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AQA Economics AS Mon 14 June AM watch

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    (Original post by TheWolf)
    if cost push occurs ie why does increasing capacity makes it worse?
    More fixed costs, more labour and capital needed for the increase in capacity, possibly a greater loan cost.
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    for those of you who remember the 20 mark question:

    discuss the likely consequences of a high value of the pound for the manufacturing sector of the UK economy

    high value of the pound means domestic good becomes less competitive in the international market, so less exports. However, you can get cheaper imported raw materials, so production costs decrease, which makes it more competitive. So do your goods become more or less competitive in this case? or is this a point to evaluate
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    (Original post by TheWolf)
    for those of you who remember the 20 mark question:

    discuss the likely consequences of a high value of the pound for the manufacturing sector of the UK economy

    high value of the pound means domestic good becomes less competitive in the international market, so less exports. However, you can get cheaper imported raw materials, so production costs decrease, which makes it more competitive. So do your goods become more or less competitive in this case? or is this a point to evaluate
    It's a point to evaluate, but remember that the manufacturing industry here has been badly hit by a strong pound for a while now. So there is empirical evidence to suggest that British goods are less competitive.
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    Surely a strong pound would mean certain manufacturing firms can import goods for cheaper and sell them in Britain for high prices? The assumption that high ER damages manufacturing firms is based on how much the firm imports relative to exports - if it imports more, it makes money from the high ER, right?
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    (Original post by mik1a)
    Surely a strong pound would mean certain manufacturing firms can import goods for cheaper and sell them in Britain for high prices? The assumption that high ER damages manufacturing firms is based on how much the firm imports relative to exports - if it imports more, it makes money from the high ER, right?
    if you dont import, and when the pound is strong, yes, youll makemore money from the cheaper production cost
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    guys why is it marginal social cost and marginal private cost on the externalities diagram not just social cost or private cost?
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    (Original post by TheWolf)
    guys why is it marginal social cost and marginal private cost on the externalities diagram not just social cost or private cost?
    Because the marginal private cost (which is the marginal cost in terms of the producer) is the supply curve of the firm.
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    (Original post by ZJuwelH)
    Because the marginal private cost (which is the marginal cost in terms of the producer) is the supply curve of the firm.
    what does it mean by marginal?
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    (Original post by TheWolf)
    what does it mean by marginal?
    oh and http://www.s-cool.co.uk/topic_quickl...s=&ebl=&elc=13

    i dont really get the cost graph. it seems that a reduction of cars shifts mpc to spc? :confused: very confused
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    (Original post by TheWolf)
    oh and http://www.s-cool.co.uk/topic_quickl...s=&ebl=&elc=13

    i dont really get the cost graph. it seems that a reduction of cars shifts mpc to spc? :confused: very confused
    please can someone explain the externalities diagrams...
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    It's like taxing a good that has externalities - supply curve shifts left, and there is a contraction in demand - output falls to the correct level and everyone pays the total social cost of the good - market faliure avoided.
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    (Original post by mik1a)
    It's like taxing a good that has externalities - supply curve shifts right, and there is a contraction in demand - output falls to the correct level and everyone pays the total social cost of the good - market faliure avoided.
    doesnt taxing shift supply curve to left tho
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    (Original post by TheWolf)
    doesnt taxing shift supply curve to left tho
    i guess becuase it increases costs and decreses the amount the firm can produce as it has less money!
    make any sence?
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    (Original post by kriztinae)
    i guess becuase it increases costs and decreses the amount the firm can produce as it has less money!
    make any sence?
    exactly, but that doesnt explain the externalities graph
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    (Original post by TheWolf)
    exactly, but that doesnt explain the externalities graph
    what graph? hmm maybe i came a lil late!
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    (Original post by kriztinae)
    what graph? hmm maybe i came a lil late!
    the externalities graphs http://www.s-cool.co.uk/topic_quickl...s=&ebl=&elc=13
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    (Original post by TheWolf)
    the externalities graphs http://www.s-cool.co.uk/topic_quickl...s=&ebl=&elc=13
    Marginal private cost can be assumed as costs to the individual, i.e. price of production. Marginal social cost is marginal private cost with negative externalities added on. If you remember, the definition of a negative externality is a cost imposed on a third party by a person/action.
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    (Original post by TheWolf)
    doesnt taxing shift supply curve to left tho
    My mistake.. make that "left" and it all makes sense.
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    if cost push occurs ie why does increasing capacity makes it worse?
    Umm...I thought about it...I drew the diagrams. No, it probably wouldn't...I'm sorry, I'm thinking waaay too much, and I seem to confuse people. Don't worry about it. Sorry!

    You can look at the diagrams attatched, but ignore the above comment!
    Attached Images
     
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    I don't understand what "marginal" means either.
 
 
 
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