80 marks · 19 question parts · Paper, mark scheme and report on Pearson's site
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A
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Candidates typically performed well on this question, with most able to identify what the division of labour is and go on to analyse the benefits of it for car manufacturers. Only a minority of candidates were able to give specific examples from the car industry which were necessary to gain the application mark.
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The majority of candidates were able to recognise that the demand curve shifted to the left but were less secure in their ability to show a change in consumer surplus. Typical mistakes were to indicate either a left shift in supply, suggesting a contraction in demand, and to confuse consumer and producer surplus.
Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms)
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C
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Though many candidates were able to achieve the mark available here, lack of precision in defining demand was an obvious issue for many. Typically, we were looking for some notion of effective demand and definitions discussing needs or simply wants without any sense of ability to buy were too vague to be rewarded.
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D
Quantitative skills: QS 8 (make calculations of elasticity and interpret the result)
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This question was a challenge for some. Many candidates were able to do the maths but not link the numbers to the requirements of the question, which was asking about total revenue. There was an acknowledgement that a correct percentage change calculation could access the application mark even if the answer was incorrect.
Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 6 (calculate cost, revenue and profit (marginal, average, totals)); QS 8 (make calculations of elasticity and interpret the result)
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A
Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)
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Most candidates were able to demonstrate a left shift of the supply curve in response to the rise in VAT on the market for energy use but the vast majority were unable to show a non-parallel or pivoted shift, tending to show only the impact of a specific rather than ad valorem tax.
Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms)
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This question required a definition of an indirect tax and the vast majority of candidates were able to perform this correctly, though over ten percent of the responses were either incorrect or too vague.
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C
Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 8 (make calculations of elasticity and interpret the result)
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Candidates were able to recognise the impact of a change in income on the demand for Freddos in most cases but many struggled to identify Freddos as an inferior good and few were able to then move on to effectively suggest how the producers of Freddos could respond to this information.
Quantitative skills: QS 8 (make calculations of elasticity and interpret the result)
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This question required candidates to consider how the health care market illustrates the economic problem and responses were generally good. Most candidates were able to recognise the nature of the economic problem and use the data to illustrate it. Most were unable to then analyse effectively enough to link back to the issues facing decision makers in health care to achieve the second analysis mark. Good responses could clearly draw the conclusion that health care priorities illustrated the economic problem.
Quantitative skills: QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)
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Candidates performed less well on this question, primarily because they focussed excessively on problems for insurers rather for consumers as well. This concept seemed insecure in many responses. Better candidates were able to clearly identify how asymmetric information causes failure in the health care market and went on to give clear examples using the extract. They could then analyse the impact of this on the market overall.
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This was the first of the levels-based questions and was the only data response question not related to health provision. Extract C contained plenty of information candidates could use to consider the extent to which parks were public goods and once the key concepts of non-excludability and non-rivalry were applied to the situation the majority of responses were able to build a case successfully. Overall responses were good and top level evaluation marks tended to be awarded for the recognition that public parks are quasi-public goods depending on variables such as the time of day, the day of the week and, indeed, the size of the park.
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This question was a four-mark calculation based on the idea of charging patients when they visit a GP. A large majority of candidates were able to complete this successfully, which is a pleasing indicator of the improving numeracy of the cohort each year.
Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)
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This fifteen-mark question was a strong test of a candidate’s ability to link textbook knowledge of supply and demand factors to a sector of the economy where market forces are unusual. The failure of the NHS to treat patients effectively is thoroughly discussed in the data and candidates used both supply and demand- side factors to score quite highly on the KAA element of the question. There was no requirement to cover both supply and demand-side factors but better candidates tended to do this and used the data intelligently to substantiate careful analysis and sophisticated use of a diagram. The best candidates were then able to evaluate effectively and this often included consideration of the elasticity of the supply or demand curves drawn, the extent to which the factors considered impacted on the market, and the time scale over which the forces considered were likely to play out in practice. Weaker candidates tended to make little attempt to evaluate and this explains why the performance overall was less than expected and, equally, where improvements could have been made most easily.
Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms)
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The first of the essay questions, this question was the most popular by a significant margin. Candidates also performed marginally better on this response than they did on 6(g). The question allows candidates to demonstrate their understanding of a range of possible ways the government could intervene to reduce excess demand. These ways are in the extract, and strong candidates made a good attempt to substantiate points diagrammatically and in context. There was usually a clear recognition that some methods will be more effective than others and this could involve clear evaluation using concepts developed during the teaching of the course, such as subsidies to the private sector which reduce demand on the NHS; the introduction of charges for visits to GPs which could reduce unnecessary appointments; and an increase in frontline funding involving greater levels of public spending. Top level KAA marks required at least two ways and the better responses would draw accurate supply and demand diagrams, whereas weaker candidates would reproduce textbook versions with little though to the elasticity of supply and demand in health care provision. Evaluation marks could be achieved equally well by considering the disadvantages of each method per se, or in more sophisticated cases, in relation to the other methods proposed. The best responses would work by proposing realistic solutions to the problem of excess demand and then evaluating the most effective in the context of the real-world situation.
Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms)
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This was a highly accessible question considering the disadvantages of the free market approach to health provision. Nonetheless, perhaps because of its slightly more theoretical premises, it proved to be much less popular than 6(f). There are numerous failures alluded to in the extracts, particularly asymmetric information. This essay requires a clear exercise of critical analysis and good candidates would be expected to have a developed notion of the positive externalities generated by health care and how they may be under-provided in a free market. Good candidates used a positive externalities diagram and used it to intelligently assess why free markets would lead to a sub-optimal allocation of resources in the health care sector. This would require government intervention of some kind to correct this market failure. Another argument that was developed in relation to the question was the inequality of access to health care developing from the unequal distribution of income in free market economies. Sophisticated responses recognised that government intervention would be required to mitigate the worst excesses of this in the health care sector. There was usually at least one other argument linking in to ideas of asymmetric information alluded to in the extracts. Comparisons may be made between countries such as the UK and the USA. There could be knowledge of Obamacare. To access evaluation marks candidates could use the prompts in the extracts which discuss the advantages of competition such as the potential to drive up standards of provision and the opportunity for consumer choice. Many candidates discussed how the NHS is a state monopoly and how it could be the best case for the expansion of the free market approach to more areas of health provision.
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