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Discuss doubts: P1 and P2 Economics AS

Nibz

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Guess Paper for AS level Economics Paper-2
Examiner might not use the same statements, however the material covered in these questions is expected to be asked by the examiner in the examination June 2011.

Is it for June 2012 or 2011?
 
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the exact answer for calculation was 2. As we were to told within which range XED lies. It means it must be 2 or below 2. While 2.5 does not come under the range of 2. It is outside the range of 2. So, 1.66 to 2 is the correct option.
Option C is correct but I guess your reasoning is incomplete... The price of X was 8 and 10 and of Y was probably 10 and 30... So what was to be done was, P1 and Q1 were to be taken 8 and 10 respectively and then they were again taken to be P2 and Q2... This gave the answer of 2 for the first and 1.6675 for the second... hence option C was absolutely correct...!!!
 
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I have got some short questions about different concepts hope you will answer them...
Starting off with does appereciation of currency result in financial inflows and why in recession demand falls ?
Also kindly tell me the Limitation of PED and YED... Thnx...
 
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i would like to ask about creeping inflation and how is it beneficial for a country?
 
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^ Exactly my question too ? i mean doesn't inflation erode the value of money so how come it is benificial even if it is 2 - 3 % This was also the last part of a data response question in 2010 I guess...
 
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^ Exactly my question too ? i mean doesn't inflation erode the value of money so how come it is benificial even if it is 2 - 3 % This was also the last part of a data response question in 2010 I guess...
Can help firms to reduce costs if they can keep nominal wage rates constant or increase it at a rate slower than inflation..so the real wage rate decreases.

It can increase consumption because real interest rates may be low as nominal interest rates don't tend to rise in line with inflation. So with lower interest rates we'd see an increase in monetary demand, namely increase in demand for loans for consumption and investment.

Also firms stand to benefit if the increase in prices of their goods is lower than their increase in cost of production incurred, essentially raising profit margins.

Low rates of inflation like that could also increase a country's price competitiveness if their rate of inflation is lower than that of their trading partners ( so, in the cost of their goods become lower for their trading partner(s).

Also for firms whose exported goods has inelastic demand, the increase in the price of their exports might actually lead to an increase in revenue for them.
 
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Can you please tell me the important topics to learn for the economics paper As...
 
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Can help firms to reduce costs if they can keep nominal wage rates constant or increase it at a rate slower than inflation..so the real wage rate decreases.

It can increase consumption because real interest rates may be low as nominal interest rates don't tend to rise in line with inflation. So with lower interest rates we'd see an increase in monetary demand, namely increase in demand for loans for consumption and investment.

Also firms stand to benefit if the increase in prices of their goods is lower than their increase in cost of production incurred, essentially raising profit margins.

Low rates of inflation like that could also increase a country's price competitiveness if their rate of inflation is lower than that of their trading partners ( so, in the cost of their goods become lower for their trading partner(s).

Also for firms whose exported goods has inelastic demand, the increase in the price of their exports might actually lead to an increase in revenue for them.
Thanks mate...
hey can you tell me why inflation is not necessarily harmful for the country ? The ways in which it is NOT harmful... ?
 
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Sir could you give me some tips on the answer formats and overall on answering p-2 ? It would be really helpful! Thanks in advance!
 
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Sir could you please send me the answers! I'm mailing you! And it would be great if you can mail me a format for answering such questions and some tips!
 
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increase in retirement age is the correct option but i m sure that u will wonder how it can be. Yes?
the answer cud be rise in unemployement since less unemployement means less people working therefore productivity is constantly decreasing and this wud shift the curve
 
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theres a question in economics paper 2 m/j 03 section a ( how might economic theory explain the composition of visible exports? i didnt quite get the question
can u explain
 
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Hey please someone tell that will export revenue rise if exports are inelastic during inflation ?? :\ confused!!
 

Nibz

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Hey please someone tell that will export revenue rise if exports are inelastic during inflation ?? :\ confused!!
If their demand is inelastic, a general rise in prices will generate more export revenues.
 
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Hey please someone tell that will export revenue rise if exports are inelastic during inflation ?? :\ confused!!
it depends on what the country is exporting and how much demand the product has for itself...
there can be a case where the demand for an export is low but still inelastic.. however the revenue generated isnt much so even if there is inflation and the demand is inelastic ... you cant assume the revenue generated from exports will rise... it has to do with how much the demand for the product really is and how much a country exports it .. :)
 
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it depends on what the country is exporting and how much demand the product has for itself...
there can be a case where the demand for an export is low but still inelastic.. however the revenue generated isnt much so even if there is inflation and the demand is inelastic ... you cant assume the revenue generated from exports will rise... it has to do with how much the demand for the product really is and how much a country exports it .. :)

No it doesn't .. it only depends on the price elasticity of demand. When demand is inelastic price increases will cause revenue increases.. price decreases cause revenue decreases. When demand is elastic price increases cause revenue decreases, price decreases cause revenue increases.
 
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