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AQA A-level Economics new 7136 - 06, 13 & 19 Jun 2017 [Exam Discussion] Watch

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    (Original post by Ellielewis17)
    I'm not sure what you learnt last year, but to correct environmental market failure, you could introduce pollution permits or give land etc property rights, to prevent the tragedy of the commons.

    Inequality may be good as it can give people an incentive to work hard as they want to earn well paid jobs, which could lead to increased productivity and efficiency.
    Thank you!!!! Really need to go over pollution permits I was just doing a question and I pretty much completely forgot about them

    Can I ask you one more question how would policies like taxing/permits affect a firms revenue would it decrease their revenue?

    ohhh okay so inequality acts as an incentive, that makes a lot of sense

    how are you feeling for the exam? (if you are taking it )
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    (Original post by physicsamor)
    Thank you!!!! Really need to go over pollution permits I was just doing a question and I pretty much completely forgot about them

    Can I ask you one more question how would policies like taxing/permits affect a firms revenue would it decrease their revenue?

    ohhh okay so inequality acts as an incentive, that makes a lot of sense

    how are you feeling for the exam? (if you are taking it )
    I did an essay on pollution permits/taxing the other day as I had completely forgotten too (it was on the specimen paper)! Yes it would decrease their revenue, I would say that firms that pollute a lot are larger firms (oligopolies and monopolies who create lots of abnormal profit), so taxing/making permits would decrease their revenue. Depends if the product they are selling is inelastic though... companies may pass on the tax to consumers, and inelastic demand means people won't stop buying the product, so could potentially increase revenue!

    You could also say for inequality, that lowering welfare benefits would increase inequality, but would incentivise people to go to work.

    I am taking the exam, and I'm feeling OK but I have to get an A* in econ, and I have geography the day before too! What about you?
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    (Original post by Ellielewis17)
    I did an essay on pollution permits/taxing the other day as I had completely forgotten too (it was on the specimen paper)! Yes it would decrease their revenue, I would say that firms that pollute a lot are larger firms (oligopolies and monopolies who create lots of abnormal profit), so taxing/making permits would decrease their revenue. Depends if the product they are selling is inelastic though... companies may pass on the tax to consumers, and inelastic demand means people won't stop buying the product, so could potentially increase revenue!

    You could also say for inequality, that lowering welfare benefits would increase inequality, but would incentivise people to go to work.

    I am taking the exam, and I'm feeling OK but I have to get an A* in econ, and I have geography the day before too! What about you?
    That's the paper I was doing today! We had it as a mock but we had to answer the trade union side, so I thought Id attempt the other side I really like your explanations.

    I would love for an A* in economics well at least in one of the papers, I need an A though. I think it's doable but I still have weaknesses in things like poverty and things I have forgotten like market failure ugh.

    Good luck for geog!!
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    (Original post by physicsamor)
    That's the paper I was doing today! We had it as a mock but we had to answer the trade union side, so I thought Id attempt the other side I really like your explanations.

    I would love for an A* in economics well at least in one of the papers, I need an A though. I think it's doable but I still have weaknesses in things like poverty and things I have forgotten like market failure ugh.

    Good luck for geog!!
    Thank you!! I'm sure you will be able to get an A or an A*! Poverty isn't too bad as I can only imagine it'll come up as a context question, which always gives you nudges in the right direction!

    Thanks, I have to get an A* in that too !!:eek:
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    (Original post by Ellielewis17)
    Thank you!! I'm sure you will be able to get an A or an A*! Poverty isn't too bad as I can only imagine it'll come up as a context question, which always gives you nudges in the right direction!

    Thanks, I have to get an A* in that too !!:eek:
    Hey , do you include application in questions to do with market structures because i dont know how i would link it in with my answer. Also when talking about the market mechanism is it ok to use a diagram thats already in excess supply?
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    (Original post by Ellielewis17)
    Thank you!! I'm sure you will be able to get an A or an A*! Poverty isn't too bad as I can only imagine it'll come up as a context question, which always gives you nudges in the right direction!

    Thanks, I have to get an A* in that too !!:eek:
    Wow! I'm sure you are well prepared Where do you want to go?
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    (Original post by Mande1724)
    Hey , do you include application in questions to do with market structures because i dont know how i would link it in with my answer. Also when talking about the market mechanism is it ok to use a diagram thats already in excess supply?
    I guess it depends on the question.... if there's a question about supermarkets for example, then you would draw an oligopoly diagram, and that would be the application.

    This also depends on the question too. Excess supply would mean there is a minimum price, but what do you mean by the market mechanism? Would you then want to shift supply/demand, with the excess supply already there?
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    (Original post by physicsamor)
    Wow! I'm sure you are well prepared Where do you want to go?
    Exeter, what about you?
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    (Original post by Ellielewis17)
    I guess it depends on the question.... if there's a question about supermarkets for example, then you would draw an oligopoly diagram, and that would be the application.

    This also depends on the question too. Excess supply would mean there is a minimum price, but what do you mean by the market mechanism? Would you then want to shift supply/demand, with the excess supply already there?
    can a market not already a have excess supply or excess demand e.g. the housing market currently has excess demand.
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    (Original post by Mande1724)
    can a market not already a have excess supply or excess demand e.g. the housing market currently has excess demand.
    Personally I would just draw a standard S&D diagram and then just shift out demand for houses to stop myself from getting confused and over complicating things in the exam
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    When discussing oligopoly is it best to use a monopoly diagram and say oligopolies have a degree of monopoly power or is there a better, more advanced diagram i should use?
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    (Original post by CJEV18)
    When discussing oligopoly is it best to use a monopoly diagram and say oligopolies have a degree of monopoly power or is there a better, more advanced diagram i should use?
    Oligopolies only have monopoly power when colluding. Otherwise use the kinked demand curve model
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    (Original post by amukaty)
    can someone please please explain to me how to argue for the free market solving market failures in context based questions? how can signalling incentives and rationing solve market failures?
    A good way to argue this is to use the example of the NHS. The decision to nationalise the NHS and provide it free of charge has meant that the NHS is over consumed. For example as soon as some people start to feel a little unwell or catch a cold they book a gp appointment. As a result people who have genuinely serious conditions are put further back on the waiting list. Furthermore if people miss their appointment and suffer no consequence then this will also lead to increased waiting times. If left to the free market a person would pay directly for the appointment and therefore would be more likely to only make an appointment if they really needed to. Therefore the over consumption of the NHS will be reduced.
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    (Original post by Ellielewis17)
    Exeter, what about you?
    SOAS
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    Anyone have any general evaluation points they'd like to share? I wrote some down but they are lost in my room somewhere. For things like intervention, I might use behavioural econ to suggest why it may not change their behaviour
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    [QUOTE=physicsamor;71800262]Anyone have any general evaluation points they'd like to share? I wrote some down but they are lost in my room somewhere. For things like intervention, I might use behavioural econ to suggest why it may not change their behaviour[/QU

    When evaluating the trickle down effect (an argument for low taxes) make sure to mention that wealthy people have a very large marginal propensity to save. This is due to the fact that even income has diminishing marginal utility. An extra £1000 per year for someone who earns over £200,000 is not going to give them much satisfaction and are likely to save it. Someone who earns £10,000 is much more likely to spend that extra £1000 on goods and services as they gain a much larger level of satisfaction. If the rich man does decide to spend it he will likely use it to gain wealth for example buying a house. This will create more inequality as income can be earned from rent and reduces the availability of houses available to low earners as supply for houses is inelastic in the short run.
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    (Original post by CJEV18)
    A good way to argue this is to use the example of the NHS. The decision to nationalise the NHS and provide it free of charge has meant that the NHS is over consumed. For example as soon as some people start to feel a little unwell or catch a cold they book a gp appointment. As a result people who have genuinely serious conditions are put further back on the waiting list. Furthermore if people miss their appointment and suffer no consequence then this will also lead to increased waiting times. If left to the free market a person would pay directly for the appointment and therefore would be more likely to only make an appointment if they really needed to. Therefore the over consumption of the NHS will be reduced.
    Thats a government failure however. The premise of market failure, is that if left to market forces, then the market will fail. When you are looking at the benefits of market forces over government intervention, you can evaluate between market and government failure but market forces will never correct a market failure, that is contradictory.
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    [QUOTE=CJEV18;71800458]
    (Original post by physicsamor)
    Anyone have any general evaluation points they'd like to share? I wrote some down but they are lost in my room somewhere. For things like intervention, I might use behavioural econ to suggest why it may not change their behaviour[/QU

    When evaluating the trickle down effect (an argument for low taxes) make sure to mention that wealthy people have a very large marginal propensity to save. This is due to the fact that even income has diminishing marginal utility. An extra £1000 per year for someone who earns over £200,000 is not going to give them much satisfaction and are likely to save it. Someone who earns £10,000 is much more likely to spend that extra £1000 on goods and services as they gain a much larger level of satisfaction. If the rich man does decide to spend it he will likely use it to gain wealth for example buying a house. This will create more inequality as income can be earned from rent and reduces the availability of houses available to low earners as supply for houses is inelastic in the short run.
    Be aware though that a rise in saving may feed through to a rise in investment elsewhere.
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    (Original post by physicsamor)
    Anyone have any general evaluation points they'd like to share? I wrote some down but they are lost in my room somewhere. For things like intervention, I might use behavioural econ to suggest why it may not change their behaviour
    Government failure - admin costs, opportunity costs, regulatory capture, unintended consequences, black market, inefficiency, distort price signals, LR vs SR etc...
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