Let me see, okay, area of wafare lose loss free market delivery excellent lose. X said y. That's not because that's the area. Okay. A decrease in the quantity from qe to Q1 will reduce the net b is non x yz. Okay. Yeah I see. I say that Yeah a decrease in the quantity from qe to Q1 will reduce the net welfare loss. A decrease in quantity from e to Q1. Yes. Q E to Q1 because we move to this point, don't we? So we've no longer got the welfare loss, so we'll just check the last one. At the free market equilibrium quantity marginal social benefit free market equilibrium. Market for market equilibrium is one x no no no that Oh Yeah sorry it is sorry it's the next one. And marginal cost benefit access is marginal social cost. Quantity that is equal maybe? Yeah. Notice they ask that a lot. And in all of the questions, the answer has been equal, hasn't it? So notice this is why it's quite good to do these questions again, because you start to see the patterns that come up good. And then explain why, which we kind of have because we've gone through why the others are wrong. And if we move from here to here, we obviously take into account the social cost and therefore reduce the welfare loss. Right. We're back to a different one. We're back to marginal private cost and marginal social costs being the same. Okay, the diagram shows a free market for vaccinations, in which the current equilibrium level of output is x and price is a pe. Free market for vaccinations, which the current equilibrium output is x, okay. And the price is at pe. So we've got marginal private benefit equals marginal private costs, and that's. Our free market equilibrium Yep. At this level of output. So at this level of output, there is what. Again, we've had this question. We've had this answer before. Is that this one? Yep. And why? So then wehave to say why? So why do you think it was that one? Or why were the other ones wrong? Because this this point is free market equilibrium and this point is the market optimum. And this and this triangle maybe is that this triangle is the way fare lose. So maybe that that seems to that seems the answer. The market failure. Yeah, very good. Very good. And then the others, there's definitely not an excess supply because we want there to be more. There's no external cost because this is a positive and the government's nothing to do with it. The government hasn't intervened in a free market. So there can't be a government failure because they haven't done anything. But miss, what's the answer about explanation? Well, you've just explained it to me. What you just said to me, you explained it. So what's the answer about that? What you just said. So it says explanation why it's right. That means why you've picked that one. So you said you said it to me, you explained it. You would just write that point t is the free market equilibrium. Point R takes into account the sort of marginal social benefits. So the positive externalities of the vaccination, meaning that the point that they're t now there is a welfare loss, which you have drawn on the, you know, as can be seen on the diagram, this shows that the market failure, there is no x. Then you can go through a couple of the ones that are wrong like we did. There's no external cost because this is actually a positive externality because ginal private costs. So it's no external cost because marginal private cost is the same as marginal social costs. Okay. So that's wrong. And then I would do government failure. It's not a government failure because at point t, we're working on a free market and a free market, you know it's not got the actions of government. So the government hasn't made this situation worse, which is what the government failure is, where the government intervenes and makes it worse. Okay. So what you explained to me as to why you picked that one is what you put in that explanation bit. And don't be afraid to draw on the diagram like you did and put, Oh, you know, as can be seen on the diagram, like you know, you drew the triangle right there in your explanation. So what you said to me is what you would have written. Is that okay? Yeah, Yeah. Which of the diagram shows the market for vaccinations? Assume there are no external. That isn't the same question, is it? No, no, it's it's just the the same question, if you see what I mean. Okay. The diagram shows the market for vaccinations. Assume there are no external costs. Which of the following is so you move it up and down. Yeah, which one is no there are no external costs. Which of the following is. The first one, free market equilibrium quantity, access social optimum quantity, so social no, it's wrong. Waverlose with verloois in Z W X Y. Shayou know it is. You know, it's a triangle. So you know that's wrong. I assume I don't even know where that is. But Yeah, this one, so base from the increase in the quality from the remarkets equilibrium will lead to a net welfare gain. No says wrong g, so it' S D no, no, no, c, it's c. It's a good thing. Which one is increase in the quantity from the free market equilibrium lead to a wafare gain if Q E to Q1, there's less welfare lose maybe. Yeah, maybe Yeah. At the free market, equroom quantity, marginal social. And you know, it's not this one. Youhave got to that one and said, no. You know, it's not that one. It's the wrong shape. You know, it's not that one. So on increasing quantity from the free market will lead to a net welfare gain. And the reason you know that is the free market doesn't take into account the benefits of vaccinations. Yep. And then we just do the explanation, which should kind of gone through. Okay market for University education. Okay. No external costs, which means marginal social costs equals marginal private costs. We've got we've got an increase, so we know it's up. Positive externality. Okay, so that's guy. Have a look at these ones. Social. Let's not excits it's wrong. There's market failure quantity Q E. No, there's. Let me say we fare again is X Y Z not X Y V. The marginal external benefits marginal external external benefits remains constant at all quantities. Of course not. Yep, market failure at qe. And the reason this market failure is because at qe, because it's free free market, it doesn't take into account the positive externality. So the free market doesn't. Sort of work like that. Exactly right? Mark your triangle on. Always mark your triangle on to show you know where it is. Again, because you know, with these explanation ones, don't be afraid to draw on the draw on the correct answer. All right. No, that's not the right answer. The correct answer is this. Good, very good. You're getting much more comfortable with them on you. Yeah. Yeah. So the reason for b is the triangle of X, Y, Z is the wafare gain. Yes, because you're at this point. So that so that is the market failure. Yeah. The free market doesn't take into account the positive externality only by moving into the to why do you get that welfare gain? Yeah. So that's your market failure. The market failure is the market is not operating and it's most efficient. Is it because it's not taken in the free market side, it's not taken into account the positive externality. Travel and tourism industry package holiday market share of the six are just provided but by uk residents. Okay, let's just see what the question is. Christloof in for way we've we've looked at this before so I won't you liking that but she wasn't it. Yet too. Okay, examine the lighimpact of Thomas Cook's plan to reduce their airline emissions on to the socially optimum position. Use an appropriate externalities diagram in your answer. So the likely impact of Thomas Cook. Reduce their airline emissions to the socially optimum position. Reduce emission to social optimum position, use an. Actionality drew graph as a diagram being answered. So impact on the plan to reduce the airline emissions. Wait, extract b line six astrucct. 96. 没发。Reduce the air image environmental impin I C. These are the quotes I'd be trying to use. Government ate emissions. Efficient air. Aircraft. Okay, so what I would do with this question is start with the diagram. Okay? So you need to so this one maybe they will reduce camera emissions and that will reduce the pollution. So that is a positive actionality. So as you draw a diagram for this. You need to I don't think you could do a positive externality. I think all you could show is them reducing the social costs. I don't think it would ever be a positive externality. It's a negative externality. The social cost and the negative tionality. Sorry, why is it a negative externality? Yeah. It's about pollution. What is reducthe airline emission? But it still won't get it to the to no externality, will it? You basically let me show you on here hanger. So what we're saying is what I would draw if I was drawing this is let me find the right one. That's now okay, marginal private cost, it's still a negative externality. But what they're aiming to do. Is reduced the margin of social costs. By putting on all the things, they're trying to reduce the marginal social costs so that the negative externality, so the welfare loss you know from the flight goes from. That size. At this. Can you see? So it's still going to be a negative externality. They're just trying to make it less negative because airline travel and pollution, you know the fuel etc. Is always gonna to have a negative impact on you know a negative sort of externality. But what they're trying to do is reduce that welfare loss. To that point. Does that help? Does that make sense? Do you want to ever a go at drawing it or not, really? 嗯呀嗯。There we are. Let me check. Maybe that is not correct. Yeah. That's right. That's not the one. That's not the one. But you want Oh, you wanted to check what the other one I drew the original one. Come on. Why is question ten suddenly. I don't know. Okay. Okay. Yeah. Very nice, right? So what are we going? That's very good. That's the diagram. It's good. So tell me about they're going to reduce their airline emissions. How are you going to use. Where are they these quotes in talking about your diagram and the answering the question? So you've drawn the diagram. You now need to answer the question. Lower carbon fucan, reduce the active actionalities and reduce the way fare news. And make a new price and new equilibrium of price and quantity. Good use these quotes, though. Remember, it's about Thomas Cook. Talk about what quote must cook. Yeah remember that it's about Thomas Cook, the airline, because you've what you've answered so far is like a really generic general answer where you've thrown the correct diagram, but it could be about any externalities question and any company. And to get the high mark, you have to make it about this externalities question and this company, which is why you have to use the things from the case study. So you've explained it correctly. Everything's right. It's just getting those extra application Marks. So now use the case study, tell me about your diagram, tell me about like what's happened. But use especially the things I've underlined in Green. Yeah actually don't know how to answer it. Okay. So you would say so you would say something like Thomas Cook are trying to reduce the negative externality shown in my my diagram, which is mainly the environmental impact of travel. It's important because it accounts for 8% of all global carbon emissions, which has a large impact, especially with people continuing to use airlines. The I can't remember what you've labeled your diagram, but to move from you know one point to the other point to reduce this externality, you can point this or point that on the diagram, Thomas Cook have decided to use efficient aircraft and lower carbon fuel. This though, as shown in the diagram, does not reduce, does not completely remove the externality. It does go a long way to reducing it. It has been successful in the past of trying to reduce these externses as it was one of the most fuel efficient airlines can you see. You've just got to talk about it. It's hard to do when you can't see the diagram. You've draas well at the same time, but you've got to talk about it with using things like using the quoso. If we go back to the diagram here, so you would say. You would say it will never get to the free market equilibrium with Peqe. However, the using the more air efficient aircraft, etc, would you move it from equilibrium, P2Q2P2Q2 from P1Q1, which reduces the welfare loss? Hang. Which reduces the welfare loss from whatever you label that triangle to that triangle or the yellow triangle to the blue triangle. So you just explain the diagram, but make sure you put in the things in the case study and what's happening and how it's helped move it from this to that. Explain it. So when it reduces carbon emission that will let msc that will make msc to be msc one zon. There's P2 and there's there's a new price, new equilibrium of price and quantity, but it will never get no with after after it. I will say, and there will be the less welfare rules. But it will never get the free market equilibrium. Because external cost is ignoring in free market equilibrium. Yeah and by the nature of the sort of airline industry, there will always be some form of pollution unless there's a massive change in technology. No, unless there's you know in the future, there's some new technology that at this, you know the technology, I can get us some gestions. Yeah, maybe I can get us some suggestions. So Yeah, maybe maybe they can improve the technology and change some environmental protect environmental friendly fields and that the environmental films, this will lead to the. Lead to less negative actionalities. Yeah. Good, good, hard question. Well done. Okay. Question ten, the sorry of Yeah maybe Yeah in that question, I can make some suggestions for the future so can say I believe that or I can't say I believe something, saying I would say I wouldn't say I believe I would say I would put the airline the impact. Anything like that and the impact depends upon an important consideration would be. Something like this, I wouldn't put I think I would put something along these lines. So you know you said about the fuel, this assumes that there is no development of more fuel, you know, more carbon emission fuel with increases in technology. What you're saying or you could say this would change if. Change if Yeah something like that. I wouldn't say I think that I would avoid it personally. Some people do. I don't like it. I don't think it's very good sort of you're writing a bit more like a child when you say that. But you can put what you think, just don't put I think that does that make sense? So what you said about technology et ceter brilliant, but just don't start the sentence with I think that okay, okay, okay, Yeah p, it's just if you get in these good habits now, you won't do them in questions, just sted when it's out. I think, Yeah, Yeah. So put in what you think, just not put instead of I think this assumes that this depends upon it is worth considering. It is of note Yeah just don't use the word I think. Thomas Cook may wish to consider in that exact otic question, you know just not I think. Right on let's just see what the question is first cause you've got lots of stuff okay with six market okay with reference to extract a explain one likely private benefit to students and one likely external benefits of higher education extract a so you need one private benefit and one external benefit each one's worth three Marks okay. So you're gonna to need a benefit for each of them and man let me just go through this. Sorry. Yeah, let me check the questions. One of any private benefit for students at one likely external benefit for the higher education. And that is six months. So you wi would I would split this question if I was doing this question and I was writing it, I would split it. I would make it a three and a three really obviously, because people tend to merge them into one. Talk about the private benefit. Talk about it, give a quote and then give a little more explanation. And then the external benefit, talk about it, give a quote a little bit more explanation, really keep them separate. Graduates will contribute significantly in the economy, in addition, will benefit greatly from additional tax revenues. So Yeah, the private cost is the media University graduate income was 10000 pound more than the average no graduated income in 2018. So Yeah, that is answer in question one. So firstly, the private the private income. The private sorry, the private benefit is is the more income for the University graduate for the student the graduate and that will 10000 more than average more average non graduate income. So that will let them so that will let. Wait, this is this is a micro or micro doesn't matter. Hasn't said either. I would say for the individual student it would be more micro because it's about the person, but the other part of it is macro. Yeah. So. Okay. So for individual. Graduate will spend more or save more. And that will increase the demand for the for the goods. Which crosses over into macro, doesn't it yet? Wait, so so so if so, can say, Yeah, like I said, if there is more for individual credits can spend more, and then the demand of the demand of some goods, demand of goods will increase. Okay. And for general and in general, and for the whole part, the consumption will increase and aggregate demand will increase. Very good. And whenever you write aggregate demand, make sure you put your little formula. Okay, Yeah. Okay. Yeah, the formula. Yeah. Maybe I can. Maybe maybe I need to write dancing formula always. I would just get in the habit. Now, every time you say aggregate demand, just put it in brackets if nothing else, if it doesn't flow in the question, just put it in brackets because it shows knowledge and it takes you, what, 3s? Put it down. Okay, Yeah because you're good at that and you don't need to think about it. The formula. So the government in addition, the government will benefit greatly for additional tax revenues because as I mentioned, the consumption will the increasing consumption will also increase the aggregate demand. So that will increase the tax revenues for the of the government. Over. So is that worth six Marks? Yeah, Yeah, Yeah, Yeah. It's not difficult. It's not a difficult that's not a difficult question. You've done well and you've got the quosin. Yeah. Porwater. With rereference to the concept of external costs, discuss the possible economic effects of an increase in the production of an economic effects of an increase in the production and consumption of bottled water. So external cost, you already know you're going to draw an externalities diagram. Yeah the external the concept of external costs, external. No cost to minus two cost to minus appropriate it cost Yeah. Whenis the difference between private costs and social costs, that is external costs and the positive and economic effects in an increase in production consumption of bottled water. Oh my God, 14Marks. Okay. Increasing the production and what consumption? Yeah, it's going to be linked to this, isn't it? Environmental damage for from boof water. Three litof water are used directly for indirectly in the country of one litof. Water. See that. Either keeps cutting out. Miles transported hundreds of miles from its origin to shops. And against contrast, type water only takes a little energy to bmp. Production and that so the impact on production and consumption. Three liters of water are used directly or indirectly in the production of one liter of Bowater. Is that a waste? Water waste? So instead of you just drinking three liters of water, for every one liter of botbottled water they make, they use three liters of water. Well, that seems like a big waste. Two thirds of it is wasted. Yeah so that is wasted water sizing Yeah the waste of water maybe that is one point. And the landfill and the majority of waters are made of plastic and and end up in landfill sites resembling recycled. So they are landfill. That there is a pollution for its landfill, not be without recycle, recycling maybe. And the plastic waste never reach the recycling plants, but end up in the oceans and can fish birds who mistake it for food. So that is a negative, and that will increase the external cost. Very good. And you could draw a of plastic to take on pose. So what's miscompose? Decompose, disappear. You know, when you like put something in the ground like leaves, they dissolve, they disintegrate and go back into the ground. So turn into nothing but plastic. Takes the long time. To decompose Yeah, maybe decompose. So it's too long to recycle it and is often transport hundreds of miles. Transport hundreds of miles with original to shops and consumers. And tap water only takes tatap water alone, takes a little energy to bmp alone. So it is a high, it is a higher cost for bottled water than tap water. The tap water is is easier to transport. Exactly right. Yeah with this one. Yeah bottled water is also expensive. Pay anything to up to one, 10000 times more than you just drink tap water. So that is a cost. But is that maybe a private cost, very good, or this not a social cost, very good? So anyway, in so anyway, in general, it come from proffile to time for government increasing their indirect teon Yeah anyway, in general, the yugovernment should increase the indirect tax on bottled water and encourage people to use tap water. Moreover, maybe, maybe some, maybe all the factories should think about whether they should whether they should change the materials materials of bottled water and change it into some environmental friendly materials and more quickly maybe, and more recycling. And you could draw that same diagram. You know, that diagram you Yeah, if you drew that, Yeah, the same one you know, where you did the three lines. You could say, theynever get it to ziyou know to the equilibrium, but they could reduce the welfare loss. So you know, that same one you drew with the three lines? That would be the one you draw again? Yeah, Yeah, good. Okay. Any questions? Oh, no, no. All right, then right. Have a good rest of the day. A good New Year's eve. Bye.