Monday, September 24, 2012

Effective Revision Strategy for Unit 1: Competitive Markets-How They Work and Why They Fail

1. Prepare the checklist. List out all the possible topics that need to be covered within these three months. Those thick Economics bibles on your table or shelf can be a good starting point. Well, in case if you are ‘anti-textbooks’, there is also another alternative. Click on the link below. They will lead you to my Unit 1 list of definitions. Use those jargons to guide you on the topics that need to be prepared. Watch out for some difficult topics. For instance, I find that students usually struggle when it comes to PPF (production possibility frontier). Many are unable to explain why a PPF can shift inward or outward and how is this related to a nation’s AS (aggregate supply). Also, few can explain why when economic resources are not fully utilised, there will be no opportunity cost involved when both goods are simultaneously increased. Pay extra attention to topics under the market failure particularly externalities. Make sure that you are able to define, give examples, draw the cost-benefit diagram and evaluate measures used to solve those problems. Equally, improve your understandings on how minimum price and buffet stock schemes work. Nonetheless, each student is unique. Some may face more problems than the others for the same topic discussed and therefore time allocation is somewhat subjective and I will not guide much on that. The bottom line is, somehow you need to juggle between the quantity (time) and quality (revision techniques) devoted for each topic 

 2. Choosing the right revision materials. Textbooks and those thick-illustrated revision materials are always good to look at but may not be your best companions. It is near impossible for you to digest so much information and yet there is so little time. I personally dislike textbooks. They are long winded and most of them are not student-friendly. Simple topics are often extended ‘unnecessarily’ just for the sake of making the book looks thick. They are pretty much the same like the Economist where events that can be told in one page are made more complicated than what they actually are with long dwindling passages. I will prefer if you use the notes/ slides/ case studies given to you by your lecturer and complement it with topical revision sheets from . As for extra read up, you may go to

3. Get ready the past year questions. One of the first few topics in Unit 1 is specialisation and that is exactly how you should apply Economics principle into action. Practice not by papers BUT by questions. For instance, if you have finished revising the topic on PPF and opportunity cost then you should focus on MCQ questions pertaining to these two topics before you move on. Practice by specialisation will give you an upper hand advantage over those who do not. First, you can see that those questions will always repeat themselves in a similar way. Second, you will know how popular and how frequently they are tested and last but not least, you will ultimately master the answering techniques. It is not true that students need to write long-winded explanations to secure marks. Sometimes by exhibiting a diagram or simple calculation using your own numerical examples will give you an edge. You use lesser time and yet achieve the same marks as your friends

The same goes for Section B which is the Data Response. Practice by case studies. For instance, attempt all Extracts that are related to congestion before I move on to other issues such as healthcare, education, smoking, air pollution, housing market, labour market and commodities. Chances are, you will understand the nature of the questions better than anyone else because you specialise. So next time, in January 2013, once you get the paper and the heading says ‘Worsening Congestion in London by 2015’, I dare to bet that you can see more or less what is coming your way! Expect definitions of private cost and external cost, cost-benefit diagram, proposing methods to reduce congestions and their respective evaluations, income and cross elasticity of demand and others

4. Be more inquisitive. Students who participate in a two-ways communication with their lecturers tend to do better than those who do not. Be more ‘provocative’ and interrogative. You cannot accept answers or explanations just like that. You need to ‘challenge’ the statements to a certain extent. Ask intelligent questions like HOW, WHY and WHAT. When you ask questions, your mind is doing all the critical thinking process. It is a proof to you and your teacher that you are actually learning and picking up. You need to do your part here as the teacher had done his. Do not assume that you had understood and please eliminate the ‘I-think-I-can-understand’ mindset. They need to be 101% solid. Even if you have the slightest doubt, please raise and bring it to your lecturer’s attention. Many fail to understand that learning by asking is a faster way to progress than the traditional method of reading-and-memorising. The former has another advantage. You tend to retain your memory longer once you understand a particular topic but if you memorise, you can retain it for just hours

Friday, June 15, 2012

9 Most Possible Topics/ Issues To Be Tested for Unit 4: Global Economy (Edexcel)

1. National debt/ budget deficit/ Public Sector Net Debt/ Austerity in UK/ euro:

A. Arguments in favour of austerity measures:
a) National debt is at record high level and this is yet to include PFIs, payment to pensioners and the bailing out of troubled banks (UK)

b)  To prevent a further divergence between stable economies like France and Germany with the periphery areas of Euro (Portugal, Italy, Greece and Spain). Otherwise, policies initiated at central level will be suitable for some and not for others e.g. interest rate set by ECB

c) Does not necessarily affect growth. Between 1993-96, Canada managed to tame its national debt by slashing public spending and raise taxes. Similar experience for Estonia and Latvia in recent times. Some economists argue that efficiency spending is so much more important than how much money is been thrown into public sectors

d) Governments should not spend the money that they do not have

e) To prevent a cut in credit rating. UK may risk losing its gold-plated AAA rating if the national debt is not brought to a more sustainable level. May follow the same fate like the USA

f) To prevent a rise in bond yields/ long term interest rates. May happen if national debt increases to an unprecedented level where individual governments find it almost impossible to further attract lenders. The only solution is to offer higher rates of return on gilts/ bonds/ securities

g) Euro and pound are at record low level against the greenback and other currencies. No investors/ speculators/ investment managers would be interested in holding currencies which are of no value

B. Arguments against austerity measures:

a) During recession, consumption, investment and exports which largely made up the aggregate demand will fall. Public spending needs to increase to offset the fall in these three

b) Austerity will most likely lead to further contraction of the economy. Assuming that the level of national debt is unchanged, a shrinking GDP indicates that national debt as a % of GDP will increase

c) Austerity leads to the worsening of the state of economy. People save more money to protect themselves but in the end they ended up worse-off than before. Related to the Keynesian's paradox of thrift

d) If it leads to deflation, then the value of national debt will be inflated

e) Canada is very much different from Euro. It has huge advantage in terms of macroeconomic stability e.g. independent central bank, ability to spend/ inflate itself out of debts and devalue its currency something which euro economies can only dream off. Even the recent economic miracle by Estonia and Latvia masks many things amongst rising double-digit unemployment

f) Politically unpopular and may cause the government to lose votes. Street protests are expected to take place everyday in the most affected areas e.g. Greece and Portugal

2. Economic effects of banking crisis:

a) Banks unable to generate lending. Fall in consumption and private investment will stifle growth

b) Banks unable to facilitate international trade. Inability to issue the Letters of Credit (LOCs) for trade finance and export credit. Period of de-globalisation

c) Rising unemployment in banking, investment and construction sectors

d) Housing bubble burst

e) Worsening of government finances as the UK government steps in to buy up the toxic debts and part nationalise some of the most troubled financial institutions e.g. RBS, Northern Rock etc

f) Falling inflation as measured by both CPI and RPI

g) Run on the pound-denominated assets

h) Reversal of FDIs from Western Europe, USA and BRICs

3. Economic effects of global recession onto SSA economies:

a) Reversal of FDIs especially from developed economies

b) Fall in the amount of remittances since many African workers who work abroad are laid off

c) SSA countries that heavily rely on tourism are adversely affected. YED >1. When income falls, quantity demanded for international tourism falls too

d) Countries that have poor diversification in their economy e.g. Nigeria with oil and Zambia with copper are very much affected due to fall in global demand

e) Foreign banks based in SSA repatriate most of their profits to HQ resulting in lower investment and cut in lending

4. Reasons for the fall in euro against pound in recent years:

a) Continuous increase in the bond yields of periphery economies within the Euro like Greece, Spain and Italy. It is a sign of economic instability where governments in concern are facing grave difficulty to raise finances. Fear of economic collapse, speculators bet the euro to fall against the pound

b) Fiscal austerity is taken to another height in troubled economies. Both actual and potential GDP are expected to contract further. No investors willing to hold currency of unstable economies

c) UK has the BOE to act as a lender of last resort. ECB is clear on its stance that it will not intervene to purchase the bonds of countries like Greece and Italy thus resulting in liquidity crisis. These governments will not have sufficient funding to meet its short term commitments. Market observers/ speculators may worsen the condition by creating a panic in financial market as if the governments would turn insolvent. Euro depreciates

d) Euro has very little macroeconomic flexibility to deal with economic shocks. It cannot alter the prime rate, devalue the euro to provide competitiveness and also spend itself out of recession unlike the UK which still at least have independent central bank and the option to export itself out of debts. ECB is heavily criticised for having zero tolerance against inflation. It maintains high interest rate of 1% despite calls to become more lenient in times of crisis. Recession is hence expected to be prolonged and therefore resulting in heavy selling of euro

5. Economic effects of rising oil prices onto UK economy in 2010/2011

a) Cost-push inflation. All firms will be affected through the increase in the costs of logistic

b) Lower competitiveness since British-manufactured goods will cost more. May be reflected in the worsening of trade balance

c) Companies are already badly hurt because of the financial/ banking crisis. Any further increase in operating costs will most likely be dealt with large scale rationalisation

d) Prospect of double-dip recession. Badly timed since this will worsen government finances e.g. more payments of dole, bailouts (banks, airlines etc) and servicing higher interest rate on debts

e) Regressive effect. Low income people will have to spend a bigger portion of their income for transports

f) People will have higher inflation expectations and this will be used as a rough guideline to bargain for higher wages. Wage-spiral inflation may happen

g) Prospect of higher interest rate. If the CPI goes beyond the targeted level, BOE may raise the interest rate despite the economic malaise

6. Primary product dependency in developing economies

A. Arguments in support of:

a) Able to reduce unemployment on a large scale especially in rural areas since farming is labour intensive. More people will be absorbed during the peak of harvesting season

b) Comparative advantage especially huge acreage of arable lands, suitable weather and most importantly large number of cheap unskilled workers. Prerequisite for farming

c) Can yield high profits for farmers especially cash crops like corn, rice, tobacco, sugar and coffee. Farmers practice mono-cropping where single crop is grown on the same piece of land to fully exploit EOS. Very different from subsistence farming. Improve their livelihood

d) Lucrative export revenue especially from commodities trade like oil (Nigeria, Congo-Brazzaville etc), copper (Zambia) and minerals like diamonds (Botswana etc). May help to reduce current account deficit and also boost governments' revenue. More budget to develop the nations

e) Explorations of minerals and metals are usually done by collaborating with multinationals. Catalyst of growth since large companies can contribute towards both actual and potential growth

B. Arguments against primary product dependency:

a) Very volatile prices. Nature of PED < 1 since they are necessities and PES < 1 because it may take a long time to grow crops or discover new mines. Any demand or/ and supply shock may cause a large price fluctuation. Unstable income for farmers. In 2000, when prices of coffee fell by 40%, Uganda which is Africa's second largest coffee producer was severely affected. For risk-adverse farmers, it may hinder investment

b) Minerals and metals are scarce in nature. Developing economies cannot forever depend on them as an engine of growth. Economies which are least or slow to diversify may find themselves vulnerable

c) Exports of commodities like copper may lead to appreciation of home currency. Importers will need to demand for kwacha (Zambia's currency) in order to pay Zambian exporters. As kwacha rises, it will gradually erode the competitiveness of its manufacturing sector. This is known as the Dutch Disease

d)  High dependency on lucrative agricultural/ mining sectors may hinder investment in other more important areas like education and healthcare which can add to the stocks of national assets. Does not assist in long term growth and development

e) Jobs creation on the farm are very seasonal in nature. Once harvesting season is over, these people will be made unemployed once again

f) Cash crops are meant for profits. Some or most of them are sold off leaving nothing much for local consumptions. Famine is expected to increase

g) Falling terms of trade. Historically, prices of manufactured goods have been relatively steady while the prices of food and raw materials have been declining. Low export prices to high import prices, resulting in lower terms of trade (fall in earnings but rise in import expenditures). Often associate with problems like large BOP deficit, declining foreign reserves and rising foreign debt

7. Factors that lead to de-globalisation post crisis:

a) Global recession especially in the first world economies. Falling income hence lower appetite for imports of consumer goods. Declining profits and business confidence have undermined imports of capital equipments

b) Fall in the value of euro and pound. Foreign goods appear to be artificially expensive

c) State governments impose protectionism e.g. tariffs and quotas onto imported goods. The aim is to prevent job losses, bankruptcies and also to collect some tax revenue to pay for national debts

d) Banking crisis means that financial institutions will be unable to provide trade finance e.g. issuance of the LOCs (Letters of Credits) and facilitate export credits. Fall in the level of international trad

e) Countries in Asia that are unaffected begin to reduce their dependencies on troubled economies. Increase their shares of trade with other emerging economies where the volumes of trade are no longer at pre-crisis level

8. Factors that lead to rising protectionism post crisis:

a) Governments of the most affected economies are calling for protectionism e.g. President Obama called for Buy American program and President Sarkozy's idea of relocating car production back home were under severe fire.Rising protectionism is therefore an act of retaliation

b) To protect local jobs. If not millions of jobs will go in case UK/US/ Euro people still buy imported goods

c) To prevent bankruptcy which will worsen the economic condition. Also as a reaction to garner supports from the grassroots

d) To improve government finances. Higher tax revenues from tariffs can be used to pay off some of the debts. Simultaneously such act can prevent the governments from paying more doles and bailouts

9. FDIs (Foreign Direct Investments)

A. Arguments for:

a) Agent of growth. When multinationals build new roads, new factories or purchase capital equipments, they inject money into the circular flow of income. Actual growth is achieved. Building of infrastructure like bridges, rail links and proving telephone lines will contribute towards the stocks of national assets. Boost supply side of the economy. Either way growth can be achieved

b) Job opportunities usually with higher pay

c) Provides state government with tax revenue

d) Transfer of resources like technical and technology

e)  Improve the trade performance of a country. Usually goods manufactured will be of better quality

B. Arguments against:

a) Investment is only at the initial. Once the operation is stable and turn profitable, most of the profits will be sent home. Creates a mirage that developing economies can continuously benefit by leveraging on their investment

b) Imports of capital goods and raw materials which are not available locally will worsen the current account balance

c) Limited transfer of knowledge. Very often, local workers are placed in front-line production processes, where tasks are repetitive/ monotonous. In mining, some of them work under very unsafe conditions e.g. rock falls, heat exhaustion and tunnel collapses. This will reduce their welfare

d) Tax revenue may not increase in the short term. Developing economies are racing ahead against one another to attract foreign investors. As such offer attractive tax exemptions

e) Modern colonialism. Minerals are plundered using the most intensive method. Once exhausted, the MNCs may just leave the country and move on to another areas which are rich in resources

f) Redistribution of income from third world to first world. It only benefits factory/mine owners and corrupted state leaders. People who work are paid much lesser than thought. Taking advantage due to monopsonist power and considering that the people are too poor to reject an employment opportunity

Heard that Unit 1, 2 and 3 were rather 'easy' this time around. Doesn't sound like the typical Edexcel to me. Anyway, just be well prepared in case if Unit 4 turns out to be a heavy storm. Best wishes

Cheers :)

Sunday, May 27, 2012

Highly Possible Questions for Section B of Unit 3: Business Economics and Economics Efficiency (Edexcel) (coming soon)

There you go:

1) Identify the market structure of a business model
It will most likely appear as question (a) and it carries 4 marks. 1 mark for identifying the underlying business model as monopoly/ oligopoly, 1 mark for definition/ explanation of its characteristics and remaining 2 marks for reference from the Extracts. Watch out for key words like heavy advertisement, existence of patents, control over 25% of market share, large market capitalisation, large R&D expenditure etc

2) Identify the type of integration
Again this will appear as question (a) and it will carry 4 marks. 1 mark for identifying the type of mergerexplanation/ definition of the merger and remaining 2 marks for making reference to support the claim that the merger is e.g. horizontal e.g. horizontal, backward or forward vertical and conglomerate, 1 mark for

3) Game theory/ pricing and non pricing/ how does the threat of competition will change the behaviour of firms
Usually appear as question (c) (12 marks) or question d (16 marks). Typical answer using price competition will be revenue maximisation, sales maximisation, predatory pricing, limit pricing, BOGOF (buy one get one free). Profit maximisation and cost-plus pricing are not applicable as they will result in higher price and this will turn the tide of competition in favour of competitors. As for non-price competition, some typical standard answers will be advertisement, marketing, improvement in customer service, loyalty schemes/ cards (careful not to use in all situations), merger to avoid direct competition or suing competitor for infringement of patent e.g. Apple suing HTC for the sliding button function and the latest Apple seeking legal permission from US court to ban Samsung from selling its S3 model from the market

By drawing a Game Theory diagram, candidates are entitled to 2 marks. Further explanations will vary. It can be as minimal as 2 marks or up to 4 marks. Please relate the diagram to situation e.g. EON vs. RWE or Samsung vs. Apple rather than typical textbook answers like Firm A vs. Firm B

4) Contestability
We usually mention that the market is not contestable since existing large firms can practice predatory pricing, limit pricing, enjoy significant EOS and hence cheaper price, large budget for advertisement, R&D, brand loyalty etc. As in evaluation, we contradict by saying that the market to certain extent is contestable and provide reasons for saying so

5) Why price is cheaper in one market and more expensive in another market?
Usually appear as question (b) where it carries 8 marks. Standard answers will be lower cost in one market e.g. lower renovation costs, no need to incur high rental etc, to price discriminate, to maximise profits, demand inelastic in one segment etc

6) Benefits of integration
Easiest of the lot. Can appear as question (c) or (d). Large variation of answers and evaluations can be obtained from the web. Just type e.g. benefit of horizontal merger + source (tutor2u, economicshelp, economicsonline etc)

7) Economic efficiency
Again, this may appear as question (c) or (d). Look out for all the evidence of efficiency which is also known as cost-saving/ reduction from the Extract. Otherwise look for something else to say e.g. productive efficiency, allocative efficiency, dynamic efficiency, technical efficiency and static efficiency. Careful when elaborating these efficiencies. They all are related to costs reduction but in different forms

8) Role and power of OFT
Look out for examples or cases from the Extracts indicating the actions taken e.g. fined company X, forced BAA to put up Gatwick and Stansted for sale outside merger etc

As for MCQs, watch out for topics like natural monopoly, profit and price capping, productive and allocative efficiency for monopoly and perfect market both in short run and long run, distinguishing the nature of curves between perfect market (price taker, TR curve that increases proportionately with output and horizontal MR and AR) and imperfect market (price maker, upside-down quadratic TR curve, downward sloping MR and AR) and concept of satisficing

Wednesday, May 23, 2012

Quick Tips for Unit 2: Managing the Economy (Edexcel)

1. Once the examination started, please ignore the Extracts and Figures. Jump to the page with questions. Quickly run through all those questions and try to get a 'feel' which one you are more comfortable with. Comfortable is highly subjective and of course this technique will not work for those candidates who sit for the paper with very minimal preparations. Logic is, both question 1 and 2 will appear equally tough. As for me, I define comfortable as being able to more or less answer those questions without taking too much time to think/ draft the answers and evaluations/ can be answered without even the need to refer Extracts

2. In case if both questions appear to be equally hard even if you are well-prepared, then watch out for 3 things. First, is whether the Figures presented are easily understood ? Second is look out for the heavyweight questions which are no other than the 30 marks essay. Are they somewhat familiar? Are they about policies to resolve macroeconomic objectives? Finally, look out for shorter questions. Do you think you are more comfortable with the first 50 marks or the last 30 marks question? Again, this is highly subjective and you need to have some good judging skills here and please make it fast since time is scarce here

3. Please make a wise decision. The choice that you make this Friday will either make you or break you!! One of the early indicators that you are heading into trouble is making a U-turn after first 10 minutes. If that were to happen, chances are you will not be able to finish the paper on time and hence I would like to remind you once again, MAKE A WISE CHOICE

4. Stick to my REDD (Refer, Evaluate, Define, Diagram) principle all the time. How well you score highly depends on this 4 fundamental instructions. Believe me. Every question that you encounter will definitely be made up of either 1 or more of the REDD combinations, unless a simple EXPLAIN question

5. JEDATE (Justify, Evaluate, Discuss, Assess, To What Extent and Examine) is the acronym for evaluative questions. Somehow I realise that in the recent, very few evaluative questions use JUSTIFY

6. Analyse, Outline, Explain and Contrast will not be requiring evaluations from you. Providing evaluations for these instructions are a waste of time. I notice that candidates always confuse between Analyse and Assess

7. Short evaluation questions will always have 4 marks as evaluation. It can be single 4 marks or 2 evaluations with 2 marks each

8. Practice your AD-AS question. Confirm there will be one. Anything that influence spending such as interest rate, consumer confidence, government spending and slash in income tax (unless stated otherwise), fall in sterling etc will affect movement of AD. Anything that got to do with EPIC (Efficiency, Productivity, Incentive and Costs) affect AS such as oil prices, wages, deregulation onto businesses etc

9. It is said that demand side essays shouldn't contain EPIC words at all since it will place the examiner in a position to think that you are actually confuse between the transmission mechanism of fiscal/ monetary policy with supply side policies. On the other hand, supply side essays shouldn't have words like consumer confidence, consumer spending etc or else you will be labelled as confused between the transmission mechanisms of supply side with demand side

10. The pillar for the 30 marks essay will be 6+12+12 where 6 marks are for definition of policies, explain phrases in "..", reference to Extract or Figure, any macroeconomic objectives and AD/AS diagram

11. Please fully label the diagram or else you are just doing charity by giving away free 2/3 marks

12. READ all my transmission mechansims towards the bottom of the page

13. Typical 'surefire' evaluations for policies are time lag, depending on which part of the economy UK is operating at (elastic/ inelastic AS), conflicts with macro objectives e.g. growth achieved but at the expense of higher inflation etc and fiscal/monetary policy vs. supply side and you say supply side policies are better because growth achieved without inflationary pressure

14. How to elaborate? Master all the definitions and bring them out at the right time and your writing can be evolving around that key word. If not, bring out an example, or real life situations in UK economy e.g. coal mine workers strike, passive resistance during the World War, Greece is the 'black-sheep' of EU economy, the collapse of Icelandic economy? This are what I called as 'writing lubricant'. They allow you to find more stuffs to write about. To spice up, use power and attractive adjectives like BOE has entered into unchartered territory, peripheral areas of the Eurozone, China is flexing its economic muscle etc

15. Suggested time is 35 minutes for the essay. Please learn how to rephrase. There is no such thing as having insufficient time in the exam. Why write long winded and unnecessary statements/ points when you can actually write it in a much simpler way?

16. Watch out for real GDP/ growth vs. HDI. They haven't been out in a while and can send another shockwave in the exam hall. I won't be surprise if they carry as much as 16 marks

17. Ask simple and yet powerful questions like HOW, WHY and WHAT as you write

18. Watch out for 'tsunami' in the 30 marks essays. I have been observing the trend closely in the past 5 papers. Expect it to be rough this time but nonetheless, it will be evolving around solving any of the 6 macroeconomic objectives

Cheers and may the force be with you!! It is 10pm Malaysian time now. Will be catching a flight in hours time, so don't expect me to reply that soon. This will be the last posting for Unit 2

All da best 

Thursday, May 17, 2012

Additional Examination Tips for GCE Edexcel Economics Unit 1: Competitive Markets-How They Work and Why They Fail

Some interesting findings:

1.   1. Any candidates sitting for GCE Edexcel Economics Unit 1 can easily PASS the paper by just providing accurate/ sensible definitions, making references and drawing the right diagrams. Let me provide the evidence here:

Each MCQ has one definition for sure. As many as four MCQs may have two definitions within the same question and so that is about 12 marks from Section A. In section B, typically all the five questions (a-e) will have one definition each and some especially the (d) and (e) may have two and so that brings us to about 7/8 marks of definitions from Section B. In total this is 20 marks

In section B, candidates can easily gain 1/2 marks for each of the five questions simply by making references from the Extracts or Figures provided. On a conservative tone, let just say that this is about 8 marks

In Section A, almost every question can be supported by a diagram which can come in the form of PPF, PED, XED, YED, PES, minimum price, minimum wage, cost-benefit etc. Well assume that this contributes to about 8 marks from four questions. In Section B, in case if you choose the COMMODITY question, it is almost certain that question (a) is about demand-supply analysis, which means 3/4 marks. Question (d) and (e) are usually diagram-based and typically the diagrams weigh as much as 4 marks each. So, in total candidates may gain 12 marks from Section B alone. Both sections can easily contribute 20 marks

Do the maths: 20 marks (definition) + 8 marks (references) + 20 marks (diagrams) = 48/ 80 and this is MORE THAN JUST A PASS!!

2.   2. Another interesting development in Unit 1 is that since January 2011, there will only be 5 questions, (a) until (e). The last two questions will always be 14 marks. The interesting fact is that, those two questions are always seemed to be predictable. It will be any 2 of the 5 topics like minimum price, buffer stock, taxation, subsidy and cost-benefit analysis. The instruction is nothing but economic effects, economic effects, economic effects and it goes on and on and the beauty is the evaluations seem to be stereotype too. You can get all the answers in the Unit 1 Guide which is also written by the Edexcel examiners. So candidates, what are you waiting for? Go and buff up these 5 topics. There will be no regret
1.       3. In case if candidates have insufficient time, as always the case, please jump to question (d) and (e). By providing definitions (market failure, external cost, external benefits etc) and diagrams for both, you can easily gain 13/14 marks out of the 28 marks. Better than nothing right?

2.     4. PLEASE DO NOT USE ELIMINATION METHOD as the core strategy in Section A. Edexcel has become increasingly stringent in dishing out marks and more often than not, to eliminate the wrong options, it is INSUFFICIENT by just changing a word or two. It must be backed by SOLID EXPLANATIONS and ELABORATIONS as why those options are wrong rather than changing the wrong economics term say from, consumers surplus to producer surplus, PED to XED, XYZ to XYW etc. Eliminations based on ‘no’ and ‘not’ will not be entertained. They are considered ‘dirt cheap’. For instance:
     Option A is wrong since it is NOT producer surplus
     Option B is incorrect since it is NOT inelastic
     Option C is wrong since this is NOT about PPF

My advice is, do not use elimination method unless you have a strong theoretical grounding

3  5.  No additional marks will be awarded for duplications. For instance, in the answer candidates mention area of consumer surplus is XYZ and again you shade the XYZ area in diagram, then only 1 mark will be available rather than two