Sunday, January 9, 2011

Possible Questions For Edexcel Economics Unit 1: Competitive Markets-How They Work and Why They Fail? (Data Response, Section B)

Examination tips (highly possible questions) :

Commodities
(1) Demand and supply diagram to show changes in price. However, it is more likely an increase than decrease. Normally is the first question and as such no evaluation is needed. Sometimes the marking schemes indicate that students must give ALL the points for DD or SS while some other time either one point will do. In such circumstance, my advice is to give ALL since we do not know exactly what to expect from the marking scheme. 100% to appear in examination and will usually carry 6m-8m. Marks can be used as a guide as whether both DD and SS will move or either one. 6m likely one curve to move while 8m both

(2) Price elasticity of demand for the commodity. First thing to do is define. Then explain that it is inelastic due to its nature being a necessity. May need to refer to extract and figure. Evaluation is expected. Normally carries 6m-8m

(3) Cross elasticity of demand. Is possible to be tested if the extract mentions together diamond and gold, aluminium and tin etc. Most likely to be substitute than complementary. Must mention that they have positive XED and are substitutes. Explain the relationship say a rise in price of gold leads to rise in demand for diamond by jewellers. Candidates may be asked to make reference. Evaluation is expected

(4) Price elasticity of supply. Providing definition is the first action to be taken. Then, explain that it is inelastic in supply in the short run and elastic in the long run. Commodities, houses and agricultural products have this sort of nature. In evaluation, candidates can argue that this nature may not be true. For instance, better technology can expedite growth of crop or improve chances of oil discovery. As such short run it may not be inelastic. The same goes for long run. While the crops are ready to be harvested and supplied to the market, hurricane or some natural disaster may take place. As such it will be inelastic in supply even though in long run. Likely to carry 8m-10m

(5) Buffer stock. Explain what is meant by buffer stock. Draw a diagram and provide explanation how it works. This question normally carries 12m where 6m are catered for evaluation. Typical evaluation can be used, for instance expensive to set up, costly to maintain due to storage, administration and logistic etc, likely to fail based on experience with other form of commodities, may not have enough stocks to release into the market during shortage etc

(6) Minimum guaranteed price. Provide definition for this, then draw the diagram with a horizontal line above the equilibrium price. Explain the purpose of the scheme and how it is related to the question. Normally we provide supportive argument. In evaluation, I recommend contradiction as one of the possible techniques. Candidates may say it increase complacency, fall in quality of crops, opportunity cost of government spending, damage the livelihood of farmers in other poor developing countries due to dumping etc. Likely to carry 10m-12m

(7) Calculation. Students are expected to perform simple calculation involving percentage. For instance, percentage of change in price or income or quantity demanded etc. Likely to carry 2m

(8) Possible economic effects. It may carry 10m-12m. Questions may sound like ‘what are the economic effects of rising oil prices/ increase in production costs/ increase in congestion charge’ etc. 6m of evaluation is expected

Market failure

(1) Definition of PC and EC or PB and EB. May carry up to 4m for both definitions

(2) Examples of PC and EC or PB and EB. Candidates may be asked to show relevant examples which may have been provided in the extract. In some situation, candidates will have to think one of their own. For instance, private costs of consuming more oil may include rise in production costs and external costs are like air pollution, noise pollution, respiratory illnesses, fall in value of property facing main road etc. May carry up to 4m

(3) Cost-benefit diagram. Candidates will be asked to provide either a diagram of cost or benefit. The diagram is expected to carry 4m. Students may need to provide some relevant explanation which may carry 2m-4m. Evaluation is definitely available. In all, this question carries 10m-12m

(4) Government failure. Students will have to make reference to the extract and explains as in why such government intervention would have led to more problems. In evaluation, again I suggest contradictive statements. Explain why it is not entirely government failure. Most probably 10m

(5) Taxation/ subsidy. Provide definition for taxation/ subsidy. Draw a diagram to strengthen your explanation. Try not to leave the diagram unattended and if can provide short explanation. May need to make reference to extract. Last part will be evaluation. Normally carries 10m-12m

(6) Assess a solution. A student may be given some solutions to congestion or pollution in the extract and then asked to evaluate it. Most challenging questions may come from here since the extract is unlikely to explain the remedies in detail. Candidates are expected to have equipped themselves with specific knowledge on the remedy which include how it works to solve the problem and problems that may arise. 8m-12m is expected
To be continued..............

1 comment:

Glysentte Mier said...

Thank you for this. Just the thing i was looking for and i love your blog on the edexcel papers.