June 2025: Paper 1

Mark scheme

Examiner's comment

In this question, candidates were asked to calculate the change in supernormal profit when a restaurant changed its objective from revenue maximisation to profit maximisation. Marks were awarded for identifying the respective maximising positions, then performing the requested calculation. This question was answered correctly by the vast majority of candidates, though there were several common pitfalls. Some candidates were unable to calculate the change correctly. A smaller minority corrected the change correctly, but failed to recognise that it was an increase rather than a decrease in supernormal profit. Other candidates gave the percentage change in supernormal profit rather than the change in total supernormal profit. This response appears on first sight to tick all the boxes. The candidate has correctly calculated the supernormal profit at both the revenue maximising output and the profit maximising output. However, they have made the mistake of subtracting the profit maximising profit from the revenue maximising profit. The answer given is -£429. The correct answer is an increase of £429, not a decrease. This response scored 3/4 marks. It is vital to read the question carefully here and check any calculations made carefully. The question asks for the change in supernormal profit, and the change is a positive one for the firm, not negative. In this second example, we can see that the candidate has clearly identified the maximising outputs and performed the calculations correctly. The direction of change has been understood and the correct answer of 426 has been given, scoring 4 marks.

Notes from the mark scheme and report

• revenue maximisation where MR = 0: (£10 - £8) x 130 = £260
• profit maximisation where MC = MR: (£14 - £7) x 98 = £686
• change = +£426 (an increase)
• -£426 scores 3
• common errors: subtracting the wrong way round, giving a percentage change

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); QS 6 (calculate cost, revenue and profit (marginal, average, totals))

Answer

A

Mark scheme

Notes from the mark scheme and report

• a fall in demand shifts the firm's AR (its demand curve) left, so MR falls too (A)
• B ignores that AR is the demand curve
• C and D have AR and MR moving in opposite directions

Mark scheme

Examiner's comment

In this question, candidates were asked to explain the likely numerical value of the price elasticity of supply of oil, with reference to the data given. Marks were awarded for identifying that it was inelastic and that the value was between 0 and 1. Further marks were available for a justification and date reference. This question was answered well by the vast majority of candidates, though there were several common mistakes. Some candidates were unable to identify the value correctly, with a 'negative' value being suggested. This indicates some confusion with price elasticity of demand. Others focused on the degree of necessity, which is again, a demand side factor. This is a precise response that achieved all 4 marks. The candidate tells us that PES is likely to be inelastic because of the amount of time it takes to extract new oil. There is a supporting data reference. They then go on to tell us that if price increases supply will increase less than proportionally. Finally, a correct numerical value is given. This second response scored 2/4. The candidate uses plenty of application but there is only 1 mark for that skill. They gain the other mark for the numerical value being 'less than 1 but greater than 0'. Unfortunately, the candidate does not say what that value means. There is no theoretical development. Candidates should always look to develop a point using relevant economic theory. This example is a case in point. We have a correct numerical value but no attempt to explore the concept of inelastic demand beyond that statement.

Notes from the mark scheme and report

• PES between 0 and 1 (relatively inelastic): supply responds less than proportionately because new fields take 20 years and equipment has no other use
• only 1 application mark
• PES is not negative and necessity is a demand-side factor

Quantitative skills: QS 8 (make calculations of elasticity and interpret the result); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Answer

C

Mark scheme

Notes from the mark scheme and report

• %change in Qd of petrol cars = XED x %change in price of diesel cars = +0.64 x -10% = -6.4% (C)
• A and B change the price of petrol cars, not quantity
• D would need a 100% price change

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)

Answer

A

Mark scheme

Notes from the mark scheme and report

• at E AR is tangent to AC so the practice makes normal profit in long-run equilibrium (A)
• B is wrong as AR = AC, not AR > AC
• C supernormal profit needs AR > AC
• D it is not at the minimum of AC so not productively efficient

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms)

Mark scheme

Examiner's comment

In this question, candidates were asked to draw an externalities diagram to identify the welfare gain from the consumption of dental care in the UK. Marks were awarded for identifying the positive externality in consumption, illustrating the correct position of the relevant curves, the relevant optimum outputs, and finally the correct area of welfare gain. This question was answered correctly by a large majority of candidates, though there were several common pitfalls. Many candidates were able to show MSB above MPB, but then marked the welfare gain in the wrong place. Others still illustrated MSB = MSC on the same curve and multiple confused combinations. In this response, the candidate has clearly indicated the MSB curve above the MPB curve. The original equilibrium is marked at Qe and the social optimal equilibrium at Q*. The area of welfare gain is indicated by the shaded area ABC. This response achieved all 4 marks. In this response, the candidate has not specifically differentiated the market equilibrium from the social optimal equilibrium. They have obtained the marks because it is obvious which is which because of the area of welfare gain. However, it would have been more precise to have labelled them as such. In this second example, we can see the candidate has the MSB and MPB curves in the right places. The market and social optimal equilibria are also clearly annotated. However, the area of welfare gain is drawn in the wrong place. This response scored 3/4 marks.

Notes from the mark scheme and report

• MSB above MPB
• market equilibrium where MPB = MPC, social optimum where MSB = MSC
• shade the welfare gain triangle between the two quantities
• common errors: welfare gain in the wrong place, MSB = MSC on the same curve

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms)

Mark scheme

Examiner's comment

This question asked candidates to explain how imperfect market information could lead to a misallocation of resources in the used-car market. Marks were available for explaining how asymmetric information led consumers of used-cars to experience lower utility than if they had the correct information, which the seller had an incentive to hide from them. Equally sellers may not attempt to sell a car because they think consumers will not pay what it is worth. This question was answered very well, though candidates lost marks by not linking the situation clearly back to the notion of market failure. This first response begins by showing a clear understanding of asymmetric information. It then moves on to quote the stem by referring to 750,000 consumers having unresolved problems. This is followed by a reference to adverse selection as a clear example of market failure. This response scored 4 marks. This candidate has clearly showcased subject-specific knowledge here, with the use of the concept of 'adverse selection', which immediately raises the quality of the response. This second response has a sense of what imperfect market information is and how consumers may allocate their resources incorrectly in the used-car market. However, there is no data reference and the reference back to market failure is simply too vague when compared to the previous example. This response scored 2/4 marks.

Notes from the mark scheme and report

• asymmetric information: the seller knows the car's history, buyers pay an average price so good cars are withdrawn (adverse selection)
• link clearly to market failure and misallocation
• 1 application mark e.g. 750 000 consumers with unresolved problems

Quantitative skills: QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Answer

B

Mark scheme

Notes from the mark scheme and report

• cancelling when the price rises is rational utility maximisation (B)
• A firms maximise profit, not consumers
• C and D are irrational behaviour

Mark scheme

Examiner's comment

This question asked candidates to draw a labour market diagram to show the likely impact of an increase in the National Minimum Wage. Marks were awarded for identifying the correct axes and curves, the upward shift in the wage, and the increase in labour surplus. This question was answered generally well, but there were several common areas of confusion. Many candidates drew the original NMW at the free market equilibrium, rather than above it. Others failed to indicate the excess supply of labour. More concerning is that some candidates drew a minimum price diagram with no reference to the labour market at all or drew the minimum wage below the free market equilibrium. In this first example, the candidate has correctly labelled the curves and axes. They have also drawn the new minimum wage (£10.42) above the free market equilibrium and indicated the excess supply on the x-axis. However, the original wage is at the free market equilibrium (P1), so this response achieves 3/4 marks. In this second response, the candidate has correctly labelled the axes and the curves. They have also drawn the original minimum wage at NMW1 and the new minimum wage at NMW2. The area of excess supply has been clearly annotated at the top of the diagram. This response scored 4 marks. Whilst the annotation on the x-axis would have been sufficient to gain the final mark, this candidate has gone above and beyond by clearly annotating the diagram. Whilst not completely necessary there can be no ambiguity here. Often times, there is simply too little annotation to know precisely what the candidate means.

Notes from the mark scheme and report

• label wage and quantity of labour axes with D and S of labour
• original NMW must already be above equilibrium and the new NMW higher
• show the wider excess supply of labour
• drawing the first NMW at equilibrium or below it loses marks

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms)

Answer

D

Mark scheme

Notes from the mark scheme and report

• higher wages in retail raise the opportunity cost of farm work so supply of agricultural workers falls (D)
• A and C raise demand for labour, B raises supply

Mark scheme

Examiner's comment

This question was the first linked directly to the digital markets material. It asked candidates to explain one likely impact of the growth of digital markets on allocative efficiency. The extract was full of information, and most candidates were able to identify how competition led to an increase in allocative efficiency, supported by relevant date references. This was a very well answered question, though full marks were sometimes missed because of a weak understanding of what allocative efficiency actually is. In this response, the candidate has simply not written enough. They have recognised that allocative efficiency will increase and connected this to the increase in competition. However, there is no further development. An explanation of what allocative efficiency is, a reference to the extract using the examples provided, would have been straightforward marks. As a result, this response scored only 2/5. This second example is exhaustive in the clarity of its explanation and the use of the extract. We have a clear understanding of what allocative efficiency is and the fact that it occurs where price equals marginal cost. The candidate refers to greater choice, access to higher- quality products and lower prices to maximise the marks for application. They then go on to tell us that this is attributable to the competition present in the market which increases allocative efficiency. This response scored 5 marks. When approaching the short-answer questions, a candidate can never be sure precisely how many marks are available for each skill because they are not indicated on the examination paper. It is therefore good practice to ensure that there is sufficient application to gain all potential marks, in addition to the knowledge and analysis which tend to be marked together on the SAQs.

Notes from the mark scheme and report

• define allocative efficiency (P = MC, resources go to what consumers most want) then link more competition to lower prices, more choice and higher quality (Extract A)
• full marks often missed through a weak definition

Mark scheme, including the levels grid and indicative content

Examiner's comment

In this question, candidates were asked to examine two effects of increased 'automation' on the demand for labour. Marks were awarded for identifying each effect, explaining it, and supporting it with a relevant data reference. Evaluation marks were available for this question. This question was answered very well by a large majority of candidates, though many candidates dropped marks by evaluating a positive effect with a negative effect. A more effective way to maximise the marks gained here was to discuss the magnitude or time-scale of the effect. In this example, the candidate clearly analyses two effects. The first one is concerned with the jobs lost as machines replace people. The extract is clearly used to support the point and the explanation is developed. The second effect concerns the creation of new jobs as the economy grows, which is again well explained. However, there is no evaluation of the magnitude or time scale of the effects. The second effect is a counter-point to the first. This response scored 6/8. The 8-mark question is always a tricky one for candidates, who often lose one or more marks for evaluation. In this situation the counter-point is evaluative, but the candidate can gain three marks for the knowledge, application and analysis marks available for the second effect. There are only two marks for evaluation. Much better to consider the time scale or extent of the effect. A really good evaluative point can gain both available marks. In this response, the candidate clearly examines two effects. The first one is a decrease in the demand for labour as automation progressively replace people as costs fall over time. The application is slightly vague but is in context, so gains a mark. The impact of this effect is then evaluated with the recognition that it will take time for the benefits to be felt. The second effect is the increasing demand for labour caused by the demand for 'highly skilled workers such as trainers and engineers'. This is effectively analysed. There is a further recognition that many of the benefits have already been felt in terms of online banking so demand may stay the same. If the application was slightly loose in the discussion of the first effect, we now have two more examples to confirm the marks awarded. This response scored 8 marks.

Notes from the mark scheme and report

• two effects: displacement of existing jobs (financial services, train drivers) and new demand for skilled workers (AI trainers, engineers)
• evaluate with time scale or magnitude, not by setting one effect against the other

Quantitative skills: QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question asked candidates to discuss whether the price elasticity of demand for video games is elastic or inelastic. This was the first of the level-based questions, and candidates were expected to develop an argument to say that PED was elastic and then counter it with an argument that PED was inelastic. Equally, candidates could switch and say that PED was inelastic and then counter it with an argument that PED was elastic. Again, the majority of candidates used the data effectively and wrote strong answers to support their points. One really well developed point on either side could achieve top marks here, but most candidates developed more than one. There are only four marks for evaluation, so one really well developed point can achieve all four marks. The first response we consider is clearly a strong example. The candidate has written two in depth arguments to say that the demand for video games is price inelastic. The first centres around the notion of the addictive nature of the game and explores the impact of the high prices. Gamers are prepared to pay £59.99 and sales still exceeded those of Minecraft, which was much cheaper. The sense that gamers are prepared to pay for the experience is clearly developed and the analysis is strengthened with a well explained cost and revenue diagram. This achieved the top Level 3 for KAA. The point is evaluated with the recognition that tastes may change and the impact of 'too much screen time' may cause demand to become more elastic over time. This was awarded Level 2 for evaluation. The second KAA point explores the habitual nature of subscription fees and makes the point that it is not possible to play the game without them. Though expensive, gamers pay them anyway. This is because they are a necessity, further strengthening the point. The candidate weaves together economic theory and the extract very effectively, again achieving the top of Level 3. Finally, the point is further evaluated by considering the threat of technological development reducing barriers to entry in the industry and how substitutes can increase the PED over time. Only four marks are available for evaluation, and this response secures all of them. Overall, this response achieved full marks. The 12-mark question is a step up from the 10-mark 'assess' question mainly in terms of the breadth of argument to support the KAA. The number of marks for evaluation is the same, so it is important for candidates to develop the KAA. In the case of this example, it is achieved by developing two distinct points. In this second example, the candidate still has the four paragraph structure, but the quality of the KAA is clearly less sophisticated when compared to the previous example. The evaluation is good, though again not in the same league as the previous example, though it is less pronounced than the quality of the KAA. The first KAA point covers the amount of time spent by gamers playing and refers to the high cost of the games and the subscriptions. However, the responses doesn’t use the data as much as it could and the points are not explained as fully as the previous example. This paragraph achieved Level 2 for KAA. The second KAA paragraph explores the impact of the Microsoft merger on the availability of alternative games. Though it is significant, it is unlikely to reduce the power of Sony and Nintendo in the short-term, so though valid the point has less gravity. This achieved Level 2 for KAA. The two evaluative points are sufficient for the bottom of Level 2. This response achieved 4 for KAA and 3 for evaluation.

Notes from the mark scheme and report

• inelastic: addictive habit (10-16 hours a day), brand loyalty, few substitutes after the merger, high prices do not deter buyers
• elastic counter-argument e.g. cheaper games such as Minecraft at £14.99 and free alternatives
• one well developed point each way is enough

Quantitative skills: QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme, including the levels grid and indicative content

Examiner's comment

In this question, candidates were asked to assess whether the market for video game development is contestable. The 10-mark 'assess' questions require only one strongly developed point on either side of the argument. The extracts were full of useful information and candidates were able to develop good responses in the vast majority of cases. However, the confusion between competition and contestability seen in last summer’s essay question on contestability in the fragrance industry still remains. There were simply too many responses talking about competition within the industry rather than the impact of the threat of competition from outside it. In this first response, the candidate has shown some understanding of the role of barriers to entry in impacting the extent of contestability in the market. The first paragraph contains both KAA and evaluation. The KAA is rudimentary but scores Level 2. The evaluation is reasonably well substantiated and in context, so edged into Level 2. The second paragraph discusses the market structure, which is not relevant, but does link it back to the senses of brand loyalty, which will impact the extent of contestability. This analysis does achieve Level 2. There is no further evaluation. This response scored Level 2 for KAA and Level 2 for evaluation. This response scored 7/10. This second example is a very strong one, which scores full marks. The quality of the KAA is particularly noticeable, with the candidate discussing brand loyalty in the first paragraph and the start up capital required in the second. This has clearly been done very well and synthesises the information provided in the extract with impressive use of economic theory. The evaluation, although not particularly extensive, was deemed sufficient to score full marks. For a 10-mark question, the evaluation only allows for four marks. The recognition of the market being more contestable 'lower down rather than higher up', in other words where cheaper games can enter the market, was considered to be a sophisticated observation. It is important in questions such as this to either implicitly or ideally explicitly, convey a clear understanding of what contestability means. It is not the extent of competition that matters but the ability for potential competition to become actualised.

Notes from the mark scheme and report

• contestability is about the threat of entry and exit, not competition among existing firms (a persistent confusion)
• sunk costs of £150 million and five years, specialist £100 000 salaries, brand loyalty
• counter: simple games and apps cost £23 000 to develop

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question asked candidates to discuss the likely benefits of mergers for firms such as Microsoft. This was the second 'discuss' type question, and in this one there are fifteen marks available rather than twelve. Knowledge, application and analysis can be awarded up to eight marks, whilst there are six marks for evaluation. The question asks for 'benefits', so candidates are expected to discuss more than one. Most candidates performed well on this question, though a common error was to discuss the impact on consumers. This is not what the question is asking about. However, candidates could gain marks using this line of argument if they were able to link back the benefit to the firm. Each point also had to be effectively evaluated to access the top marks here. In this first response, the candidate develops a very strong first paragraph in which they explore the impact of the merger on competition within the gaming industry. This increase in market power will bring significant benefits to Microsoft, and enable them to take advantage of the low PED by raising prices to maximise revenue. This paragraph achieves the top of Level 3 for KAA. The point is then evaluated with reference to the interest attracted from the CMA, something which did happen, and which led to the merger initially being blocked. This achieves E3. The candidate then moves on to explore a second benefit, which is access to economies of scale. They focus on the risk-bearing economies available and link them to the movement along the company’s LRAC curve towards the Minimum Efficient Scale. This is further explored diagrammatically. This paragraph also achieves Level 3+ for KAA. The candidate then offers further evaluation by exploring the impact of the acquisition on the Microsoft’s profitability and potential for dynamic efficiency gains, which may well diminish. This also achieves E3. Overall, this response scored 15/15 marks. This second response lacks much of the sophistication of the first. There are only two paragraphs to the response, which limits its scope. The candidate talks about the benefits of economies of scale, specifically risk-bearing economies. These will generate profits which can then be re-invested, leading to dynamic efficiency. There is some merit in these points but the chains of reasoning are not strongly developed. At the end of the paragraph the candidate then introduces, but doesn’t develop, financial economies that could be available. Overall, this paragraph achieved Level 2 for KAA. The candidate then offers some evaluation, raising the question of market power and its abuse, which may attract the attention of the CMA. Again, this is not developed, and it is apparent that the candidate stops mid-sentence. This paragraph edges into the bottom of Level 2 for evaluation. Overall, this scored 5 for knowledge, application, and analysis, and 3 for evaluation. Candidates should endeavour to develop the requested benefits in separate paragraphs to create a more detailed analysis. Evaluation also needs to be substantial to access the top level. One short paragraph is clearly insufficient.

Notes from the mark scheme and report

• benefits to the firm (market share, Activision's titles, economies of scale, control of supply chain, subscription model), not to consumers unless linked back
• horizontal and vertical integration
• evaluate each benefit e.g. CMA scrutiny, diseconomies of scale

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question is the first example from Section C and provided the opportunity for candidates to showcase a wide range of subject knowledge to support their arguments. Q7 asked candidates to evaluate the likely microeconomic effects of building major infrastructure projects. The clue here was in the question, and candidates were expected to write about the impact on firms, external costs and benefits, the labour market etc. Reassuringly, most candidates did precisely this, though a small minority failed to differentiate sufficiently between microeconomic and macroeconomic effects. For example, reference to the effect on employment is a microeconomic effect but the effect on unemployment is macroeconomic. Having said this, the quality of responses was strong and the majority of candidates were able to develop and evaluate two clearly structured points and offer an informed judgement as the mark scheme requires. This first response begins by attempting to analyse two negative effects of the construction of HS2. The first effect is the overall risk to the government and the taxpayer, leading potentially to an electoral defeat. The tone of the paragraph is very political and quite macro in tone. This paragraph was awarded Level 2 for knowledge, application, and analysis. The second effect centres around the negative 'ethical' impact and discusses a range of negative externalities stated in the question stem. Popular protest could develop as a consequence. Again, this is valid but would benefit from more economic theory to clarify and support the point. The overall sense of the response is very political in places. This paragraph was also awarded Level 2 for KAA. We then have the presentation of a positive effect, which can be awarded as evaluation. Jobs will be created as a result of greater geographical mobility, though the candidate doesn’t use that term. We also have a basic supply and demand diagram to develop the point. There is some drift into macroeconomic concepts such as economic growth and government tax revenue towards the end of the paragraph. This was judged to have just edged into Level 2 for evaluation, overall. The candidate then develops this further with a point on the benefits of stronger transport links. This is not developed, so remains at E1. There is then a conclusion which was awarded at the bottom of Level 2. The conclusion does attempt a judgement but is again very political. Overall, this response scored 6 marks for KAA and 4 for evaluation. Candidates should be encouraged to support their points with relevant economic theory as much as possible. The essay questions are a significant opportunity to showcase subject specific terminology and concepts to build and sustain an argument. An essay on economic policy is not an essay on political theory, and candidates could use concepts such as 'normative' and 'positive' to support their analysis and evaluation of economic concepts. The second example we consider here is significantly more developed and marshalls a significant amount of information to create an excellent response. The first effect discussed is the impact on the construction industry. Many jobs would be created in such an endeavour. The candidate points out that the impact would be more significant at the bottom end of the labour market, with low paid jobs benefitting the most. This achieved the top of Level 4 for KAA. The evaluation regarding the possibility of government failure is very strong and achieved E3. The second paragraph considering the extent of negative externalities is again, very sophisticated and achieved the top of Level 4. Again, helped by the integrated use of a well drawn diagram. The evaluation then moves on to consider the benefits to workers who are able to access more highly paid jobs in London, and which would offset the negative externalities created during the process of construction. This paragraph was awarded at the top of Level 3 for evaluation. The conclusion, though brief, identifies the most significant impact in the long-term and is sufficient to achieve full marks in light of the quality of the evaluation throughout. The key takeaway here is that an essay doesn’t have to be perfect to achieve full marks. The candidate is quite possibly writing this essay in thirty minutes and to produce something of this quality in that time is a significant challenge. Such attempts will be awarded using the full range of marks available.

Notes from the mark scheme and report

• microeconomic effects only (macro points max Level 2): costs and profits of firms, labour mobility and construction jobs, external costs (woodland, homes) and benefits (less car travel) with diagrams
• employment is micro, unemployment macro
• evaluate with £100 billion opportunity cost and valuing externalities

Mark scheme, including the levels grid and indicative content

Examiner's comment

This final question asked candidates to evaluate the likely microeconomic effects of increased spending on education. Again, there was plenty of scope for candidates to develop points around the private and social benefits of education. There were many excellent responses considering the impact on firms, on the labour market, and the wider society. Again, there was sometimes a tendency to develop macroeconomic analysis on the government’s fiscal position but this was rare and most candidates were careful to answer the question asked. In this first response, we see a basic response which clearly addresses the question, but which is limited in several respects. The structure is sound. There are two KAA paragraphs, which explore similar areas. The first considers an increase in labour supply as workers develop more relevant skills for the modern workplace. This then leads to increased employability, reducing unemployment. The chains of reasoning are straightforward, though somewhat simplistic. The use of the macroeconomic concept of unemployment rather than employment softens the impact of the argument. Overall, this first paragraph just edges into the bottom of Level 3. There is then some reasonable evaluation, which considers the time scale and the possibility for the government to invest into other areas of workplace training. This is Level 2 for evaluation. The second paragraph then considers the impact on dynamic efficiency, which then feeds through into higher rates of economic growth. Though coherent and logical, the analysis is again simplistic and again strays into the macro realm. This is bottom Level 3 for KAA. We then have some further evaluation which explores the opportunity cost of the investment in education and considers the impact on HS2 and the loss of its benefits. We then have an overall judgement which attempts to weigh-up the overall benefits of the investment in education. Overall, this response just achieves Level 3 for knowledge, application, and analysis, and Level 2 for evaluation. The response scores 14/25. In this second response we can see a much more sophisticated approach than the previous example. The quality of the KAA is very strong throughout. The response is interesting in its scope and chains of analysis. The first paragraph explores the impact on firms and considers factors such as better economic modelling and improvements to production processes. The analysis is deepened throughout by a developed use of a diagram, and the candidate fully interacts with it. The candidate moves on to explore how the costs of more highly-skilled labour could impact positively on the bargaining power of employees but negatively on the cost base of firms. This is good evaluation and achieves Level 3. The next paragraph then explains how this may not be an issue for firms as artificial intelligence can mitigate the negative impact on business costs. The final paragraph offers a judgement and further marks for evaluation. This response score 16 marks for KAA and 7 for evaluation, primarily because the focus of the evaluation could have been wider. 23/25 marks overall. The essay we have just considered achieved high marks in a rather original way. It is good practice to clearly signpost responses to make marking as straightforward as possible. For essays, we recommend a structure of KAA and evaluation, followed by a second KAA and a second evaluation. The conclusion should make a substantiated judgement rather than simply summarise the arguments. Though by no means exhaustive, and other structures may work as well, it is important to aim for both breadth and depth in the arguments presented.

Notes from the mark scheme and report

• microeconomic effects only: education has external benefits in consumption (welfare gain diagram), raises occupational mobility, labour supply and wages, demand for maths teachers
• avoid macro analysis of the fiscal position
• evaluate with time lags, opportunity cost, suitability of maths for all