AQA Economics 25 mark questions
1.Methods of dealing with over-consumption/under consumption of merit/demerit
goods:
1. Information Provision
Left shift in demand long term fashion and trends
, AQA Economics 25 mark questions
Outreach may not be extensive enough
May not impact e.g. demerit, inferior goods-necessary when people
poor/habit forming goods More inelastic demand.
2.Subsidies/taxation
DIAGRAM ON INELASTIC GOOD
Inelastic, probably just more willing, pass on, minimal impact on producer and
demand Disproportionately affect lower income
Discuss elasticity
2. 'Discuss efficiency of monopoly markets' (25):
Point 1: Dynamic Efficency/economies of scale :) for firm and consumer
DIAGRAM OF LONG TERM FALL IN LRAC CURVE
Will monopolies lead to lower average prices as long run average costs decrease
from economies of scale Competitive market only one point is productively
efficent (static) Monopoly efficency in long term
Point 2: R + D :) for firm and
consumer More income from
higher prices
More research and development, more information, better quality goods, innovation and
investment
Point 3: X inefficency - :( for firm and consumer
lack of willingness of firms with monopoly power to control their costs of production
vs competitive firms which constantly look to cut Operates at higher costs
However... Quality, Corner Cutting
Point 4: Productive and Allocative Inefficency - :( for consumer
CURVE HIGHER PL THEN DEMAND, less Q, more P
Productive-minimum abg total cost, min inputs for max outputs, however lack of
competition little incentives to lower costs for consumers
1.Methods of dealing with over-consumption/under consumption of merit/demerit
goods:
1. Information Provision
Left shift in demand long term fashion and trends
, AQA Economics 25 mark questions
Outreach may not be extensive enough
May not impact e.g. demerit, inferior goods-necessary when people
poor/habit forming goods More inelastic demand.
2.Subsidies/taxation
DIAGRAM ON INELASTIC GOOD
Inelastic, probably just more willing, pass on, minimal impact on producer and
demand Disproportionately affect lower income
Discuss elasticity
2. 'Discuss efficiency of monopoly markets' (25):
Point 1: Dynamic Efficency/economies of scale :) for firm and consumer
DIAGRAM OF LONG TERM FALL IN LRAC CURVE
Will monopolies lead to lower average prices as long run average costs decrease
from economies of scale Competitive market only one point is productively
efficent (static) Monopoly efficency in long term
Point 2: R + D :) for firm and
consumer More income from
higher prices
More research and development, more information, better quality goods, innovation and
investment
Point 3: X inefficency - :( for firm and consumer
lack of willingness of firms with monopoly power to control their costs of production
vs competitive firms which constantly look to cut Operates at higher costs
However... Quality, Corner Cutting
Point 4: Productive and Allocative Inefficency - :( for consumer
CURVE HIGHER PL THEN DEMAND, less Q, more P
Productive-minimum abg total cost, min inputs for max outputs, however lack of
competition little incentives to lower costs for consumers
