Indifference curve analysis income and substitution effects 

Brilliant!!!! I’m really happy for you. You should be proud of this. How did you study for the exam?

I read the textbook word by word. And watch all the AS videos on ur channel. I also read some good and bad candidate responses from ECR (Examiner candidate response). It was also important to watch the essay examples you have put up in ur channel. They were extremely helpful. It is good to collect different ideas from different essay as every student's thought process vary. Students really have to have their own way of categorizing the topics in their brain that may come up especially in Section A of paper 2 such as "Exchange rate", "trade", "policies to correct....", etc. For MCQ, I finished all the past year papers, from 2002 to 2018. It only has 30questions not too much. You would see many repeated questions. My paper had at least 3 repeated questions and I just circled without looking at it LOL. There are some things student have to keep in mind which I think can be great help to you. Many student think that a shift in for example, the supply curve would mean that the resulting change would be the length along the demand curve. THIS IS WRONG! It is the straight distance between the two supply curves (y-axis) Another major MAJOR mistake students make is that they Consider elasticity to be gradient. Many would argue that they can cancel x100% out which is not true. They have to remember that they divided by the orginial amount which is still percentage change just that it is in decimal form. One thing I had to remember is that every straight supply curve that passes through the origin has elasticity of 1. It may be hard for those who believe elasticity is gradient to believe this. Give them any linear equation that passes through origin and tell them to calculate elasticity themself. One example is y= 2x. Try another if necessary. From my experience honestly, I am most worried about exchange rate in Section A of paper 2. I was literally praying that it wouldn't come out. Because if it did, it will never be easy. I suggest students to look into different past year papers for exchange rate in Section A. Look into 2015 and 2016 for P2. As for P1 u just have to keep doing the papers, there's no other way. Students have to get used to the tricks. All the papers have repeated questions.

@@EnhanceTuition For the ECR, it is important for students to not overlook the power of the essays even those that have gotten very low marks like 2/12. There was one essay which I myself gave a score of 10/12 after reading it. It was like my style of writing but much better. It turned out to be 5/12 only. It is important for students to read the bad ones also. Examiner comments will help to explain.

Great advice. I’ll have to summarize it into a new video. Is there anything else I should add?

One more thing is that students shouldn't worry about allocating time in P2. They only need to remember to finish section A as fast as they can and move to section B. This way of motivating students would be better in increasing their speed. On the day before the exam I was wondering what if I just skim through the passage and answer the questions. I tried once and it was fabulous. I had so much time for section B. Believe it or not, I finished my section A in 5mins questions A B C D E and some parts. Can u imagine the amount of time I had for Section B. I wrote 2 pages for first question and 2.5pages for second question. I would also like to tell u about some things that I always get tricked. It is also the most common ways to get trick. 1. Government set maximum price above equilibrium. How to establish equilibrium again? Obviously u don't do anything as its max price and above equilibrium not below. Throughout all the MCQ questions I have done I can tell u I saw this type of questions at least 7times already LOL. 2. Another one is government subsidising for a good. What will be the resulting shifts of the curves. I HATE IT WHEN I GET TRICKED BY THIS. I would always shift supply curve to right. But one should not forget to shift the demand curve to right as well due to government spending. 3. Another one I had trouble with was the CPI, terms of trade and any other things that have values relative to base year. I always wondered if the values is compared to the one before it or compared to the value in the base year.

Great question. The mark scheme offers some guidance, but leaves a lot left to be explained: "Explanation of indifference curves, description of normal good, (positivesubstitution, positive income) inferior, (negative income does not outweigh positive substitution for price fall) Link to demand curve, showing possible different slope of curve and different price elasticity." In the next video I'll address inferior goods directly and how a change in price triggers income and substitution effects. In this video from G Conomics, he explains how a change in price of a good can help you determine a demand curve from a consumer's budget line and indifference curve: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-SKhwLyjV3iY.html. Using that analysis, determine how a price fall would create different demand curves for normal and inferior goods. In so far as a price fall results in a greater quantity consumed of normal goods and a less responsive change in quantity demanded for inferior goods. That's the best explanation I can come up with immediately, but let me know if it's not clear and feel free to challenge it.

@@EnhanceTuition How about using price consumption curve?

To eliminate the income effect

With an increase in price: “The good becomes more expensive that alternatives. This is the substitution effect and it assumes the same level of income. It measures how much a high price on a good causes the consumer to switch to substitutes.” So basically, we hv to eliminate the income effect, otherwise, once 1 person gets higher income, he(she) is able to buy the expensive one without switching to another good.

Hi Ram, try to flip through these slides and see if it makes more sense: www.slideshare.net/mobile/tutor2u/indifference-curves-income-and-substitution-effects-for-a-normal-good

Tell me about it, I used to struggle with this when I started teaching it. I can imagine what’s it’s like as a student seeing it for the first time

@@EnhanceTuition it's okay, i understand it already. Btw, are u doing A2 unit 3? Cuz I finished all of unit 1 and 2 yesterday Hahaha. I love ur vids so much

Trying to get through unit 2 - definitely before your exams. I need to finish up market structures and the objectives of firms.

@@EnhanceTuition Ok thanks 👌