Group revision session 2008_09

1
Group revision session - 2008_09

• Put these onto tables students to have no more
  than 5 mins per Q then to rotate around to the
  next.
• Get them to write their answers onto an A3 sheet
  of paper to then bring their answer to the
  front have same Q template at front for them
  to leave their answers next to.
• Keep rotating around.
• At the end of the session to put out all the
  answers back to the same table
• Teacher lead on one of the sets of answers to one
  of the questions. go through range of
  techniques.
• Groups to EVALUATE the quality of answers which
  bits are good!
• Need to pull together the skills required.

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Rearrange the room

• You will be sitting in teams of 5!

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Before this

• Go through quiz for Unit 1 as a warm up.
• MC HWK use projector to show student answers!

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Groups for today!
Sorted by GCSE points!
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Groups for today!
Sorted by GCSE points!
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AS Ec revision session

• With Mrs G

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Getting started you owe me

• Bees dont just make honey

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• 3 MORE MC Qs

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Groups for today!
Sorted by GCSE points!
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Groups for today!
Sorted by GCSE points!
11

• A London health club has 5,000 members. They each
  pay monthly fees of 80. The health club owner
  conducts market research and estimates that price
  elasticity of demand for its membership is 0.5.
• If the owner increases monthly fees by 10, the
  change in total revenue is likely to be
• A 22,000
• B 18,000
• C 22,000
• D 18,000

Answer
12

• A café observed an increase in the demand for its
  coffee following a rise in the price of a cup of
  tea from 1.20 to 1.50. Assuming the cross price
  elasticity of demand for coffee with respect to a
  change in the price of tea is 3, by how much
  will the demand for coffee have increased?
• A 33
• B 20
• C 25
• D 75

Answer
13

• The diagram shows the European Union wheat
  market. It operates a minimum price scheme. The
  government guarantees to purchase any surplus
  output at the minimum price.
• At first the minimum price is at 0P1 and the
  government purchases Q1Q4 wheat.
• If the minimum price is reduced from 0P1 to 0P2
  which of the following is correct?
• A Consumer surplus falls.
• B Excess demand for wheat falls.
• C Government spending on the minimum price scheme
  for wheat falls.
• D Output of wheat increases.

Answer
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Answers
15

• A London health club has 5,000 members. They each
  pay monthly fees of 80. The health club owner
  conducts market research and estimates that price
  elasticity of demand for its membership is 0.5.
• If the owner increases monthly fees by 10, the
  change in total revenue is likely to be
• A 22,000
• B 18,000
• C 22,000
• D 18,000

Answer
16
D 18,000
D

• Correct calculation which shows candidate
  workings (3 marks).
• Percentage change in demand is -0.5 10 -5.0
• Original revenue is 80 5000 400,000
• New revenue is 88 4750 418,000
• The change in revenue is 18,000
• Note There are various methods candidates might
  use to calculate answer!
• Award candidates who select the incorrect option
  but show correct workings 2 marks.
• Also award
• Definition of price elasticity of demand or
  formula (1 mark).
• Demand of -0.5 is price inelastic (1 mark).

17

• A café observed an increase in the demand for its
  coffee following a rise in the price of a cup of
  tea from 1.20 to 1.50. Assuming the cross price
  elasticity of demand for coffee with respect to a
  change in the price of tea is 3, by how much
  will the demand for coffee have increased?
• A 33
• B 20
• C 25
• D 75

Answer
18
D 75
D

• Definition or formula for cross price elasticity
  of demand (2 marks)
• Calculation of increase in price 25 (1 mark)
  and then application to formula to arrive at
  answer i.e. 25 x 3 75 (1 mark )
• Or explanation/definition of meaning of
  substitute goods or positive cross price
  elasticity of demand (total of 1 mark available
  for either explanation)

19

• The diagram shows the European Union wheat
  market. It operates a minimum price scheme. The
  government guarantees to purchase any surplus
  output at the minimum price.
• At first the minimum price is at 0P1 and the
  government purchases Q1Q4 wheat.
• If the minimum price is reduced from 0P1 to 0P2
  which of the following is correct?
• A Consumer surplus falls.
• B Excess demand for wheat falls.
• C Government spending on the minimum price scheme
  for wheat falls.
• D Output of wheat increases.

Answer
20
C Government spending on the minimum price scheme
for wheat falls.
C

• Minimum price is a floor price / a level below
  which the price of wheat cannot fall (1 mark).
• Government spending on wheat falls from Q1Q4YX to
  Q2Q3WZ (11 marks).
• This may be shown by annotation of the diagram.

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Exam technique
You can work collaboratively! Write definitions
on sheet Use whiteboards to structure answer to
2 3

• On your desks Ill give you a few exam Qs!
• Requires definitions
• Requires a diagram with your answer
• Requires an essay plan

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Definitions..

• One copy per table

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Definitions

• Buffer Stock
• Burden Of Indirect Tax
• Composite Demand
• Demerit Goods
• Derived Demand

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Definitions

• Equilibrium
• Excess Demand
• Income Effect
• Index Number
• Joint Supply

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Definitions

• Maximum Prices/Price Ceiling
• Merit Goods
• Normative Statements
• Opportunity Cost
• PED

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Definitions

• PES
• Pollution Permits
• Positive Externalities
• Positive Statements
• PPF

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Definitions

• Private And Social Costs Or Benefits
• Signalling
• Subsidy
• Substitution Effect
• CPeD

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Q requiring a diagram and an explanation.
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Using a demand and supply diagram, explain the
meaning of the phrase there is a danger of an
excess supply in the oil market
30
The price of DVD recorders are likely to fall
rapidly over the next few years. With the help
of a demand and supply diagram, explain how this
may effect the market for videos.
31
Examine the likely effect on consumer surplus of
an increase in demand forplumbers.
32
Using a relevant diagram, what are the likely
effects of a minimum price set alcohol sold
through supermarkets.
33
Using a relevant diagram, what are the likely
effects of a maximum price set on private dental
treatment in the UK.
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Extended essay Qs
35
Evaluate as many likely consequences of
fluctuating prices on producers of cocoa.
36
Discuss the likely impact of an increase in the
price of ink cartridges on the price of printers.
37
Evaluate as many likely consequences of
fluctuating prices on consumers of cocoa.
38
To what extent does price affect the demand for
cars?
39
Discuss as many advantages and disadvantages for
a country like Botswana specialisingin the
production of diamonds.
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Revision.

• Remember that if you have any Qs you can use
  the facebook revision group!
• Exam paper for you to take home and use for
  revision.
• If not handed in on 1st lesson back I will NOT
  mark it!

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HOMEWORK
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(No Transcript)
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More Multi Choice work
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• The table shows income and price elasticity of
  demand data for a selection of food and drink
  items.
• From this information we can deduce that
• A The demand for all items is price elastic
• B Orange juice is an inferior good
• C A reduction in income will result in an
  increase in demand for French bread
• D An increase in the price of Indian ready meals
  would raise the revenue to the retailer.

45

• The market for light bulbs is shown in initial
  equilibrium at P1, Q1.
• Which area represents the producer surplus after
  new technological processes are used in
  manufacturing light bulbs?

A P3 N R B P2 M U C P2 M T D P3 N U
46

• The income elasticity of demand for fresh
  potatoes has been estimated to be 0.32.
• This means that the demand for fresh potatoes
  will
• A fall by 3.2 if incomes rise by 10.
• B rise by 3.2 if incomes rise by 10.
• C fall by 3.2 if the price rises by 10.
• D rise by 3.2 if the price rises by 10.

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Answers
48

• The table shows income and price elasticity of
  demand data for a selection of food and drink
  items.
• From this information we can deduce that
• A The demand for all items is price elastic
• B Orange juice is an inferior good
• C A reduction in income will result in an
  increase in demand for French bread
• D An increase in the price of Indian ready meals
  would raise the revenue to the retailer.

49
An increase in the price of Indian ready meals
would raise the revenue to the retailer.
D

• Definition or formula for Price Elasticity of
  demand 1 mark
• Identification that Indian ready meals are
  relatively price inelastic 1 mark
• Therefore an increase in the price of an Indian
  ready meal will result in a less than
  proportional fall in demand, thus raising
  revenue. - 1 mark
• No credit for definition of YED.

50

• The market for light bulbs is shown in initial
  equilibrium at P1, Q1.
• Which area represents the producer surplus after
  new technological processes are used in
  manufacturing light bulbs?

A P3 N R B P2 M U C P2 M T D P3 N U
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P3 N R
A

• Definition of producer surplus (the difference
  between the price a firm would be willing to
  supply at and the market price) 2 marks
• or The area between the price and the S curve (1
  mark)
• Explanation that technological innovation will
  cause Supply curve to shift from S1 to S3 1
  mark
• Annotation of new producer surplus on the diagram
  1 mark
• Annotation of old producer surplus on the diagram
  1 mark
• or Identification of old producer surplus (1
  mark)

52

• The income elasticity of demand for fresh
  potatoes has been estimated to be 0.32.
• This means that the demand for fresh potatoes
  will
• A fall by 3.2 if incomes rise by 10.
• B rise by 3.2 if incomes rise by 10.
• C fall by 3.2 if the price rises by 10.
• D rise by 3.2 if the price rises by 10.

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A fall by 3.2 if incomes rise by 10.

• Definition of income elasticity of demand (2)
• Correct numerical calculation 10x-0.32 -3.2
  (2)
• Potatoes are an inferior good (1)
• A rise in incomes will cause a fall in demand (1)
  

A
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Homework

• Revision .. Get started!
• Create your own MIND MAP of diagrams using sheet
  for guidance

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Mind map of diagrams

• DS equilibrium
• Causes of shifts in D (and of S)
• Perfect elastic, perfectly inelastic, unitary
  elasticity demand
• Income elastic, inelastic zero elasticity
• Cross Price Elasticities for complements and
  substitutes
• Price elastic inelastic Supply
• Buffer stock diagram
• PPF
• Positive externality diagram
• Negative externality

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Tues lesson

• A look at tax subsidies AND remind/tell them
  about T2U website

• After Christmas 4 lessons will look at a past
  paper on the Monday quiz!
• Tuesday a TIMED section of a paper some MC
  harder mark Q.
• Following week ICT room (?) general revision
  following what needs to be covered.