OCR F581 Markets in Action - 11 May 2015 Watch

Hammy_23
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#581
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discuss whether regulation is the most effective way of correcting market failure arising from info failure??
some willing to make some points in relation to regulation please?
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CamilleClarke
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#582
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When providing a numerical estimate for elasticitiy measures, is this right...

A YED measure of 0.02= a 10% increase in income results in a 0.02% increase in demand ( or it it 2%)
A YED measure of 0.40= a 10% increase in income results in a 4% increase in demand ( or is it 40%?)
A YED measure of 1.65= a 10% increase in income results in a 6.5% increase in demand ( or is it 65%?)

Thank you !
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alhamzahh
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#583
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can someone explain elasticity and the different types? thanks
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Makashima
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#584
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(Original post by Hammy_23)
discuss whether regulation is the most effective way of correcting market failure arising from info failure??
some willing to make some points in relation to regulation please?

why not you provide a starting point and we can add towards it? most effective way of learning
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meems5
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(Original post by Hammy_23)
discuss whether regulation is the most effective way of correcting market failure arising from info failure??
some willing to make some points in relation to regulation please?
Effective;
Simple and clear policy backed by power of law.
Consequences if standards are not followed.
Can limit the supply of a demerit good so prices go up and overconsumption is reduced.
Third parties no longer have to take into account external costs.

Not effective;
Difficult and costly to enforce (opportunity cost to gov)
Difficult to measure level of market failure therefore level of reg that should be enforced.
Larger firms may choose to ignore the fine.
If a flat rate fine is imposed, smaller companies will lose out more than larger companies.

These are points which are general for regulation. I did this question a while back i think its from the June 2013 paper and I suggest you link it to the case study which talks about info failure associated with tanning products.

Make sure you write about other policies like info provision or indirect tax to work alongside regulation which will help make it even more effective.
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mainmans
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If a question asked to 'discuss the business relevance of these elasticity estimates' what sort of information would I have to put down?
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keynes24
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(Original post by mainmans)
If a question asked to 'discuss the business relevance of these elasticity estimates' what sort of information would I have to put down?
Depends on the elasticity and the values
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mainmans
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(Original post by keynes24)
Depends on the elasticity and the values
Say, for example there was a product with a PED value greater than 1
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keynes24
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(Original post by mainmans)
Say, for example there was a product with a PED value greater than 1
There was a similar question in May 2014, elastic PED firms should decrease prices to increase revenue, explain PED elastic and importance for setting prices evaluation estimates, changes over time...... There were similar questions before, best to check mark schemes for ideas.
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Yousf
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(Original post by keynes24)
There was a similar question in May 2014, elastic PED firms should decrease prices to increase revenue, explain PED elastic and importance for setting prices evaluation estimates, changes over time...... There were similar questions before, best to check mark schemes for ideas.

For market failure diagrams, if supply curve shifts to the left, does q1-q2 represnt the overproduction issues, and p1-p2 represent consumption issues?
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justfly
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When discussing regulations and you chose to opt for a limit on how much a supplier can produce on a monthly basis, would your supply be vertical?
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jamesbird18
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Can someone tell me what mark they think my answer for this question would be? Really struggling for the business significance questions....

''comment on the business significance of an XED value of 1.5'' ( 6 marks)

The XED value is positive and therefore a substitute. This means that if the price of another good goes up, the demand for the first good increases.
The value is also elastic, meaning that the demand for the first good will rise by a greater then proportional amount following a rise in price of the second good.
The extent to which demand for the first good will rise will depend on the size of the price increase of the second good. A small price rise may not increase demand that much due to other demand determinants non price related.
However elasticity values are based on historical data. This means they are likely to be inaccurate due the fact they do not take into account present economic shocks such as natural disasters (affecting the production) or changes in tastes and fashion which could change the elasticity value.
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keynes24
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(Original post by Yousf)
For market failure diagrams, if supply curve shifts to the left, does q1-q2 represnt the overproduction issues, and p1-p2 represent consumption issues?
For an externality diagram I would use cost/benefit diagram with marginal curves.
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keynes24
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(Original post by jamesbird18)
Can someone tell me what mark they think my answer for this question would be? Really struggling for the business significance questions....

''comment on the business significance of an XED value of 1.5'' ( 6 marks)

The XED value is positive and therefore a substitute. This means that if the price of another good goes up, the demand for the first good increases.
The value is also elastic, meaning that the demand for the first good will rise by a greater then proportional amount following a rise in price of the second good.
The extent to which demand for the first good will rise will depend on the size of the price increase of the second good. A small price rise may not increase demand that much due to other demand determinants non price related.
However elasticity values are based on historical data. This means they are likely to be inaccurate due the fact they do not take into account present economic shocks such as natural disasters (affecting the production) or changes in tastes and fashion which could change the elasticity value.
The answer depends on the context, what is the case study about? The significance for the business could be how a change in price from a competitor will affect their demand.
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sam_aggy96
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What do you guys think the 18 mark question will be on??


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Coombsy
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(Original post by nadsss)
What advice would you give on revising for the 18 mark questions?
Generally, you should have a short introduction wich should include definitions of the key terms.

You should then analyse how the statement in the question is true using relevant graph with the best analysis clearly showing how the cause leads to the effect.

Then evuate by saying why the statement in the question MAY NOT be true and why this is the case. Two or three evaluative points here will get you in to the higher marks.

Then conclude on which side of the argument you fall on with reasons why. Also include long term consequences of the decision to get in to the higher marks.

It may be easier to explain the structure if you have a question that you want me to go through.

Here is my answer to the January 2013 18 mark question where I got 18/18 if it's of any use: http://www.thestudentroom.co.uk/album.php?albumid=10936

Hope that's helped in some way.
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Yousf
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(Original post by keynes24)
For an externality diagram I would use cost/benefit diagram with marginal curves.
I mean for a normal supply and demand diagram.
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jamesbird18
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#598
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(Original post by keynes24)
The answer depends on the context, what is the case study about? The significance for the business could be how a change in price from a competitor will affect their demand.
No context just made it up lol
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Kitty260
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#599
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Sure tradable permits will come as 18
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Yousf
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(Original post by Kitty260)
Sure tradable permits will come as 18
how do you know ;o
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