Paper 3 plans

With reference to Figure 1, explain one possible cause of the forecast change in total energy use (5)

shows increase in gas production, relatively low price

EXPLAIN WHAT FIGURE 1 SHOWS INCLUDING DATA MANIPULATION

-increased population or larger middle class leading to more demand

-UN estimates population will continue to grow till 2100

show AD shift right to AD1

With reference to figure 5 and extract C, explain one likely reason for the fall in the exchange rate of the Turkish lira (5)

-depreciation is a decrease in the value of a nations currency

-slowdown in economy causes fall in confidence and decrease in FDI and less demand for its currency

show decrease in demand and p to p1 shows the value of depreciation

Explain the difference between good and bad deflation (5)

-good deflation leads to falling prices which is caused by growth in supply of commodities food and energy sectors as there's tech improvements e.g. more automation in the ploughing of plants, production at cheaper rate

show SRAS out to rght

-bad inflation leads to decreased demand. in times of deflation consumers hold out to see how much further price falls reducing consumption and inflation

show ad shift left

With reference to extract C, explain what can be inferred about the PED for coffee beans (5)

-extract states that producers see higher prices on smaller volumes indicating price inelasticity of demand as people will continue to demand coffee

show lras shift left on inelastic AD curve

With reference to figure 2, explain one likely reason for the change in the Chile peso rate between 2013 and 2015 (5)

-figure shows depreciation from 0.20 to 0.15 to dollar rate

- reduction in chile major export, less exports less foreign demand for currency so e/r decreases

show decrease in demand and value of p to p1 as depreciation

With reference to extract D, explain the meaning of the term 'output gap'. use and AD and AS diagram in your answer (5)

an output gap is the difference between real and potential GDP

characterised by low productivity, resulting from lack of investment of lack or x-inefficiency

output gap diagram

With reference to figure 1, briefly explain the market structure that best describes the UK branded coffee shop market (5)

oligopoly-situation where a few large firms dominate the market

costa, caffe nero, starbucks, pret, tesco, morrisons

firms have a 71% concentration ratio

show monopoly making SN profit diagram

Using the data in figure 4 and other information provided, explain the likely change to Indonesias terms of trade since 2011

ratio of an index of its export prices to index of import prices.

index of X prices/ index of M prices x100

xprices>M PRICES, TOT goes up. fewer exports for given value of imports

xprices

Examine the likely reasons for a fall in oil prices since 2014 (8)

a1/ technological advances allows more supply pushing prices down

e1/

a2/more shale oil and gas reduces power of OPEc allowing prices to fall so they can compete and sell

e2/

examine likely impact of 19% increase in price of coffee beans on price of coffee cup (8)

a1/ increase in price of cup to consumers, con surplus decreases

e1/ coffee 3.16% of cost, up 19% is 15p increase which has minimal effect

a2/ price may not increase to consumers as producers decide to reduce profits

e2/ monopsony power could lead to undercut suppliers if price ncreases

examine likely impact of externalities of copper mining on farms and communities within china (8)

a1/ communities, water insecurity as water used in production process

e1/ recent tighter regulations reduce amount used by companies so smaller effect

a2/ costs to firms up as water costs rise mc up on supermicro, less profits

e2/ monopoly can afford to take loss

a3/ farmers water insecure so reduce output

e3/ desalination plants and smarter irrigation methods

examine relationship between national debt as a proportion of GDP and the fiscal deficit (8)

def: fiscal deficit when gov revenue less than gov spending

def: national debt as % of GDP is sum of debts over time as proportion of GDP

a1/ fiscal deficit feeds into national debt

e1/ other factors may explain trend e.g. change in GDP

a2/ deficit rising quicker than debt

e2/ fall in dept of gdp dependent not on austerity measures but on GDP

examine the advantages of using indirect tax to reduce usage of disposable coffee cups (8)

a1/ fall in consumption = less ex costs +diagram mpc plus tax

e1/ could be minimal effect is inealsticly demanded

a2/ rise in tax revenue

e2/ inequality up as regressive

examine the likely effects on the profitability of indonesian rice farmers of gov increased investment in dams (8)

a1/ investment can increase efficiency over time lowering lrac for firms ac falls

e1/ investment time lag, may not be completed

a2/ profits increase due to falling ac

e2/ farmers could face increased costs as output rises if exploited economies of scale

discuss the factors necessary for the success of a cartel (12)

a1/ cooperation within the group

e1/ minor players can leave group e.g. Qatar

a2/lack of product substitutes

e2/shale oil and gas on rise

a3/ monopoly power

e3/doesn't have to be gloabl monopoly

discuss degrees of contestability in farming of coffee beans and in uk coffee shop market (12)

a1/oligopoly in uk of branded coffee shops,

e1/monopolistic of non branded, low barriers to entry

a2/ coffee farmers = perfect competition low barriers

e2/ only grown in particular climates

apart from externalities discuss problems chile faces as result of dependency on copper mining (12)

a1/ prebisch singer worsening tot primary product dependency

e1/ weak currency currently so tot varies

a2/ dutch disease and worsening balance of payments

e2/ growth of other industries

discuss liekly impact of national living wage on profitability of firms (12)

a1/profits down as variable costs go up supermicro

e2/ if nmw is below market wage it will reduce costs (regional variances)

a2/recruitment easier as attracts more jobs less spent on job adverts

e2/diminishing marginal returns of labour

a3/incomes up ad up revenue to firms up

e3/ dependent on what firm sells and elasticity eg. cars little impact

pricing and non pricing strategies to increase profitability (12)

a1/advertising, strengthens brand attracting customers

e1/ sunk cost may not work

a2/collusion with costa cafe nero +payoff matrix

e2/ illegal and break collusion/ fines

a3/ extend product range/improve quality

e3/very hard to achieve, depends on loyalty

discuss benefits of aid to a a country of your choice (12)

a1/improve education

e1/overdependence on aud?

a2/ improve infrastructure

e2/ tied aid

a3/ injection of cash causing multiplier

e3/ microfinance more effective