Common Errors Found in Paper 1 (9708) of CIE A Level Economics

Common errors for 9708/01

Chapter 1: Basic Economic Ideas

a. Unable to distinguish between the outward shift of a PPC and movement of a point inside the PPC towards boundary

b. Unable to differentiate between a positive and a normative statement

c. Confuse between functions and characteristics of money

Chapter 2: The Price System

a. Unable to tell the difference between price elastic in demand/ high PED and price inelastic in demand/ low PED

b. Always forget the fact that goods/ services with PED = 1/ unitary PED will have the same TR even after price changes

c. Mixing up the positive (+) and negative sign (-) for XED

d. Inability to identify the direction of shifts in both demand and supply curves

e. Forget the fact that value of a subsidy or indirect tax is measured based on the vertical distance of two supply curves

Chapter 3: Government Intervention in the Price System

a. Unable to identify positive and negative externalities from a given case study

b. Unaware that the market price for demerit goods is cheap because negative externalities are not accounted for. Equally market price for merit goods is expensive because positive externalities are not factored in

c. Forget that maximum price policy will be futile if price is set above equilibrium. Likewise, minimum price policy is useless if it set below equilibrium. In both cases, price will eventually settle at original equilibrium level

Chapter 4: International Trade

a. Confuse between the features of a free trade area, custom union and economic union

b. Weak in questions involving terms of trade

c. Do not know how to interpret the tariff diagram e.g. calculating tax revenue and identifying the amount of new imports

d. Unaware that entries into the financial account also have impact onto the current account in the long run

Chapter 5: Theory and Measurement in the Macroeconomy 

a. Always misinterpret falling rate of inflation as falling prices  

Chapter 6: Macroeconomic Problems 

a. Unable to identify factors that cause demand-pull and cost-push inflation 

b. Poor reasoning skills regarding the demand and supply of a country’s currency  

 

Chapter 7: Macroeconomic Policies 

a. Lack of understanding of how deflationary fiscal and monetary policies actually work to reduce BOP/ current account deficit 

b. Confuse between expenditure-dampening/ reducing and expenditure-switching policies 

c. Always forget that high value of PED for exports and imports is good for the BOP/ current account