AQA Economics 18th May 2012 Unit 1 Exam

Hey i am also doing both,

could someone provide help with the 25 mark question please

also anyone got any revision tips for this

i am self teaching myself this btw

Hello - I'm no expert at 25 markers myself, but hopefully these pointers will help

For the 25 marker, try and define key-terms related to the question and then develop your analysis accordingly. Do a diagram (or two, preferably) for this part of the exam, you can earn up to six marks for the diagrams and two for the definitions, if correct.

Always remember to refer to your diagram when you write, like say, "In my diagram, as can be seen, Aggregate Demand shifts from AD1 to AD2 ... " so that the examiner knows you understand the theoretical concepts too.

Most importantly, evaluate your answer and make a decision with a conclusion - do you or do you not agree with whatever is suggested in the question? Justify it.

Hoping this helps,
Good luck

I have heard that when concluding you should not use words such as "To conclude" or "I beleive" etc . What words would you deem appropriate to use? Thanks!

Hey there guys! I'm also doing both units in may

Pointers for 25 markers

Unit 1: There are two main types of questions that come up:
1. "Evaluate the different policies that the government can use to *insert action here* -" Firstly, define any key words you need to, set the scene, talk about market failure. Then, talk about all of the RELEVANT different policies. This could include subsidies, taxes, min prices, max prices, buffer stocks, regulation etc. Don't take too long on this as this is still just ANALYSIS. To get the top marks, you must EVALUATE, and that should be ongoing. So, once you explain a policy, discuss how effective it would be in leading to a better allocation of resources. So why may subsidies not be effective? - well, if the supply was very inelastic. Why may buffer stocks not be a good idea? - well, because buffer stock agencies may dry up after a few years etc. For a max price ceiling - the emergence of black markets. At the end, come to a well-rounded judgement. Make sure you are drawing graphs all of the time, and explaining.

2. The other type could be a simple "Market forces vs government intervention" essay. So, intro - set the scene, define key terms, recognise the type of good it is (merit, public, demerit etc). Then:

Market forces - for: signalling, incentive and rationing functions of price can lead to an efficient allocation of resources. Market forces may lead to productive efficiency (remember to define terms). Government intervention could lead to govt failure (and expand on that). With government intervention, there is an opportunity cost.

Govt intervention - for: Use graphs to show how subsidies/taxes could be used to correct market failure - MSC/MSB. Market forces doesnt take into account ext costs and benefits, and so can lead to market failure. Talk about different govt policies (as above).

Then, come to a conclusion saying which you think is more effective - there is no right answer, but just make sure you have reasons to back up your choice. So, for example, market forces are more effective, as govt intervention can lead to govt failure and an even further misallocation of resources.

And sorry, I havent really started revising unit 2, so I wouldnt be of much help there

Oh, and one question: in microeconomics, is it necessary to talk about the price adjustment process?

Great tips! And I don't deem discussion on the price adjustment process necessary unless you find it extremely relevant to the question - btw, would you have any quick tips for MCQs? I usually get stuck when there are two equally likely options and you don't know which one to choose... When you read the solutions or think it over it makes sense, but doesn't really strike you at the spur of the moment! Any help will be appreciated! Thanks

Thanks, and oh i looked in past mark schemees and you can get marks for it in the third part of the data response, so im gonna learn it anyway hehe

For MSQs, what I do is after I read the question, I try to already have an answer in my mind, without even looking at the choices. Then I go through each choice, and just choose the one which is most similar to what I had in my mind - this only works for the easier questions, mind you. For the slightly more trickier questions, remember that three of the choices are detractors (is that spelt right?) so go through each choice and cross off the ones it definitely cant be, which I'm sure you do. When it gets down to only two choices, do the 'reverse' test, in that ask yourself, would the scenario really make sense if that was the answer.

But seriously, the best piece of advice I can give you is to just do ALL OF THE PAST PAPERS! Questions start to exactly repeat themseves after three years, so its worth doing all of the papers from 2003 onwards. As you do each paper, you'll get better at answering the questions, and you'll get quicker too - trust me.

Oh, and can someone please explain buffer stocks to me, with the graph? For some reason, it's not making any sense to me

In agricultural goods, prices tend to fluctuate more due to conditions such as weather. But such variations are not good:
-lowers consumer confidence
-lowers farmers standards of living in high supply
-leads to wastage in high supply
-prevents investment due to lack of confidence
-makes country dependent on imports at times.

This is the best graph to use for buffer stock schemes.

The Supply curves are vertical as fixed in the short run (crops take time to grow).
S1 represents a good harvest (due to favorable weather conditions etc) and the high supply has forced market price down to below the min price and outside the ideal zone between max and min.
S2 represents a poor harvest (bad weather cond etc) and the low supply pushes market price up so it is above the max price and outside the ideal zone.

The government intervenes by artifically stimulating demand by buying up extra stocks - the D curve shifts out (the dashed D curve on the graph) which pushes the market price up to within the ideal zone.
And when there is a poor harvest the government will release stocks onto the market that have been held in storage to increase supply - S2 shifts out to the right (the dashed S curve) which lowers the market price to the acceptable zone.

In theory this should work. But perishable goods can expire before opportunity to release them on the market arises (wastage). High transport, administration and storage costs.

Hope that helps

Thanks, a lot of that makes sense..but one thing. When there has been a good harvest, the government intervenes by buying stock. I thought that that would shift supply to the left, not demand to the right? Or could either happen, as they both have the same effect of pushing up prices?

Thanks, a lot of that makes sense..but one thing. When there has been a good harvest, the government intervenes by buying stock. I thought that that would shift supply to the left, not demand to the right? Or could either happen, as they both have the same effect of pushing up prices?

Ooh one more thing - the graphs for positive externalities and merit goods are the same right? (In both, MSB > MSC and so when left to the free market, it is underprovided)

And similarly, the graphs for negative externalities and demerit goods are the same (MSC > MSB, so the good is overprovided).

Please someone verify that?