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AS and A Level: Markets & Managing the Economy

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216 AS and A Level Markets & Managing the Economy essays

  • Marked by Teachers essays 7
  • Peer Reviewed essays 12
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  1. Marked by a teacher

    Explain and illustrate the roles played by profit in allocating scarce resources within the economy over time.

    5 star(s)

    An excellent piece of work that achieves its purpose well…

    • Essay length: 954 words
    • Submitted: 10/08/2011
    • Marked by teacher: (?) David Salter 12/02/2012
    • Reviewed by: (?) groat 04/03/2012
  2. Marked by a teacher

    Discuss the merits of road pricing (25)

    4 star(s)

    ****
    Some very good points here. The evaluation at the end is particularly strong and the writer makes a good case for congestion charging. They have not researched sufficiently into…

    • Essay length: 1868 words
    • Submitted: 18/04/2012
    • Marked by teacher: (?) David Salter 02/05/2012
  3. Marked by a teacher

    A free market is an economic system where the prices of goods and services are determined by unrestricted competition between privately owned businesses.

    4 star(s)

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    This essay is strong on market failure but not so strong at describing how the market actually works. I would like to have seen more on this at the…

    • Essay length: 986 words
    • Submitted: 09/03/2012
    • Marked by teacher: (?) David Salter 21/03/2012
  4. Marked by a teacher

    Explain how the equilibrium level of output is determined in perfect competition. Both for the whole market and one firm within the market

    4 star(s)

    This essay starts off well but I do not think the writer has a full grasp of this (quite difficult) concept of perfect competition. The second part of the essay…

    • Essay length: 1303 words
    • Submitted: 27/01/2009
    • Marked by teacher: (?) Dennis Salter 04/12/1999
  5. Marked by a teacher

    Comment on the statement that only carbon trading is likely to be an effective and efficient way of reducing C02 emissions.

    3 star(s)

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    This essay raises most of the arguments for and against carbon permits but there are some fundamental misunderstandings. Its big attraction is that it is market based so after…

    • Essay length: 1003 words
    • Submitted: 05/11/2010
    • Marked by teacher: (?) David Salter 12/02/2012
  6. Marked by a teacher

    Asses the extent to which the internet has made markets more competitive

    3 star(s)

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    This essay lacks a proper structure. Points are made randomly. It would benefit from more analysis. There is little evidence of research to back up points e.g. what percentage…

    • Essay length: 811 words
    • Submitted: 09/04/2010
    • Marked by teacher: (?) David Salter 05/04/2012
  7. Peer reviewed

    Is the existence of a monopoly against The public interest?

    5 star(s)

    This essay engages superbly with the task, exploring various arguments favouring monopolies and those criticising them. I would note that if this task had said "Is the existence of a…

    • Essay length: 1068 words
    • Submitted: 22/12/2003
    • Reviewed by: (?) groat 28/02/2012
  8. Peer reviewed

    Outline the argument for and against smoking ban

    4 star(s)

    This essay engages well with the question, discussing the positives and negatives of the smoking ban. I would note that I think there's another interpretation of the question, where a…

    • Essay length: 1026 words
    • Submitted: 02/11/2010
    • Reviewed by: (?) groat 29/02/2012
  9. Peer reviewed

    The effect of Trade Unions on causing Labour Market Failure Today

    3 star(s)

    Although this response is short, there is a good level of analysis here. There is a sustained focus on trade unions causing labour market failure, with the key terms being…

    • Essay length: 367 words
    • Submitted: 26/03/2012
    • Reviewed by: (?) groat 15/04/2012
  10. Peer reviewed

    What are the main characteristics of a free market economy and a centrally planned economy?

    3 star(s)

    This essay engages at an okay level with the task, explaining the main characteristics of the two economies well. It's a shame to see the second part of the question…

    • Essay length: 751 words
    • Submitted: 30/11/2011
    • Reviewed by: (?) groat 04/03/2012
216 essays
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How do markets work?

  1. 1 Economics is the study of the allocation of resources so understanding how prices are set and the amount of resources used for any particular product is important.
  2. 2 Most resources are allocated by the free market. Adam Smith called this ‘the invisible hand’ as no one is in charge of it. It just happens through the interaction of millions of individual buyers and sellers, all working in their own best interest.
  3. 3 The price and amount produced are determined where the amount supplied equals the amount demanded. This is known as market equilibrium or the market clearing output.
  4. 4 Any changes to the supply of a good e.g. costs change, weather disrupts production or any change in demand e.g. a product goes into or out of fashion will cause a change in the equilibrium point and so lead to a change in price and output.
  5. 5 When discussing this, always start with the change in supply and demand and talk about the change to price and output this causes. Not the other way round.

What is market failure?

  1. 1 Markets do not work perfectly all the time. Several things can and do go wrong with its operation. One of these is market power. If individuals or groups of producers (or consumers to a lesser extent) have too much power, they can distort the market.
  2. 2 Externalities – The production and consumption of many goods has an external cost e.g. pollution that is paid by other people than those who consume or produce the product. To determine how much of this product should actually be produced or consumed for the greatest benefit to society, this cost should be taken into account as well.
  3. 3 Public goods – Some goods would not be produced at all by the free market as it is impossible to stop other people benefiting from them (the free rider problem). Examples include defence, light houses and street lights.
  4. 4 Merit goods – Some goods would be under-consumed if it was left to individuals to decide how much they wanted to spend on them. This is because they have external benefits to society beyond the private benefits e.g. we all benefit from an educated workforce.
  5. 5 Make sure you are comfortable with the market failure graphs and some of the other reasons for market failure e.g. information problems, immobility of the factors of production.

Five key facts about price elasticity of demand

  1. 1 Elasticity matters because it determines the importance of shifts in the demand and supply curves and helps with our understanding of how markets operate. In theory all demand and supply curves have different elasticises at different points along them. We are interested at their elasticity where they intersect.
  2. 2 Price elasticity of demand measures the responsiveness of demand to a change in price. The formula is the percentage change in quantity demanded divided by the percentage change in price.
  3. 3 Demand for a product is elastic if the percentage change in demand is greater then the percentage change in price e.g. a 10% price rise causes a 20% reduction in demand.
  4. 4 Demand for a product is inelastic if the percentage change in demand is less than the percentage change in price e.g. a 10% price rise causes a 5% reduction in demand.
  5. 5 Remember the formulae for income and cross elasticity of demand and price elasticity of supply. Q always goes on the top in the formula. We always ‘queue up’.

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Conclusion analysis

Good conclusions usually refer back to the question or title and address it directly - for example by using key words from the title.
How well do you think these conclusions address the title or question? Answering these questions should help you find out.

  1. Do they use key words from the title or question?
  2. Do they answer the question directly?
  3. Can you work out the question or title just by reading the conclusion?

  • "Discuss and evaluate the proposition that perfect competition is a more efficient market structure than monopoly."

    "Consequently the statement of perfect competition being more efficient than monopoly is not entirely true. In conclusion, although perfect competition is more economically and productively efficient than monopoly, monopolies have dynamical advantages. Monopolies can exploit economies of scale and economies of scopes which in theory would lower cost. Also perfect competition doesn't include externalities in which case it wouldn't be efficient. Even though it is almost impossible to have a pure monopoly or a pure perfect competition market structure in an economy, perfect competition seems to have an advantage regarding static efficiency over monopoly. The question now is whether a perfect competition market model is more desirable over a monopoly market model. Economics Essay By: Santiago Caicedo 10-5 Topic: Perfect competition and Monopoly. Research question: "Discuss and evaluate the proposition that perfect competition is a more efficient market structure than monopoly". 1 ROY J. RUFFIN, PAUL R. GREGORY, "Principles of Economics" Chapter 30 pg.563 Fifth Edition 2 ROY J. RUFFIN, PAUL R. GREGORY, "Principles of Economics" Chapter 30 pg.566 Fifth Edition 3 ROY J. RUFFIN, PAUL R. GREGORY, "Principles of Economics" Chapter 30 pg.610 Fifth Edition 4 ANNE KRUEGER, "The Political Economy of the Rent-Seeking Society." American Economic Review 64 (June 1974). 5 HARVEY LEIBENSTEIN, "Allocative Efficiency vs X-Inefficiency", American Economic Review56(June 1966)"

  • Discuss the view that monopoly power is always negative from a consumer and economic view point.

    "Overall, there are many negative impacts of monopoly power; however, there are also benefits, both to the consumer and from an economic view. We can definitely reach the conclusion that monopoly power is not always negative as there are advantages. However, overall, the disadvantages do overpower the advantages of monopoly power when considering the view economically or form the consumers' view"

  • What are the implications for economic welfare of a market structure changing from perfect competition to a monopoly charging a single price? To what extent would you modify your conclusion if the monopoly practiced price discrimination?

    "In conclusion, perfect competition results in allocative and productive efficiency. When market structure changing from perfect competition to monopoly charging a single price, there is a deadweight loss to the society. The resources are not used efficiently. Meanwhile, there is redistribution from consumers to the monopoly producer. Moreover, the monopoly leads productive inefficiency because of lack of pressure. But on the other hand, monopoly has the incentive to innovation. It may benefit from the economies of scale. From these standpoints, monopoly is more efficient than we thought. If monopoly practices price discrimination, the economic welfare will increase up to the total surplus in the perfect competition. The price discrimination increases the efficiency of monopoly. "The more perfectly the monopoly can price discriminate, the closer its output gets to the competitive output and the more efficient is the outcome." (Economics, fifth edition, Michael P) However, there is a transfer of surplus from consumer to producer."

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