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microeconomics evaluation help

i am trying to up my eval marks and one of the things i keep hearing is to mention any assumptions i have made in my paragraphs. could anyone tell me any key assumptions in micro, especially ones that can be linked to negative externalities/demerit goods as that is what my next test is on.
Reply 1
if you are putting for example a tax on cigarettes to lower consumption, you are assuming that they are price elastic enough for the change in price to actually change the quantity demanded. this may not be the case because cigarettes are highly addictive and likely to be more price inelastic as ppl may buy them regardless of the price

other assumptions
workers are homogeneous (when talking ab labour supply)
products are homogeneous and highly suitableable (when talking ab market structures like perfect competition)
that people are acting rationally (just bc price goes up doesn't mean they have self control to ration (this is called bounded rationality or bounded self control) )
that everyone is acting in thier own best interests (there may be an element of altruism)

microeconomics evaluation ideas (MATES)
Missing info (eg what the context doesnt tell you)
All people (it may not affect everyone)
Time (might take a long time to see the effects of ur polices, may be more immediate ones )
Elasticities (what i said above)
Scale (eg you put a tax on production but its not a big proportion of the firms costs so they don't rly care)

hope this helped pls lmk x
Reply 2
Original post by pk027
if you are putting for example a tax on cigarettes to lower consumption, you are assuming that they are price elastic enough for the change in price to actually change the quantity demanded. this may not be the case because cigarettes are highly addictive and likely to be more price inelastic as ppl may buy them regardless of the price

other assumptions
workers are homogeneous (when talking ab labour supply)
products are homogeneous and highly suitableable (when talking ab market structures like perfect competition)
that people are acting rationally (just bc price goes up doesn't mean they have self control to ration (this is called bounded rationality or bounded self control) )
that everyone is acting in thier own best interests (there may be an element of altruism)

microeconomics evaluation ideas (MATES)
Missing info (eg what the context doesnt tell you)
All people (it may not affect everyone)
Time (might take a long time to see the effects of ur polices, may be more immediate ones )
Elasticities (what i said above)
Scale (eg you put a tax on production but its not a big proportion of the firms costs so they don't rly care)

hope this helped pls lmk x

thanks this has helped a lot

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