Wednesday, May 16, 2018

Forecast Essay Questions for Section B of 9708/22 (A-Level Economics) (CAIE) (CIE) (more updates on Monday night!)

Highly anticipated essay questions for 9708/22 this coming Friday (25th May):

1. How a production possibility curve can be used to illustrate economic ideas like opportunity cost, rising opportunity cost (these two are different and the latter is becoming more popular in the recent), unemployment, economic growth and unattainable position
2. Whether market economy or planned economy is more desirable/ likely to improve consumer well-being/ better in making decisions/ better in allocating resources
3.  Functions of money and whether money is able to perform all the four functions in an economy that is experiencing high rate of inflation
4. What is meant by equilibrium price and quantity and how a change in demand/ supply would alter both equilibriums

5. The right type of elasticity to determine whether two goods are substitutes or complements/ normal goods or inferior goods

6. Whether PED/ XED/ YED would be useful for firms and governments (I won't do these essays if I were you!)

7. Whether the problem of demerit goods can be dealt with an indirect tax and banning/ better information/ minimum price

8. Whether the problem of merit goods can be dealt with subsidies and maximum price

9. Whether the imposition of maximum price would be able to help low income families 

10. Using AD/ AS diagrams, explain how a fall in exchange rate/ depreciation can cause both demand-pull and cost-push inflation

11. Inter-relationships between the inflation rate, exchange rate and balance of payments

12. Whether floating or fixed exchange rate system is more desirable

13. Terms of trade and whether a fall/ increase in terms of trade is beneficial to an economy

14. Comparative advantage and how an economy can consume outside its own PPC. Illustrate with trading possibility curve

15. Fiscal/ monetary/ supply-side policies to achieve macroeconomic objectives like higher growth, lower unemployment and lower inflation

16. Expenditure-dampening vs. expenditure-switching policies in reducing current account deficit

More updates tomorrow on techniques! Stay tune!

Suggested Solutions for 25 marks Efficiency-Related Essays (9708/42) (CIE) (CAIE)

October/ November 2011 (V1)
Question 2
The removal of imperfections in the market leads to an increase in efficiency in the allocation of resources. Discuss whether you agree with this view (25m)

P1 - define and explain social efficiency, productive efficiency and allocative efficiency (both are subset of social efficiency) (3 diagrams)

P2 - define and explain market failure 

P3 - demerit good and its relationship with negative production and consumption externalities (2 diagrams) 

P4 - merit good and its relationship with positive production and consumption externalities (2 diagrams)

P5 - monopoly and why it is a market failure (1 diagram)

P6 - using indirect tax to deal with demerit goods (1 diagram) and evaluation e.g. difficulty to estimate negative externalities accurately and also prevalence of black market

P7 - using subsidies/ direct provision of merit goods and evaluation e.g. very costly where taxes may have to be increased

P8 - deregulation to promote competition in an industry/ competition authority may break down a monopoly e.g. how British Airport Authority was forced to sell Gatwick and Stansted Airport in the UK and evaluations e.g. unable to enjoy EOS so becomes productively inefficient and also fall in profits means unable to invest in new products and so allocatively inefficient

P9 - government interventions may not completely improve resource allocation but better than without any

May/ June 2013 (V1)
Question 2
It is important that an economy makes the most efficient use of its resources. This can only be done if firms are allowed to increase in size. Government regulation of firms should, therefore, be minimised

Discuss whether you agree with this statement (25m)

P1 - define and explain social, productive and allocative efficiency (worth noting that the other two are subset of social efficiency) (3 diagrams)

P2 - big firms may enjoy EOS and hence become productively efficient 

P3 - evaluate e.g. may experience DEOS and so the opposite may happen too

P3 - big firms have higher profits which can be reinvested and this may lead to breakthrough discoveries and so become allocatively efficient

P4 - no worthwhile competition and so may not have the incentive to invest

P5 - reason for the existence of mixed economy. Government needs to intervene to improve resource allocation

P6 - Government may deregulate the industry to introduce more competition. Prices will fall and so firms have to become productively efficient

P7 - May no longer enjoy EOS and so becomes productively inefficient

P8 - Competition will automatically force firms to invest in products. Give back values to consumers. Allocatively efficient

P9 - However, extreme competition may reduce profits and hence inability to invest. Becomes allocatively inefficient instead

P10 - Neither government nor private sector on its own can ensure efficiency. Thought that both may complement one another

Tuesday, May 15, 2018

Popular Questions for Section A of 9708/42 (A-Level Economics) (CIE) (CAIE)

1. Dear all, this will be my final posting (although I may have some last minute updates tonight) before the exam tomorrow

2. Here are some of the most popular questions that had been tested:
a) GDP related
(i) GDP
(ii) GDP per capita
(iii) real GDP growth rate
(iv) economic growth
(v) recession
(vi) GDP at factor cost
(vii) GDP at market price

b) lately on difference between macroeconomic policies e.g. distinguish between fiscal and monetary policy, monetary policy and supply-side policy, fiscal policy and quantitative easing etc

c) two macroeconomic policies and whether they will conflict with any two other macroeconomic objectives. Usually students will be asked to make reference from the article. Always the last question and is an 8-marker

d) whether a particular behaviour mentioned in the article indicates that the consumers are trying to maximise their utility. Watch out for budget lines too!. The question may ask you to draw a budget line to reflect changes in price or income. Refer to the following series:
(i) W09 (Variant 2)
(ii) S10 (Variant 2)
(iii) W10 (Variant 3)
(iv) W11 (Variant 1)
(v) W11 (Variant 3)

e) Whether a large firm is beneficial/ against a public interest

f) Benefits/ costs of integration, usually horizontal

g) Lately on distinguishing between fixed costs and variable costs with reference to information e.g. wages of contract workers and salaries of managers

3) Some recent Q&As by my students:
a) To do a (12m + 13m) essay or a stand-alone 25m essay?
Well, to be honest, I don't have a definite answer for that. It actually depends on plenty of factors e.g. how well-prepared are you and how difficult are those questions. However, I do set some guidelines for myself if I were to attempt those questions. It will be topic-based. If it is related to 'efficiency, market failures/ imperfections and government interventions to improve resource allocation (25m)', then I would have strong case to attempt those sort of questions. I would also attempt if it is about 'how wages are being determined in an ideal competitive market/ theory of wage rate and whether they are applicable in a real life labour market condition (25m)'. Essays like 'whether GDP is useful to compare standards of living between countries (25m)' are also pleasant to write. However, be mindful that it is also this sort of question that is extremely manipulative. They may give you an artificial impression that you could write and score but there are also chances that whatever you have written may not perfectly fit in the frame that they want

Essays on 'macroeconomic policies to achieve certain aims' as well as 'macroeconomic conflicts' are also nice to attempt. Areas that I would usually avoid are such as cardinal/ ordinal utility/ indifference curve. The questions are usually very abstract

2) How many diagrams can I use?
Again, it depends on how you charter the path of your essay. In a long 25m question, I may use as many as 7 - 9 diagrams. There is nothing unusual about that. Mathematics i all about formulas but Economics is all about diagrams!

3) How long should I spend for every Section?
Not more than 50 minutes for Section A, not more than 50 minutes for both essays

4) Is it even possible to finish the essay under time constraint? 
While many students may struggle there are quite some that can finish within the time provision. Most importantly, write concisely, use words with weight/ explanatory power, avoid writing evaluations and conclusions unnecessarily and do not overwrite certain paragraphs when you realise that it has been more than sufficient. Quantity does not translate to quality

5) If I write very well for my analysis, would that cover my evaluation marks assuming that I can't think of anything to write for evaluations?
Unfortunately, that is not how it works. Your essays have to be balanced in every aspect e.g. analysis, evaluations and conclusion. Excelling in one area will not give you extra credit to cover up your weakness in another section

6) What to do if I can't finish the last question of Section A?
Simple, list out the points IN A PROPER SENTENCE. You may get a probably 3/8 marks and that's better than nothing. Salvage anything you can

7) Do I have to make reference to the article if the question says so?
Yes, you must. Failure to do so may cause your writings to not gain full credit. Well, think about it. If we can just write anything without making reference, then obviously the article serves no purpose isn't it? :)

8) What should I do before the exam tomorrow? Should I practice more?
Well, yes but not as in writing out the whole essay. I think it is better for you to practice on how to structure the entire essay. Practising on drawing few diagrams would help too

9) Should I just focus on macro?
No you shouldn't. Let's not forget that there isn't any option for you in Section A. It may be entirely based on micro (I hope not!)

10) How frequent should I paragraph?
I think it would be extremely good to paragraph for every analysis or evaluation. Let's make our work presentable and earn impression-credit from the examiner. Yes, there is such thing. That explains why two students may gain Level 4 marks but one is higher than the other. Paragraphing is extremely important because it also helps the examiner to spot and distinguish between your first, second and third points (so forth). It is worth noting that some points especially in macroeconomics that are so closely related. If you were to put them in the same paragraph, you meant them to be two different points. However, may be because of the way you write them, the examiners would end up thinking that these two are actually one with the second one being an in-depth analysis of the first. So you actually lose marks here. Problems may have been avoided if you put them in separated paragraphs. At least when we see it, we are automatically triggered to think that these two are different ideas. As you can see, it's not just about practice. How you deliver them matters too! Always put ourselves in their shoes