Economics P12 june 2012 ANSWERS...!!!

[Agassi Cazaubon]

a decrease in innovation means that a country will have lesser new, more efficient capital for the future... if the same level of innovation had been sustained the level of production would not have decreased leaving the PPF intact.. but since the question said "decrease in innovation" the country will have less of more efficient capital in the long run thus causing the PPF to shift inwards... i asked my teacher abt this question and he said the answer was A... and he is an examiner.. so yea..

One thing I don't understand about your response is that.. technology that's already there will not magically disappear.. so if they still have the same technology then they can continue producing at the same level of output ?

 

[Mattman]

consumer surplus.. cuz producers vie to maximize their profits.. so in course of that they won't mind taking up all of consumers' surpluses... and other answers seemed unlikely... ur talking abt the same question, aren't you?

Yea, which means firms take into account of it when making investment decisions. If consumer surplus is zero for example, maybe firms will decide not to invest after cba

 

[Sonish Raj Pant]

i meant the government would consider it bt not the firms... firms will only be bothered about the cost that has incurred to them and the revenue they might earn by selling the product... firms don't give a shit abt consumers' surplus.. but the government will be concerned about consumers' welfare so they take consumers' surplus into account...

 

[Mattman]

i meant the government would consider it bt not the firms... firms will only be bothered about the cost that has incurred to them and the revenue they might earn by selling the product... firms don't give a shit abt consumers' surplus.. but the government will be concerned about consumers' welfare so they take consumers' surplus into account...

But they do. They see if there is a consumer surplus for firms to exploit

 

[Sonish Raj Pant]

what's you answer to that question? i thought the other options were unlikely... i don't remember the question though... i just remember marking that particular option cuz the other options seemed unlikely...

 

[abcde]

With regard to the cost benefit analysis questions, all options mentioned involved private costs except for 'consumer surplus'. Tax payments are obviously considered by a private firm since they are private costs. The govt. does not consider it because it doesn't need to pay tax!

 

[Mattman]

The question never said its about cost benefit analysis it Asks what the govt considers but firms don't when deciding whether to invest in something. Tax payments can be how the govt considers how much tax revenue it receives etc.

 

[ibadsiddiqi]

The question never said its about cost benefit analysis it Asks what the govt considers but firms don't when deciding whether to invest in something. Tax payments can be how the govt considers how much tax revenue it receives etc.

Yea thats what thought..

 

[mistymemory]

Only cash. I think the option was C.

The answer was D. All 3 of them were getting a consumer surplus of $4.

Only cash? Can credit cards used to pay goods and services?

 

[Sonish Raj Pant]

the question WAS about CBA... i can bet my ass on that one lol...

 

[Saad Ghori]

Only cash? Can credit cards used to pay goods and services?

Not everywhere, there are still many shops which do not accept them. Plus what if you have reached the limit on your credit card? So it can't be termed as money if we make an assumption that money should ALWAYS be acceptable to pay for goods and services.

 

[Saad Ghori]

yes it was D! But do u remembr their amounts, I think it was 10 8 and 6...so tht turned into 6 4 2 so yes all had 4 consumer surplus...

Yeah

 

[ibadsiddiqi]

Not everywhere, there are still many shops which do not accept them. Plus what if you have reached the limit on your credit card? So it can't be termed as money if we make an assumption that money should ALWAYS be acceptable to pay for goods and services.

exactly..and furthermore people don't usually use credit cards to pay a plumber or a carpenter or a gardener..

 

[mhalvi]

guyz hows preparation for P2??

 

[mhalvi]

is anyone giving Chemistry over here on 21st?

 

[ibadsiddiqi]

^^im giving chemistry on the 21st..preparation for eco p2 is good..

 

[abcde]

The question never said its about cost benefit analysis it Asks what the govt considers but firms don't when deciding whether to invest in something. Tax payments can be how the govt considers how much tax revenue it receives etc.

I don't remember the question but if that's the case, you're probably right. =)

 

[mhalvi]

^^im giving chemistry on the 21st..preparation for eco p2 is good..

prep of eco P2 better or chem p2?

 

[ibadsiddiqi]

prep of eco P2 better or chem p2?

Chem p2 is better..strange considering that eco is my fav subject

 

[ibadsiddiqi]

For the PPC question i chose A as the answer. Arguments stated by people who chose A and those who chose C are both good. The answer could be A if one considers whats going to happen in the long run. For example if innovation decreases to zero and you have a machine, after a period of say 10 years the machine is going to become redundant. Considering that fact that there is no technological advancement, the production possibilities are bound to decrease. Rise in the price of energy means that the COP is going to rise but that does not mean that production possibilities are going to decrease. True oil importing firms may reduce output but the production possibilities will remain the same. So this is what i think. Obviously this is open to discussion.