economics p42!

[JamesSmith]

hey economics-candidates!

hope the studies are going well.. I was just wondering maybe we all should cross revise stuff here as well.. I am exhausted with my books, notes and past papers.. even i've listened to lectures on youtube.com and read the books on google..

Ask me some questions, which are difficult so that i can answer and lets see who's answers are more accurate!?! hows that.. :Bravo:

 

[sourgho16]

In 2002 in the UK public sector fire-fighters threatened to go on strike because they stated that
their earnings were very low compared with other workers. In the same year Robbie Williams, a
singer from the UK, signed the largest ever recording deal in the music industry, worth millions of
pounds.
Discuss whether the economic theory of wages can explain how workers in a vital industry such
as the fire-fighting service can have lower pay than workers in a less vital industry such as
entertainment. [25]

 

[sourgho16]

Discuss whether an efficient allocation of resources can be obtained only if large-scale
investment is undertaken by the public sector rather than the private sector. [15]

The gain in happiness when someone gets an extra dollar is much smaller when the person is rich
than if they are poor. So money transferred from rich to poor raises total happiness and
governments should seek to make such transfers.
(a) Explain what is meant by the Law of Diminishing Marginal Utility and consider whether the
statement above is a correct application of it. [12]

 

[JamesSmith]

thats a copy paste from past papers, dude..

and haha.. i won't be doing the 25 marks question.. so lets move to the next ones..

question no.2
definition of efficient allocation of resources i.e. productively efficient (lowest of AC curve, on PPC) , show diagram with point of technical efficiency., and allocatively efficient (price = MC)
private sector: market failures may arise: externalities (positive, neagative with respect to Dead weight loss), lack of public goods, too low production of merit goods, too much production of demerit goods. monopoly powers (high price, low output)
but yes can be allocatively efficient, productively efficient IF conditions met (i.e. existence of competitive environment)
public sector: public goods( non rival and non-exclusive), cost benefit analysis all costs and benefits are taken into account.
however, problem of information (wrong levels of demand anticipated), distribution, production (productive inefficient as no incentives).

conclusion: depends upon the type of good (public or private) and the efficiency of the government!

 

[JamesSmith]

question no.3:

law of diminishing marginal utility states that with each additional unit of commodity consumed the level of satisfaction received reduces.

 

[Xenon]

@ JamesSmith

bro, did u finish all the past papers and every question ? Its a huge task if someone ask me

 

[JamesSmith]

yupp i have apart from variants other than 12,22,32 and 42.. .. and now i'm so bored and killing time so the 7th and 10th june.. i wish 32 and 42 were on same day..

@xenon: hows your prep?

 

[Xenon]

haha.. I haven't gone through even half of all the questions (42).. as told it looks like a huge task..
Oh, I have two questions:
>> are monetarist the same as neo/new classical economists
>> does all the points on LRAS represent cost-minimising point/least cost combination

 

[samsung156]

JamesSmith - On the topic related to Govt intervention to reduce market failure , theres a part which discusses where the Govt themselves may fail.
The reasons are -
Lack of proper Information. Not knowing the exact cost of pullution , etc
Undesirable incentives - Higher progressive taxes.
The third point made in the Bamford book is , Distribution of Income , can you help me understand the third one?

Other than that , insha'Allah I have studied a lot and hopefully will do good Economics A level is such a huge syllabus :|

 

[Shahnam]

if James don't mind Samsung156 here is your answer:

the distribution of income is the welfare benefits that the government gives to a certain segment of the society. For example, the pensioners. Now, the government's micro economic aim is to improve the efficiency and equity in the market. If the inflation is high, the government would try to transfer more money to the pensioners and this is funded from the tax receipts from the employed people. If the marginal rate of tax (m.r.t) is high then this would act as disincentive and there would be inefficiency and inequity in the market. Inequity as employed are now more worse off and the people receiving the benefits are having "free ride" on the incomes of the employed.!!!