AS and A Level: Markets & Managing the Economy
- Marked by Teachers essays 10
- Peer Reviewed essays 11
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Explain and illustrate the roles played by profit in allocating scarce resources within the economy over time.
5 star(s)Hence, firms would allocate their resources to increase output till this point as reflected in the diagram A. As shown in Diagram A, producing at output level, Q1 would result in a profit earned reflected by the blue border box. However, the firm is not producing at the optimal output level of Q2 which generate the highest possible profit as reflected by the red border box. Hence, profit-driven firms would be motivated allocate more scarce resources to increase their output level to Q2 to maximize profits. Therefore, this shows that potential profit is able to drive allocation of scarce resources to achieve profits maximisation.
- Word count: 954
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Supermarkets in UK - An oligopily
5 star(s)The market average increase in sales over this period was 4.4%. Tesco hold an 'actual monopoly' over the industry, with 30.7% market share. The industry is currently worth �146.3bn and is predicted to grow to �175.9bn by 2014 according to 'UK Grocery Retail Outlook 2009 - Repositioning for Growth' Market share The market in which Tesco operates is supermarkets. Although this is a highly competitive one Tesco holds a disproportionate amount of power. The figures below indicate that Tesco holds over a third of the market share, and even double the amount of Asda's market share, the second leading supermarket.
- Word count: 3335
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Discuss the merits of road pricing (25)
4 star(s)means of transport such as the train or tube, or they may simply think twice about using their car if it isn't necessary. The London congestion charge has, for example meant that congestion in the extended zone has decreased by 20% and there are 8-12% less vehicles being used on a daily basis that before the charge. Showing that road pricing has decreased congestion. The hypothecation of road pricing has meant that the �120 million raised per year can be spent on improving public transport services.
- Word count: 1868
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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)Unlike public goods, merit goods are excludable. With merit goods such as healthcare, only those with sufficient income would be able to access the service and those who have insufficient income would not be able to access the good/service. This leads on to the next limitation of a free market, unequal distribution of income. In a free market economy, there is large unequal distribution of income because the income of most labourers is driven down by the high level of competition in the market. Those whose businesses are profitable and not forced down by competition are those with great wealth.
- Word count: 986
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Discuss the strengths and weaknesses of demand-side policies (fiscal and monetary policy)
4 star(s)Deflationary demand-side policies decrease aggregate demand in the event of aggregate demand running ahead of aggregate supply and posing inflationary risks or leading to an unsustainable deficit on the balance of payments. An example of when reflationary demand-side policies would be used is when aggregate demand is too low, so for instance when taxes are high and interest rates are high. The policies that would be used in order to shift out the aggregate demand curve would be lowering taxes and government spending, fiscal policy, and decreasing interest rates, monetary policy.
- Word count: 810
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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)There is also perfect information for the consumers and producers. Most importantly, in a perfectly competitive market, the firms aim to maximize profits, firms aim to sell where marginal costs meet marginal revenue, where they generate the most profit. Following on from above, an important idea from which equilibrium output is determined in perfect competition is that the firms main aims are to maximize profits. So, price taking from the firms guarantees, that when the firms maximize profits, by choosing the quantity they wish to produce and the combination of factors of production to produce it with, the market price will be equal to marginal cost.
- Word count: 1303
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Is the existence of a monopoly against The public interest?
5 star(s)In this market structure it is also assumed profits are maximised and there is consumer rationality. Traditionally monopoly is thought to be a potentially harmful market structure with unwelcome consequences for the consumer and the economy. Competition has always therefore been seen to be desirable. It could be said therefore to be against the public interest. However there are arguments not only against monopolies but also for their existence. One of the main arguments against monopolies is that they raise prices, restrict output and therefore exploit consumers.
- Word count: 1068
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Outline the argument for and against smoking ban
4 star(s)So they want people to consume where the pink lines meets the green line. MSB = MSC (5 a day). Below 5 a day both the MSC and MPC are below MPB and MSB. So both society and the individual wants to consume the good. Above 10 a day the MSC and the MPC are above the MSB and the MPB so neither the individual or society wants more than 10 cigarettes a day. However in between 5 and 10 cigarettes a day, the MSC is above the MSB so society does not want to have that many cigarettes.
- Word count: 1026