The demand for such products will fall DD shift left. Good answers would have discussed some of these constraints and limitations in the main body and may reiterate and reinforce the case they are making by focusing on at least 2 economies to round up the discussion. Price rigidity can be a feature of oligopolistic markets. Assess how the markets involved might be affected by these developments. To reach Level 3, answers should include diagrams MC, AC curves to show how profit- maximising decisions are made within a range of market structures.

No – The high and rising consumption of M as seen in the table is not just due to unfair trade practices in the global arena, it is also due to loose lending policies in the US. Road congestion resulting in negative externalities due to imperfect information; OR. We do not know how the countries have performed in trade in services. As a result the actual comparative advantage in some labour intensive manufactured goods was manipulated to favour import substitution even by firms with little if any comparative advantage. The market in such countries may be small. This involves increasing expenditure on human capital and strategic alliances with firms that can make use of such labour, by offering ‘supply side support’. However, fears of traditional industries declining job losses are real problems but this could be managed with improvement in the countries institutions and appropriate govt policy e.

CED of electricity and other fuels is positive? If China is indeed dumping, then stuy to prevent dumping will be justified as it protects EU consumers in the LR where by dumping had succeeded in increasing Chinese producer power in the EU market.

2008 h2 econs case study

Also, the Indian whisky industry need not necessarily collapse if the tariffs are removed since it could still compete on non-price level. Also, the data is lacking. For answers that are very descriptive and only able to show the link between barriers to entry and pricing decisions, it will at most score a Level 2 mark. This resulted in the PPC not only growing but changing shape.


Competition helps to reduce market power 2080 individual energy firms. If price of natural gas remains below price of electricity, natural gas consumers may not switch to electricity. CSQ2 a i It appreciated.

H2 Economics Case Study Questions

The resulting historical changes, from entrept to lower skilled labour intensive, to capital intensive and eventually to human capital and technology intensive goods and services being exported, fits well apart from the early 60’s with theoretical predictions.

Lower prices are not reflected by lower costs of production, but due to deliberate government policy. USAs rising current account deficit is seen in figure 1 and this is to be contrasted with Chinas big rise in foreign reserves. Evaluate that this is not the reason: PED of electricity is negative Law of Demand?

The demand for such products will fall DD shift left. This will in turn affect their pricing decisions. Examine case materials to support market failure: Ensure there are ccase labeling. Being tied to longer term contracts, consumers are not given the opportunity to respond to the lower wholesale prices of natural gas by increasing their quantity demanded of natural gas.

Therefore, it is now more elastic.

ecojs UK fuel market is oligopolistic. Impact of developments in modern technology on recorded music and associated products will depend on the relationship whether substitutes or complements ie direction of DD changes and their closeness the extent of DD shift.

Such power would allow the firm to have greater control over prices and as a result lead to higher profits. Interests of consumers were not met given the under-utilization of facilities and high market power present in the fuel market. It has difficulty explaining intra-industry trade unless we take differing brands of products as different goods.


2008 h2 econs case study

Q2 Firms pricing and output decisions depend on barriers to entry and the behavior of competitors a Explain why barriers to entry are a key determinant in firms pricing decisions.

Value of PED of electricity is relatively large due to availability of substitutes, especially close substitutes such as natural gas?

2008 A-Levels H2 Economics Case Study

In curing a recession, to what extent can a rise in G offset the fall econd CD in big economies like US and the fall in X in extremely small and open economies like Spore? We export tourism sttudy Australia and import it from Australia, but the exports and imports are clearly very different, and so are logically determined by exploitation of mutually advantageous trade opportunities.

Road congestion resulting in negative externalities due to imperfect information; OR. In addition, with greater competition, the market structure can evolve from one that is oligopolistic in nature to one that veers toward monopolistic competition.

Hence, allocative inefficiency is reduced. Answer should be based on the context of the case material as far as possible. Overview Part a requires explanation whereas b requires evaluation. This will reduce the price of exports to EU markets.