Revision Tips for 2016 Economics A Level exams Watch
So GNI is the same as GNP but the only difference is that it's at market prices (it adds indirect taxes and excludes subsidies)?
Why do we calculate GDP at market prices rather than factor costs?
Because it then accurately reflects the actual prices being paid by consumers for goods and services.
Is it alright if you answer this please:
'a rise in income will shift the demand curve. It may, but need not necessarily, alter its slope. This was found in one of the mark schemes. How would a rise in income alter the demand curve slope?
Also, if it was an inferior good, there would be a fall in demand so the curve would shift to the left, right?
A rise in income could affect the elasticity of demand for a product because if we have more income then a rise in the price of the good may not lead to a significant fall in demand because we can still afford it. So, it may make demand more inelastic. Correct on the inferior good.
How would speculative demand be affected by a rise in unemployment?
some students were able to suggest that even in markets which might be thought to be more competitive – suchas street fruit and vegetable markets – it is not always possible for a consumer to obtain an articlethat the stall-holder, and every other stall-holder, was not supplying. They then questioned theexistence of consumer sovereignty even in these relatively competitive markets.
Does this mean that even in a street market not all products are exactly the same quality, so the producer may be more in control than the consumer since they control what products are available and what quality they are??
Balance of Payments
Today's revision tip focuses on Unit 2 macroeconomics. Ensure you know the main macroeconomic objectives. Make up an acronym to remember them so that you can discuss them in responses. For example try GUBI:
Balance of Payments
How many diagrams would you expect to see in a 25 marker?
Also, if we get a 25 marker on why GDP is a good/not good indicator of living standards, I could do a diagram showing higher GDP - higher employment which would lead to higher living standards, but also the Kuznets curve to show how GDP doesnt show income distribution. Is there any other diagrams I can do?
Discuss whether there is a relationship between the marginal cost curve of the firm and thesupply curve of the industry to which it belongs.
I know that in the short run for a perfectly competitive firm, the supply curve is the portion of the MC curve that lies above the AVC. The firms' supply curves are added to form the market supply curve, which is upward sloping.
In the long run, the supply curve is the portion of the MC curve that lies above the ATC. However, I read that you cannot horizontally add all individual firms' supply curves to add the market supply curve in the long run. Why is this? How do we form the market supply curve?
I would also have to explain the lack of such a relationship in imperfect competition. But why is there a lack of this relationship - why can't we add the marginal cost curves of firms in imperfect markets to form the supply curve? What diagram would I draw to show the lack of this relationship?Thanks.