive always been of the impression that its literally the easiest to explain and draw. Market contestability and perfect competition market mechanism graphs are what I consider pretty impressive to explain. How's revision going in general?

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mahatma ghandi
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(Original post by Pulse.)
Well for Oligopoly; its pretty much the only graph you could use to max marks but Ive always been of the impression that its literally the easiest to explain and draw. Market contestability and perfect competition market mechanism graphs are what I consider pretty impressive to explain. How's revision going in general?

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I think perfect comp graphs are fairly straightforward to draw, but I agree explaining them and the various elasticities can prove tricky. Not bad, I'm fairly solid on Oligopoly, Monopoly, Competition and Price discrimination questions. I really dislike the equity and environmental questions which always seem to pop up. How about you?
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Pulse.
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(Original post by mahatma ghandi)
I think perfect comp graphs are fairly straightforward to draw, but I agree explaining them and the various elasticities can prove tricky. Not bad, I'm fairly solid on Oligopoly, Monopoly, Competition and Price discrimination questions. I really dislike the equity and environmental questions which always seem to pop up. How about you?
Negative externalities you mean? I'm pretty solid on the most topics, hate the labour market though. Mainly working on my evaluation skills and going through Mark schemes; my second time doing this exam lol.

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mahatma ghandi
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(Original post by Pulse.)
Negative externalities you mean? I'm pretty solid on the most topics, hate the labour market though. Mainly working on my evaluation skills and going through Mark schemes; my second time doing this exam lol.

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Yeah the labour markets not the best either, yeah essentially questions revolving around externalities. that's a pain, what did you get first time round?
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Pulse.
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(Original post by mahatma ghandi)
Yeah the labour markets not the best either, yeah essentially questions revolving around externalities. that's a pain, what did you get first time round?
For some reason I like the externalities questions, so much generic **** you can say. A high B last time, hoping for an A* overall. I'm guessing your doing your A2s, what are you hoping to get?

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mahatma ghandi
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(Original post by Pulse.)
For some reason I like the externalities questions, so much generic **** you can say. A high B last time, hoping for an A* overall. I'm guessing your doing your A2s, what are you hoping to get?

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I need an A* in one of my A2s for my offer, economics is probably the most likely so thats the aim. What generic stuff do you mean? Like-opportunity cost-unintended consequences-benefits of free market-Invisible hand etc.. ?
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Pulse.
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(Original post by mahatma ghandi)
I need an A* in one of my A2s for my offer, economics is probably the most likely so thats the aim. What generic stuff do you mean? Like-opportunity cost-unintended consequences-benefits of free market-Invisible hand etc.. ?
Stuff like that and market failure nonsense. Sounds like a killer offer, luckily mine is just AAA.

Lol I'm out, definitely need to fix this sleeping pattern for Tuesday. Good luck guys.

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gr8wizard10
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(Original post by mahatma ghandi)
Yeah but we're talking Econ 3 here, the examiners love a bit of the kinked demand curve, just read the examiners reports
Correct, it's good to use however you have to understand it's limitations as you suggested there isn't uncertainty in Oligopolistic markets.
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gcole19
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Guys how would you score high marks in the multiple choice questions. I need to score high in those to boost my possible grade up because the essay questions are much easier and I tend to lose marks in the multiple choice questions
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