economics paper31 discussion

[djdead1]

and hey... what abt in which the maximum price was given.. was it LM shift towards left??? fall in demand??

JAMES...I THINK WE HAD DIFRNT PAPERS

I DID P 31

 

[JamesSmith]

yea but i thought maybe if the DWL question came maybe this question would have also come in both variants..

 

[Xenon]

the questions are usually the same in both variants... just that there order is different

for the DWL, the answer is x + y.... kinda sure about it

 

[JamesSmith]

please tell me it was "y only" .. oh please...!! i don't want to loose any more marks then 4 i have messed up already... :S

 

[Xenon]

referring to the pic,
social effeicient level is where MSC = MSB while market(private) efficient level is where MPC = MPB

before imposition of tax:
total social cost to society: area under MSC curve, i.e. AEMG
total benefit to society: area under MSB curve, i.e. ACMG
net loss (DWL) = AEC or x + y+z

after tax: new MPC to producers is MPC + tax, output reduces to H
total social cost to society: area under MSC curve, i.e. ADHG
total benefit to society: area under MSB curve, i.e. ABHG
net loss (DWL) = ADB or z

thus reduction is x + y

 

[Xenon]

hey do u remember the ans to imposition of maximum price on electricity producers one, I gave reducing something monopolistic.... I forgot the full line
also the infinite supply elasticity with 10% tax... what was the govt. revenue.... I gave 85
and also the one with fixed parity(something similar) exchange rate.... what policy did the country have to give up.... I gave interest rate policy

about the DWL, I guess a lot of students made that mistake.. in my centre... everyone gave y except me and another guy

 

[JamesSmith]

nice diagram you drawed. okay so here, see that the decrease in the DWL is only of Y, x+z still exist. ..

okay for the fixed parity: yes i answered the interest rate policy.
85 is also something i did .. don't remember the question but i can recall it had alot of calculations..

 

[whatsmyname]

lol bro its x+y that is reduced...as the new intersection point gives u the new eqN point..meaning quantities pertaining from H to M in the fig above are no longer consumed and above them the externalities related to them are internalized by the tax and are no longer generated...found the tax questions kinda tricky

 

[Xenon]

lol bro its x+y that is reduced...as the new intersection point gives u the new eqN point..meaning quantities pertaining from H to M in the fig above are no longer consumed and above them the externalities related to them are internalized by the tax and are no longer generated...found the tax questions kinda tricky

exactly

 

[Xenon]

what about the maximum price question?

 

[JamesSmith]

xenon, i guess the maximum price question there was a shift towards left from the equilibrium.. maybe LM or something..
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OOOooooOOOOOHHhhhhhhhHHHhhhh!!!!!!! i do get it..
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but i still want to be in state of denial..
hahahha.. good work guys.!!!! you are certainly smarter!! ;p

 

[Xenon]

LOL...

wait not the unemployment question, I was talking about the electricity supplier... question saying something about valid economic reason or something similar

 

[djdead1]

the questions are usually the same in both variants... just that there order is different

for the DWL, the answer is x + y.... kinda sure about it

yaaaaay @ james

 

[djdead1]

xenon, i guess the maximum price question there was a shift towards left from the equilibrium.. maybe LM or something..
.
OOOooooOOOOOHHhhhhhhhHHHhhhh!!!!!!! i do get it..
.
.
.

.
.

.
.
but i still want to be in state of denial..
hahahha.. good work guys.!!!! you are certainly smarter!! ;p

awwww james dont say that ure a smart ass urself sir

 

[djdead1]

lol bro its x+y that is reduced...as the new intersection point gives u the new eqN point..meaning quantities pertaining from H to M in the fig above are no longer consumed and above them the externalities related to them are internalized by the tax and are no longer generated...found the tax questions kinda tricky

james, FACE IT