UNOFFICIAL Mark Scheme Edexcel MicroEconomics 9EC0-1 Paper 1 20 May 2019

I got 57 million but I cant remember what the numbers are

Original post by RoseA_01

does anyone remember the numbers that were used to get 58 million i dont remember if i wrote that or not

Reply 4

eddygallacher

Original post by RoseA_01

does anyone remember the numbers that were used to get 58 million i dont remember if i wrote that or not

Profits were like 17 million and revenue was like 75 million but idk the percentage increases

Reply 5

dsxmpsxn

for the 25 marker on collusion
my first point was on overt collusion and creating more revenues and therefore profits by both firms pricing at a higher level. i used a payoff matrix for this.
EV: a lack of trust between firms and the threat of being undercut and losing demand - firms less likely to collude
second point was on tacit collusion and the fact that firms are likely to collude by following a price leader because demand above the market price is elastic and below is inelastic - colluding tacitly therefore allows no losses to be made through a fall in demand or a price war.
EV: if it is a contestable market in which a firm can come in with lower prices and undercut all colluding firms, a firm is less likely to collude and may price lower to subvert this threat.

Any thoughts? I thought this was decent but i'm not so sure reading people's answers now. Are my two KAA points too similar? I made sure to distinguish between overt and tacit collusion.

Reply 6

Yourmiuuu

Did you talk about game theory? I think most of the marks will be awarded there, but your other points make sense.

Original post by dsxmpsxn

for the 25 marker on collusion
my first point was on overt collusion and creating more revenues and therefore profits by both firms pricing at a higher level. i used a payoff matrix for this.
EV: a lack of trust between firms and the threat of being undercut and losing demand - firms less likely to collude
second point was on tacit collusion and the fact that firms are likely to collude by following a price leader because demand above the market price is elastic and below is inelastic - colluding tacitly therefore allows no losses to be made through a fall in demand or a price war.
EV: if it is a contestable market in which a firm can come in with lower prices and undercut all colluding firms, a firm is less likely to collude and may price lower to subvert this threat.

Any thoughts? I thought this was decent but i'm not so sure reading people's answers now. Are my two KAA points too similar? I made sure to distinguish between overt and tacit collusion.

Reply 7

Its all about the informed judgement, how did you weigh it up?

Original post by dsxmpsxn

for the 25 marker on collusion
my first point was on overt collusion and creating more revenues and therefore profits by both firms pricing at a higher level. i used a payoff matrix for this.
EV: a lack of trust between firms and the threat of being undercut and losing demand - firms less likely to collude
second point was on tacit collusion and the fact that firms are likely to collude by following a price leader because demand above the market price is elastic and below is inelastic - colluding tacitly therefore allows no losses to be made through a fall in demand or a price war.
EV: if it is a contestable market in which a firm can come in with lower prices and undercut all colluding firms, a firm is less likely to collude and may price lower to subvert this threat.

Any thoughts? I thought this was decent but i'm not so sure reading people's answers now. Are my two KAA points too similar? I made sure to distinguish between overt and tacit collusion.

Reply 8

dsxmpsxn

i talked about the payoff matrix and the different outcomes, and I created one based on the car industry (which was my chosen focus for the question). Didn't explicitly mention game theory tho, deffo couldve done that

Original post by Yourmiuuu

Did you talk about game theory? I think most of the marks will be awarded there, but your other points make sense.

Reply 9

James Bennett 12

i did question 8 on collusion. my first point was as it says in the original thread and my second point was about collusive tendering to reduce administrative work. and evaluated it with the potential fine and loss of brand image after the exploitation of customers and weighed it up in my judgement.... Any thoughts?

Reply 10

exactly what i said as well; its one of the better points.

Original post by James Bennett 12

i did question 8 on collusion. my first point was as it says in the original thread and my second point was about collusive tendering to reduce administrative work. and evaluated it with the potential fine and loss of brand image after the exploitation of customers and weighed it up in my judgement.... Any thoughts?

Reply 11

dsxmpsxn

ran out of time at the end of the final ev. that will lose me some ev marks yes, not doing the judgement. hopefully the rest is still there tho.

Original post by trey_44

Its all about the informed judgement, how did you weigh it up?

Reply 12

ye the rest is defo fine. do u think for the the 12 marker this is fine: I did two reasons and wrote that due to asymmetric information, we do not know whether the impact on costs or impact on AR + MR is significant thus it is a combination of both that exacerbates the change in profits. Does that sound alright?

Original post by dsxmpsxn

ran out of time at the end of the final ev. that will lose me some ev marks yes, not doing the judgement. hopefully the rest is still there tho.

Reply 13

BcnTheGiant3

Can one point for the collusion question be that market share will increase?

Reply 14

iroy280201

For the 12 marker i used a different angle to do with the cost of rental prices of the phone's suppliers falling, which would reduce average costs allowing the firm to pass on lower prices to consumers through better deals which would shift AR and MR up and increase profits (used a graph for this). i then evaluated by saying in the long run supernormal profits are unlikely to continue because of OFGEM investigating them.
What do you guys think?

Reply 15

James Bennett 12

sounds ok its very similar to the EOS point

Original post by iroy280201

For the 12 marker i used a different angle to do with the cost of rental prices of the phone's suppliers falling, which would reduce average costs allowing the firm to pass on lower prices to consumers through better deals which would shift AR and MR up and increase profits (used a graph for this). i then evaluated by saying in the long run supernormal profits are unlikely to continue because of OFGEM investigating them.
What do you guys think?

Reply 16

is this fine for the 12 marker anyone: I did two reasons and wrote that due to asymmetric information, we do not know whether the impact on costs or impact on AR + MR is significant thus it is a combination of both that exacerbates the change in profits. D

Reply 17

Jony1005

For the 25 marker I did the wage one I did geographical disparities eg London vs a cheap area and then skills differences eg nurse and doctor, then the differences between ceo’s And their workers because of profit Max aims and high bonuses, then about how unskilled workers are more elastic and there are more of them so wages are lower and then the opposite for unskilled workers
Can someone tell me if this is correct please!!!!!!

(edited 4 years ago)

Reply 18

Julien78

Original post by RoseA_01

does anyone remember the numbers that were used to get 58 million i dont remember if i wrote that or not

It was like the total revenue was from 2017 75.8 M and the one from 2016 was 72.8 - 14.4 profit in 2016 which was equal to 57.4 for cost in 2016

Reply 19

saammbaker