context 2 was decent
im going to place my answers to the questions i rememeber below
i would appreciate if someone who did context 2 to reply and tell me if they got close or similar answers.
how does new tech increase wages?
i wrote how advancements in technology bring in new technology and new machinery into markets. This requires specialised labour to monitor and be able to fix this new tech therfore training will be allocated to the excisting workforce leading to labour being more desireable and firms will be willing to increase wages as the labour will now have skills.
I showed this by a right shift in labour demand causing the price of labour to increase leading to new tech resulting in higher wages.
That may have been confusing but it sounded good when i wrote it in the exam XD
should the gov interviene where new tech enters markets?
no because the market mechasism leads to allocative efficience. intervention can be expensive. governments can fail leading to unintended concequences such as if a tax on robots, less dynamic efficiency
yes because the unemployment it causes. benefits may increase, pressure on public services increases, crime can increase, income inequality may rise
overall i said that they shouldnt interviene as new tech advancements can create new industries and markets so in the long term, jobs may be created however in the short term, governments may have negative impacts fromthe employment fall.
In the 15 + 25 marker section i did the polution area (first questions)
15 marker
how does deisel and petrol cause market failure
basically chain of reasoning for de merit with mab shift being on the left. also because of imperfect information they are overconsumed. blah blah miss allocation of scarce resources blah blah net wellfare gain insnt maximised.
25 marker
is regulation better intervention for polution rather than allocating property rights or taxation.
regulation is better as it puts a cap on polution emmisions but it can be expensive to administer and hard to judge how much firms are polluting. it burdens gov finance therefore a tax may be a better method
a tax will reduce pollution levels as their costs of production will be higher and there is incentive to be more efficient. however if tax is too high, firms may leave the narket/move country leading to gov failure. also hard to set tax rate accuratley.
allocating property rights will internalise any negative impacts on the land/area owned therefore the owner will have incentive to be efficient therefore pollution levels will fall. also they can sue anyone in court where they breach pollution or waste on their property and that revenue can be re invested for efficiency
overall tax will be the best as regulation burdens gov finance and property rights are very hard to allocate correctly and decide who deserves them. allthough a tax may disincentivise high profits and may reduce eco of scale exploitation, the rev gained by the government can be re invested for information failure and more sustainable energy methods such as solar power.
feedback would be highly appreciated . obviously i dont remember everything i wrote word for word but its just a rough idea.
shout out to econ plus dal’s wife