Quick Question - 2008 Eco Paper (1 Viewer)

[imoO]

Hey everyone,

I'd just doing some final minute prep for economics HSC

I'm having trouble understanding these questions from the 2008 HSC (http://www.boardofstudies.nsw.edu.au/hsc_exams/hsc2008exams/pdf_doc/2008HSC-economics.pdf)

Question 8 - Can somebody please explain this to me? I don't understand how the wage system will affect inflation (Answer is C)
Question 19 - I don't understand this... (Answer is C)
Question 20 - I thought costs were greater for private, because the firm has to pay for it? (Answer is A)

Thanks in advance for any help

 

[sidereal]

8. in a centralised wage system, wage rises are essentially forced on all employers. that means that even if their employees haven't become more efficient (=> decreasing costs), they still have to pay them more. this leads to cost push inflation. under a decentralised system the firm is (theoretically) free to decide wage rises based on the productivity + efficiency of the firm or even individual employees. thus there's no pressure on the firm's price level.

19. you can get this by elimination. both A and B are either demand side influences or result in an increase in AS, not a decrease as shown. D has no real appreciable difference on supply. therefore C must be the answer. considering C, if an economy reduces its intake of skilled workers, all other things being equal, its aggregate supply will fall since productivity will stop growing as quickly.

20. the answer is B (see http://www.boardofstudies.nsw.edu.au/hsc_exams/hsc2008exams/pdf_doc/economics-notes-08.pdf ). D is clearly nonsense, and C is backwards. considering A and B, if negative externalities exist, then the cost to society is greater than the costs borne in the transaction (i.e. the private costs). thus B.

i dont think my explanations are very clear but i hope that helps. economics isn't for two weeks, psych up for english!

 

[imoO]

8. in a centralised wage system, wage rises are essentially forced on all employers. that means that even if their employees haven't become more efficient (=> decreasing costs), they still have to pay them more. this leads to cost push inflation. under a decentralised system the firm is (theoretically) free to decide wage rises based on the productivity + efficiency of the firm or even individual employees. thus there's no pressure on the firm's price level.

19. you can get this by elimination. both A and B are either demand side influences or result in an increase in AS, not a decrease as shown. D has no real appreciable difference on supply. therefore C must be the answer. considering C, if an economy reduces its intake of skilled workers, all other things being equal, its aggregate supply will fall since productivity will stop growing as quickly.

20. the answer is B (see http://www.boardofstudies.nsw.edu.au/hsc_exams/hsc2008exams/pdf_doc/economics-notes-08.pdf ). D is clearly nonsense, and C is backwards. considering A and B, if negative externalities exist, then the cost to society is greater than the costs borne in the transaction (i.e. the private costs). thus B.

i dont think my explanations are very clear but i hope that helps. economics isn't for two weeks, psych up for english!

I'm already set for English...well I think so anyway...

Thanks for the reply