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A2 Micro Unit 3 Revision Advice

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Stepping stones to a great answer

Stepping stones to a great answer

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  • 1. A2 Micro Strong Exam Techniques Stepping stones to great A2 grades Geoff Riley, FRSA Tutor2u
  • 2. I love answers that....... Use the data well Please! Everything in economics is contextual Use A2 concepts! Put things in context Current knowledge Evaluate the point made Have great analysis diagrams Critical evaluation! This is A2 not AS!
  • 3. http://www.scoop.it/t/unit-3-micro-business-economics
  • 4. Get help from fellow students, teachers and tutor2u on Twitter: #econ3 @tutor2u_econ
  • 5. Quick Advice on EdExcel Unit 3
  • 6. Quick Advice on EdExcel Unit 3 1. 2. 3. 4. Define term Explain answer Draw or annotate diagram One knock-out (rejection)
  • 7. Another structured MC example
  • 8. Another structured MC example 1. 2. 3. 4. 1. 2. 3. 4. 5. Revenue maximised when MR = zero Unsold flowers can be offered at a price discount to run down stocks. This is a form of second-degree price discrimination Likely to be elastic demand, flowers have to be disposed of anyway Draw a diagram to illustrate. P1 is profit maximising price, P2 is a revenue maximising price – Q1-Q2 sold at the lower price adding to revenue One knock-out, predatory pricing is illegal in UK Define term Explain answer Draw or annotate diagram One knock-out (rejection) Price MC P1 P2 AR Q1 Q2 MR Qty
  • 9. Explain how both a firm and its consumers may be affected by economies of scale
  • 10. Explain how both a firm and its consumers may be affected by economies of scale
  • 11. Explain how both a firm and its consumers may be affected by economies of scale Define your terms • Internal EoS • External EoS Internal Economies External Economies
  • 12. Explain how both a firm and its consumers may be affected by economies of scale Define your terms • Internal EoS • External EoS Internal Economies • Falling long run unit cost • Increasing returns to scale External Economies
  • 13. Explain how both a firm and its consumers may be affected by economies of scale Define your terms • Internal EoS • External EoS Internal Economies • Falling long run unit cost • Increasing returns to scale External Economies • Growth of an industry • Lowers unit costs for most businesses
  • 14. Explain how both a firm and its consumers may be affected by economies of scale Analyse No evaluation needed in this question! Impact on firms • Lower average costs • Higher profits (producer surplus) Impact on consumers • Real price levels • Consumer surplus
  • 15. Explain how both a firm and its consumers may be affected by economies of scale Price Economies of Scale – Benefits for Businesses and Consumers AR = demand LRAC Output (Q)
  • 16. Explain how both a firm and its consumers may be affected by economies of scale Price Economies of Scale – Benefits for Businesses and Consumers Profit at output Q1 P1 AR = demand C1 LRAC Q1 Output (Q)
  • 17. Explain how both a firm and its consumers may be affected by economies of scale Price Economies of Scale – Benefits for Businesses and Consumers Profit at output Q1 P1 Profit at output Q2 AR = demand P2 C1 LRAC C2 Q1 Q2
  • 18. Explain how both a firm and its consumers may be affected by economies of scale Price Economies of Scale – Benefits for Businesses and Consumers Profit at output Q1 P1 Profit at output Q2 AR = demand P2 Gain in consumer surplus C1 LRAC C2 Q1 Q2
  • 19. Explain how both a firm and its consumers may be affected by economies of scale Price Economies of Scale – Benefits for Businesses and Consumers Profit at output Q1 P1 Profit at output Q2 AR = demand P2 Gain in consumer surplus C1 LRAC C2 Economies of scale have the potential to benefit both producers and consumers – higher profits and lower prices Q1 Q2
  • 20. Explain how both a firm and its consumers may be affected by economies of scale Price Economies of Scale – Benefits for Businesses and Consumers Profit at output Q1 P1 Profit at output Q2 AR = demand P2 Gain in consumer surplus C1 LRAC C2 LRAC2 External economies of scale here Q1 Q2
  • 21. Explain how both a firm and its consumers may be affected by economies of scale Price Economies of Scale – Benefits for Businesses and Consumers Profit at output Q1 P1 Profit at output Q2 AR = demand P2 Gain in consumer surplus C1 LRAC C2 LRAC2 External economies of scale here C2 Q1 Q2
  • 22. Discuss whether utilities such as train operating companies, water, and telecoms businesses are better left in the private sector or whether all, or some, should be taken back into public ownership
  • 23. Deeper evaluation (4+1 approach) Outline (explain/analyse) and then evaluate 4 separate points with a brief final reasoned evaluative paragraph 1/ Case for private sector • Profit motive • Dynamic efficiency 2/ State ownership option • Objectives? • Outcomes? 3/ Impact on stakeholders • Consumers • Employees • Taxpayers 4/ Alternatives to public sector • Competition policy • Business taxation
  • 24. Evaluate the case for stronger action by governments to protect consumers from the monopoly power of firms involved in supplying gas and electricity to UK homes and businesses Please note the error in the workbook Significant rise in average energy bills in the UK – this is a major policy issue – directly affects millions of consumers and businesses.
  • 25. Evaluate the case for stronger action by governments to protect consumers from the monopoly power of firms involved in supplying gas and electricity to UK homes and businesses One main point per paragraph Build an argument, support, then evaluate Evaluation must relate to the point that has already been made Case for Action High prices /allegations of collusion Tougher price caps? Rising fuel poverty / complex prices Supernorma l profits Create competition in the wholesale market? Evaluation 1. Large barriers to entry 2. Huge economies of scale 3. Limited contestability is a feature of the market Windfall Tax on profits State Ownership Cheapest tariff as default Using windfall tax to fund insulation
  • 26. Evaluate the case for stronger action by governments to protect consumers from the monopoly power of firms involved in supplying gas and electricity to UK homes and businesses One main point per paragraph Build an argument, support, then evaluate Evaluation must relate to the point that has already been made Case for Action High prices /allegations of collusion Tougher price caps? Rising fuel poverty / complex prices Supernorma l profits Create competition in the wholesale market? Evaluation 1. Large barriers to entry 2. Huge economies of scale 3. Limited contestability is a feature of the market Windfall Tax on profits State Ownership Evaluation 1. Abnormal profits used to fund capital investment 2. Long term energy security 3. Nationalisation & inefficiency Cheapest tariff as default Using windfall tax to fund insulation
  • 27. Evaluate the case for stronger action by governments to protect consumers from the monopoly power of firms involved in supplying gas and electricity to UK homes and businesses One main point per paragraph Build an argument, support, then evaluate Evaluation must relate to the point that has already been made Case for Action High prices /allegations of collusion Tougher price caps? Rising fuel poverty / complex prices Supernorma l profits Create competition in the wholesale market? Evaluation 1. Large barriers to entry 2. Huge economies of scale 3. Limited contestability is a feature of the market Windfall Tax on profits State Ownership Evaluation 1. Abnormal profits used to fund capital investment 2. Long term energy security 3. Nationalisation & inefficiency Cheapest tariff as default Using windfall tax to fund insulation Evaluation 1. Fewer tariffs but higher average prices 2. Windfall tax discourages investment & research 3. Government failure when using revenues
  • 28. Get help from fellow students, teachers and tutor2u on Twitter: #econ3 @tutor2u_econ