As Summer 2022 Flashcards
Explain why flood defences such as those in the Calder Valley are usually provided by the public sector. (3 marks)
- Flood defences are public goods (e.g. non-excludable and non-rival)
- Government investment of £74m in the Calder Valley
Define the term ‘minimum price’. (1 mark)
The lowest price that can legally be set
Explain one likely problem for the EU of maintaining prices at P2. (2 marks)
- At P2 there is a surplus/excess supply which has to be paid for through higher tax
Explain how Bitcoin fulfils one function of money, apart from as a medium of exchange. (3 marks)
- A store of value when an individual saves bitcoin they are confident they will receive the equilivalent value
With reference to the statement above, explain the difference between positive and normative statements. (3 marks)
- Positive statements are based on facts
- Normative statements contain value judgement
- ‘should’ in the statement suggests it is normative as this is a person’s value judgement
- ‘those who are not vaccinated will benefit’ is a positive statement as evidence exist
Explain one reason why flour producers might find it difficult to increase quantity supplied in the short run. (3 marks)
K:
* It takes time for firms to respond
App:
* It takes time for wheat to grow
Ana:
* Small quantity response to a change in price
Which one of the followung is the resulting % change in supply? (1 mark)
D - 15%
Explain the likely impact of the new 2020 TAC’s on the price of cod. Include a supply and demand diagram in your answer. (5 marks)
K:
* Supply and demand diagram
App:
* Cod catch limits cut by 50%
Ana:
* Price rise, shift left in supply
Assess whether is it rational for fishing companies to behave in this way. (10 marks)
KAA para
Fishing is rational:
* Rational for fishing company, revenue linked to size of catch
* ‘Private producers will act in their own self-interest and exploit CARs to maximise profit’
* Figure 1
* Techniques to increase size of catch minimise costs
Assess whether is it rational for fishing companies to behave in this way. (10 marks)
Ev para
Fishing is irrational:
* ‘Exploitation is unsustainable’ and lead to depletion of resources (i.e. tragedy of the commons)
* Short run profits mean stock is depleted, in long run no resources to fish (e.g. ‘90% of fish stocks are depleted)
* Harmful to society (e.g. negative externalities)
With reference to the information provided and your own knowledge, explain two characteristics of private ownership in a free market economy. (6 marks)
K and Ana:
* Rivarly
* Private owners of resources can choose to buy and sell resources in order to generate profit
App:
* ‘private producers will act in their own self-interest’
With reference to the information provided, calculate the new quantity demanded of bags of chips from fish and chip shops, following a 2% increase in the price of fish. You are advised to show your working. (4 marks)
- XED = %change Qd Good A/% change P Good B
- -8 = x/2%
- -8 * 2% = -16%
- 950,000 * 16% = 152,000
- 950,000 - 152,000 = 798,000
Discuss the likely impacts on an economy of specialising in the fishing industry. Use a production possibility frontier diagram in your answer. (15 marks)
KAA para
Advantages:
* Fishing ports have infrastructure to process catch and distribute to markets in UK and overseas
* Employment opportunities grow as industry develops
* Efficient use of resources
* Creates jobs - people of Scotland can find employment in the fishing industry
Discuss the likely impacts on an economy of specialising in the fishing industry. Use a production possibility frontier diagram in your answer. (15 marks)
Ev para
Disadvantages:
* Over-exploitation of resources leaves agents over-exposed, leading to job losses
* Reduction of cod TAC leads to issues for Scottish fishing
* External costs to congestion/pollution
Other than using a TAC, evaluate the policy options which can be used to reduce market failure resulting from over-fishing, Use at least one apporpriate diagram in your answer. (20 marks)
KAA para
Reduce over-fishing:
* Provision of info (i.e. consumers consume sustainably)
* Regulation (e.g. area of fishing allow stock to recover)
* Indirect tax on fish to reduce consumption
* Subsidy paid to firms to use safer technology
* Min price for fish
