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For RI Year 6 in preparation for A levels. Not for sale/profits.

17/11/2012 20:37:19

Economics structure, skills framework, mark allocation (just a guide) for essays
PLAN content, STRUCTURE content and apply SKILLS
Plan, plan, plan
Red the entire question
Pick out the key words as they give you an indication of the topic and the econs framework to
Read the command word for the skills to illustrate
Look at the mark allocation for how much to write
Read the entire question to know what the question is really asking. Do not provide a rehearsed
answer without repackaging it to suit the question
Use examples from the preamble to illustrate your points; set your analysis/evaluation in the
context given, highlighting how unique and broad characteristics of different countries or
situations can affect economic outcomes
Structure your points well; one well-elaborated point per paragraph for instance, impact on one
goal per paragraph; impact on one specific market per paragraph
Well-balanced answer
Scope of coverage perspectives, variety of distinctly different factors
TAS/Argument vs counter-argument/flip-side
Linkages back to the focus of the question
Command word: Distinguish/Compare , Explain, Discuss, Evaluate
Use the appropriate signposts like similarly, however, to evaluate, In
Mark allocation
Organisation and classification
What (identify)
Why (reasons)
How (process; cause-effect relationship)
Who (perspectives/parties involved)
When (time frame short run vs long run); Where (location)
Breakdown into parts
Use economic concepts, theories and diagrams where useful to do so
From context or preamble (if there is)
Own knowledge
TAS &/or Value-adds to TAS
State/Clarify assumptions of theory, context, situation, time frame
Relax/question assumptions and predict different outcomes
Make a stand/judgement and explain your stand
Useful phrase: It all depends on
MICRO concepts, principles, definitions, diagram and its application: E.gs
Basic assumption of economic theories rational economic agents in pursuit of self-interest
Illustrate scarcity, choice, opp cost
Illustrate econ growth actual and potential growth
Unemployment of resources vs full employment
1. Market failure arising from structural unemployment which
includes immobility of factors of production like structural
unemployment and frictional unemployment (due to imperfect
PE & AE (macro perspective)
Demand-supply diagram
Price and output determination in a SPECIFIC good or service market
i. Automatic price adjustment process
Analyse impact on the market
i. Eqm P, Q, TR, CS, PS
Market failure arising from imperfect information
Application to non-goods markets
i. Explain how exchange rates are determined
ii. Explain how interest rates are determined
iii. Explain how equilibrium wage rate (price of labour) is determined

For RI Year 6 in preparation for A levels. Not for sale/profits. 17/11/2012 20:37:19

Elasticity of demand and supply
Refinement of analysis to impact on a market using the dd-ss diagram:
ii. E.g. PED & PES: Incidence of indirect taxes, subsidies
Usefulness of elasticity concepts to a firm
i. PED: Reduce or increase price to increase TR depends on PED
ii. YED: If money income changes, apply YED, ceteris paribus
1. Sign of YED
- positive for normal goods and negative for inferior
- Normal goods: Necessities 0<YED<1; Luxuries
2. Value of YED will enable firm to estimate by how much to
increase or reduce production and sales for a given increase or
reduction in money income, ceteris paribus
iii. CED: If price of substitutes or complements increase, apply CED,
ceteris paribus
1. Sign of CED
- Substitutes have positive CED
- Complements have negative CED
2. Value of CED will enable firm to estimate by how much to
change production and sales for a given change in price of a
substitute or complement
iv. Limitations of elasticity of demand concepts to the firm
Cost of production diagram
Short run cost curves: SRATC=AVC+AFC; SRMC
LRAC and LRMC; MES, IEOS, IDOS (expansion of the size of a firm)
EEOS, EDOS (expansion of an industry)
Firms level of analysis
Illustrate SR and LR profits of firms in the different market structures
i. LR profits depends on whether barriers to entry/exit are high or low or
Analyse changes to profits of a firm in different market structures;
Analyse price and output determination of a firm in different market structures
i. Only PC firm is a price taker (why?) and is only able to make LR normal
profits because of no BTE (eqm price is determined by the PC industry)
ii. MPC firm is a price setter (why?) and able to make only LR normal
profits because of low BTE
iii. Oligopoly and monopoly are price setters (why?) and are able to make
LR supernormal profits because of high BTE
Assess whether PE and AE is achieved in the different market structures
Market failure: Failure of the free market/price mechanism to achieve efficient allocation of
resources (which includes AE and PE) and other social goals like equity
i. MSB/MSC framework
Merit goods/Demerit goods:
i. Personal well-being argument due to imperfect information (Dd/Ss)
ii. Externalities due to pursuit of self-interest (MSB/MSC)
Public goods
i. Non-rivalry, non-excludability, free rider problem
Imperfect market structures
Imperfect information
Immobility of factors of production
i. Occupational and geographical immobility of fop (structural
ii. Frictional unemployment
Efficiency (AE and PE) and equity

For RI Year 6 in preparation for A levels. Not for sale/profits. 17/11/2012 20:37:19

AD/AS diagram
Explore effects on GPL (inflation) and real NY (economic growth actual and
potential growth) arising from
i. Shifts in AD curve due to changes in C, I, G, X, M
ii. Shifts in AS curve due to changes in
1. Cost of production upward or downward shift of AS curve
2. Quality and quantity of factors of production and technology
outward shift of AS curve and/or downward or upward shift of
AS curve
Analyse changes in GPL (if increases in GPL is persistent inflation)
Analyse changes in real national income
Keynesian multiplier to illustrate full multiplier effects must shift AD curve
along the horizontal part of the AS curve (For the full K process to be achieved,
GPL must be held constant)
i. When the AD curve shifts along the upward sloping or vertical part of
the AS curve, GPL increases and this causes the multiplier process to
be dampened
Keynesian cross diagram and diagrammatic stepped illustration of the multiplier process
Only if the focus of the question is just on extent of change in national income
for a given increase in autonomous spending (autonomous C, I G, X and
autonomous M)
Use the intuitive explanation of the multiplier process if the questions focus is
on 2 or more goals of the economy with impact on national income being one of
the goals; AD/AS diagram to illustrate the changes in GPL and changes in real
national income (full K effect if AD curve shifts along the horizontal part of AS
curve but dampened K effect if AD curve shifts along upward sloping or vertical
part of AS curve)
Impact on the economy
Refers to impact on the 4 macro goals and 2 micro goals
i. Internal stability
1. Economic growth (actual and potential growth),
2. Inflation (demand-pull and cost-push inflation; anticipated and
unanticipated; stable and unstable; high vs low)
3. Unemployment (demand-deficient, real wage, structural,
frictional and seasonal unemployment)
ii. External stability LR balance of payments equilibrium (current and
financial/capital account) and stable exchange rates
iii. Efficient allocation of resources: (Allocative efficiency AND Productive
Efficiency. Note in order for AE to be achieved, PE must be achieved)
iv. Equity
Explain the goals of the economy
Refers to the desirable effects arising from achieving the goals and the
undesirable effects if the goals are not achieved
Theory of comparative advantage
Numerical illustration required if the question is focusing on gains from
specialisation and trade or if the question specifically asks u to explain the
theory of CA
i. Engine behind international trade (and globalisation)
Tariff diagram
Welfare gains from removing tariffs on imports vs deadweight losses from
imposing tariffs on imports
Tariff revenue
Marshall-Lerner condition (for basics) and J-curve effect (for evaluation)
Explore impact of changes in exchange rate on balance of trade as a
component of balance of payments
OK to apply MLC to explore impact of changes in ER on AD in terms of X and M
as components of AD
Interest rate determination: out of the syllabus
Loanable funds theory
i. Interest rate is determined by demand and supply of loans
Liquidity preference theory
i. Interest rate determination via money dd and money ss (out of the
Crowding out effects
Financial crowding out, physical crowding out
For RI Year 6 in preparation for A levels. Not for sale/profits. 17/11/2012 20:37:19

Marginal efficiency of investment theory
Inverse relationship between interest rates and investment
Shifts in vs movement along MEI function
Interest elasticity of MEI curve
Standard of living material and non-material SOL
Theory of comparative advantage as the engine of globalisation
Includes 3 aspects (importance in the following order)
i. Trade in goods and services exports and imports
1. Lowering of trade barriers on imports tariff diagram
2. Lowering of trade barriers by other countries on domestic
countrys exports E.g. Impact of exports on economic growth -
AD/AS diagram; IEOS
ii. Foreign direct investment inward and outward investment
iii. Labour flows between countries
Impact of 4 macro goals and 2 micro goals

o Define key terms and clarify ambiguity and assumptions or direction of essay
Body: Depending on the command word
o Explain and provide a balanced scope of coverage (e.g. a variety of distinctly different factors) and/or
o Thesis-Antithesis-Synthesis (arguments-flipside structure)
o Evaluation of individual ideas
o Synthesis /Holistic evaluation; address the question directly first (make a stand on the issue and explain
why you arrive at that stand)
o Anything interesting, intelligent and insightful (3Is)

Command Word Mark/Time Allocation Points
Plan 3 minutes
Explain 10 marks
(about 15-17 mins)
Introduction: Clarify ambiguity; state direction
3 distinctly different points/broad categories
Within each category, can provide 2 sub-points
if appropriate
Conclusion: Make a stand and explain why
(Each point must be well-elaborated)
Discuss/To what
(about 20-25 mins)
Introduction: Clarify ambiguity; state direction
Body: TAS structure/evaluation
2-3 distinctly different points(depends on marks
and time)
2-3 distinctly different points (depends on marks
and time)
Conclusion: Make a stand and explain why; 3Is
(Each point must be well-elaborated; must go beyond
one or two sentences)
Discuss/To what
25 marks
(45 mins)
Introduction: Clarify ambiguity; state direction
Body: TAS structure/evaluation
4-5 distinctly different points
4-5 distinctly different points
Conclusion: Make a stand and explain why; 3 Is
(Each point must be well-elaborated; must go beyond
one or two sentences.)