AQA Economics Paper 1- Markets and Market Failure (Tuesday 5th June)

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Bigpaddy27
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Exam thread for AQA Economics paper 1. Use this thread to discuss revision and answers after the exam etc.
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walid67
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what are people thinking will come up for micro?
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a_m123
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Guys watch econplus videos, he gives reliable predictions
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username4057920
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is this AS
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Shusuff
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For those that did the question 1 on banking, for the 25 marker on assessing whether the government should intervene to make the industry more competitive, did you talk about certain policies ie deregulation pros and cons, or just to intervene or not to intervene (leaving to market).
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Rossymalossy
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(Original post by Shusuff)
For those that did the question 1 on banking, for the 25 marker on assessing whether the government hould intervene to make the industry more competitive, did you talk about certain policies ie deregulation pros and cons, or just to intervene or not to intervene (leaving to market).
I was always told not to talk in detail about policy’s if they ask wether or not to intervene so
I mainly gave views for why and why not to and then added a bit about if they were to intervene how they might do it
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Bigpaddy27
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For 25 marker in banking- one argument of government intervention through regulation of the banks to reduce oligopoly power and increase comp

Evaluate with data and own knowledge e.g financial service authority unable to identify previous bank failures and new bodies e.g PRA etc.

Second argument on price mechanism so no gov intervening needed as price mechanism will signal high prices increase completion etc.

Depends on ability of firm- metro increasing market share shows some firms are able to enter market etc
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jonnyboy67878
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[QUOTE=Shusuff;78089620]For those that did the question 1 on banking, for the 25 marker on assessing whether the government should intervene to make the industry more competitive, did you talk about certain policies ie deregulation pros and cons, or just to intervene or not to intervene (leaving to market).[/QUOT

i did a bit of both. talked about perfect information being socially beneficial as well as benefits and drawbacks of oligopoly
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Bigpaddy27
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jonnyboy67878 I thaught it was just a government intervention essay so did one about government regulation against a collusive oligopoly as collusive oligopoly will be a barrier to competiton explained it etc.

One argument about market forces price mechanism to ensure high comp

Then concluded
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jonnyboy67878
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(Original post by Bigpaddy27)
For 25 marker in banking- one argument of government intervention through regulation of the banks to reduce oligopoly power and increase comp

Evaluate with data and own knowledge e.g financial service authority unable to identify previous bank failures and new bodies e.g PRA etc.

Second argument on price mechanism so no gov intervening needed as price mechanism will signal high prices increase completion etc.

Depends on ability of firm- metro increasing market share shows some firms are able to enter market etc
this is just so wrong, higher prices can't signal firms to join the market when there is an oligopoly....
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sugargirl12
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For the part B externalities air pollution question could pollution permits count as regulation?
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Bigpaddy27
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jonny35293278 yes that can. The price mechanism will signal any high prices in a market and so firms will in theory enter. You can then evaluate saying they won't have the ability due to barriers. Learn your **** bro
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hey8023
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For the banking question, I did three paragraphs.
First is pros and cons of splitting the Big Four into smaller banks. The good side being lower prices but bad side being not enough profit for reinventing so dynamic inefficiency.
Second paragraph I discussed about deregulation of the banking sector to increase contestability and evaluation of possible aggressive reaction from incumbent banks (predatory pricing) and also the systematic risk.
Third paragraph is about market force and technological improvements which lead to creative destruction so no govt intervention needed.
My conclusion is quite weak as I ran out of time so I just concluded that govt intervention is needed but market forces are also needed to minimise the risk of government and market failure.

What do you guys think I could score? Feeling like I went a bit off topic cus I didn’t talk much about whether or not government should intervene
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Bigpaddy27
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(Original post by hey8023)
For the banking question, I did three paragraphs.
First is pros and cons of splitting the Big Four into smaller banks. The good side being lower prices but bad side being not enough profit for reinventing so dynamic inefficiency.
Second paragraph I discussed about deregulation of the banking sector to increase contestability and evaluation of possible aggressive reaction from incumbent banks (predatory pricing) and also the systematic risk.
Third paragraph is about market force and technological improvements which lead to creative destruction so no govt intervention needed.
My conclusion is quite weak as I ran out of time so I just concluded that govt intervention is needed but market forces are also needed to minimise the risk of government and market failure.

What do you guys think I could score? Feeling like I went a bit off topic cus I didn’t talk much about whether or not government should intervene
sounds good but it was about creating competition so yeah, are you sure you gave it the weighing needed?
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Bigpaddy27
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(Original post by jonnyboy67878)
this is just so wrong, higher prices can't signal firms to join the market when there is an oligopoly....
No it isn't wrong. Its a signalling effect, it doesn't mean firms can actually join as there are barriers.
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Tasting the jiz
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I found that hard:

I did the banking essay/oligopoly:
1- Defo didn't get the ratio question, I didn't even put it in a ratio I just got 38.6 or something like that
2- I didn't understand how to show normal profit in a oligopoly diagram and just drew a monopoly one
3- I shoved everything in the 25 marker, talked about how the market provides competition itself by backing up with extract A, then talked about diseconomies of scale, lack of efficiency, x-inefficiency, then shoved in collusion, cartel agreements and price rigidity

Essay 2
Did the market failure
1- I used negative externalities in production due to profit incentive and negative externality in consumption due to info failure
2- 25 marker didn't even talk about pollution permits or property rights just did regulation and taxation.

I shegged it
Spoiler:
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Btw Econplusdal chats breeze

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hey8023
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(Original post by Bigpaddy27)
sounds good but it was about creating competition so yeah, are you sure you gave it the weighing needed?
I did two paragraphs on government intervention and one on market forces so the weighing is like 2:1 (or 3:1 even), and I didn’t compare and evaluate the two. So really worried about how it would score.
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Tasting the jiz
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(Original post by hey8023)
For the banking question, I did three paragraphs.
First is pros and cons of splitting the Big Four into smaller banks. The good side being lower prices but bad side being not enough profit for reinventing so dynamic inefficiency.
Second paragraph I discussed about deregulation of the banking sector to increase contestability and evaluation of possible aggressive reaction from incumbent banks (predatory pricing) and also the systematic risk.
Third paragraph is about market force and technological improvements which lead to creative destruction so no govt intervention needed.
My conclusion is quite weak as I ran out of time so I just concluded that govt intervention is needed but market forces are also needed to minimise the risk of government and market failure.

What do you guys think I could score? Feeling like I went a bit off topic cus I didn’t talk much about whether or not government should intervene
Thank the Lord!

I thought I was the only person who mentioned that incumbent firms will predatory price to eliminate or deter new entrants
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Cshell
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I did banking. Monopoly vs free market Efficiency argument. Then economies of scale and types of intervention. Overall some dynamic efficiency need to ensure investment into safety measures to prevent hacking. Also large ability to change firms in 2016 ensure reducing market share so overall minimal further intervention needed
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sahil19
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(Original post by Tasting the jiz)
Thank the Lord!

I thought I was the only person who mentioned that incumbent firms will predatory price to eliminate or deter new entrants
would an valid point in terms of contestability; threat of incoming firms means firms are likely to price closer to the alloc efficient point and thus increase consumer welfare?
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