Quantitative skills

Answer

D

Mark scheme

Notes from the mark scheme and report

• 284 152 : 281 555 = 1 : 0.99 (D)
• the £2 597 fall was Feb-Mar not Jan-Feb
• March was 1.665% lower, not 16.65% higher
• no base year is given for an index

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Answer

D

Mark scheme

Notes from the mark scheme and report

• multiplier = 1 / (1 - MPC) = 1 / 0.2 = 5 (D)
• A is 1 - 0.8, B is the MPC, C is 1 / 0.8

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions)

Mark scheme

Examiner's comment

4a This question felt very familiar and the mean score was high. The only errors seem to have arisen from the negative words in A and D (discourage, and restrict) which sometime cause processing errors when students are under mental and time pressure. 4b This again felt like an approachable question for many candidates. Although it appears easy at the outset it surprises examiners that very many students each year drop marks on making calculation errors, for example. 1/mpc and 1/(mpc-1) are common errors. Missing units (millions) 3 out of 4 Do note that £ sign not needed. Answer alone can get full marks on a calculation question, so there is no need to define or explain your answer. If you have the correct multiplier you can get 3 out of 4, so it is very wise to show your working, even if you make a mistake at the end. Make sure the answers seems right and logical. If students put 6.67 million this does not feel right as a total if the government has spent £60 million, when G is clearly part of AD. It is important to think about units (e.g. millions) and using a % sign here makes it seem there is some confusion going on. Wrong units so 3/4 Check your answer seems right. A total increase is unlikely to be a percentage. It is very helpful to show your working... ...although if the answer is correct it will not add marks. Examiners look through your working very carefully to see if they can add marks, if by chance your final answer is not correct. Show every step!

Notes from the mark scheme and report

• multiplier = 1 / (1 - 0.1) = 1.11
• 1.11 x £60m = £66.6m to £66.7m
• report: 1/MPC and 1/(MPC - 1) are common errors
• missing "million" scores 3 of 4
• a total below £60m cannot be right

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions)

Answer

C

Mark scheme

Notes from the mark scheme and report

• answer C (options not in the crop)
• A wrong as corporation tax (£40bn) is below excise duties (£48bn)
• B wrong as income tax raises more than VAT
• D wrong as NICs are about 3.7 times council tax

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); 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

• public 114 : private 118 = 1 : 1.04 (B)
• A is private relative to public
• C is the 4-point gap in the index
• D is the 14% rise in public pay since 2018

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); QS 5 (calculate and interpret index numbers); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This calculate question asks candidates to calculate US national debt as a percentage of GDP. Most candidates got the correct answer. The incorrect ones had often got the numbers round the wrong way, dividing 23 by 28.4. This is the correct answer and, as such, achieves full marks. This answer has the correct formula but the candidate has made a mistake in their calculation so they get 1/2. This shows why always writing out your working out is important. If this candidate had simply written their answer (12.35%) they would have got 0/2.

Notes from the mark scheme and report

• 28.4 / 23 x 100 = 123%
• common error dividing 23 by 28.4

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Mark scheme

Examiner's comment

This question requires candidates to calculate GDP per capita. Many candidates were able to answer this question relatively easily. However, some candidates lost all marks because they selected the wrong two pieces of data.

Notes from the mark scheme and report

• 2 061 408 / 66.4 = £31 045.30
• adding 'million' to the answer caps at 1 mark
• some used the wrong data

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

In this question, candidates are required to calculate the total reduction in the UK’s GDP. There are two steps in the process. Firstly, candidates need to calculate the value of the multiplier. Secondly, they need to multiply this value by £20 million. There were a range of answers with many of the weaker responses demonstrating a lack of understanding of this key macroeconomic formula. This is a response that was awarded the full 4 marks for the correct answer. Make sure you know key formulas, such as how to calculate the multiplier. It is always worth showing your workings in case you make a mistake as marks can be awarded for the workings.

Notes from the mark scheme and report

• multiplier = 1/(1 - MPC) = 1/0.36 = 2.78
• 2.78 x £20m = £55.6m (allow £55m to £56m)
• 3 marks if 'million' is missing
• show working
• weaker answers did not know the multiplier formula

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Notes from the mark scheme and report

• final increase in AD = multiplier x injection = 1.5 x $800bn = $1 200 billion
• 1 mark only if units are wrong ($1 200)

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions)

Answer

C

Mark scheme

Notes from the mark scheme and report

• 2 008 593 / 1 852 845 = 1.08, so 1 : 1.08 (C)
• A is 2014 to 2015, B 2016 to 2017, D 2014 to 2017

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This is a multiplier calculation question that candidates were able to answer relatively easily, and the majority were able to do this. Candidates also need to be careful to read the question and the data carefully, as some candidates lost marks because they didn’t understand the requirements of the question.

Notes from the mark scheme and report

• multiplier = change in GDP / injection = £44.1bn / £9.3bn = 4.74
• report: some misread what the question required

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions)

Mark scheme

Examiner's comment

For this question candidates were given a statement indicating that Cuba has a healthcare system with a patient to doctor ratio of 155:1, then asked to calculate the number of doctors in an estimated population of 11 000 000 people. Most candidates were able to gain 2 marks on this question, firstly by using the figures in the correct formula for 1 mark, and then correctly calculating the number of doctors in Cuba from the data given. The candidate here provides a simple two-step answer, dividing the Cuban population by 156. This is elaborated to show that the 156 figure includes the 155 patients plus the doctor. Showing your working will enable you to gain a mark for that step even if you make an arithmetical mistake at the final stage of the process. This response shows the other acceptable response, with the candidate here dividing 11 000 000 by 155 to achieve an answer in the range of 70 500 and 71 000, as required by the mark scheme. Again, a clear two-stage answer to the question.

Notes from the mark scheme and report

• 11 000 000 / 155 = 70 968 doctors (or / 156 = 70 512 counting the doctor)
• accept 70 500 to 71 000
• show working

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions)

Mark scheme

Examiner's comment

This is a GDP per capita calculation question that candidates were able to answer relatively easily. Candidates need to be careful to read the question and the data carefully, as some candidates lost marks because they selected the wrong two pieces of data. This candidate achieves 2/2 marks. They have correctly calculated an answer of £28,766.73. This candidate achieves 0/2 marks. They have not correctly calculated the UK's GDP per capita.

Notes from the mark scheme and report

• GDP / population = 1 872 714 / 65.1 = £28 766.73
• some selected the wrong two figures

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This question asks candidates for two factors. It is important that candidates focus specifically on their factors and answer the question in terms of the multiplier. Too much time was wasted on explaining and drawing the circular flow of income diagram without any link to a rise in the value of the multiplier. Each reason needed to be identified and analysed. There are two marks for application, which most candidates attained through the use of an accurately written multiplier formula. This candidate gets 6/6 marks for this answer. They identify two factors - a fall in the marginal propensity to save and a fall in the marginal propensity to import. They get 2 application marks for the use of multiplier formula and their explanation is well made, which gives the other 2 marks for analysis. This candidate gets 3/6 marks for this answer. They get 2 knowledge marks, one for defining the multiplier effect and one for identifying a factor of a decrease in the marginal propensity to save. They get 1 additional mark for its analysis. No marks have been awarded for the second paragraph and they get 0 application marks. Make sure you know the difference between injections and leakages/withdrawals.

Notes from the mark scheme and report

• two factors (fall in mps, mpt or mpm, i.e. fewer withdrawals) each analysed
• multiplier formula or Figure 2 savings data for application
• drawing the circular flow without linking to the multiplier wasted time

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); 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

• London price divided by North East price (C)
• A inverts the ratio (North East to London)
• B and D are computational errors

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Answer

D

Mark scheme

Notes from the mark scheme and report

• multiplier = 1/MPW = 1/(0.1+0.2+0.1) = 1/0.4 = 2.5 (D)
• A is MPW itself, B is 1 - MPW, C is 1/0.6
• use the mps/mpt/mpm given in the part, not the table

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions)

Mark scheme

Examiner's comment

In this question it was clear who knew their multiplier formula and who did not. Candidates need to be practicing such key calculations as part of their exam preparation. This candidate has the correct answer of '£30bn' and so achieves all 3 marks. This candidate achieves 2/3 as they have correctly identified the multiplier formula and worked out that the multiplier is 2. Unfortunately the candidate fails to multiply it by £15 billion. Always show your working out in calculation questions. That way even if you get the wrong answer at the end (or fail to include it like here) you can still get marks for your working out.

Notes from the mark scheme and report

• multiplier = 1 / (1 - MPC) = 1 / 0.5 = 2
• £15 billion x 2 = £30 billion
• some found the multiplier but did not multiply by £15 billion

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions)

Mark scheme

Examiner's comment

This question was designed to test quantitative ability and was focused on price elasticity. Candidates who lost marks did not manage to understand how to use the PED figure within the equation to complete the new quantity demanded, however on the whole was very well answered by the vast majority of candidates.

Notes from the mark scheme and report

• %change in P = 20%
• %change in Qd = PED x %change in P = -0.2 x 20 = -4%
• 4% of 2.5m = 100 000, so new quantity = 2.4 million per week
• maximum 2 marks without the correct answer
• report: some could not use the PED to find the new quantity

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

D

Mark scheme

Notes from the mark scheme and report

• 284 152 : 281 555 = 1 : 0.99 (D)
• the £2 597 fall was Feb-Mar not Jan-Feb
• March was 1.665% lower, not 16.65% higher
• no base year is given for an index

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

The four marks for this question are split in half between knowledge and application. Candidates achieved 2 marks for explanation of the term ‘rate of economic growth’ and 2 marks for relevant application from Figure 1 only.

Notes from the mark scheme and report

• the percentage change in real GDP over a period
• two data references from Figure 1 (e.g. about -9.9% in 2020, about 7.5% in 2021)

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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

C

Mark scheme

Notes from the mark scheme and report

• (92 - 80) / 80 x 100 = 15% (C)
• A is the 12-point change, B divides 12 by the 2020 value 92, D is the 2020 index

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 5 (calculate and interpret index numbers); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

There was a limited amount of confusion on this question when it came to what is meant by the labour force inactivity rate. As such, different answers were allowed to this question as you can see in the mark scheme. Having said that, the overwhelming majority of candidates calculated it as the question was originally intended, with an answer of 7.42m The candidate has correctly calculated a value of 7.4 million and so they achieved full marks. There is no need to write any words in a 'calculate' question so don’t waste time doing so. Just do the calculation as this candidate has. This answer achieves 1 mark as the candidate has not expressed their answer in millions. It is important to remember to check for units when you are doing calculation questions. The question says the total UK labour force was 34.5 million.

Notes from the mark scheme and report

• 34.5m x 0.215 = 7.42 million
• leaving out "million" loses a mark
• alternative interpretations accepted by the mark scheme (0, as the labour force excludes the inactive)

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Mark scheme

Examiner's comment

Question 5 (a) Many students performed very well on the price elasticity of demand question and produced an elasticity coefficient between -1.5 and -1.54. As within previous series, students did struggle to find the change in price, as a percentage. The formula appeared very well recalled by the majority of candidates.

Notes from the mark scheme and report

• %change in price = -4 200 / 42 990 x 100 = -9.77%
• PED = 15 / -9.77 = -1.54 (allow 1.5 to 1.54)
• many struggled to find the percentage change in price

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)

Mark scheme

Examiner's comment

Question 6 (c) This question was posed relating to the topic of income elasticity of demand and the analysis of its coefficient. Many students identified the normal/ luxury good and its figure needing to be greater than 0, however only the strongest candidates were able to reference the extract and the impact of income changes upon sales of refillable cleaning products.

Notes from the mark scheme and report

• positive YED, normal and income elastic (luxury)
• income fell 4.3% and sales fall from 200 000 to 130 000 (-35%), so YED = -35 / -4.3 = 8.1
• only the strongest used the extract data

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)

Mark scheme

Examiner's comment

This question asked candidates to calculate percentage decrease in budget deficit. Many candidates found this question a little challenging to answer. These candidates lost marks because they did not use the correct formula.

Notes from the mark scheme and report

• (83.6 - 38.7) / 83.6 x 100 = 53.7% decrease (accept 54)
• many used the wrong formula, e.g. dividing by the 2019 figure

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Mark scheme

Examiner's comment

The four marks for this question are split in half between knowledge and application. Candidates achieved 2 marks for explanation of the term inflation rate and 2 marks for relevant application from Figure 1 only.

Notes from the mark scheme and report

• the percentage change in the average price level over a year
• application from Figure 1 only, e.g. 0% in 2016 rising by nearly 2 percentage points by 2017, peak of 5% in 2012

Quantitative skills: QS 10 (distinguish between changes in the level of a variable, and the rate of change); QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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

• %change in Qd = PED x %change in P = -0.4 x 4.8 = -1.92 (B)
• C uses the student PED
• A and D divide instead of multiply

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

C

Mark scheme

Notes from the mark scheme and report

• %change in P = %change in Qs / PES = 12 / 1.8 = 6.67 (C)
• 1.8/12, 1.8/1.2 and 1.8 x 12 are the distractors

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)

Mark scheme

Examiner's comment

On this question, candidates had to use the information in the market share chart to explain the market structure of mortgage lending in the UK. The most effective method here was to calculate the n-firm concentration ratio, which was worth two marks. This calculation indicated that the market structure was oligopolistic. Marks were then available for some explanation of the characteristics of oligopoly, such as high barriers to entry or a few large firms. Some candidates mistakenly identified monopolistic competition or monopoly from this data. This response clearly recognises that the market structure of the UK mortgage industry is oligopolistic. The candidate then tells us that there are multiple large firms with significant market share. There is then a final mark for the reference to Lloyds being the largest firm. Overall, this response scored 3 marks. To maximise your marks, always refer to the stem for numerical data. Quoting the table provided or, better still, manipulating the numbers provides access to higher marks. This second response achieved full marks. The candidate informs us that this industry is an oligopoly. They have then used the numerical data to calculate the five-firm concentration ratio of 64%. They go on to tell us this is typical of oligopolistic industries. A very efficient response.

Notes from the mark scheme and report

• calculate an n-firm concentration ratio (e.g. 5-firm 64%) for 2 marks and conclude oligopoly
• some wrongly said monopolistic competition or monopoly

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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

• 19.5% x £1 601 billion = £312 billion (C)
• A divides by 19.5, B uses 12.7%, D divides by 0.195

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Mark scheme

Examiner's comment

This question tested whether the skills of this economist candidate include the use of data, and the majority found the 10% savings ratio. Some students misinterpreted the graph (1ap mark for reading off the savings level) but almost all students could calculate the percentage and score one mark that way. The only issue noticed with this question was that the 'quarter' markers did not tie up with the year changes, and were marking the end of the quarters rather than the start. This is a fair way to illustrate data, but not one that many students might be used to. This a lovely, clear and correct answer. 1 mark for data use, and 1 mark for correct calculation. Always show your working. It is imperative not to give 'subsequent information' that contradicts your answer. If you add something to your answer that makes it incorrect, we cannot allow this as fully correct. This is a tragedy – the workings did include the correct answer, but the answer finally presented was not correct, so only 1 mark could be awarded. Underline your final answer, and make sure you show the savings as requested.

Notes from the mark scheme and report

• savings ratio in Q4 2015 is 10%, so 10% x £26 300 = £2 630
• report: some misread the quarter markers
• do not add later working that contradicts the answer

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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

• percentage point fall = 23.5 - 21.4 = 2.1 (C)
• D is the percentage change between the values, A a part-calculated percentage change, B the July to October 2020 fall

Quantitative skills: QS 10 (distinguish between changes in the level of a variable, and the rate of change); QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Answer

C

Mark scheme

Notes from the mark scheme and report

• (1 971 - 1 277)/1 277 x 100 = 54% (C)
• A divides the change by the new price
• D is the change in pounds (694), not a percentage

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Mark scheme

Examiner's comment

In this question the marks are split as 1 for knowledge, 1 for application, and 1 for analysis. The knowledge comes from identifying one impact, the application for explaining the data, and analysis for development building on the knowledge. Most candidates were able to access application marks.

Notes from the mark scheme and report

• healthcare spending rose £44.8bn (25.6%), shifting LRAS right
• develop via a healthier, more productive workforce and fewer days lost to sickness

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This was a straightforward percentage change question and the vast majority of candidates answered it correctly. However, around 10% of candidates either scored 0 or just 1. Again this stresses the importance of practising the quantitative skills type of question. A typical mistake was to divide the change by the new price rather than the original price. On this response we can clearly see an accurate formula, followed by the correct answer. For all the calculation questions make sure you show your workings just in case there is an error in your calculation. A calculator can make sure you get this calculation right. On this response, the candidate has entered the correct data into the formula, therefore scoring the first mark, but has then made a mistake with the calculation. As a result, it scores 1/2.

Notes from the mark scheme and report

• (5 664 - 5 044) / 5 044 x 100 = 12.3%
• report: a typical mistake was dividing by the new price rather than the original

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Mark scheme

Examiner's comment

For this question, there is one mark for identifying the correct market structure as either an oligopoly or a legal monopoly. A further two marks were awarded for the correct calculation of any concentration ratio. Two analysis marks were available for a linked explanation, for example high barriers to entry or a market dominated by a few large firms. There were a few cases of candidates either not using the numerical data at all, or calculating the ratios incorrectly. In this response, the candidate achieves the knowledge mark for the identification of the market as an oligopoly. There is then a correct calculation of the 3 firm concentration ratio in the second quarter of 2022, which is 58.5%. The analysis marks are then achieved for the reference to a few big firms and high barriers to entry. This is a strong response which also makes use of a diagram, though this would not be necessary to achieve the full marks available. Again, we can see here the importance of using quantitative data to achieve the application marks, and again the importance of a calculator to aid with the process. In this second response, the candidate has correctly identified the market structure as an oligopoly, and calculated a 5 firm concentration ratio of 74% for the second quarter of 2022. It is acceptable for this question to round numbers up or down to the nearest whole number. The first analysis mark is awarded for the recognition of a few large firms dominating the market, but no further marks are achieved, so this response scored 4/5. Question (b) The assess type questions on this paper take us into levels based marking, which means that we are looking for a best fit approach to awarding marks. There are 6 marks for knowledge, application and analysis, and 4 for evaluation. This question was answered well by the majority of candidates, with many very strong responses. The usual approach was to write about why Netflix subscribers did behave rationally, for example by switching to Disney because it has a higher customer satisfaction rating. The counter view, that subscribers behave irrationally tended to centre on the idea of habitual behaviour, with subscribers paying for a service that isn't necessarily used extensively, or the idea of 'forgetful subscribers', who forget to cancel after a short term trial period. This first response is a very strong example. The candidate explains carefully how Netflix subscribers behave rationally, by cancelling their subscriptions and switching to better value alternatives like Disney+. The candidate also makes a clear link to the concept of maximising their utility. There is full use of supporting numerical data in the response, which really helps to lift the quality. The counter view is also well developed, with the candidate going on to explain a series of reasons why subscribers are behaving less rationally, such as other services being cheaper or 'not being bothered to deal with the administrative faff' of trying to switch or cancel a subscription, which is a good reference to habitual behaviour or inertia. This response scored at the top of level 3 for knowledge, application, and analysis. It also scored at the top of level 2 for evaluation. Overall, this achieved 10/10. Ensure that in levels based responses, you clearly link the analysis of concepts to data which supports your points, like the previous example. In this response the candidate develops some analysis of rational behaviour by subscribers. There is clear use of context. However, the analysis is not linked to utility, so it didn't get into level 3 for knowledge, application and analysis. The evaluation was clear, and linked to inertia and information gaps. Overall, this scored top level 2 for KAA and top level 2 for evaluation. Overall, 4 + 4.

Notes from the mark scheme and report

• oligopoly (or legal monopoly for Amazon over 25%): calculate a concentration ratio (e.g. 3-firm Q2 2022 = 58.5%) for 2 marks
• explain few large firms and barriers to entry
• report: a few did not use the data or miscalculated

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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

• 5.0% (Feb 21) to 4.0% (Dec 21) is a fall of one percentage point (B)
• A confuses 1.4 percentage points with 1.4%
• C reverses the highest and lowest months
• D is a forecast the chart cannot show

Quantitative skills: QS 10 (distinguish between changes in the level of a variable, and the rate of change); QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This question asks students to calculate and make use of the data provided in the table. The majority of candidates understood what calculation was required of them, but a significant number didn't appreciate that the data in the table was in £ millions. Properly reading headings in tables/on graphs is absolutely vital, and in this case something that cost a lot of candidates a mark. This answer has correctly calculated the right answer and so gains full marks. Remember to always show your working out. If this candidate had written out the right calculation but somehow got the wrong answer, they would still have gained 1 mark. This answer only gets 1/2 as it is not the correct answer. The candidate has not noticed that the data in the table is in £ millions.

Notes from the mark scheme and report

• 2 198 473m x 1.035 = £2 275 420 million
• many lost a mark by omitting 'million' (data are in £ millions)

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This calculate question asks candidates to calculate US national debt as a percentage of GDP. Most candidates got the correct answer. The incorrect ones had often got the numbers round the wrong way, dividing 23 by 28.4. This is the correct answer and, as such, achieves full marks. This answer has the correct formula but the candidate has made a mistake in their calculation so they get 1/2. This shows why always writing out your working out is important. If this candidate had simply written their answer (12.35%) they would have got 0/2.

Notes from the mark scheme and report

• 28.4 / 23 x 100 = 123%
• common error dividing 23 by 28.4

Quantitative skills: QS 1 (calculate, use and understand ratios and fractions); QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Answer

D

Mark scheme

Notes from the mark scheme and report

• %change in Qs = PES x %change in P = 1.5 x 10 = 15% (D)
• A and B misplace the decimal
• C divides 10 by 1.5

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)

Mark scheme

Examiner's comment

This question was a four-mark calculation based on the concept of cross elasticity of demand. A majority of candidates were able to complete this successfully, which is a pleasing indicator of the improving numeracy of the cohort each year.

Notes from the mark scheme and report

• XED = -8: %change in Qd chips = -8 x 2% = -16%
• 950 000 x 0.16 = 152 000
• new Qd = 798 000 bags
• up to 3 marks for working

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

B

Mark scheme

Notes from the mark scheme and report

• (1.22 - 1.53)/1.53 x 100 = -20.26%, a 20.26% fall (B)
• A is the $0.31 difference, C divides by the new value 1.22, D is the index with 2015 = 100

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Mark scheme

Examiner's comment

In this question the focus is on having the ability to correctly calculate the percentage change in quantity demanded and to substitute the answer into the PED formula. A mark was not awarded for the formula itself but overall, this question was well answered by candidates and nearly all carefully made use of the formula and showed their working to achieve their final answer. This response provides a correct answer and is awarded 2 marks. This response correctly manipulates the formula to identify 5 % x 1.37 for 1 mark. However, the calculation is incorrectly given as 0.0685% which negates the answer. Therefore, this response was awarded 1 mark. Ensure you make use of a calculator and double check that your final answer makes sense.

Notes from the mark scheme and report

• %change in Qd = PED x %change in P = -1.37 x 5 = -6.85%
• report: some slipped to 0.0685%

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)

Mark scheme

Examiner's comment

In this question the focus is on having the ability to correctly calculate the percentage change in quantity demanded and to substitute the answer into the XED formula. A mark was not awarded for the formula itself but overall this was well answered by candidates and nearly all carefully made use of the formula and showed their workings to achieve their final answer. This response gives a considerable amount of detail for a 2 mark calculate response. The final correct answer is quite obscured at the foot of the page and was rounded up to 3.2%. Whilst most candidates identified an answer of 3.15%, rounding up to 3.2% or down to 3% was accepted and the response was awarded the full 2 marks. Be careful to clearly identify your final answer. This is an example of a common response to this question and it was awared the full 2 marks. It is always worth showing your workings. This does not need to take a lot of time and can help you pick up a mark if human error creeps into your final calculation.

Notes from the mark scheme and report

• %change in Qd of water = XED x %change in price of sweetened drinks = 0.63 x 5 = +3.15%

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)

Mark scheme

Examiner's comment

Candidates were asked to calculate the concentration ratio with the majority taking a straightforward approach. The candidates were allowed to round up or down the answer of 52.96%. Candidates were also allowed to write as a ratio but there was little evidence of this happening. As a calculate-type question, the expectation was for a numerical answer but a definition was allowed as a knowledge mark. This response is awarded 4 out of the 5 marks available up until the final answer. By writing the final correct answer this response is awarded the full 5 marks. It is important to show your workings to secure marks in case your final answer is incorrect. This response correctly identified the answer '4354' and was awarded 1 mark. The response is also awarded 1 mark for knowledge for an accurate definition. As a consequence, this response is awarded 2 of the 5 marks available. For calculate questions, numerical responses are the most simplest expected answer.

Notes from the mark scheme and report

• (2681 + 1025 + 648) / 8222 total shops = 4354 / 8222 = 52.96%
• total must include AMT, Soho, Coffee Republic and other chains

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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 proved to be most challenging for candidates. The response was to identify that a rise in incomes would increase demand which would cause a significant rise in price if supply was price inelastic. However, as there are more plantations grown supply may become less price-inelastic and there would be less volatility. Some candidates chose to look at the factors and then to consider price-elasticity and this was marked positively. Some candidates made use of a diagram that enhanced their written explanation or evaluation. At least one reference to Figure 2 was required for application. As a points-based question, these are marked following the marking criteria Knowledge (K), Analysis (AN), Application (APP) and Evaluation (EV). In this response, the first point identified is price inelastic demand (1K). This is followed by two numerical references (2APP max). The next part was not seen as an effective evaluation. Another factor was price inelastic supply (1K) with reference then to income rising (1AN). Overall, this response is awarded 1K + 2APP + 1K +1AN and achieves 5 of the marks 8 available. Make effective use of the data. 2 marks are always reserved for application on 8 mark responses. This response is awarded 2 marks for application from the start. 1 mark is awarded for identifying supply is price inelastic for knowledge. A further mark is awarded for analysis for explaining how a significant increase in price will have a small increase in demand. The response is further supported by use of the diagram. Two evaluative marks are then awarded for identifying how and why supply may become less price inelastic in the long run. A second factor regarding a good harvest is also provided as a non-price determinant of supply (1K) with a written explanation that is again supported by the use of an accurate diagram (1AN). Overall, this response is awarded the full 8 marks. Making effective use of supply and demand diagrams can help lock in knowledge and analysis marks or may provide a way into evaluation.

Notes from the mark scheme and report

• price inelastic demand and supply make shifts cause large price swings
• supply shocks (harvests, weather), demand shocks (incomes, café closures in 2020)
• quote Figure 2 changes, e.g. +11.11% in Aug 2020
• report: "This question proved to be most challenging for candidates"

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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

• price fell from $40 to $15: (15 - 40) / 40 x 100 = -62.5% (C)
• A is the $25 change written as a %, B is 15/40, D divides the change by the new price

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Notes from the mark scheme and report

• subsidy share = 100% - 30% ticket sales - 12.5% donations = 57.5%
• 0.575 x $200 000 = $115 000

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))

Mark scheme

Notes from the mark scheme and report

• (3.69 - 3.50)/3.50 x 100 = 5.4%

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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

2a This question was poorly understood, and the common confusion between deficits and debts was in evidence. - The candidates do not have to just use Figure 2 - anything from the extract is fine (all figures) but because it is mentioned in the question this must be a very good place to start - 1 implicit mark for national debt understanding - accumulation over time - 1 mark if able to identify a valid reason - Up to 2 for development of reason - 1 application mark for trend and 1 for data reference - Examples of the opportunity costs as analysis e.g. debt servicing Common confusion between debt and deficits: The above failed to score, as the data use was also linked to debt not deficits. This scored full marks: 2b - Must be the impact on firms e.g. - costs, revenue, profit, motivation of workers - Do not award macroeconomic effects - consumption and AD A very common problem was to read the increase in unemployment from 5 to 6.1% as a 1.1% increase. It is strongly advised that the term ‘percentage points’ is used. This scored just one data mark (for the trend) but no marks for the use of 1.1%: The main problem however was not explaining the effect of increased unemployment on firms. Most gave solely macro diagrams and there were no links to the micro, so some impressive chains of reasoning involving AD shifts and multipliers did not unfortunately make a link to the question in many cases. This however scored nearly full marks (needed more evaluation): 2c - Can have one impact with the diagram (no need for 2 separate KAA points) - Do not accept supply and demand diagrams - Must be a shift - not static - Can be either - higher costs (either just AC or both MC and,AC) or increased revenue (to match explanation) and the alternative (revenues or costs) can be used as the evaluation. This answer goes on to evaluate, introduce a second point, then evaluate again, and then make a judgement. Clearly a 12/12 answer: Other diagrams were often used, but they are not advised. This scored 2/12 from the chain of reasoning, not the diagram (this was the total response, so clearly a time issue here too): 2d - 2d was much less popular. It was apparent that causes questions were more difficult for candidates to access than effects questions on this paper. - Can talk about actual or potential - Often hard to find micro factors - General lack of diagrams in the answers - EV - needs to be a criticism of their point (not just the opposite) - Needs to be in reference to the German economy in context for L4 - This answer clearly was going to be fully macro based, and the plan made it clear that the candidate was not confident in applying micro concepts in areas taught within the macro part of the specification. 2e - Needs to be in reference to German fiscal policy for L4 - Many did not successfully find a micro link to fiscal policy, but the most effect answers showed the effects on firms’ cost curves or the positive externalities in consumption of many public sector goods. This answer was clearly a L4 and L3 evaluation, right from the outset: It then goes onto a micro point, and although this isn’t perfectly drawn (MC does not going through the lowest part of AC2) there is every sense of the change costs but it does not give a verbal explanation of why there is only a change in fixed costs The answer as a whole (not fully shown here) did secure nearly full marks but would need a clear link as to why it is fixed and not variable costs changing to secure the higher level micro marks. In future the candidates taking this exam should address the following issues: Use the data in every question. This is a data response paper. Use a diagram in the longer questions if you can, even if it is not requested. For example, the essay question on government spending on public goods, or the essay question on electric cars, could have positive externalities in consumption, even if not required. Timing. Generally, allow a minute per mark, and this gives 20 minutes reading or correction time. You can achieve all the marks in this time, and you do not need to fill all the space available. Question spotting does not help. Candidates who think they know how to answer a certain type of question tend to give generic responses and do not read the data available. Explain every step in your chain of reasoning, and have multiple steps. Stick to either micro or macro in the non-25-mark questions. The questions are based on the separate four themes and you do not need to mix up your answers. Of course, synoptic answers are valid, but the safest and most reliable option is to ‘keep it simple’. Structure your answers around the material provided, rather than trying to pin the data onto a pre-learned theoretical answer. In your 25-mark essays, write an informed, critical conclusion weighing up your argument, not a summary. Return to the question, and answer it - avoiding the personal pronoun is preferred - in an informed and reasoned framework. with its registered office at 80 Strand, London, WC2R 0RL, United Kingdom

Notes from the mark scheme and report

• 5% to 6.1% is a 1.1 percentage point rise, not a 1.1% increase
• effects on firms (lower demand, easier recruitment, lower wages), not macro AD and multiplier chains
• evaluate: only a forecast, still below 11.7% in 2005

Quantitative skills: QS 10 (distinguish between changes in the level of a variable, and the rate of change); QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This question was a four-mark calculation based on the manipulation of student loans data. 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. There were still errors, nonetheless, where percentage changes were clearly confused.

Notes from the mark scheme and report

• (102 357 - 45 418) / 45 418 x 100 = 125% (accept 125 to 126)
• up to 3 marks for correct working
• some confused the percentage change formula

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Answer

D

Mark scheme

Notes from the mark scheme and report

• RPI 2.1% minus CPI 1.5% = 0.6 percentage points (D)
• A ignores the difference
• B and C are not the percentage point gap

Quantitative skills: QS 10 (distinguish between changes in the level of a variable, and the rate of change); QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Mark scheme

Examiner's comment

Most students were able to accurately calculate the answer here. Those who didn't get full marks generally hadn't read the question properly and so didn't calculate what they had been asked to. This answer achieves 1/2 marks for correctly calculating the total variable cost. They also would secure one out of two marks for 300 + 320.Unfortunately they do not provide the final correct calculation required for full marks. This answer achieves 2/2 marks for correctly identifying the answer is £620.

Notes from the mark scheme and report

• AVC = 40% x £2 = £0.80
• TVC = 0.80 x 400 = £320
• TC = £320 + £300 = £620
• report: errors came from misreading what was asked

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))

Mark scheme

Examiner's comment

In this question most students were able to access close to full marks. There was, in most cases, an accurately labelled diagram accompanied by a relevant explanation. However, a significant number of responses ignored the requirement to refer to Figure 1. This answer secure 5/5. A correctly labelled diagram annotated to show a shift right in supply is explained with reference to the data in Figure 1. There is also some explanation of the effect being a rise in consumer surplus and in the diagram of the financial gains to the producer and consumers of the subsidy illustrated in the diagram. This is an excellent answer to this question scoring full marks. An accurate diagram is provided showing a double shift right indicating an increase in subsidy, as allowed in the mark scheme. Accurate reference to the data in Figure 1 is also provided within the careful explanation of the diagram.

Notes from the mark scheme and report

• higher subsidy (£277m to £287.9m, about 3.9%) shifts supply right so fares fall (or rise less than they would with RPI-linked fares)
• 2 KAA marks reserved for an accurate diagram
• report: a significant number ignored Figure 1

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Notes from the mark scheme and report

• growth in 2017 was 1.7%: £200 000m x 1.017 = £203 400m
• report: "students found this a fairly difficult calculation" and scored much lower than on the Q4(a) calculation

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Notes from the mark scheme and report

• (910 - 894) / 894 x 100 = 1.79% (accept 1.78 to 1.8)
• divide by the April figure

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

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.

Notes from the mark scheme and report

• %change in Qd = -0.5 x 3% = -1.5%, so 19.1m x 0.985 = 18.8135m tickets
• TR = £7.63 x 18.8135m = £143.547m (allow 143.5 to 143.6)
• many did the percentages but never reached total revenue
• max 2 without the correct answer

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)

Answer

A

Mark scheme

Notes from the mark scheme and report

• VAT = 5% x £1 070 = £53.50 (A)
• B divides by 0.5, C multiplies by 1.005, D gives the bill including VAT (x 1.05)

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Answer

C

Mark scheme

Notes from the mark scheme and report

• %change in income = (8.75 - 7)/7 = 25%
• %change in Qd = -0.1 x 25 = -2.5% (C)
• A multiplies 8.75 by -0.1, B uses 2017 as the base year, D forgets to multiply by -0.1

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)

Mark scheme

Examiner's comment

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.

Notes from the mark scheme and report

• 450m visits x £12 = £5.4 billion
• only 10% are charged, so £5.4bn x 10% = £540 million (£0.54bn)
• 4 marks for the correct answer
• most candidates got this right

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required the candidates to discuss limitations of using GDP data to compare living standards between the UK and developing countries. Candidates needed to ensure they answered the question being asked, as there were a few answers which listed the limitations and did not develop their arguments. They were not able to receive higher analysis marks. Evaluation was fairly weak and most points were only listed. Many did not make any use of data in this question and often found it hard to access application.

Notes from the mark scheme and report

• limitations: growth rates without the level of GDP, informal economy (five times larger in developing countries), income distribution, PPP and exchange rates, population, quality of life
• report: limitations only listed, evaluation weak, many ignored the data

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

In this question the focus is on having the ability to correctly calculate the percentage change in quantity supplied and to substitute the answer into the PES formula. A mark was not awarded for the formula itself but overall this was well answered by candidates and nearly all carefully made use of the formula and showed their working to achieve their final answer. The main issues that candidates faced here was failing to correctly calculate the percentage change or to apply the formula the correct way around. The candidate correctly calculated the % change in quantity supplied as 20.99 thus earning one mark. They then substituted their answer correctly into the PES formula but the final calculation was wrong. As an incorrect answer they receive 0 marks for the final calculated answer despite having the correct working. Overall they achieve 1+0 = 1 mark. Ensure you make use of a calculator and double check that your final answer makes sense – to overcome human error. This candidate provides a correct answer, achieving 2 marks.

Notes from the mark scheme and report

• %change in Qs = 28 268 / 134 612 x 100 = 21%
• PES = 21 / 5.4 = 3.9
• report: errors were a wrong % change or the formula the wrong way round

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)

Mark scheme

Examiner's comment

Being a few years into the new specification candidates are well practiced in showing their working. A significant number of candidates were not able to calculate the total revenue and profit for 2016 so were unable to obtain the final answer. Some candidates wrongly subtracted the 2017 figures to obtain their final answer of 58.3 million. Nearly all responses seen ensured that they used the correct unit of measurement as £58.4 million rather than 58.4. This answer achieves one mark for correctly calculating profit in 2016 as being equal to 14.4 million. They miscalculate revenue for 2016 resulting in the wrong overall answer. An additional mark was awarded for the correct use of the formula. 2 marks overall. By showing your working it is possible that you may pick up at least a mark even if computational errors occur. This candidate has the correct answer of £58.4 million and hence achieves full marks.

Notes from the mark scheme and report

• 2016 profit = 17.5 / 1.215 = £14.4m
• 2016 revenue = 75.8 / 1.041 = £72.8m
• TC = TR - profit = £58.4 million
• report: some subtracted the 2017 figures instead of working back to 2016

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))

Mark scheme

Examiner's comment

The majority of candidates were able to accurately calculate the answer here. Those who didn't get full marks generally hadn't read the question properly and so didn't calculate what they had been asked to. This answer achieves 1/2 marks for correctly constructing the formula 500,000 X 0.17 but unfortunately the candidate didn't get the right answer from their calculation.

Notes from the mark scheme and report

• 500 000 x 0.17 = £85 000

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Mark scheme

Examiner's comment

This was mainly well-answered, with good responses able to both explain the characteristics of a highly concentrated market (knowledge and analysis) and calculate an appropriate n-firm concentration ratio. The mean was 3.8 out of 5. Many candidates scored well on this question, showing a clear understanding of highly concentrated markets which was often developed through an understanding of the market structure being an oligopoly or monopoly power. The best answers calculated an accurate concentration ratio in order to gain both marks, although many just listed market shares to score one application mark. Weaker responses tended to make errors through confusing 'highly concentrated' and 'highly competitive', or simply listing the firms' market shares rather than using them to show the concentrated nature of the market. The data could be numerical or verbal, and it is advised to use both sources (though not required for full marks). We were strict in not awarding a mark for the observation that Walker's had or was a (pure) monopoly; rather we were looking for candidates to appreciate that it was a legal or working monopoly, or in another way showing market dominance rather than overall control. Please note the similarity with the marking on the coffee shop question in 2018 1(a). Don't list data. Use it. Try to make two separate points if you can't use the data in a calculation.

Notes from the mark scheme and report

• highly concentrated means a few firms hold a large market share, not many firms or 'highly competitive'
• calculate a concentration ratio (2-firm 78.0%, 3-firm 82.2%) for both application marks rather than just listing shares
• Walkers is not a pure monopoly
• max 1 application mark without Figure 1 or Extract A

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This question was answered well by a large majority of candidates and again the use of a two-step method using the data was essential. It was important for candidates to use the data to obtain the first mark, with both marks being reserved for a correct answer. A common mistake was for candidates to get the formula for Price Elasticity of Demand the wrong way around, dividing 8.3 by -5.4 and getting -1.54. In this example the candidate has clearly worked through the steps of the calculation, gaining the first mark for 8.3, and the second for the correct answer of -0.65. Writing the correct formula doesn't in itself gain any marks here but it is the first step in obtaining the correct percentage change in price. This then enables the correct final answer to be calculated.

Notes from the mark scheme and report

• %change in P = 5 / 60 x 100 = 8.3%
• PED = -5.41 / 8.3 = -0.65
• report: common mistake was the formula upside down (8.3 / -5.4 = -1.54)

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)

Mark scheme

Examiner's comment

Though most candidates were able to score 2 marks on this question the majority were unable to score 3 marks. So, whilst candidates could define inferior goods and/or give a formula, and many could identify bus travel as an inferior good, there was insufficient manipulation of the data, e.g. calculating the percentage change in income, i.e. 6.2%, or the YED of bus travel, i.e. -0.48. This is an excellent answer which gains marks for the relevant formula, a correct calculation, and the statement that bus travel is an inferior good. 3 marks. Use the data provided to calculate whether bus travel is a normal or an inferior good. In this example the candidate both defines inferior goods and identifies that bus travel is an inferior good. However, the data is only quoted and not used to calculate the change in income or YED. Use the data provided in the question beyond simply re-stating what is in the question.

Notes from the mark scheme and report

• %change in income = 1 500 / 24 200 = +6.2%
• YED = -3 / 6.2 = -0.48, negative so bus travel is an inferior good
• report: most scored only 2 of 3 as they quoted the data without calculating

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

D

Mark scheme

Notes from the mark scheme and report

• health spending rose from 141 to 145: 4/141 = 2.84% (D)
• the biggest change is social protection (+8), all areas rose, defence (46) is less than twice housing (34)

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This question asked candidates to calculate the forecast UK government spending on social protection as a percentage of total forecast UK government spending in 2016/17. Many candidates were able to answer this question relatively easily. However, some candidates lost marks because they selected the wrong two pieces of data. This candidate achieves 2/2 marks. They have correctly calculated an answer of 31%. This candidate achieves 0/2 marks. They have not shown the correct workings and their answer is incorrect.

Notes from the mark scheme and report

• 240 / 772 x 100 = 31.1%
• the £716bn tax receipts figure is a distractor
• some used the wrong data

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

Most candidates found this to be a straightforward question, gaining 2 marks for giving the correct answer of £6357 or rounded up to £6360. There are 2 marks available for application, 2 marks for the correct answer or 1 mark for providing the correct working but not the correct answer. This answer scores the full 2 marks. The candidate makes clear their final answer by double underlining £6357. In the absence of this correct answer they would have obtained 1 mark for 0.013 x 489 000. Ensure you make clear your final answer on quantitative skill questions. This answer scores zero as unfortunately the candidate doesn't have the correct percentages – in this case what 1.3% means numerically. Candidates need to develop their competence in the quantitative skills as listed in the specification.

Notes from the mark scheme and report

• 1.3% x £489 000 = 0.013 x 489 000 = £6 357
• report: some could not convert 1.3% into a decimal

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)

Answer

A

Mark scheme

Notes from the mark scheme and report

• (276.7 - 352.4) / 352.4 x 100 = -21.5% (A)
• B divides by the 2015 figure
• C uses 2014 to 2015 only
• D gives the absolute fall, not a percentage

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This was a high scoring question with the vast majority of candidates gaining 2 marks, although a few only scored 1 mark as they had only calculated the total market share of the companies but had not expressed the answer as a percentage. This answer achieves a mark of 2/2. Full marks for correctly identifying 68.75% for five firm concentration ratios. Without the correct answers being provided only one mark would have been awarded for the formula provided as per the mark scheme. Ensure you clearly state your final answer.

Notes from the mark scheme and report

• sum of five largest firms' sales 190 239 / 276 700 x 100 = 68.8%
• report: a few gave the total share but not as a percentage

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This question should be a standard calculation task. Candidates simply need to calculate the percentage change using the data provided. The main mistake candidates made was not correctly working out that the change in the current account from -200 to -800 is 600. This candidate has the correct answer of 300% and hence achieves full marks. This answer achieves no marks as the candidate is not using the correct numbers in their formula.

Notes from the mark scheme and report

• deficit rose from 200 to 800 billion: 600/200 x 100 = 300%
• main error was not reading the change from -200 to -800 as 600

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This answer is actually very straightforward but it seems that many candidates did not correctly understand the data they had been presented with before starting to answer the question. The data is already presented as percentage change, as it says clearly in the title. Therefore candidates simply needed to add 4 to 100 to get the answer of 104. This answer achieves 1 mark for 2015=100, since this shows the candidate has some understanding of index numbers and base years. This candidate has the correct answer of 104 and as such achieves the full two marks. Ensure you understand what index numbers are and that you can calculate them.

Notes from the mark scheme and report

• the data are already percentage changes: 2015 = 100, plus 4% gives 104
• 2015 = 100 alone earns 1 mark
• report: many candidates did not understand the data were presented as percentage changes

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 5 (calculate and interpret index numbers); 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

• (16 129 - 16 606) / 16 606 x 100 = -2.87% (B)
• C divides by the 2015 figure, D is the absolute change in thousand tonnes

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

The question was one requiring use of quantitative skills and provided an accessible question asking candidates to calculate the price elasticity of demand for tobacco cigarettes in high-income countries and in low-middle-income countries. Eighty five percent of candidates achieved full marks by correctly applying the PED formula twice to the data provided in Extract A, lines 11–13. Where marks were lost was an inability to identify the correct formula to perform the calculation. Where the correct formula data was substituted into the formula but the wrong answer was provided this was awarded 1 of the marks available. Answers which simply wrote down an acceptable accurate response, 0.4 and 0.5, were awarded full marks. 4 out of 4 marks awarded. Correct formula identified which if it was done in isolation with no further correct responses would obtain 1 mark. 1 mark was awarded for data located for high income countries and substituted into correct formula used (1 mark). Correct answer ‘-0.4’ was provided (2 marks). 1 mark for data located was awarded for low income countries and substituted into correct formula used (1 mark). Correct answer ‘-0.5’ was provided (2 marks). The written comments explaining what the answers meant were not relevant to the question so were awarded no marks. Accurate working will always receive credit and candidates are strongly advised to show their working in case they make a computational error with the final answer. 1 out of 4 marks awarded. 1 mark was awarded for a correct formula as an alternative for substituting correct figures on up to one occasion. The candidate did not then apply the data to calculate the formula for high and low income countries. Showing your working, including stating the correct formula, may help pick up some marks if you make computational errors.

Notes from the mark scheme and report

• PED = %change Qd / %change P: high income -4 / 10 = -0.4
• low-middle income -5 / 10 = -0.5
• 85% scored full marks
• a correct formula alone earns 1

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)

Mark scheme

Examiner's comment

This is a straightforward percentage change calculation that candidates should be able to answer relatively easily, and the majority were able to do this. It is vital that time is spent practicing calculations such as this. Candidates also need to be careful to read the question and the data carefully, as a number of candidates lost marks because they selected the wrong two pieces of data. This candidate achieves 2/2 marks. They have correctly calculated an answer of – 0.16%. Always show your working out in calculation questions. This candidate also correctly calculates the right answer and as such achieves full marks.

Notes from the mark scheme and report

• (128.2 - 128.4) / 128.4 x 100 = -0.16% (accept -0.15 to -0.2)
• use the September 2014 and 2015 values, some picked the wrong pair

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 5 (calculate and interpret index numbers)

Mark scheme

Examiner's comment

In this question the marks are split as 1 for knowledge, 1 for application, and 1 for analysis. The knowledge comes from explaining what under-employment is, the application for discussing the numbers, and analysis for some development building on the knowledge. This answer scores 2/3 marks. There is a correct definition of under-employment and also application that it has increased by 86.7%. There is no analysis of their answer. This candidate scores full marks. They have explained what under-employment is, applied it to the information provided, and also analysed this in terms of falling unemployment and zero hours contracts.

Notes from the mark scheme and report

• working fewer hours than wanted (or below one's skills)
• data: rose from 76 482 to 142 788 (about 87%) while unemployment fell to 5.7%
• analysis e.g. zero-hours and part-time contracts, flatters the unemployment figure

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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 = XED x %change in P = 0.16 x 5 = 0.8 (C)
• positive because e-cigarettes and tobacco are substitutes
• A and D divide 5 by 0.16
• B just restates the XED with a minus sign

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)

Mark scheme

Examiner's comment

Another Theme 1 question. In this question it was clear who knew their PED formula and who did not. Candidates need to practice such key calculations as part of their exam preparation. This answer achieves a mark of 2/2. This candidate has got the correct answer of 1.2, a minus or plus sign is allowed. Some margin for rounding up/down is allowed on mark schemes but do try to be as accurate as you can with calculations. This answer achieves a mark of 1/2. This candidate receives one mark for correct calculations of both percentages. However their formula is the wrong way around. A significant minority of candidates made this mistake. Learn your formulas and be careful in applying the formula accurately.

Notes from the mark scheme and report

• PED = %change in Qd / %change in P = -21.65 / 17.78 = -1.2
• 1 mark for both percentages
• report: a significant minority put the formula the wrong way round

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)

Mark scheme

Examiner's comment

Most candidates achieved full marks but a significant number of candidates lost a mark as the answers were transposed incorrectly i.e. they identified consumers as receiving 87.55 and producers 12.5%. Candidates need to practice similar subsidy and tax diagrams from Theme 1. This answer achieves a mark of 2/2. Full marks for correctly identifying 12.5% for consumers and 87.5% for producers. Without the correct answers being provided only one mark would have been awarded for correct annotation of diagram. This answer achieves a mark of 1/2. This response has transposed the answers incorrectly. Ensure you carefully follow the instructions provided.

Notes from the mark scheme and report

• consumers gain the fall in price 526 - 455 = 71 rupees: 71 / 568 x 100 = 12.5%
• report: a significant number transposed the consumer and producer shares

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

Most candidates achieved full marks but a significant number of candidates lost a mark as the answers were transposed incorrectly i.e. they identified consumers as receiving 87.55 and producers 12.5%. Candidates need to practice similar subsidy and tax diagrams from Theme 1. This answer achieves a mark of 2/2. Full marks for correctly identifying 12.5% for consumers and 87.5% for producers. Without the correct answers being provided only one mark would have been awarded for correct annotation of diagram. This answer achieves a mark of 1/2. This response has transposed the answers incorrectly. Ensure you carefully follow the instructions provided.

Notes from the mark scheme and report

• producers receive 1023 - 526 = 497 rupees: 497 / 568 x 100 = 87.5%
• the two shares must sum to 100%
• supply is inelastic so producers gain most of the subsidy

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

Most candidates were able to calculate correctly. The main problem was a failure to indicate the answer as a unit that clearly could be interpreted in pence between 29 and 30. This answer achieves a mark of 2/2. A clear answer is provided. This answer achieves a mark of 1/2. The wrong answer is provided but one mark is awarded for 13% of £2.27 in their working. It is always advisable to show your working in case of a computational error.

Notes from the mark scheme and report

• profit = 13% of 227p = 29.5p (accept 29 to 30)
• answer must be clearly in pence (report)
• show working to earn a mark for 13% x 227

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))

Mark scheme

Examiner's comment

In this question it was clear which candidates knew what the four firm concentration ratio meant. Candidates need to practice such key knowledge and why it may change as part of their exam preparation. Be careful in future about percentage points change and percentage change. This answer achieves a mark of 5/5. The candidate starts by calculating the four firm concentration ratio for both years and identifies that the ratio has decreased by 3.6 percentage points (benefit of doubt given here as technically it is not 3.6%); thereby picking up 2 marks for analysis and one for implicit knowledge of concentration ratio. They then go on to provide and explain the reason for the change. This answer achieves a mark of 5/5. The candidate starts by calculating the four firm concentration ratio for both years thereby picking up 2 marks for analysis and one for implicit knowledge of concentration ratio. They then go on to provide and explain the reason for the change. Ensure you carefully apply the data available, as instructed in the question.

Notes from the mark scheme and report

• 4-firm CR fell from 76.1% (2010) to 72.5% (2015), a fall of 3.6 percentage points not 3.6%
• reason: shoppers switching to discounters Aldi and Lidl and online (Extract A)
• define or show understanding of a concentration ratio

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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 clearly differentiated between the candidate that understood the theoretical problems of mergers in context, with a coherent chain of reasoning and responses which were theoretically light. Full marks were not always accessed when the answer did not consider carefully the context of the question and data available. Candidates who focused on the question and provided ‘problems for Sainsbury’s and Morrisons’ rather than to other agents achieved much higher scores and were generally able to develop these using the context and wider knowledge of issues of oligopolistic mergers effectively. The mean mark was 8.65. Use this as a model for your writing, along with other high scoring responses. Carefully unpick where the economic ideas are concisely linked together in context with both the problems and their evaluation. This answer achieves a mark of 15/15. This candidate achieves top level KAA and Evaluation. The further chains of reasoning are very impressive in looking at the two problems in context with concise use of theory and likewise with the linked evaluation. Ensure your evaluation is well-balanced against what you have previously written. This answer achieves a mark of 13/15. The candidate just secures maximum KAA but the chains of reasoning are not as fully developed as in the previous example and if this was an essay they would not have secured Level 4. The evaluation is a little disjointed and receives 4 marks for Level 2 evaluation.

Notes from the mark scheme and report

• problems for the two firms: CMA may block a horizontal merger (combined share 27.4% exceeds 25%), diseconomies of scale from overlapping stores, co-ordinating staff and a new IT system
• report: answers focused on problems for other agents scored lower
• evaluate with economies of scale and growth of Aldi and Lidl

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This answer is a straightforward percentage change calculation. Most candidates were able to answer this question easily and achieve the full 5 marks. Some candidates forgot the minus (or a reference to decrease or similar) and as such scored 4/5 marks. This question also demonstrates the need for candidates to know key calculations such as percentage change. This answer scores 4/5 marks. They have the correct value but have not appreciated that this is a decrease in the exchange rate. This candidate has calculated the correct answer and as such achieves full marks. Always ensure you know how to calculate percentage change and other similar calculations.

Notes from the mark scheme and report

• (0.75 - 0.95)/0.95 x 100 = -21% (accept -21 to -21.1)
• no minus sign or reference to a fall = max 4

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Answer

D

Mark scheme

Notes from the mark scheme and report

• %change in Qd = PED x %change in P = -0.2 x -20 = +4% (D)
• A and B misplace the decimal, C has the wrong sign

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)

Mark scheme

Examiner's comment

The question was one requiring use of quantitative skills question and provided an accessible question asking candidates to calculate the percentage change in house prices between the first quarter of 2009 and the first quarter of 2015. Nearly all candidates were able to obtain at least 1 mark by locating the data. Where marks were lost was an inability to identify the correct formula to perform the calculation. Where the correct formula and calculation was completed resulting in a mistaken answer this was awarded 3 marks, for example in identifying prices had fallen. Answers which simply wrote down an acceptable accurate response, 23-25%, were awarded full marks but were rare to find indicating good exam technique by the overwhelming majority of candidates. 4 out of 4 marks awarded. 1 mark for data located accurately and easy to follow with year references 375 (2015) and 300 (2009). Correct formula used (1 mark) and data substituted accurately (1 mark). Without the correct answer identified this would achieve 3 marks. The correct calculation is made, a 25% change, which makes the overall score 4 marks. In isolation writing '25%' change would have received full marks but this candidate has clearly shown their working in a concise manner in case they did make a computational error. Ensure you understand what Index numbers mean, some candidates added pound signs and zeros i.e. 2008 house prices were £300,000 which is inaccurate. Despite this error full marks could still be achieved for identifying the correct percentage change. Accurate working will always receive credit and candidates are strongly advised to show their working in case they make a computational error with the final answer. 1 out of 4 marks awarded. This answer clearly locates the data for 2009 and 2015 and uses the key to identify that they are Index numbers (1 Application mark). Unfortunately they do not then apply the data to calculate the percentage change (1+0 Application marks). They do not know how to work out a percentage change so receive no knowledge marks. Make careful use of data in a Figure you are asked to look at, spending time to see what the data is showing, there are always marks for doing this. Being aware of how to calculate percentage changes accurately is a useful tool for economists.

Notes from the mark scheme and report

• (373 - 300)/300 x 100 = 24% (accept 23 to 25%)
• index read from Figure 2 at Q1 2009 and Q1 2015
• some used the wrong formula or showed a fall

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 5 (calculate and interpret index numbers); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This question was a straightforward test of quantitative skills, and most candidates could correctly do the calculations involved. With the renewed emphasis on quantitative skills it is important that candidates practice such questions as part of their economics course. This candidates has got the correct answer of '-10.70%'. Some margin for rounding up/down is allowed on mark schemes but do try to be as accurate as you can with calculations. This answer only scores 1/2 as the candidate has failed to appreciate that this is a fall in the percentage change in the claimant count. Always check whether an answer should be positive or negative in calculation questions.

Notes from the mark scheme and report

• (858 344 - 961 149) / 961 149 x 100 = -10.7%
• giving +10.7% scores 1
• check the sign of the answer

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); 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

• median = the middle income when all household incomes are placed in order (B)
• A is the range, C the mode, D the mean

Quantitative skills: QS 3 (understand and use the terms mean, median and relevant quantiles)

Mark scheme

Notes from the mark scheme and report

• demand for meat substitutes is price inelastic (demand rises despite £21.81 per kg vs £6.61 for beef), so higher prices raise total revenue
• apply Nestlé and Vegetarian Butcher acquisitions
• report: good extract use but limited explanation of how revenue increases

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was a question targeting the difference between private and external costs, on the extract regarding meat farming. One key area where candidates lost marks was the understanding of what private costs are in this example to farmers. The concepts of externalities and pollution was very clearly understood, however private costs were not and therefore many candidates did not score particularly highly here. The use of diagrams although not essential here was advisable to really show further degree of understanding. The strong responses evaluated both private and external and explained why they may not be as problematic or complicated to resolve which again, many candidates were unable to effectively showcase. To achieve the highest levels within the twenty-mark essays, the maximum evaluative marks, needs to show evidence of a substantiated judgement. This was often missing or left to a conclusion, which summarised the points and made a generic judgement call. Both essay questions were accessible to candidates though question 6(g) (indirect tax) proved to be significantly more popular than question 6(f) (subsidy reduction ).

Notes from the mark scheme and report

• private costs to farmers (feed, land, labour) vs external costs (greenhouse gases, land use, loss of habitat, health)
• negative production externality diagram, no valid diagram caps at Level 2
• Level 3 must consider both consumers and producers
• report: many did not understand private costs so did not score highly

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

The first of the essay questions, this question was the least popular by a significant margin. Candidates also performed substantially worse on this response than they did on 6(g). The question allowed candidates to demonstrate their understanding of what the likely impact would be of removing subsidies upon animal products and the potential for reduction in market failure as a result The stronger responses showcased the reduction in deadweight loss through the subsequent switching to other products. Strong responses made a good attempt to substantiate points diagrammatically and could show the subsidy being removed increasing prices of these products, limiting their demand and therefore the size of the DWL. Top level KAA marks required at least one ‘effect’, very well analysed, and developed relating to the implementation of such a reduction. Evaluation marks could be achieved by counterbalancing the point(s) made and arguing why/ why not the subsidy being removed could be successful.

Notes from the mark scheme and report

• removing subsidies shifts supply left: higher prices, lower output, lower farm incomes (grazing livestock profit negative without subsidy, Figure 1), less overproduction and welfare loss
• evaluate with PED, farm closures, food security
• report: candidates "performed substantially worse on this response than they did on 6(g)"

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was a highly accessible question considering the use of taxation to reduce the market failure associated with meat farming. There are numerous possibilities that candidates could explore, and the vast majority talked about the increase in price and switching to other goods, using a simple taxation diagram. This essay required a clear exercise of critical analysis, and strong responses would be expected to have a developed a clear appreciation of the impact of taxation and its benefits and drawbacks as a method of government intervention to correct the market failure and introducing the concept of the incidence of the tax based on the elasticity of the goods. Sophisticated responses recognised that other forms of government intervention would be more effective than taxation. Good use of diagrams was showcased throughout the candidate’s responses, most commonly, an indirect tax diagram. To access evaluation marks, candidates could explore the various strengths and weaknesses of the proposed method and use the prompts in the extracts to consider how effective the policy might be. Another line of development considered how some combination of policies might be necessary to effectively tackle the problem of excessive consumption of production of these animal products. 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, in this case limiting negative implications.

Notes from the mark scheme and report

• indirect tax shifts supply left and raises meat prices (beef £24.24 to £29.50, Figure 2), reducing consumption towards the social optimum
• incidence depends on PED and PES
• revenue (£35bn) could fund cheaper fruit and veg
• evaluate inelastic demand, regressive effect, valuing the externality

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

Answer

C

Mark scheme

Notes from the mark scheme and report

• C is where actual GDP is above trend GDP = positive output gap
• A and D are on trend (no gap), B is below trend (negative gap)

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

Mark scheme

Examiner's comment

This question required candidates to show/draw the likely impact of a reduction in indirect tax in the context of an AD/AS diagram. Marks were awarded as 1 mark for a rightward shift in AD/SRAS and 1 mark for equilibrium showing new price level and new real output. Most candidates achieved the 2 marks on this question.

Notes from the mark scheme and report

• lower indirect tax cuts firms' costs so SRAS shifts right: lower price level, higher real output (AD shifting right also accepted)

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required the candidates to discuss effects of a decrease in government expenditure on the UK economy using an AD/AS diagram. Candidates needed to ensure they answered the question being asked, as there were a few answers which listed causes of changes in government spending and did not answer the question. Those candidates who made an attempt at this question, could not only identify the effect but were not able to receive the analysis marks. Evaluation was well written, but some candidates were only able to list their points. Many used the data and often found it hard to access application.

Notes from the mark scheme and report

• Level 3 needs an accurate AD/AS diagram showing AD (and/or AS) shifting
• less G lowers AD via the multiplier: output, unemployment, inflation, budget deficit, poorer public services (cut by a third of GDP 2024-28)
• evaluate with size of the cut, spare capacity, crowding in, time lags

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required the candidates to evaluate the possible causes of inflation. Many candidates were able to effectively answer this question by identifying and explaining the causes. They linked it to an AD/AS diagram in context of their explanations. One of the issues was that many candidates discussed solutions to solving inflation as evaluation and this was not credited. Candidates who effectively answered this question explained their arguments in context.

Notes from the mark scheme and report

• demand-pull vs cost-push (import, food, fuel and energy prices) and money supply growth, with AD/AS diagrams and Figure 2
• solutions to inflation are not credited as evaluation
• evaluate the relative importance of causes

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 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

• 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 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)

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question seemed to be highly accessible to candidates and one where there were many very good answers. Some candidates wrote much more than was needed, especially for the KAA side of the question. The question specifically asked for the impact on aggregate demand - that is all that needed to be discussed in terms of KAA. Candidates would not gain any marks by discussing how increased investment by firms may help to increase aggregate supply, as that was not what they had been asked to do. Good answers frequently made effective use of the case study to illustrate points, both for KAA and for evaluation. For example, referencing the number of jobs and how this will increase consumption in the economy but then, for evaluation, referencing the fact that many of these jobs are only for construction and so won’t have a long-term impact on Germany’s aggregate demand. Candidates also needed to draw a correctly labelled diagram showing an increase in aggregate demand for KAA Level 3. This is a high-quality answer that achieves full marks. For KAA, the diagram correctly shows AD increasing and everything is correctly labelled. Looking at the written explanation, it is clearly broken down with step-by-step explanation focused on injections into the circular flow of income as well as discussion of the multiplier effect. The evaluation on the second page is equally very well-explained and goes beyond what would be needed for 4/4 evaluation marks. This answer is a good example of what not to do when it comes to answering an exam question - and that is to not answer the specific question set. The first paragraph is simply descriptive and repeating information from the extract but not using it in any way to answer the question. There is some understanding that the increase in employment will increase aggregate demand, but it isn’t clearly explained how this would come about. The diagram shows an increase in aggregate supply, not aggregate demand. Overall, this achieves low Level 2 for KAA, mainly because there is good application and there is some idea of more jobs increasing AD, but no marks for evaluation. Make sure you read the question carefully. Here the focus is on aggregate demand, NOT aggregate supply.

Notes from the mark scheme and report

• Intel's €30bn FDI is investment (I in AD = C + I + G + X - M): AD shifts right, multiplier from 7 000 construction and 3 000 permanent jobs
• Level 3 needs a correctly labelled AD/AS diagram
• evaluate: construction jobs are temporary, size relative to GDP, imports leak
• report: discussing AS earned nothing

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

Mark scheme

Examiner's comment

Candidates were confident in drawing a diagram showing a rightward shift in supply. However, some were unable to indicate the price the producer receives, and as a result, not many were able to show the cost of the subsidy in terms of what the government pays. • Many examiners observed that some candidates who were able to draw a more complex subsidy diagram, correctly showing the total area of government cost, were sometimes receiving 4 marks when they only quoted once from the data than others who got 5 but who only drew the simpler supply curve shifts right diagram but then had quoted the 2 billion cost in the drop in poverty figure and then knew that a subsidy was a grant paid by the government. • It was surprising to see so many candidates draw the subsidy diagram incorrectly. An effective method for application to a diagram is to show the monetary cost of subsidy but surprisingly few could do this, by showing the value of the subsidy per unit, multiplied by the new number of units sold. • Use of data gained a relatively easy 2 marks although for some it was hard to find the second application mark. • Most candidates identified opportunity cost and understood what a subsidy is. The effect of the subsidy was generally well answered and annotated on the diagram, although some had difficulty identifying the total subsidy area. This diagram clearly shows the cost of the subsidy. K/An diagram 2 - right shift (1) lower price (1) cost area to gov (1) - maximum of 2 diagram marks achieved. 1 Ap for $2.3 million (1) K/An change of the gov area written analysis (1) 3 K and An 1Ap Short answers can be very effective. This one just cut short the application (1/2 AP). A good diagram such as this is very pleasing to see, as a marker. K/An definition of subsidy (1) K/An diagram 2 - right shift (1) cost to gov area (1) lower price (1) subsidy per unit (1) - maximum of 2 diagram marks achieved 2 Ap marks - “$2.3 million” (1) 14.6% improvement (1) Note - if these numbers had been shown on the diagram they could still be awarded. K/An 3 Ap 2 Use the diagram to illustrate your point. Make the diagram answer the question about the cost and not a different question - many just showed what a subsidy is. K/An clear definition of subsidy (1) K/An diagram 2 - right shift (1) lower price (1) cost area to gov (1) - maximum of 2 diagram marks achieved “$2.3 million” (1) 14.6% improvement (1) K/An 3 Ap 2 Short answers such as this easily earn the 5 available marks.

Notes from the mark scheme and report

• supply shifts right by the subsidy per unit
• the cost to government = subsidy per unit x new quantity (area between the two supply curves)
• opportunity cost
• quote the $2.3 million subsidy
• report: "not many were able to show the cost of the subsidy in terms of what the government pays" and "so many candidates draw the subsidy diagram incorrectly"

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Answer

D

Mark scheme

Notes from the mark scheme and report

• a cyclone destroys productive capacity, so the PPF shifts inward and X moves to Y on the new curve (D)
• A is an unobtainable point, B a movement along the PPF, C an outward shift

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

Mark scheme

Examiner's comment

This question was diagrammatical and targeted the production of a new equilibrium point, given a shift in supply to the left. In addition, with a subsequent increase in price and fall in in quantity demanded. Students that lost marks did not label the axes, show the change in price or quantity, or shifted the demand curve instead.

Notes from the mark scheme and report

• draw and label the new supply curve shifted left and the new equilibrium with a higher price (and lower quantity)
• marks lost for no labels, not showing the price change, or shifting demand instead
• command word is 'Annotate'

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Question 6 (f) The second of the essay questions, this question was the least popular by a significant margin. Candidates also performed substantially worse on this response than they did on 6(g). The question allows candidates to demonstrate their understanding of what the likely impact would be of a tax upon plastic food packaging. The best candidates showcased the reduction in deadweight loss through the implementation of a tax, with some discussing the incidence in terms of evaluation. Strong candidates made a good attempt to substantiate points diagrammatically and could show the tax limiting the size of the DWL. Many recognised the issues relating to the products that the tax would be applied to being particularly important, and the details of the % of recycled element ensuring less impact. Top level KAA marks required at least one ‘impact’, very well analysed, and developed relating to the implementation of a tax. Evaluation marks could be achieved by counterbalancing the point(s) made and arguing why/ why not the tax could be successful in its design.

Notes from the mark scheme and report

• maximum Level 3 without a valid diagram (MSC/MPC+tax externality diagram or tax incidence diagram)
• higher food prices, less consumer surplus, incentive to use recycled packaging, revenue to hypothecate
• evaluate with PED, size of the tax, the 30% recycled exemption
• report: "Candidates also performed substantially worse on this response than they did on 6(g)"

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Question 6 (g) This was a highly accessible question considering the methods that could be used to reduce the market failure associated with plastic waste. There are numerous possibilities that candidates could explore, and the vast majority talked about subsidies, taxation or minimum prices being introduced. This essay requires a clear exercise of critical analysis, and good candidates would be expected to have a developed a clear appreciation of the method of government intervention to correct the market failure. Sophisticated responses recognised that some forms of government intervention would be more effective than others. Good use of diagrams was showcased throughout the candidates’ responses, most commonly, an indirect tax diagram. To access evaluation marks candidates could explore the various strengths and weaknesses of each method proposed and use the prompts in the extracts to consider how effective the policy might be. Another line of development considered how some combination of policies might be necessary to effectively tackle the problem of environmental damage. 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, in this case limiting the implications of too much consumption or production of plastic.

Notes from the mark scheme and report

• maximum Level 3 without a valid diagram
• subsidies for alternatives, information, taxation, bans, minimum prices, regulation
• evaluate each with government failure (distortion of price signals, unintended consequences, administrative costs, information gaps), PED and opportunity cost
• combinations of policies

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

Mark scheme

Examiner's comment

This question requires candidates to show/draw the likely impact of a fall in business investment in the context of an AD/AS diagram. Marks were awarded as 1 mark for leftward shift in AD and 1 mark for equilibrium showing new price level and new real output. Most candidates achieved the 2 marks on this question.

Notes from the mark scheme and report

• shift AD left and mark the new equilibrium with lower price level and lower real output

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to assess the likely impact of an increase in real wages on the UK economy using an AD/AS diagram. In these longer questions the focus for a candidate needs to be on the quality of their answer, bearing in mind the levels mark scheme. They should ensure they are clearly giving step-by-step explanations of the impact. This covers the exam skills of knowledge, application and analysis. There are 4 marks available here for evaluation.

Notes from the mark scheme and report

• Level 3 needs an AD/AS diagram with AD shifting right (higher consumption, real output and price level, lower unemployment)
• evaluate with spare capacity, saving, imports, cost-push effects on SRAS

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

Mark scheme

Examiner's comment

This question is looking for an accurate diagram showing the difference between profit maximisation and revenue maximisation. Candidates had to mark both the output and the price to achieve all four marks. The typical mistake on this question was a failure to mark the price accurately. Many candidates indicated profit maximisation as MR=MC, or revenue maximisation as MR=0. This would gain two marks only. On this response we can see the candidate has clearly marked the profit maximising point at MR=MC, and this point has been extended down to the x axis and labelled Q1. This point has also been extended up to the AR curve and then across to the y axis, and marked at P1. The candidate has also marked the revenue maximising point where MR=0. However, they have not extended this point up to the AR curve and the y axis. Overall, this response scored 3 marks. Always ensure that you label diagrams accurately. Practise the drawing of these systematically as you prepare for the examination. On this response the candidate has correctly indicated the point of profit maximisation and extended this point to the x and y axes. They have also indicated the point of revenue maximisation and extended it to both axes. Although the extension of the revenue maximising point indicates P2 as higher than C2, the candidate correctly recognises that this is a loss, and has marked the shaded area as a loss. As a result this response scored full marks.

Notes from the mark scheme and report

• mark price AND output for both objectives: profit max where MC = MR, revenue max where MR = 0
• showing only MC = MR and MR = 0 scores 2 of 4

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

Mark scheme

Examiner's comment

In this question, the first of our Section B examples, candidates had to use Extract A to explain the likely reasons for the change in price of electronic devices. A supply and demand diagram was specifically asked for. The most efficient approach was to draw the diagram indicating the correct shifts, then explaining why the shift occurred the way it did. The application mark was reserved for a specific data reference, such as the increase in the price of computer chips from 1. Typical issues on this question were the failure to either indicate both shifts or to not explain them in the written narrative. 0.20toover This response has correctly illustrated a right shift in demand, and explained why this has happened. The reference to the growing popularity of home entertainment gains the application mark. However, there is no reference to the shift of the supply curve referred to in the extract. Overall, this response scores 3 marks. Carefully reading the extract is essential to maximising the marks on data response questions. The data contains relevant information that candidates can use. This second response is significantly better than the first. The candidate uses the extract and quotes it directly. They pick up on the fact that higher material costs have also caused the supply curve to move inwards. The drawing of the new supply curve and the explanation of the reason gains access to all the marks available for this question.

Notes from the mark scheme and report

• show BOTH shifts (supply left from higher chip/material costs, demand right from popularity of home entertainment) and explain each
• data reference e.g. chips $0.20 to over $1

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Answer

D

Mark scheme

Notes from the mark scheme and report

• read the savings ratio chart carefully (D)
• A wrong as savings rose during 2015, B wrong as savings fluctuated, C wrong as the lowest point was in 2017

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

• a boom is where actual GDP is furthest above trend (C)
• A and D lie on the trend line
• B is a recession below trend

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

Mark scheme

Examiner's comment

The question was accessible and there were almost no blank responses. It was mainly answered well by a significant number of students. Must apply to the steel market but then the analysis can be developed from this eg steel output up can lead to more employment or more AD. Diagram can be app or an. Decide at the end to give the candidate the highest mark. A diagram alone with no explanation will only get 1 mark, but a diagram used and explained well could access more than 1 mark. 25% is allowed as that is in the extract not the question. Definitions of a tariff do not get a Knowledge mark as this is an impact question. A diagram can earn the marks in many ways – in this case all 3 from the diagram! Good example with a diagram. Diagram and explanation is 4/4 in a box in the annotated pack. First part of the answer is also 4/4. A picture is the most wonderful way to earn marks, if you can link it, as here, to the question. This scores 2/5. 2 K not developed. Definitions ignored as this is an “impact” question. The question is asking about the IMPACT not the definition. You certainly don't need to try to evaluate in Section A!

Notes from the mark scheme and report

• tariff raises the US steel price, cuts UK imports, raises domestic output and employment, gives tariff revenue, loses consumer surplus with deadweight loss
• apply the 25% tariff
• a tariff definition earns nothing
• a diagram alone with no explanation earns only 1

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Probably the first thing that candidates should have noticed with this question is the word ‘one’ in bold. The question only asks for ONE likely externality, so candidates who write about two different externalities are wasting valuable time. The question specifically asks for a diagram, and as such answers that do not have a correct diagram showing the external costs of production can achieve a maximum mark overall of 6/8. Fortunately this wasn't an issue for the majority of students, but again it does illustrate the importance of ensuring that you can draw all the key diagrams across the specification. Many well-written answers gained the knowledge/analysis marks relatively quickly. Some struggled to receive the second application mark - remember in any 8-mark question, there will ALWAYS be 2 marks for application. Whilst the number seems to be falling, as hopefully the structure of an 8-mark question is well-understood by now, there are still a signiifant number of candidates who simply aren't evaluating in this question. Remember this automatically means there are two marks you won't be able to earn. <i sesuitsPs This answer achieves full marks. First of all, they have a correct diagram. The first paragraph, above the diagram, clearly identifies the negative externality and references ‘third parties’. In terms of application, this can be found both in the first and second paragraphs. There are two marks for evaluation on the second pageofthe answer. Clearly a well-written answer that does exactly what is required to answer the question and achieves full marks. <6ResultsPlus This answer achieves 6/8. There is a correct diagram along with deadweight loss labelled. This therefore means that 3 marks have been achieved so far. The rest of the answer easily achieves the final k mark and the two application marks - there is plenty of discussion about the negative externality from burning gas and explanation of the diagram. There is really more written here than is needed - the candidate could have stopped writing a lot earlier. Unfortunately, there is no evaluation in this answer and so therefore it can't achieve more than 6/8. “aN mae}ResultsPlus Remember there are ALWAYS 2 marks for evaluation in every 8-mark question.

Notes from the mark scheme and report

• ONE externality only (air pollution, carbon emissions, health of third parties)
• MSC above MPC diagram with welfare loss
• maximum 6 of 8 without a correct diagram
• second application mark often missed
• evaluate e.g. hard to value external costs, gas cleaner than coal

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question asks candidates to discuss factors influencing the level of aggregate demand in Ghana and specifies that they draw an AD/AS diagram. If a candidate does not drawa diagram, they are unable to achieve level 3 for KAA. Any AD/AS diagram is acceptable. The route that many candidates took on this question was to consider the aggregate demand formula of C+I+G+(X-M) and discuss two of these, but other factors were also valid. It should be noted that the question is in the plural - it is asking for factorS, and so candidates need to write about two different factors to access KAA level 3. There are four marks for evaluation on this question, so candidates need to ensure they have offered some clear evaluation in their answer, with some development of their point. <p BesultsPtus The first point in this answer is well-argued and includes a correct AD/AS diagram, achieving low KAA level 3. The second point is very brief and doesn't go beyond KAA level 1. Overall therefore, this answer is KAA level 2. There is no evaluation in this answer, so the candidate cannot achieve those four marks. G4, ResultsPius ~~) Examiner Tip There is no need to define things such as aggregate demand ina question like this - just focus on answering the question. KkResultsPlus This is a high quality answer that does an excellent job of answering the question. The first point focusing on removal of tariffs through joining the AfCFTA is really nicely explained with good step-by-step explanation, along with application such as the 90% reduction in tariffs as well as an accurate AD/AS diagram. This is clearly top level KAA. The evaluation of this point is also clear and well-argued. The second KAA point, focusing on the depreciation of the cedi, again is clearly applied to Ghana by referencing the 98% depreciation. Analysis is clear and well-argued. The evaluation is also relevant and developed. Overall this is a high quality top level answer for both KAA and evaluation. G4, ResultsPius ~~) Examiner Tip Remember to make sure you have two KAA points in a question such as this.

Notes from the mark scheme and report

• Level 3 KAA needs an AD/AS diagram and two different factors (exchange rate and net trade, interest rates and access to credit, government spending, tax rebates, AfCFTA)
• no need to define AD
• evaluate relative size of components, time lags

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

Mark scheme

Examiner's comment

Candidates performed well on this question, with most able to distinguish where the original and maximum price would appear on the. A common misconception was to add the maximum price above equilibrium which a high number of students showcased.

Notes from the mark scheme and report

• a maximum price is set below equilibrium: mark the original cap (£1 277) below P1 and the new cap (£1 971) higher but still a ceiling
• many wrongly put the maximum price above equilibrium

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

Mark scheme

Examiner's comment

This question was diagrammatical and identified opportunity cost along a PPF curve. Some responses indicated a lack of understanding of opportunity cost and illustrated shifts in the curve, although the majority understood the question well.

Notes from the mark scheme and report

• move along the PPF from W towards more consumer goods and show the capital goods given up
• shifting the curve does not show opportunity cost

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This fifteen-mark question was a strong test of a candidate’s ability to link textbook knowledge of demand and supply and how this relates to price determination. Examples within the extract featured reference to where the price of television streaming content would potentially increase or/ and fall. Diagrams were drawn well and explained, although the majority of answers did not evaluate sufficiently well to reach the highest levels. The best candidates, used two evaluated points to explain why and why not price of such content would increase in price. Points relating to the increased investment in new programming increasing costs was a key point used by many candidates in reference to price / costs increasing. Less candidates discussed the increasingly competitive nature of the market and why this could lead to an increase in supply and ultimately falling prices. Government intervention enviro damage – TV consumption

Notes from the mark scheme and report

• Level 3 needs a demand and supply diagram: demand right (lockdowns, quality content, YED 1.6) and/or supply left (costly original content, advertising)
• evaluate: new entrants increase supply, PED
• most answers lacked evaluation

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was a highly accessible question considering the methods that could be used to reduce the environmental damage associated with the consumption of television content. There are numerous possibilities that candidates could explore, and the vast majority talked about taxes,, regulation or provision of information. This essay requires a clear exercise of critical analysis and good candidates would be expected to have a developed a clear appreciation of the method of government intervention to correct the market failure. Sophisticated responses recognised that some forms of government intervention would be more effective than others. Good use of diagrams was showcased throughout the candidates’ responses, usually an indirect tax diagram. To access evaluation marks candidates could explore the various strengths and weaknesses of each method proposed and use the prompts in the extracts to consider how effective the policy might be. Another line of development considered how some combination of policies might be necessary to effectively tackle the problem of environmental damageThe 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.

Notes from the mark scheme and report

• negative consumption externality from electricity use and CO2 (Extract C)
• tax to internalise the external cost (MSC), information provision, regulation of viewing hours, subsidies for efficient devices
• evaluate effectiveness, valuing the externality, US firms beyond UK reach

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

Mark scheme

Examiner's comment

This question requires candidates to show/draw the likely impact of a fall in business investment in the context of an AD/AS diagram. Marks were awarded as 1 mark for leftward shift in AD/AS and 1 mark for equilibrium showing new price level and new real output. Most candidates achieved the 2 marks on this question.

Notes from the mark scheme and report

• lower investment shifts AD left: lower price level and real output at the new equilibrium (a leftward AS shift with higher price was also accepted)

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

Mark scheme

Examiner's comment

In this question, the focus is on having the ability to clearly calculate the opportunity cost of the decision by the farmer to harvest 6 units of wheat at point Y. Candidates were being asked to calculate this change, which is 1 unit of oats. The main issues faced by candidates were either stating the opportunity cost of 4 wheat to 2 oats at point X and 6 wheat to 1 oats at point Y. The question was asking about the reduction in the number of oats. Another issue was to discuss the increase in the production of wheat, which though rewarded, didn't score full marks. In this response the candidate has correctly calculated the opportunity cost as 1 unit of oats. Ensure you read the question carefully so that you give the correct answer in terms of the movement from point X to point Y. In this response, the candidate has calculated the opportunity cost ratios at point X and point Y but has completed an incorrect calculation. This scored 0/2.

Notes from the mark scheme and report

• moving from X (4 wheat, 2 oats) to Y (6 wheat, 1 oats) gives up 1 unit of oats
• report: some gave ratios at X and Y or stated the 2 extra wheat instead of the oats forgone

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This question is looking for a recognition of what would happen to efficiency in the following year, when a farmer operates inside the production possibility frontier, to achieve the knowledge mark. The analysis mark is then given when the candidate explains why efficiency would fall. This was a well answered question, with the majority of candidates scoring both marks. In this response the candidate clearly tells us that point W is inefficient, which achieves the knowledge mark. The explanation that the farmer is not making use of all resources then gets the analysis mark, so 2/2. This second example achieves both marks because the candidate tells us that production at W is inefficient, leading to lower output for both wheat and oats in the following year.

Notes from the mark scheme and report

• W is inside the PPF so resources are inefficiently allocated / unemployed
• the farmer could produce more of both wheat and oats

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

Mark scheme

Examiner's comment

There are four marks for this question, and most candidates scored at least 3 of them. Correctly identifying the brownie baker facing a downward sloping average and marginal revenue was sufficient for the first mark. The candidate then had to identify the profit maximising point where marginal revenue equals marginal cost. They then had to draw the average cost curve above the average revenue curve before correctly marking the area of loss on the diagram. Many candidates did not successfully indicate the area of loss. In another case, the candidate either drew the AC curve at a tangent to the AR, indicating normal profit, or below the AR curve, indicating supernormal profit. In this response the candidate has successfully drawn the downward sloping curves, and has marked the MC=MR as the correct output. They have then drawn AC above AR and extrapolated the profit maximising output to the point where it hits the AC curve. They have marked this point on the y axis as C to distinguish it from the Price charged at P. This is sufficient to indicate the area of loss, though it would have been better if the candidate had shaded or marked it as 'loss'. Nonetheless, this scored full marks. It is good practice to clearly label all points on your diagrams as carefully as possible. In this example the candidate has successfully drawn the downward sloping AR and MR curves. However, the marks stop there. The AVC curve gets nothing because we're looking for an AC curve. The candidate has also marked the output where MR equals AVC, when it should be MC. The comment 'P is less than AVC' is a recognition that costs are higher than revenue, but it is poorly phrased and does not link to the AR curve. This scores 1/4.

Notes from the mark scheme and report

• downward-sloping AR and MR, output where MC = MR, AC above AR, loss area shaded
• report: many did not mark the area of loss, or drew AC tangent to AR (normal profit) or below AR

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

Answer

C

Mark scheme

Notes from the mark scheme and report

• read the change in producer surplus off the minimum-price diagram: GEPeP1 (C)
• A is the change in consumer surplus, B the new consumer surplus, D the new producer surplus

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

The second of the 'discuss' type questions, this one has 9 marks available for KAA and 6 for evaluation. This means that more emphasis should be given to evaluation in responses. A diagram is specifically asked for, and candidates were expected to make a clear distinction between the impact on profits in price elastic markets and price inelastic markets. Many good responses did precisely this and discussed different pricing between student and non- student markets, or between UK and Indian markets. There was some confusion between price discrimination and product differentiation, so candidates are reminded that price discrimination is charging different prices for the same product to different groups of consumers. The ability to separate markets is pivotal to the success of the strategy, and good responses could explain this and then evaluate by developing the idea of 'seepage' between markets, for example when consumers share passwords. This is a very strong example which achieved 14/15, with 9 for KAA and 5 for evaluation. The diagrams are detailed and used throughout the first paragraph. There is also clear use of the information provided and the concepts are clearly explained. The evaluation is also very thorough, and considers how price discrimination may not increase a firm's profits as much as expected. The questions raised about the ethical aspects of price discrimination are valid but really need to be linked back to the impact on profits to get full marks. Again, this is a question which specifically asks for a diagram. It is always good preparation to practise drawing all of the diagrams on the specification. This second response scored level 2 for KAA, 6/9 and level 2 for evaluation, 3/6 giving a total of 9/15. The diagrams are not as well developed as the previous example, lacking any revenue or cost curves. Similarly, the areas shaded are revenue and not profit. It then goes on to discuss students against adult price elasticities of demand, but again this isn't linked to profit. The reference to the trade cycle is evaluative, but linked to revenue. The second diagram is better, with clear reference to profit and there is a useful discussion of UK and Indian markets. The evaluation is about the differing business objectives, but not linked to profit.

Notes from the mark scheme and report

• third-degree price discrimination diagram: higher price in the inelastic sub-market (UK adults), lower in the elastic one (students, India) so profit rises
• conditions: market power, separable markets
• evaluate seepage (password sharing) and costs of separation
• report: some confused price discrimination with product differentiation

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

Mark scheme

Examiner's comment

This question asked candidates to 'draw' an AD/AS diagram. As such that is all they need to do. There is no need for words to explain the diagram. This question was generally well answered by most candidates who drew a diagram shifting either AS or AD (or in some cases both) to the left, showing a decrease. This answer only gets 1/4 for correct labels on axes/lines. The candidate has shown an increase in AS rather than a decrease. Practice drawing AD/AS diagrams to illustrate a range of economic scenarios, so you can correctly answer questions such as this. This answer correctly shows a decrease in AD to the left and what would happen to price level and real output in that situation, and as such gains full marks.

Notes from the mark scheme and report

• higher interest rate shifts AD left: lower price level and real output (a fall in AS also accepted)
• shifting AS right scores only the label mark
• no written explanation needed

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

The question this year was much more fruitful and highly awarded than in previous years because it was clearly that the impact could be singular or more than singular. This meant there was no cap on the levels of marks, and a short but well explained impact could easily reach Level 3 KAA. A little use of the data, and specific to the diagram was all that was required. However there were some significant problems. One examiner commented that the drawing of diagrams had not been sufficiently rehearsed and there is a presumption that in the classroom the use of whiteboard for drawing had greatly diminished because of the ease of finding ready made diagrams on the internet. Even the PE noted from her own classroom that when asked to draw a cost and revenue diagram, any students making notes on electronic devices would just search up a diagram. It is vital that we practice time and time again with these diagrams. The geometry is important and it is only really clear about things that can go wrong when we try to do them ourselves. The other issue that really stood out as a problem was the distinction between fixed and variable costs. Clearly for some firms such as swimming pools, gas will be a fixed cost, because once the water is heated it will not cost more for one extra swimmer, but for many firms it is a variable cost e.g. steel plants or electricity producers the extra unit needs more case. It is fundamentally important that the candidate makes it clear in her answer, as to whether fixed or variable costs are being considered, and moves the appropriate curves in connection with their choice (that is make sure that MC moves if it’s variable cost, and make sure there is a new equilibrium price and quantity).

Notes from the mark scheme and report

• Level 3 needs an accurate cost and revenue diagram: AC and MC shift up for a variable cost (AC only for a fixed cost) and the new profit area at MC = MR
• make clear whether gas is a fixed or variable cost
• use Figure 1
• evaluate with share of gas in costs, PED, shut-down point

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

• intervention buying spend = guaranteed price P2 x the surplus bought (Q2 to Q3), area JHQ2Q3 (B)
• HKL is lost consumer surplus, LKJH the producer surplus gain, Q1Q2LK spending by consumers

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

Mark scheme

Examiner's comment

This question required candidates to consider the impact of the new Total Allowable Catches (TACs) on the market for fish. Most candidates were able to clearly draw a supply and demand diagram and used the extract fully to support their answers. Almost half of the candidates scored full marks on this question.

Notes from the mark scheme and report

• TACs cut the cod catch by 50%, so supply shifts left and price rises
• diagram with original and new equilibrium
• apply the 50% cut or Figure 1 data
• almost half scored full marks

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This fifteen-mark question was a strong test of a candidate’s ability to link textbook knowledge of an economy specialising in a particular industry, usually discussed in the context of production possibility frontiers, with the reality of the Scottish fishing industry. Most candidates could effectively draw a PPF to support their analysis. Better candidates tended to develop their analysis using examples from the extract, developing the advantages of specialisation such as higher productivity. The best candidates were then able to evaluate effectively and considered the problems of over-specialisation for the workers themselves or the Scottish economy, particularly with the moves to reduce TACs discussed in 6(a). Top candidates considered 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.

Notes from the mark scheme and report

• PPF diagram required: specialising in fishing raises productivity and output (Scotland, 24 000 workers) and allows trade
• evaluate over-specialisation, falling TACs, structural unemployment and occupational immobility

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

The first of the essay questions, this question was the least popular by a significant margin. Candidates also performed substantially worse on this response than they did on 6(g). The question allows candidates to demonstrate their understanding of a range of possible external costs arising from fishing. Extract B talks about the depletion of fishing stocks and candidates were expected to use a negative externality diagram to anchor their analysis. Strong candidates made a good attempt to substantiate points diagrammatically and in context. Many recognised the dangers of overfishing, such as a higher supply of fish leading to lower prices compared to other foodstuffs, the damage to marine life cause by nets, and the risk of pollution from fishing boats. There was usually a clear recognition that some costs will be more significant than others and this could involve clear evaluation using concepts developed during the teaching of the course, such as putting a precise value on the external costs, the difficulties of establishing how quickly the impacts can develop, and the possibilities of more environmentally friendly methods of fishing. Top level KAA marks required at least two likely costs and the better responses would draw an accurate negative externalities diagram. Evaluation marks could be achieved equally well by considering the many benefits from the fishing industry such as the 24 000 jobs in Scotland, and the quality of fish as a food compared to red meat.

Notes from the mark scheme and report

• negative production externality diagram (MSC above MPC, welfare loss) is required, otherwise maximum Level 3 KAA
• external costs: depleted stocks, damage to marine life, pollution, lost future livelihoods
• Figure 1 overfishing (Sweden 52.4%)
• evaluate valuing the costs
• report: candidates "performed substantially worse on this response than they did on 6(g)"

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was a highly accessible question considering the methods that could be used to reduce overfishing. There are numerous possibilities that candidates could explore, and the vast majority talked about indirect taxes, a minimum price for fish, regulation or provision of information. This essay requires a clear exercise of critical analysis and good candidates would be expected to have a developed a clear appreciation of the method of government intervention to correct the market failure of overfishing. Sophisticated responses recognised that some forms of government intervention would be more effective than others. Good use of diagrams was seen throughout the candidates’ responses, usually an indirect tax diagram or minimum price diagram. To access evaluation marks candidates could explore the various strengths and weaknesses of each method proposed and use the prompts in the extracts to consider how effective the policy might be. Another line of development considered how some combination of policies might be necessary to effectively tackle the problem of overfishing. There was also a recognition that the UK’s new position outside the EU may lead to overfishing or conflict overfishing stocks, something which has been borne out of practice. 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.

Notes from the mark scheme and report

• policies other than TACs: taxes on catches, minimum price for fish, regulation (no-fishing zones, net sizes), information, property rights
• diagrams
• evaluate effectiveness, enforcement and government failure
• no credit for changing TACs

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

Mark scheme

Examiner's comment

This question requires candidates to show/draw the likely impact of an improvement in net trade in context of an AD/AS diagram. Marks were awarded as 1 mark for rightward shift in AD and 1 mark for a new equilibrium showing higher price level and higher real output. Most candidates achieved the 2 marks on this question.

Notes from the mark scheme and report

• improved net trade shifts AD right
• mark the new equilibrium with a higher price level and higher real output

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

Mark scheme

Examiner's comment

This question specifically asks candidates to draw a diagram. There is no need for candidates to write any explanation to go along with their diagram. When drawing diagrams candidates should always double-check that the lines and axes are correctly labelled. Nearly all candidates provided the answer as illustrated in the mark scheme. The diagram is for illustrative purposes and other valid alternatives in terms of labelling were allowed. Some candidates showed supply as horizontal given it is a subscription service. This was allowed and was awarded 4 marks. The diagram is drawn accurately. The candidate has identified original and new equilibrium. Unfortunately the response also shows a shift in supply so the response does not address the main aspect of the question, but it showed some knowledge and it was awarded 3 marks. For shifts in supply and demand consider the non-price determinants as identified in the data. Do not confuse shifts in supply with extensions in supply. This diagram is correctly labelled. It also shows the shift in demand in the correct direction and illustrates the new equilibrium points. In addition, it annotates the answer given the context. Whilst this is not in the mark scheme, this is a good approach to take to ensure your answer is correct or in answering longer responses where a diagram may be useful or required. Therefore, this answer achieves full marks. Draw diagrams clearly and large enough for ease of interpretation.

Notes from the mark scheme and report

• demand shifts right: price and quantity rise, label original and new equilibria
• a horizontal supply curve was allowed
• shifting supply as well capped answers at 3 marks
• no written explanation needed

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

Mark scheme

Examiner's comment

The diagram in the mark scheme is for illustrative purposes and there are lots of valid alternatives. Price would be allowed instead of costs and benefits, MSC and MSB can be labelled SMC and SMB and some candidates did a double shift to the left of the MSC. Some candidates also covered supply and demand but had some elements of the externalities diagram. A small number of candidates also identified negative externality of consumption in the tourism industry, whilst this is not on the specification it was viewed as a valid response. This response is awarded 1 mark for correct labelling of MSB and MSC. There is also 1 mark for correct shift and 1 mark for identifying correctly welfare loss. This response has also clearly identified a movement in price and output to remove overproduction. This response was awarded the full 4 marks. Fully label externalities diagrams. This response provides a fully annotated correct answer and was awarded the full 4 marks. The candidate has identified the social optimum price and output and the free market equilibrium.

Notes from the mark scheme and report

• negative production externality: MSC above MPC, market output above the social optimum where MSC = MSB, external cost and welfare loss area shown
• MSC and MSB may be labelled SMC and SMB

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

Mark scheme

Examiner's comment

The diagram in the mark scheme is for illustrative purposes and other valid models were allowed. Candidates could refer to profit rather than revenue or have the top right box blank as long as the pay-off matrix worked. Likewise, some candidates had price decrease first and then price increase, with the starting position bottom right. In addition, some candidates referred to collude or not collude. A common response was awarded 3 marks. However, marks were typically awarded as follows: Often where they colluded there was a higher figure than if they engaged in a price war so securing one mark. They then indicated one firm cheated and gained financially and as a consequence the other firm lost out, so securing a second mark and potentially a third if they had a similar situation if the other firm moved first. The key jump to 4 marks was what if the second firm retaliated and where it went wrong was when they failed to show the second firm countering in their financial interest. If they ended up financially worse off then there was not a logic as the movement for the second firm was not rational. The matrix had to work for the response to be awarded the full 4 marks. Application-wise, the pay-off matrix working was key rather than use of the $361 million. This response was awarded 1 mark for correctly analysing that by colluding and setting higher prices, Tyson and Pilgrim would gain financially more than if they were to engage in a price war. A second mark was awarded for stating that Tyson, being a first mover and undercutting Pilgrim's price, resulted in them making a financial gain of £12m and Pilgrim losing out (£5m). There is similar analysis for Pilgrim being a first mover thus securing a third mark. For the fourth mark there is a logic to Pilgrim retaliating and following Tyson's price cut, as they are now achieving £7m which is more than £5m. This response is awarded the full 4 marks. Practice pay-off matrix diagrams and ensure there is a clear logic in the numbers as to what firms are doing and why this is rational behaviour. This response is awarded the full 4 marks. This response was awarded 1 mark for analysing that by colluding and setting higher prices, Tyson and Pilgrim would gain financially more than if they were to engage in a price war. A second mark was awarded for estimating that Pilgrim, being a first mover and under-cutting Tyson's price, would result in making a financial gain of $400m and Pilgrim losing out ($100m). There is similar analysis for Tyson being a first mover thus securing a third mark. The fourth mark was not awarded as there was not a logic to Tyson retaliating and following Pilgrim's price cut. They now achieved $50m which is less than the $100m. Tyson and Pilgrim are now financially worse off so there is no logic to this analysis. This response was awarded 3 marks. Double check your two firm/two outcome game theory model to ensure it makes sense.

Notes from the mark scheme and report

• pay-off matrix: both high price gives $361m each, more than both low price (e.g. $300m)
• the cheat who cuts price first gains more and the other less, so collusion beats a price war
• report: the 4th mark was lost when the second firm's response was not in its own interest

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); 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 required candidates to use a cost and revenue diagram in order to achieve Level 3. The diagram in the mark scheme is only for illustrative purposes and alternative correct diagrams were also allowed. To secure top marks, diagrams needed to match against written explanations. For example, a rise in fixed costs would shift AC and not MC and a rise in variable costs would shift both AC and MC upwards. Candidates were required to accurately identify the change in fixed costs or variable cost in the context of the data. The diagram in this response shows a rise in AC and MC and lower profitability box and achieves Level 3 for KAA for the diagram. However, the response does not identify why costs and variable costs increased in this case. The response provides some explanation of the diagram and a sophisticated sense of using the data to say why quantity is limited, but the lack of reason for the increase in costs places it borderline Level 2 and Level 3. The evaluation linking higher wages to productivity is done well and secures Level 2ev. Overall, this response achieves L3-(6) and L2e-(3ev) and is awarded 9 marks of the 12 marks available. Ensure that you have a precise understanding of why costs curves shift. Further development of evaluation is welcome but it is best to try to make two evaluative points. Evaluating the diagram would have made sense here. Perhaps the firm does not pursue profit maximisation. This is an example of a well developed responses which is awarded the full 12 marks. Ensure that in planning your response you place more thinking time into the marks for Knowledge, Application and Analysis (KAA) rather than Evaluation.

Notes from the mark scheme and report

• Level 3 needs an accurate cost and revenue diagram: a fixed cost rise (rent) shifts AC only, a variable cost rise (wages, beans) shifts AC and MC
• profit at MC = MR shrinks or becomes a loss
• report: diagrams must match the explanation and identify which costs rose

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

Mark scheme

Examiner's comment

The Lorenz curve was the focus of this question. Candidates were asked to explain how income inequality is measured using the Gini coefficient. Candidates were awarded 2 marks for a correctly drawn and labelled Lorenz curve diagram. The remaining marks were awarded for explaining how the Gini coefficient works and for some application to the data. Referring to the fact that the UK’s Gini coefficient is 0.34 was the key piece of application, and the majority of candidates gained the mark. However, many candidates lost marks for incorrect labels on the diagrams. This response was awarded the full 5 marks. The candidates has given a clear and correctly labelled Lorenz curve diagram and it was clearly explained in the written response. Make sure you correctly label the axes on diagrams, such as a Lorenz curve. This response was awarded 2 mark. The candidate gained 1 mark for application for the Lorenz curve diagram (only 1 mark as the axes are not correctly labelled), and 1 mark for analysis.

Notes from the mark scheme and report

• Gini = A/(A+B) from the Lorenz curve
• label axes cumulative % of income and cumulative % of population/households
• quote UK Gini of 0.34 (Extract A)
• maximum 3 without a Lorenz diagram
• many lost marks for incorrect axis labels

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); 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 there are 9 marks for KAA and 6 marks for evaluation. The question specifies that candidates need to draw a diagram, which is a requirement in order to achieve highly at level 3 for KAA. Some of the better responses were able to clearly analyse and evaluate the benefits and downsides of increased spending on infrastructure. They also often used the information in the case study, such as the new station at Bow Street, to illustrate their argument. Evaluative arguments could discuss the significance of one small station or the long timespan of UK infrastructure projects. This is a response that was awarded 8 marks and achieved level 2 for KAA and level 1 for evaluation. The candidate knows the basics of the discussion provided in the answer but lacks a sufficiently detailed and step-by-step explanation to go beyond these levels. If a question asks you to draw a diagram, make sure you do so. However, the diagram alone is not enough to get you into the top levels of the marking criteria. This is an excellent answer which gained top level for both KAA and evaluation and was awarded 14 marks. The benefits are clearly discussed in terms of both aggregate demand and aggregate supply as well as the downsides. There is application and there is good use made of correctly drawn AD/AS diagrams. Remember to relate your answer to the real world by using the extract and/or your own knowledge.

Notes from the mark scheme and report

• Level 3 KAA needs a correct AD/AS diagram (AD and/or LRAS shift right) and reference to Extract B (e.g. Bow Street station, £8m cost, £24m boost)
• evaluate significance of small projects, time lags, opportunity cost, crowding out, national debt, size of the multiplier

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

Mark scheme

Notes from the mark scheme and report

• BOTH shifts needed: supply right (new DRC mines) and demand left (China cut electric-car subsidies)
• new lower equilibrium price
• report: the common mistake was showing only one shift for half marks

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

Question 3a consists mainly of a price-discrimination draw question. The vast majority of candidates demonstrated a very good understanding, but a significant number of candidates were not able to complete this successfully perhaps indicating gaps in their knowledge. Most candidates answered the multiple-choice question accurately. In Question 4 there was a lot of accurate answers to the quantitative-skill based 2-mark questions. Most candidates showed their working, allowing them to pick up at least one mark if they had made a computational error. The overwhelming majority of candidates then went on to correctly answer the revenue maximisation multiple choice question. The first part of Question 5 asked candidates to identify using the data that this was a long run perfect competition scenario. Most candidates had some understanding of the perfect competition model but some struggled to fully complete the diagram accurately in order to achieve full marks. A common error was not identifying the profit maximization output level. Having said that, there were some confident answers that did this with comparative ease. Whilst the majority of candidates did correctly answer the multiple-choice question there was a significant number of random wrong answers. It is possible that less time had been spent on perfect competition than in previous years. Section B, the data response section, was based on data from the travel and tourism industry. This included two figures and three extracts, which high-scoring candidates drew on extensively.

Notes from the mark scheme and report

• third-degree price discrimination with constant AC = MC: MR = MC in each sub-market, lower price Pa for students (more elastic) and higher Pb for non-students, profit area in each
• report: a significant number could not complete it

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

Mark scheme

Notes from the mark scheme and report

• two side-by-side diagrams: market price set by industry S and D
• firm faces horizontal AR = MR at that price
• MC = MR output with AC = AR (normal profit) at minimum AC
• report: a common error was not identifying the profit-maximising output

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Question 6b requested an appropriate externalities diagram. There were some confusing positive externalities of production diagrams used and the occasional negative externalities of consumption diagram. It is worth remembering that the Edexcel specification refers to 1.3.2 use of diagrams to illustrate external cost of production and external benefits of consumption. The suggested diagram in the mark scheme is only as an example and other valid responses were awarded. Many responses were high scoring with good use of application and valid evaluation. The focus of the question was on the social optimum position and the majority of candidates were confident in addressing this.

Notes from the mark scheme and report

• negative production externality diagram: lower emissions reduce MEC so MSC moves towards MPC, the social optimum output moves right and the welfare loss area shrinks
• apply fuel-efficient aircraft (Extract B)
• evaluate: hard to measure emissions
• report: some drew positive production or negative consumption externality diagrams

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

Answer

A

Mark scheme

Notes from the mark scheme and report

• higher net exports shift AD right along a Keynesian LRAS, raising real output (and the price level near full capacity) (A)
• B and D draw a classical vertical LRAS, C shows AD falling

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Question 6d is focused on tariffs and asks candidates to draw an appropriate diagram. It was pleasing to see that the majority of candidates were able to correctly draw a diagram and use it to assist their argument explaining what the impact of the increase in tariffs would be. Where a significant number of candidates struggled was in not reading the question carefully or perhaps not fully understanding the extract. It is important to distinguish between second-hand clothes that are being imported and new clothing being produced by domestic factories. It did get a bit confusing sometimes reading about factories in Rwanda producing second-hand clothes. The answer below has done a very good job of answering this question and scored full marks.

Notes from the mark scheme and report

• Level 3 needs an accurate tariff diagram (world supply + tariff, domestic output up, imports down)
• consumers lose consumer surplus, domestic producers (Kigali factory) gain
• distinguish imported second-hand clothes from new domestic clothing
• evaluate with PED and retaliation by the US

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

1a The market structure that was expected for this question was monopolistic competition, although the characteristics are so close to perfect competition that this model was fully acceptable. Many however wrote ‘monopolistic’ without the noun ‘competition’ and although it may seem generous, this was accepted if it was clear that the model being described was not in fact monopoly. - Allow perfect competition/highly competitive as the ID mark (Knowledge)- with follow on explanation to match - ‘Monopolistic’ is allowed this year for first time as shorthand for monopolistic competition but monopoly/oligopoly is not allowed - Allow low or no barriers to entry - 1 mark for the ID of model, 2 characteristics of model, 2 applications - Diagrams can be used as the analysis marks (up to 2 marks e.g. - price setting power and SNP/normal profit) Below is an exceptional answer worth full marks; This is not: 1b The reason for increased use of hand car washes during a period of lower income was best answered by using the data and the concept of elasticity. Falling income and rising demand is associated with inferior goods, but as with items such as chocolate, the luxury of a car wash might be just the thing to increase standards of living at a low expense. The other common argument used was that the HCW is cheaper than an automated service so this is an inferior good. Many commented on the low price (£5) to explain high demand, but it was important to explain why demand was rising rather than just not responding. - 2 K, 2 Ap, 2 An, 2 Ev - Allow diagrams as An: 2 An or 1Ap + 1 An - Many are confused with PED and YED - be careful when awarding - High utility is an acceptable reason - Reference to aspects of car washing is enough for data marks, e.g. the hoses/chemicals - Be careful for candidates losing track of the question - needs to link to incomes changing This only scored half marks; This was better; good reasons but no evaluation 1c - Answer needs to be about increased migration to UK (opposite in context of leaving the EU/shortage of staff as a result of the global health crisis was seen as EV, a good way to evaluate using the current economic context) - Any industry with large use of migrant workers is accepted as application e.g. - hospitality, nursing, construction - Higher demand for labour and MRP arguments are allowed if correctly explained, although MRP not required - Must have a valid diagram and reference to an industry for L3 - Some segments may not suit low skilled migrant workers e.g. - valeting and paint touch up - Accept variations on the axis if the explanation is correct e.g. - £ not wages - Do not need more than one point as long as ‘effects’ are considered within it. - A Level 3 diagram should be linked to the effect on wages (not confused with price of the product) - The question is the impact on the firm (not wider effects e.g. government budgets) - Application can be shown on the diagram or reference to ‘low skilled jobs’ This clearly starts well with a labour market diagram and a fairly good approach using a cost and revenue diagram: 1d - 1d was much less popular. Causes questions are more difficult to access than effects questions on this paper. - L4 response must have reference to an industry - Must link to the number of firms in the market This was a good attempt at a difficult question This was more typical: This scored quite poorly. It is imperative that the candidate focuses on the requisites of the question. 1e - Must be reference to a specific industry - Any forms of government intervention are allowed This scored 11/25 but this was more typical: This short answer was running out of time. There was an opportunity cost in the introduction here, and although it starts well with a valid idea and some application, this was all that was written, so it scored Level 1 3/25.

Notes from the mark scheme and report

• Level 3 needs a valid labour market diagram (supply of labour shifts right, lower wage) and an industry reference
• the diagram must show wages, not the product price
• effects on the firm, not the government budget
• falling migration after leaving the EU can be the evaluation

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

2a This question was poorly understood, and the common confusion between deficits and debts was in evidence. - The candidates do not have to just use Figure 2 - anything from the extract is fine (all figures) but because it is mentioned in the question this must be a very good place to start - 1 implicit mark for national debt understanding - accumulation over time - 1 mark if able to identify a valid reason - Up to 2 for development of reason - 1 application mark for trend and 1 for data reference - Examples of the opportunity costs as analysis e.g. debt servicing Common confusion between debt and deficits: The above failed to score, as the data use was also linked to debt not deficits. This scored full marks: 2b - Must be the impact on firms e.g. - costs, revenue, profit, motivation of workers - Do not award macroeconomic effects - consumption and AD A very common problem was to read the increase in unemployment from 5 to 6.1% as a 1.1% increase. It is strongly advised that the term ‘percentage points’ is used. This scored just one data mark (for the trend) but no marks for the use of 1.1%: The main problem however was not explaining the effect of increased unemployment on firms. Most gave solely macro diagrams and there were no links to the micro, so some impressive chains of reasoning involving AD shifts and multipliers did not unfortunately make a link to the question in many cases. This however scored nearly full marks (needed more evaluation): 2c - Can have one impact with the diagram (no need for 2 separate KAA points) - Do not accept supply and demand diagrams - Must be a shift - not static - Can be either - higher costs (either just AC or both MC and,AC) or increased revenue (to match explanation) and the alternative (revenues or costs) can be used as the evaluation. This answer goes on to evaluate, introduce a second point, then evaluate again, and then make a judgement. Clearly a 12/12 answer: Other diagrams were often used, but they are not advised. This scored 2/12 from the chain of reasoning, not the diagram (this was the total response, so clearly a time issue here too): 2d - 2d was much less popular. It was apparent that causes questions were more difficult for candidates to access than effects questions on this paper. - Can talk about actual or potential - Often hard to find micro factors - General lack of diagrams in the answers - EV - needs to be a criticism of their point (not just the opposite) - Needs to be in reference to the German economy in context for L4 - This answer clearly was going to be fully macro based, and the plan made it clear that the candidate was not confident in applying micro concepts in areas taught within the macro part of the specification. 2e - Needs to be in reference to German fiscal policy for L4 - Many did not successfully find a micro link to fiscal policy, but the most effect answers showed the effects on firms’ cost curves or the positive externalities in consumption of many public sector goods. This answer was clearly a L4 and L3 evaluation, right from the outset: It then goes onto a micro point, and although this isn’t perfectly drawn (MC does not going through the lowest part of AC2) there is every sense of the change costs but it does not give a verbal explanation of why there is only a change in fixed costs The answer as a whole (not fully shown here) did secure nearly full marks but would need a clear link as to why it is fixed and not variable costs changing to secure the higher level micro marks. In future the candidates taking this exam should address the following issues: Use the data in every question. This is a data response paper. Use a diagram in the longer questions if you can, even if it is not requested. For example, the essay question on government spending on public goods, or the essay question on electric cars, could have positive externalities in consumption, even if not required. Timing. Generally, allow a minute per mark, and this gives 20 minutes reading or correction time. You can achieve all the marks in this time, and you do not need to fill all the space available. Question spotting does not help. Candidates who think they know how to answer a certain type of question tend to give generic responses and do not read the data available. Explain every step in your chain of reasoning, and have multiple steps. Stick to either micro or macro in the non-25-mark questions. The questions are based on the separate four themes and you do not need to mix up your answers. Of course, synoptic answers are valid, but the safest and most reliable option is to ‘keep it simple’. Structure your answers around the material provided, rather than trying to pin the data onto a pre-learned theoretical answer. In your 25-mark essays, write an informed, critical conclusion weighing up your argument, not a summary. Return to the question, and answer it - avoiding the personal pronoun is preferred - in an informed and reasoned framework. with its registered office at 80 Strand, London, WC2R 0RL, United Kingdom

Notes from the mark scheme and report

• Level 3 needs a valid cost and revenue diagram showing a shift (lower AC/MC or higher AR/MR) and the change in supernormal profit, not supply and demand
• costs may rise in the short run and fall in the long run
• Extract C: firms expect higher long-term profits

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

Answer

C

Mark scheme

Notes from the mark scheme and report

• subsidy per unit (vertical distance J to L) x quantity Q2 = area P3P1JL (C)
• OP3LQ2 is consumer spending
• the other areas ignore the supply shift or the subsidised quantity

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

Answer

C

Mark scheme

Notes from the mark scheme and report

• tax revenue = tax per unit (H to K) x Q1 = area P3P1HK (C)
• P2P1HJ is the consumers' share and P3P2JK the producers' share of the tax
• OP1HQ1 is total consumer spending

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

Answer

A

Mark scheme

Notes from the mark scheme and report

• a tax on workplace parking raises the cost of driving to work, so demand for rail (a substitute) shifts right (A)
• subsidies and more track shift supply, not demand
• cheaper petrol would reduce rail demand

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

Mark scheme

Examiner's comment

This question requires candidates to illustrate the shape of the Classical long-run AS curve. A few candidates were not able to distinguish between the classical and the Keynesian AS curves.

Notes from the mark scheme and report

• Classical LRAS is vertical at full-capacity real output
• some drew the Keynesian (reverse L) shape

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

Mark scheme

Examiner's comment

This question requires candidates to draw the likely impact of a rise in the base interest rate in context of an AD/AS diagram. Marks were awarded as 1 mark for the leftward shift in AD/SRAS and 1 mark for a new equilibrium. Most candidates achieved the 2 marks on this question.

Notes from the mark scheme and report

• shift AD left (a SRAS shift is also accepted) and mark the new equilibrium with lower real output and price level

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to assess the likely impact of an increase in consumption on the UK economy using an AD/AS diagram. In these longer questions the focus for a candidate needs to be on the quality of their answer, bearing in mind the levels mark scheme. They should ensure they are clearly giving step-by-step explanations of the impact. This would cover the exam skills of knowledge, application, and analysis. There are 4 marks available here for evaluation, which almost all candidates covered.

Notes from the mark scheme and report

• Level 3 needs a valid AD/AS diagram with AD shifting right (higher real output and price level, lower unemployment)
• evaluate with spare capacity, debt-financed spending (credit card borrowing up 9.6%), rising interest rates, imports

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

Mark scheme

Examiner's comment

This question was generally answered well, with many candidates able to accurately draw a diagram showing for a specific tax a parallel shift left in supply to secure the two knowledge marks. A minority illustrated the shift as it was an ad-valorem tax and thus only secured one knowledge mark. The majority were also able to accurately apply the consumer and producer tax incidence. This answer scores the full 4 marks - it clearly shows a parallel shift to the left in supply and the resultant tax incidence carefully annotated to the right of the diagram as best practice, given the writing inside the boxes is not clear. Everything is also correctly labelled - all axes and lines. In addition, they have also applied accurately the tax per litre. This answer scores the 2/4 marks. Again, it clearly shows a parallel shift to the left in supply, but the resultant tax incidence is labelled incorrectly.

Notes from the mark scheme and report

• specific tax is a parallel leftward shift of supply (a pivot is ad valorem and loses a knowledge mark)
• label consumer and producer incidence
• application mark for showing the 58p per litre tax
• report: some labelled the incidence areas the wrong way round

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

Mark scheme

Examiner's comment

This question was generally answered well, with many candidates able to accurately draw a diagram showing MPB, MSB and MSC. The main reason for candidates scoring 2/4 marks as opposed to 4/4 marks was not correctly identifying the external benefit/welfare gain/new social optimum equilibrium. This answer scores the full 4 marks - it clearly shows the welfare gain as well as the free market (Qfm) and social optimum (Qso) outputs. Everything is also correctly labelled - all axes and lines. This answer also scores 4/4 marks. This time there is additional annotation regarding the under-provision with both axes applied.

Notes from the mark scheme and report

• MSB above MPB with MPC = MSC
• market equilibrium at MPB = MPC, social optimum at MSB = MSC
• mark the external benefit and the welfare gain area
• report: the usual loss of 2 marks was not identifying the welfare gain or social optimum

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

Mark scheme

Examiner's comment

Most responses secured high marks with many explaining and illustrating a secure knowledge or tradable pollution permits using a supply and demand diagram. This was undertaken in a concise manner linking the rise in the price of permits to a fall in pollution levels, with students thus going beyond the four marks for this question. This answer achieves zero marks. Several effects are provided without a valid explanation. This answer achieves 4/4 marks. There is an awareness of how limiting the supply of permits will increase their price in the tradable pollution permits market. This is then further developed and applied in the context of reducing pollution in the long run.

Notes from the mark scheme and report

• fewer permits shift supply of permits left, raising the permit price, so firms pollute less or invest in cleaner technology
• one effect developed in context
• listing several effects without explanation scored 0

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

Mark scheme

Examiner's comment

A significant number of candidates achieved zero marks or one mark for this question. This was due to them only identifying that total costs were rising. No marks were awarded for simply saying that costs or average costs were rising. There was a mistaken belief that diminishing returns will only occur at output levels greater than Z. There was little evidence of a secure knowledge regarding the relationship between marginal costs and average cost. This answer achieves 1/2 marks for correctly identifying that total costs are rising. Unfortunately, they do not go beyond this to secure a second mark. This answer achieves 2/2 marks for correctly identifying that total cost would be rising (1) at a higher rate than output i.e. at a faster rate (1).

Notes from the mark scheme and report

• beyond Z MC > AC so total cost rises at an increasing rate
• just "costs" or "average costs rise" earns nothing
• report: "a significant number of candidates achieved zero marks or one mark", only saying total cost rises, with little secure knowledge of the MC and AC relationship

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

Answer

B

Mark scheme

Notes from the mark scheme and report

• beyond Z average variable cost rises (B)
• AFC keeps falling as fixed costs are spread, so the AFC distractors (C, D) are wrong
• A wrong as AVC does not fall

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

Mark scheme

Examiner's comment

In this question most students were able to access close to full marks. There was, in most cases, an accurately labelled diagram accompanied by a relevant explanation. However, a significant number of responses ignored the requirement to refer to Figure 1. This answer secure 5/5. A correctly labelled diagram annotated to show a shift right in supply is explained with reference to the data in Figure 1. There is also some explanation of the effect being a rise in consumer surplus and in the diagram of the financial gains to the producer and consumers of the subsidy illustrated in the diagram. This is an excellent answer to this question scoring full marks. An accurate diagram is provided showing a double shift right indicating an increase in subsidy, as allowed in the mark scheme. Accurate reference to the data in Figure 1 is also provided within the careful explanation of the diagram.

Notes from the mark scheme and report

• higher subsidy (£277m to £287.9m, about 3.9%) shifts supply right so fares fall (or rise less than they would with RPI-linked fares)
• 2 KAA marks reserved for an accurate diagram
• report: a significant number ignored Figure 1

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 4 (construct and interpret a range of standard graphical forms); 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 focused on the likely benefits of price discrimination and required a diagram to support an answer. The best answers used correct diagrams as illustrated in the mark scheme or alternative correct diagrams looking only at young and older rail customers. This was accompanied by clear and in-depth explanation of why this was a benefit and then evaluated with use of the diagram. Some answers also included a judgement, but candidates should note that this is not required in this question. This answer scores 8KAA and 5EV = 13/15. The diagram is not quite spot on, but the response has good supportive chains of reasoning. Focused examples are carefully integrated into knowledge and understanding. Better clarity on profit and revenue indicates one area where it could be better, but responses are not negatively marked. This answer scores 10/15. The response starts by looking at price discrimination between the young and old with a suitable diagram to address the young and valid evaluation = L3 and L2e+. The second point regarding revenue secures L2and L2e. The response though lacks balance and is a narrow response given the demands of the question. 6KAA and 4EV = 10/15.

Notes from the mark scheme and report

• third degree price discrimination diagram (separate markets, different PEDs) required
• benefits: cheaper young person fares (£69.50 v £105.30), cross subsidy keeps services running, spreading peak demand, revenue for investment
• evaluate with adults paying more and loss of consumer surplus

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

Mark scheme

Examiner's comment

Question 5 consists mainly of a draw question, and the vast majority of students demonstrated a very good understanding of what an AD/AS diagram should look like, and what should be happening on it in this case study- i.e. an increase in either aggregate supply and/or aggregate demand. Section B, the data response section, is based on information provided in the exam paper about trade and development issues in Africa. This includes 2 figures and 2 extracts on different issues.

Notes from the mark scheme and report

• labels on axes (price level, real output) and curves for 2 marks
• government-funded infrastructure can shift AD right, LRAS right or both
• show the new price level and real output

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

Mark scheme, including the levels grid and indicative content

Notes from the mark scheme and report

• micro: lower transport costs for firms, external costs and benefits of the airport, external economies of scale
• macro: AD up via I or G with the multiplier and LRAS shifting right
• Level 4 needs both micro and macro
• evaluate with opportunity cost, crowding out, white elephant risk, valuing externalities

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Two level 2 points without the diagram Diagram is acceptable L3 with the explanation on previous page 7/8 Evaluation is L2 – as a weak point 3/4 8/12

Notes from the mark scheme and report

• Level 3 needs at least one valid cost and revenue diagram showing a fall in AR/MR or a rise in costs and the shut-down point (P < AVC)
• online competition, business rates and rents, falling confidence from Extract D
• evaluate e.g. firms stay open in the short run while covering AVC

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

Mark scheme

Examiner's comment

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.

Notes from the mark scheme and report

• demand shifts left (the ban reduces demand), and consumer surplus shrinks to the smaller triangle under the new demand curve above the new price
• common errors: shifting supply or confusing consumer with producer surplus
• 1 mark if the shift is wrong but the new surplus is correct

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

Mark scheme

Examiner's comment

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.

Notes from the mark scheme and report

• VAT is ad valorem so the supply curve pivots (non-parallel) left, plus the new equilibrium
• a parallel shift (specific tax) scores max 1
• most drew only a parallel shift

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

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.

Notes from the mark scheme and report

• Level 3 needs one relevant supply and demand diagram
• demand right (ageing population, NHS waiting times) and/or supply left (staff shortages, administrative costs)
• evaluate with magnitude of shifts, PED/PES and time scale
• weak evaluation pulled marks down

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

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.

Notes from the mark scheme and report

• define excess demand and apply to NHS waiting lists
• Level 4 needs at least two ways: more state provision (supply right), GP charges to ration, subsidies for private insurance, information and taxes on unhealthy goods
• evaluate with government failure, PES of doctors, time lags

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

Mark scheme

Examiner's comment

This question requires candidates to illustrate the shape of the Keynesian long-run AS curve. A few candidates were not able to distinguish between the classical and the Keynesian AS curves.

Notes from the mark scheme and report

• Keynesian LRAS is horizontal at low output, upward sloping, then vertical at full capacity
• report: a few drew the classical vertical LRAS instead

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

Mark scheme

Examiner's comment

This question requires candidates to draw the likely impact of government policy to promote business competition in context of an AD/AS diagram. Marks were awarded as 1 mark for the rightward shift in LRAS and 1 mark for a new equilibrium showing lower price level and higher real output. Most candidates achieved the 2 marks on this question.

Notes from the mark scheme and report

• competition policy shifts LRAS right
• the new equilibrium has a lower price level and higher real output

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to assess the likely impact of the change in the value of exports, on the economic growth of the UK using an AD/AS diagram. In these longer questions the focus for a candidate needs to be on the quality of their answer, bearing in mind the levels mark scheme. They should ensure they are clearly giving step-by-step explanations of the impact. This would cover the exam skills of knowledge, application, and analysis. There are 4 marks available here for evaluation.

Notes from the mark scheme and report

• Level 3 needs an accurate AD/AS diagram with AD shifting right
• exports rose from about £43bn to £50bn a month after the 2016 depreciation, an injection with multiplier effects raising real GDP
• evaluate with import content, spare capacity and size relative to GDP

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This question specifically asks candidates to draw a diagram. There is no need for candidates to write any explanation to go along with their diagram. When drawing diagrams candidates should always double-check that the lines and axes are correctly labelled. Nearly all candidates provided the answer as illustrated in the mark scheme. The candidate received two marks for drawing a supply and demand diagram annotated to show a left shift in the supply curve. An arrow was not required in this case since the candidate had indicated S1 shifting correctly to S2. A large number of candidates did make use of arrows and this did help overcome the rare occasion whereby they had mistakenly drawn two supply curves with both annotated as S, or likewise with equilibrium points labelled P and/or Q on two occasions. This candidate did not obtain the two application marks as they did not indicate the new equilibrium price or quantity. They obtained 2+0 = 2 marks overall. Always ensure you fully annotate your diagrams and double check that you have done so. This diagram is correctly labelled. It also shows the shift in the correct direction and illustrates the new equilibrium points. In addition it annotates the answer given the context. Whilst this is not in the mark scheme, this is a good approach to take to ensure your answer is correct or in answering longer responses where a diagram may be useful or required. Therefore this answer achieves full marks. Draw diagrams clearly and large enough to be easy to interpret, like in this answer.

Notes from the mark scheme and report

• supply shifts left (2 marks)
• label the new higher equilibrium price and lower quantity for the application marks
• no written explanation needed
• label curves S1 and S2, not both S

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

Answer

A

Mark scheme

Notes from the mark scheme and report

• a natural disaster destroys capacity, so the PPF shifts inward and output falls from X to Y (A)
• B is growth in potential output, C a reallocation along the PPF, D a move from inefficiency to the frontier

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

Mark scheme

Examiner's comment

A significant number of candidates achieved zero marks for this question. This was due to them drawing monopoly diagrams showing abnormal/normal profit or perfectly competitive diagrams showing a horizontal AR curve. To secure marks for this question candidates had to first draw an AC curve tangential to a downward sloping AR curve. Candidates found it difficult to show the tangential point as just touching so we allowed this diagram as long as the touching point was not too extended along the AR slope. This answer scores two marks as it shows AC tangential to a downward sloping AR curve. Candidates found it difficult to show the tangential point as just touching so we allowed this diagram if the touching point was not too extended along the AR slope. This is not followed by an identification of the profit maximising equilibrium price and output where MC=MR. Also, AC is not equal to AR at the profit maximising equilibrium output price and output where MC=MR. This answer achieved 2+0 = 2 marks. Practice drawing accurate long run monopolistic competition diagram, as per the mark scheme. This diagram is correctly drawn. Therefore this answer achieves full marks.

Notes from the mark scheme and report

• AC tangential to a downward-sloping AR (2 marks), MC = MR output and price, AC = AR at that output (normal profit)
• report: "A significant number of candidates achieved zero marks" by drawing monopoly or perfect competition (horizontal AR) diagrams

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Stronger answers identified how integration increased revenue with a Level 3 diagram showing an outward shift in AR and MR and a larger SNP area accurately identified. This was accompanied by economic ideas carefully explained in context and then evaluated twice with a logical chain of reasoning in both cases. Alternatively, stronger answers made appropriate use of the extract to identify falling costs as illustrated by the AC and MC falling. When only the AC was shown to fall, stronger candidates identified that this was due to a fall in fixed costs whilst weaker responses failed to identify why only AC was falling. The static cost and revenue diagram alone secured Level 1KAA as it did not provide one reason for the rise in BT's profit. The written answer on the same page lifted the overall response to Level 2 as it suggested in context that the ability to set a profit maximising price had now been secured. To achieve a Level 3 response the diagram would have been made dynamic by additional annotations showing the change in price for example from allocative efficiency pricing to profit maximising price. The evaluation on the next page secured Level 2ev- and required extending and/or an additional evaluative point to secure L2e+. As such this answer scores 4KAA and 3ev = 7/12 marks. Ensure you provide a clear diagram, when asked, with additional annotations that help you answer the question set. In contrast with the first exemplar this candidate provides a dynamic diagram in context and with analysis concerning the PED being relatively price inelastic. The answer secures 7 KAA and 4ev = 11/12 marks.

Notes from the mark scheme and report

• Level 3 needs an accurate cost and revenue diagram: AR and MR shift right (EE integration, 35% share, higher line rental) or AC and MC fall (wholesale cost down)
• a static diagram with no reason for the change only reaches Level 1

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

Mark scheme

Examiner's comment

This question was generally answered well, with many candidates able to accurately draw a diagram showing either AD or AS increasing, or both. The main reason for candidates scoring 3/4 marks as opposed to 4/4 marks was labelling the vertical axis as price rather than price level. This answer scores the full 4 marks - it clearly shows AS shifting out to the right and the resultant effect on price level and real output. Everything is also correctly labelled - all axes and lines. There is no need to write anything for these questions - just draw the diagram. This answer also scores 4/4 marks. This time the candidate has shifted out AD, showing an increase in price level and real GDP. Again everything is correctly labelled.

Notes from the mark scheme and report

• AD shifts right (and/or LRAS shifts right) with new price level and real output marked
• the usual lost mark was labelling the vertical axis 'price' not 'price level'
• no writing needed

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

Mark scheme

Examiner's comment

A small majority of candidates achieved full marks on this question. Most were able to identify a point to the right of W for 1 mark. However, many did not properly indicate the opportunity cost of providing more educational programmes. Some answers also shifted the curve outwards to indicate more educational programmes. This response answers the question precisely, showing a point to the right of W, whilst clearly indicating the opportunity cost of providing more educational programmes. Clearly annotate your diagrams. Opportunity cost is measured on the relevant axes. While this answer shows X as the new output it fails to identify the opportunity cost and only scores 1 mark. Clearly annotate the diagram to show the opportunity cost.

Notes from the mark scheme and report

• mark a new point to the right of W along the PPF and show the fall in popular entertainment output as the opportunity cost on the axis
• report: many did not show the opportunity cost or wrongly shifted the curve outwards

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

Mark scheme

Examiner's comment

This proved to be a reasonably accessible question with most candidates scoring at least 3 marks, though only a small number were able to access all 5 marks. The question asked for a supply and demand diagram, and while candidates were able to do this most only drew a supply shift, thus missing the final analysis mark which required them to show a correct shift in demand and supply. Extract A and Figure 1 offered plenty of scope for the application marks, and candidates were able to identify both supply-side factors, such as Kazakhstan's stockpiles of uranium; and demand-side factors, such as falling public confidence in the nuclear industry following the Fukushima disaster. This answer achieved 5 out of 5 marks. The knowledge mark is achieved in the second sentence with decreased demand for uranium. The candidate develops this in the context of the Fukushima disaster, thus accessing the first application mark. The candidate then goes on to discuss the stockpiling of uranium, accessing the second application mark. The diagram show both a price fall and the shift in both demand and supply for the second analysis mark. Both must be shown to get this second mark. Always use the data to substantiate your points. Here the candidate does that sufficiently well enough to gain the available application marks, while gaining the analysis marks by showing shifts in both demand and supply. Be sure to correctly label the direction of the shifts. This answer achieved 3 out of the 5 marks. The candidate begins by drawing a supply and demand diagram which shows a rightward shift in supply and a price fall. The supply shift gets the knowledge mark, while the fall in price achieves the first analysis mark. The candidate then goes on to discuss the stockpiles of uranium. There is no discussion of demand-side factors whatsoever. Consequently, the opportunity to achieve further application or analysis marks is missed. Simply re-stating the question is not sufficient to pick up application marks. Make sure you use the data and think how you can develop your answer analytically.

Notes from the mark scheme and report

• show BOTH supply right (Kazakhstan output, stockpiles, 2016 surplus about 7 million kg) and demand left (Fukushima, Japan closing reactors)
• report: most showed only a supply shift and missed the last analysis mark

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); 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 differentiated significantly between candidates, as one would expect from the higher tariff responses, though the mean mark was just below 8. Many candidates did not score highly in terms of evaluation, for which skill there was 6 marks. Most candidates were able to draw a good maximum energy price diagram, and could go on to explore the impact on both consumers and producers reasonably effectively. Marks tended to be lost because of the inability of less able candidates to consider the negative effects on consumers, such as energy shortages, or how the impact of the governement's intervention will depend on how far below the equilibrium the price is set. Other evaluative strategies considered price elasticity of demand or supply, and the concept of government failure. This answer achieved 13 out of 15. The KAA is at the top of Level 3. There is a clear diagram and then sustained chains of reasoning discussing how a maximum price can help lower income people, perhaps reducing income inequality. There is reference to rising consumer surplus, demonstrating strong use of economic concepts. Analysis of the impact on producers then follows, with a discussion of lower profits and the strong possibility of some producers exiting the market. On the next page there is some good evaluation referring to the administration costs of the scheme and the possibility of government failure. There is also some discussion of where the maximum price is set, in relation to the equilibrium, though the diagram isn't properly labelled and the point is less developed than the first. Overall, the evaluation is at the top of Level 2. In depth evaluation is the key to accessing all available marks. Remember to label diagrams properly and sustain your arguments to gain full marks. This answer scored 8 out of 15 and is typical of a mid-level answer. KAA is at the top of Level 2. There is little use of context but the diagram is precise and well explained. The candidate addresses the impact on producers, but only very briefly considers consumers. In terms of evaluation, there is a sentence referring to the difficulty of targeting maximum prices because the government doesn't have perfect information. The three lines referring to consumers on page 2 of the answer are also mildly evaluative. These comments are generic, and therefore evaluation is Level 1. In questions offering this many marks, always look for the opportunity to develop evaluative points, using data from the extract to back-up your point.

Notes from the mark scheme and report

• maximum price below equilibrium: lower bills and more affordable energy for consumers but excess demand (shortages)
• lower revenue and profit for producers, less investment
• evaluate with how far below equilibrium, PED and PES, government failure
• report: many lacked evaluation and ignored negative effects on consumers

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Less than fifteen percent of candidates attempted this question and the performance was much poorer on the whole compared to 6(g), with the mean mark being less than 9 compared to 11 for 6(g). More able candidates considered the extent to which nuclear power is over-provided or under- provided using the concepts of external costs and benefits. Within good essays, there was the confident use of the Extract A and C, referring to a range of external costs in the production of nuclear energy. External cost in production diagrams, which were clearly labelled, were a hallmark of good answers. The evaluation usually referred to nuclear power as reducing the external costs associated with carbon emissions and explored a range of other benefits from nuclear power, such as affordable energy. Many candidates also considered the extent to which nuclear power was ‘safe’ in the context of the very specific circumstances of Fukushima and the likelihood of a recurrence of such a disaster. Hinkley Point and the future of UK energy supplies was also often considered. For many candidates, however, there was considerable confusion as to the nature and extent of the externalities discussed. The candidate begins with a clear theoretical explanation of the social costs of production, exploring negative externalities in the production of nuclear power. The candidate then goes on to illustrate how nuclear power is over-produced, leading to a range of possible negative externalities, with clear reference to the context. The candidate discusses the dangers of nuclear accidents and then links them to the possibility of lower productivity in the UK if people are affected negatively by such accidents. This is very good KAA and accesses Level 4. On page 3 the candidate then proceeds to consider how nuclear power is under-provided, in context, helping to reduce the levels of carbon dioxide in the atmosphere, and therefore the impact of climate change, with positive consequences for humanity. The candidate also discusses external benefits from employment, although this point is less well developed. All of the arguments are in context and well explained. This answer therefore accesses Level 3 evaluation. The conclusion is not quite developed into a substantiated judgement. Always try to 'anchor' an essay's analytical structure around a clearly drawn diagram, as the candidate does here. Interlink analysis and reference to the context throughout to build clear, well-substantiated points. Be sure to come to a conclusion at the end of the essay to access full marks. This answer scored 10 out of the 20 marks. The candidate begins with a reasonably accurate negative externality of production diagram, which is then explained. The candidate then goes on to consider a range of negative externalities which are attributable to nuclear power generation. These are developed at a basic level and flit between the bottom of Level 3 and the top of Level 2. The candidate is going for quantity rather than quality. The candidate takes a similar tack with the case for nuclear power being underprovided. Points are briefly explained but in context. This edges into Level 2 evaluation. Take the time to construct a series of well- developed and sustained points rather than going for quantity. Breadth of argument is important but there needs to be a balance between breadth and depth. Too many points will leave to little time to develop a sustained chain of reasoning.

Notes from the mark scheme and report

• negative production externality diagram with welfare loss triangle: radiation risk and waste storage suggest over-provision
• evaluate: nuclear reduces carbon external costs of coal and gas, so may be under-provided
• report: "performance was much poorer on the whole compared to 6(g)" (mean below 9/20)

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was a very accessible question and very popular with candidates. More able candidates explained a range of different policies, almost always with a clearly drawn diagram to further the analysis. Policies tended to be tradable permits, indirect taxation, and the provision of subsidies to alternative energy suppliers. They used the context extensively to substantiate points made in order to access Level 3 and above. The extracts provide multiple avenues for candidates to explore, e.g. the shutting down of coal-fired power stations by 2025 in Extract A. Extract C suggests multiple policies, so one would expect to see substantial development of them analytically. Evaluation of the policies tended to focus on why the policies may not be effective. More able answers developed points based on the excessive administration costs of regulation, government failure to set the tax at the most appropriate level to correct the stipulated market failure, and questioning the extent of the link between carbon emissions and climate change. The mean mark on this question was 11, and had a wider range of marks indicating that candidates did better at the bottom end than on the previous question. This answer scored only 6 out of 20. There are three Level 2 KAA paragraphs. The question asks for a diagram, which the candidate has attempted on page 2, but this is an incorrectly drawn subsidy diagram and adds nothing to the candidate's answer. There is little development of ideas either analytically or in terms of context. On page 3 the candidate talks about promoting and allocating firms low carbon technology, but doesn't say what this is or how it might work in reality. There is no evaluation of the drawbacks of any policies proposed or which might be the more effective. The question asks for different ways to be evaluated. This requires an assessment of the disadvantages of the policies proposed together with an assessment of which policy is best in the context of the extracts. This answer achieved 19 out of 20. The candidate begins by exploring carbon taxes and analyses thoroughly in context. There is then in-depth evaluation of the effectiveness of this policy, considering the possibility of government failure. The second policy considered is the subsidising of cleaner 'low carbon' technology, using a subsidy diagram, and explaining in context how the policy is likely to work. The candidate then evaluates by considering the opportunity cost of such subsidies and how they might distort the price mechanism. The candidate develops the essay further by exploring tradable permits and evaluates by considering whether the policy is effective in the long-term, seeing it as only a short-term solution to the problem. Each point is clearly balanced with good evaluative commentary. There is also some assessment of which policy might work best, though this is not developed fully. Carefully crafted paragraphs, which use the context well, are clearly evident here. Notice how the points are evaluated before the next policy is introduced, explained, and again evaluated. There is a good attempt at a conclusion.

Notes from the mark scheme and report

• taxes on carbon (shift MPC to MSC), tradable pollution permits, subsidies to renewables, regulation (closing coal plants by 2025), information
• diagram required
• evaluate effectiveness, valuing external costs, government failure, global free-rider problem

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

Answer

B

Mark scheme

Notes from the mark scheme and report

• B is where actual GDP is below trend GDP = negative output gap
• A and D are on trend (no gap), C is above trend (positive gap)

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

Mark scheme

Examiner's comment

This question requires candidates to draw the effect of a rise in the cost of raw materialsin context of an AD/AS diagram. Marks were awarded as 1 mark for the leftward shift in SRAS and 1 mark for a new equilibrium showing higher price level and lower real output. Most candidates achieved the 2 marks on this question. This candidate achieves 2/2 marks. The shift in SRAS is correct and they have illustrated the new equilibrium and the change in price level and real output with the dotted lines. This candidate achieves 1/2 marks – the shift in SRAS is correct but they have not illustrated the new equilibrium and the change in price level and real output.

Notes from the mark scheme and report

• shift SRAS left and mark the new equilibrium with a higher price level and lower real output
• missing the new equilibrium loses a mark

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to assess the likely macroeconomic effects of increase in house prices using an AD/AS diagram. In these longer questions the focus for a candidate needs to be on the quality of their answer, bearing in mind the levels mark scheme. They should ensure they are clearly giving step-by-step explanations for their reasons. This would cover the exam skills of knowledge, application, and analysis (KAA). There are also 4 marks available here for evaluation. Popular comments revolved around the wealth effect for existing home owners and the effect on inflation, coupled with the impact on first time buyers as evaluation. This is a more able response, scoring the full 10 marks. It clearly and logically explains different effects of an increase in house prices and also offers two relevant evaluations of these points. The candidate uses the data from the extract to support their arguments. This answer scores 3 marks in total. There is no evaluation and so the highest mark possible is 6/10 marks. In terms of KAA, only one relevant point has been explained - government spending on helping people to buy homes. This however could have been further developed and hence only fits with the criteria for Level 2. Keep the levels in mind – in this case you are aiming for KAA Level 3 and Evaluation Level 2.

Notes from the mark scheme and report

• wealth effect and confidence raise consumption, AD shifts right, higher real output and price level
• Level 3 needs an accurate AD/AS diagram
• evaluate with first-time buyers, regional differences, size of the effect, falling real incomes

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

Mark scheme

Examiner's comment

In this question the focus is on having the ability to apply the concept of opportunity cost to the PPF curves as shown. There are 2 marks for application. The main issue that candidates faced here was failing to correctly read the information as presented; with some candidates identifying the original opportunity cost as 70 or not displaying a clear understanding of opportunity cost and therefore the ability to apply. This often meant that candidates were unable to achieve full marks, since it often led on to incorrect application. This answer scores the full 2 marks. The candidate has identified correctly the original and new opportunity cost. Be clear and concise in these short questions. This candidate correctly identifies 20 as the original opportunity cost to obtain one mark and provides their working as per the mark scheme. They then correctly identify that the calculation of new opportunity cost of 50 capital goods along XZ is 170-140 but then make the computational error of saying this is equal to 70 rather than 30 consumer goods. As an incorrect answer they receive 0 marks for the new opportunity cost despite having the correct working. Overall they achieve 1+0 = 1 mark. Always try to ensure you re-read your work – especially if you allow time for this at the end of the exam.

Notes from the mark scheme and report

• read across at 50 capital goods: on XY 120 - 100 = 20 consumer goods, on XZ 170 - 140 = 30
• report: some misread the PPF and gave 70 as the original opportunity cost

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

Many candidates clearly identified the unemployment of resources and most gained analysis marks operating inside PPF. Marks were lost where candidates stated unemployed resources and allocative efficiency showing dual knowledge but then no analysis so they could only be awarded a single mark. This answer achieves a mark of 1/2. The response does not move beyond showing an understanding of an inefficient allocation of resources. For a 2 mark explain answer it is always advisable to provide some linked development or an example. In this case the diagram provided the opportunity to use quantitative skills by identifying that the economy could produce at either 100 or 140 consumer goods but is currently producing 80. This answer achieves a mark of 2/2. Full marks for correctly explaining position W and analysing with use of the diagram whereby it is possible to increase output of both consumer and capital goods. The candidate displays a concise grasp of the economic concepts covered. Ensure you have a clear understanding of all the economic concepts in the specification.

Notes from the mark scheme and report

• W is inside the PPF: unemployed resources or inefficient allocation
• analysis mark for more of both goods possible (could produce 100 or 140 consumer goods, producing 80)
• two knowledge points without analysis score only 1

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

Mark scheme

Examiner's comment

In this question, candidates needed to make sure they could identify supernormal profit at a profit maximisation and revenue maximisation level of output. They then need to calculate accurately the supernormal profits and subtract to achieve a change of £117. The majority of candidates did identify the profit maximisation and revenue maximisation level of output but some had difficulties with knowing how to calculate the supernormal profits – especially at the revenue maximisation output. Full marks could be achieved for simply stating £117 or -£117. This answer achieves a mark of 3/4. They provide a model approach when showing their working and do identify accurately the change but do not calculate the change of £117 in total supernormal profit as stated in bold in the question. Ensure you provide the final answer to the question set. For stating change = -£117 the candidate obtains full marks.

Notes from the mark scheme and report

• profit max MC = MR at 25 treatments: (£17 - £8) x 25 = £225
• revenue max MR = 0 at 36: (£12 - £9) x 36 = £108
• change = -£117
• report: some could not calculate supernormal profit at the revenue-maximising output, or did not state the final change

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was the less popular of the two essay questions, although it was still completed by several thousand candidates. Diagrammatic analysis was required and when done well was accurate, well labelled and well explained with a solid chain of reasoning to access a Level 4 response. Poor diagrammatic analysis was evident with some careless labelling errors, most often mixing MSC and MPC. High scoring responses were well-structured and at times provided clear evidence of planning. Weaker responses ignored private costs entirely or seemed confused as to exactly what they were. In addition, candidates did not always move on to the third party effects associated with the external cost. As with 6(c) and 6(e), evaluative comments were often tagged on to the end of a paragraph. Top level evaluation often referred to difficulties in measuring the monetary value to private costs and external costs as well as linked evaluation of external benefits offsetting the external costs. Effective sustained judgement balanced the size of the external costs against the private costs and whether these could be offset by benefits to make a judgement call. 18 out of 25 marks awarded. The candidate started by unpacking the demands of the question and then provided an accurate diagram to a Level 3+ standard, as it was accurately labelled and included the social optimum and welfare loss diagram, which was then integrated into their written explanation. This was a valid approach laying the foundations for what could have been a well-structured response. The likely external cost was awarded Level 3+ but would have achieved Level 4 if the candidate had developed further by looking at specific third party effect(s). The paragraph on private costs was well-structured, demonstrating a logical and coherent chain of reasoning in context to a Level 4 standard. Evaluation was focussed on long run external costs in comparison to coal, which was awarded L2e. Likewise the external benefits as evaluation was awarded L2e+ however, whilst being substantial it needed to be linked more tightly to the question in offsetting the external costs or reducing the welfare loss to be awarded L3e. The final bit of evaluation attempted to address private costs but lacked clarity thus achieving L1e. Overall the response lacked judgement and was awarded Level 3+ (12) + L2e+ (6e). Plan to evaluate as you work through your response to better ensure relevant reasoning in context. Higher awarded responses tended to offer a paragraph evaluating private costs having just covered private costs, then likewise for external costs. This was then followed by a substantial conclusion offering judgement or informed judgements were made explicitly throughout. This answer achieves a mark of 19/25. A clear explanation is offered followed by an accurate diagram which is well explained. External costs gets to the third party effect (Level 4)+ but the private costs analysis is thin (Level 2) achieving overall Level 3+ KAA (12). The evaluation is concise but sophisticated in both context and theory as well as offering an attempt at judgement in the conclusion to achieve L3e- (7e). Explaining private costs was a weak spot for many candidates. Try to ensure you can demonstrate precise knowledge and understanding of all the concepts, principles and models.

Notes from the mark scheme and report

• Level 4 needs an accurate MPC/MSC diagram with market and social optimum and welfare loss, and both private AND external costs
• report: MSC and MPC labels mixed up, private costs ignored or misunderstood, third-party effects not developed
• evaluate by measuring costs and offsetting external benefits

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question was the more popular of the two essay questions. Question 8 focused on the impact on consumers of one firm having high market share. Many candidates correctly identified that this question focused on monopoly power and were able to accurately draw technical diagrams. Some candidates failed to refer back to consumers and instead focused purely on the advantages and disadvantages of high market share. Many candidates used the stimulus on Apple and showed awareness of the firm and the impacts it has on consumers. This was not necessary in order to achieve full marks but those who applied to Apple did score highly. Other candidates applied to other firms that they were more familiar with, which still allowed them to access the top mark bands. The old definition of 25% market share was valid but beyond the specification and most textbooks. Centres may be interested to look at the CMA's new definition on "monopoly power/market dominance". The most common approach linked profits made by the firm followed by a discussion of the possibility of dynamic efficiency, innovation and customer service compared to x-inefficiency, high prices, lack of consumer care or poor quality. Evaluation when not well developed was fairly generic (profits may not be reinvested, diseconomies of scale etc.) and rarely developed beyond L1e or L2e. This answer achieves a mark of 21/25. This answer focuses primarily on the theoretical arguments in context to an advanced level. Apple's innovation focus benefiting consumers is evaluated well with the Vodafone point being valid and displaying some reading around the subject thus achieving Level 3+ & L3e. The ability to achieve economies of scale is linked well through chains of reasoning and context of benefiting the consumer and is again well evaluated to achieve Level 4 & L3e. The Wanadoo point we were less convinced by and awarded Level 2 but the evaluation here was again strong achieving L3e. Finally, the candidate offered valid judgement in their conclusion. Overall, they achieved Level 3+ and L3e = 12 + 9e. Inevitably some judgement is made by examiners as to whether overall a response is to a Level 4 or 3, in this case rather than adding the additional Wanadoo point, time may have been better spent on explaining how a monopoly can control output and price to achieve maximum KAA. Try to plan your responses so that you can use your time effectively to secure the highest Level responses. This is an excellent response achieving full marks 25/25. There appears to be some evidence of planning which may have helped secure top marks. The logical and coherent chains of reasoning are clear throughout as well as offering substantial evaluation and informed judgement to a high standard.

Notes from the mark scheme and report

• Level 4 needs an accurate (monopoly) diagram
• link every point back to consumers (price, choice, quality, consumer surplus)
• dynamic efficiency and economies of scale against higher prices, x-inefficiency and deadweight loss
• evaluate with contestability, rivals and CMA regulation
• report: evaluation rarely beyond L1e or L2e

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

Mark scheme

Examiner's comment

This question specifically asks candidates to draw a diagram. There is no need for candidates to write any explanation to go along with their diagram. When drawing diagrams candidates should always double-check that the lines and axes are correctly labelled. In this question half of the marks are awarded for this. This diagram is correctly labelled. It also shows the shift in the correct direction and illustrates the impact on the price level and real output. Therefore this answer achieves full marks. Draw diagrams clearly and large enough to be easy to interpret, like this answer. This answer has correct labels and the shift of AD is in the correct direction, but the candidate has not illustrated the change in price level or real output, and hence scores 3/4.

Notes from the mark scheme and report

• half the marks are for labels on axes (PL, real output) and curves
• shift AD left and show the fall in price level and/or real output
• showing the shift without marking the new PL or Y scored 3 of 4
• no written explanation needed

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

With a mean of 5.1/8, this was one of the most challenging questions on the paper. Many candidates in fact left it blank or crossed out large parts of their answer having realised there were inconsistencies. Many candidates did not draw a cost and revenue diagram at all. The best answers could effectively use diagrammatical analysis in this question and it is a key requirement of the Theme 3 course. A variety of approaches were acceptable, with more answers explaining the impact of efficiency on MC and AC, with very few answers explaining the link to MR and AR due to more harvests to sell in the sense that the demand faced by the individual firm was greater — clearly there is a mistake in the answer that simply shows an increase in supply leads to an increase in AR/MR. This fundamental misunderstanding meant that many answers contained an error that made the diagram and its description invalid; indeed some candidates went so far as to suggest there would be an increase in supply, a fall in price and therefore a rise in demand. Although the mark scheme made it possible to discuss the fact that individual competitive firms could face increased revenue, this was not owing to a shift in demand but a movement along a demand curve. Monopoly diagrams were accepted but to show a change in demand in this context, a more sophisticated approach was needed to show increased revenue for individual firms, and a rightwards/downwards movement of MC and AC along a price taking AR was certainly very effective. A surprisingly large number of answers showed a shift in marginal but not average costs (which could not be credited) or static diagrams. Answers which shifted FC or VC were equally acceptable, although it is important that the explanation does not contradict the diagram, for example by discussing a fall in the overheads for the farmers but showing a shift in MC and AC. It was important to show the shift correctly and the new area of profit. This question caused quite a bit of confusion with many crossed out diagrams and more answers without any diagrams at all than might have been expected when the diagram was specifically requested. There was also a surprising large number of supply and demand diagrams, which cannot on their own be credited as cost and revenue diagrams – although as part of a wider perfect competition analysis or as part of evaluation they were credited if valid. Evaluation marks were scored consistently well on this question, with many answers offering one relevant point with explanation to gain both marks. One effective argument was to suggest that Indonesian rice farmers are likely to operate in a highly competitive or contestable market, and therefore any supernormal profits would be eroded in the long run. This answer was fairly representative in that the diagram was static. The economies of scale diagram is partially valid as there is a cost curve, but again it was not used effectively nor was it related to the context so it did not attract marks. There were two marks available for the diagram, either as 2 application or 1 An and 1 Ap. This gets a mark for saying that the profit increases from the investment (1), that costs fall (1) and the application to 90 000 hectares of rice paddy (1). Make sure that the diagram shows a SHIFT and a NEW PROFIT AREA. If you are going to argue that the quantity demanded increases (shift along) then do not show a shift in demand. It is clearly a shift in supply as productivity and efficiency increase. This is a short, clear and effective answer. The diagram is clearly labelled. The text describes the diagram. There is a clear paragraph set apart for evaluation. This is a joy for an examiner to read. Note that you can also score all the marks using a shift in just the FC or AC, although you must be careful not to describe a change in VC and draw just a change in fixed costs, and vice versa.

Notes from the mark scheme and report

• 2 marks reserved for a cost and revenue diagram showing a shift down in AC (and MC if variable costs) and the new profit area
• a shift in MC only, a static diagram or a supply and demand diagram earns nothing
• do not shift AR/MR because supply rises
• report: "this was one of the most challenging questions on the paper" (mean 5.1/8), many did not draw the diagram

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

Mark scheme

Examiner's comment

Just over eighty percent of candidates had little trouble in obtaining full marks by making effective annotations of the diagram. A significant number of candidates lacked precision, losing a mark for not labelling the new curve or equilibrium points. This candidate achieved 2 out of 2 marks. Clear and confident annotations was provided identifying the new supply curve drawn and labelled, showing a shift inwards, and the new equilibria labelled showing a rise in price and decrease in quantity. Ensure you fully label accurate diagrams to obtain full marks. This answer achieved 1 out of 2 marks. The shift inwards in supply was accurate but not labelled. The new equilibria points were more than fully obtained and were awarded 1 mark. Ensure when you practice drawing diagrams they are always fully labelled.

Notes from the mark scheme and report

• draw and label the new supply curve shifted left and label the new equilibrium (higher price, lower quantity)
• a significant number lost a mark for not labelling the new curve or equilibrium
• command word is 'Annotate'

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

Mark scheme

Examiner's comment

The question required candidates to explain why ‘bans on tobacco advertising’ may result in a fall in revenue. Most candidates started with a diagram and explained how the ban would shift demand to the left. More able candidates then clearly defined revenue in their written explanation or by identifying in their diagram and went on to explain or clearly illustrate the fall in revenue. Almost all candidates drew a well-labelled and accurate diagram showing the shift but marks were lost by failing to define revenue or show the effect on revenue in the diagram, in some cases there was confusion with profit. 5 out of 5 marks awarded. The answer began with applying the ban to a shift inwards in demand as illustrated (awarded 1 mark for Application). There then followed further relevant application regarding consumers but this had already been awarded. The candidate then defined revenue (1 Knowledge). Finally the candidate explained the decrease in revenue with a careful reference to a relevantly shaded diagram (+1 Application as well as identifying revenue worth 1 Knowledge). The diagram clearly showed the shift left in demand and the new equilibrium, aided by relevant arrows (1+1 Analysis). Always make explicit use of your diagram when asked to draw one to answer the question set; in this case illustrating the decrease in revenue of tobacco firms. 3 out of 5 marks awarded. The candidate started by mostly repeating the question set before finally linking the ban to a decrease in demand (1 Application mark). The candidate then illustrated the shift in demand and explained the new equilibrium (1+1 Analysis). There was no attempt to define or identify diagrammatically the fall in revenue so there was no mark for Knowledge and no additional mark for Application. Ensure you provide a clear definition of the key term required and make it central to your answer.

Notes from the mark scheme and report

• the ban reduces consumption, shifting demand left
• define revenue (P x Q) and show the smaller revenue area on the diagram
• marks were lost for not defining revenue or confusing it with profit

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

Mark scheme

Examiner's comment

There is 1 mark available for this question, for showing an output gap on the diagram. Whilst a lot of candidates did get this correct there was also a significant number who clearly didn't know what to do to answer this question. This answer does not illustrate an output gap and so therefore scores no marks. This candidate has correctly identified an output gap as the difference between full employment and the current level of output, and thus achieves the 1 mark available.

Notes from the mark scheme and report

• mark the gap between current real output Y1 and full-capacity output where AS becomes vertical
• many did not know what to show

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

Mark scheme

Examiner's comment

This question requires candidates to draw the effect of the increase in the personal allowance in terms of an AD/AS diagram. Marks were awarded as 1 mark for the rightward shift in AD and 1 mark for a new equilibrium showing higher price level and real output. Most candidates achieved the 2 marks on this question. This answer achieves the full 2 marks – the shift in AD is correct and they have illustrated the new equilibrium and the change in price level and real output with the dotted lines. This answer achieves 0 marks – there is no shift in aggregate demand and also therefore no appropriate new equilibrium and impact on price level and real output.

Notes from the mark scheme and report

• a higher personal allowance raises disposable income and consumption so AD shifts right
• show the new equilibrium with higher price level and real output (an AS shift right is also allowed)

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

Mark scheme

Examiner's comment

In this question it was clear who knew how to calculate subsidy and who did not. A number of candidates lost a mark as 'million' was missing from their answer as the unit of measure. Candidates need to practice similar subsidy and tax diagrams from Theme 1. This answer achieves a mark of 2/2. This candidate achieves full marks for providing the correct answer, being 1,022,400,000. Best practice is always to state the currency. This answer achieves a mark of 1/2. The candidate can only be awarded 1 mark as million, the unit of measure, is missing. Always ensure you state the correct unit of measurement.

Notes from the mark scheme and report

• subsidy per unit = 1023 - 455 = 568 rupees x 1.8 million cylinders = 1 022.4 million rupees
• leaving out "million" loses a mark
• read the subsidy as the vertical gap between S and S1 at the new quantity

Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

Most candidates achieved full marks but a significant number of candidates lost a mark as the answers were transposed incorrectly i.e. they identified consumers as receiving 87.55 and producers 12.5%. Candidates need to practice similar subsidy and tax diagrams from Theme 1. This answer achieves a mark of 2/2. Full marks for correctly identifying 12.5% for consumers and 87.5% for producers. Without the correct answers being provided only one mark would have been awarded for correct annotation of diagram. This answer achieves a mark of 1/2. This response has transposed the answers incorrectly. Ensure you carefully follow the instructions provided.

Notes from the mark scheme and report

• consumers gain the fall in price 526 - 455 = 71 rupees: 71 / 568 x 100 = 12.5%
• report: a significant number transposed the consumer and producer shares

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

Most candidates achieved full marks but a significant number of candidates lost a mark as the answers were transposed incorrectly i.e. they identified consumers as receiving 87.55 and producers 12.5%. Candidates need to practice similar subsidy and tax diagrams from Theme 1. This answer achieves a mark of 2/2. Full marks for correctly identifying 12.5% for consumers and 87.5% for producers. Without the correct answers being provided only one mark would have been awarded for correct annotation of diagram. This answer achieves a mark of 1/2. This response has transposed the answers incorrectly. Ensure you carefully follow the instructions provided.

Notes from the mark scheme and report

• producers receive 1023 - 526 = 497 rupees: 497 / 568 x 100 = 87.5%
• the two shares must sum to 100%
• supply is inelastic so producers gain most of the subsidy

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This was a straightforward question from Theme 3 that required candidates to fully annotate carefully and correctly. One issue that some candidates faced was incomplete labelling and not carefully identifying the smaller profit/loss box. This answer achieves a mark of 4/4. Full marks are awarded for a fully labelled cost and revenue diagram carefully annotating the fall in profits. . This answer achieves a mark of 0/4. Whilst the shift left in demand is indicated, this answer receives no marks as a cost and revenue diagram was requested. A decrease in Average Revenue and Marginal Revenue would have received one mark. Make sure as you identify whether a Theme 3 cost and revenue diagram or a supply and demand Theme 1 diagram is required. Remember diagrams are an effective way to concisely apply economic theory.

Notes from the mark scheme and report

• cost and revenue diagram: AR and MR shift (or pivot) left, new MC = MR output and price, original and smaller supernormal profit (or loss) areas
• report: a supply and demand diagram scored 0
• label the smaller profit box carefully

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

Mark scheme

Examiner's comment

Candidates that gave a clear diagram showing an output gap and referred to the situation evident in the UK as shown by Extract D scored well on this question. An extraordinarily large number drew the output gap incorrectly as a triangle bounded by the LRAS, SRAS and AD, or just drew a shift in AD or a static AD/AS without showing full or potential output. If candidates understood an output gap, most were able to define and show such a gap on an AD/AS diagram successfully. Many candidates failed to use the data at all and did not focus on the evidenced negative output gap. This was a surprisingly common answer, providing theory only and no use of the data provided. 4/5 marks awarded. There is no sense of full capacity (AS) or reduced demand (AD) as evidenced in the passage. Another very common approach. Use the data, especially in this question where the Extract and line are clearly indicated. Zero marks are awarded here. This is a good example of how to earn full marks. Show the output gap on the horizontal axis as the difference between potential and actual output (or similar). 2K: 2 clear explanation 1AN + 1AP: clear diagram showing the gap on the horizontal axis meeting the full employment level 1 AP: clear use of data – immobility of labour 5/5 marks Short answers can be very effective. There is no need to fill all the space.

Notes from the mark scheme and report

• show the gap on the horizontal axis between actual and full-capacity output, not a triangle between LRAS, SRAS and AD
• 2 marks reserved for the AD/AS diagram
• max 4 of 5 without using Extract D (weak demand, immobility of labour)

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

Many candidates recognised that the National Living Wage would increase firms’ costs and lead to a rise in average and marginal costs. A good and challenging question which candidates attempted well. Most were able to give a correct diagram. Diagrams then showed a reduction in profits for the firm, but finding the new profit area lined up with the new MC=MR point was challenging for many candidates (although much easier for those who had reasoned that the change in costs was a fixed factor and therefore no change in MC). This was often evaluated by arguing that any fall in profits may be offset by gains in productivity because of increased wages. Other excellent evaluation included the evidence that the wage increase was estimated to have a 0.3% impact on overall costs, does not affect the under-25s, depends on whether firms can pass on cost increases (often with consideration of the market power of firms and their profit levels), and effects on productivity also suggested in the data. This was the question where candidates gave a large amount of evaluation to a very good standard. Candidates were able to respond well to this question perhaps as it resembled the previous syllabus Unit 3 questions. There was a tendency for the candidates to provide very long multiple evaluative points (a legacy from the 16 mark questions in 6EC03) and so perhaps spent too much time on this question. Some candidates confused the concept of a mandatory NLW with the optional Living Wage proposed but not mandatory in some areas of the country. The passages made it clear that the NLW was a change in mandatory pay for the 25+ age group with a premium for the 25+ age group. This diagram was one of very few that was drawn fully accurately. KAA L3 (8): strong KAA and diagram; no need for second KAA as diagram required EV L2 (4): sustained L2 ev The handwriting on this script was Illegible and it took some deciphering. Examiner’s must be able to read responses. A common mistake for many candidates was to use a diagram showing the NLW on the labour market without any use of a cost and revenue diagram. KAA L2 (5): effective KAA but no cost revenue diagram (CAP L2) EV L2 (4): strong ev, sustained 9/12 Remember to be explicit about whether fixed or variable costs change, and apply this to firms not labour markets when requested.

Notes from the mark scheme and report

• a higher wage raises variable costs so AC and MC shift up (AC only if treated as a fixed cost)
• Level 3 diagram must show the change in profit at the new MC = MR output
• evaluate: only 0.3% rise in wage costs, under-25s exempt, ability to pass on costs, productivity gains

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

Answer

B

Mark scheme

Notes from the mark scheme and report

• a subsidy of RS per unit (the vertical gap between MSB and MPB at the optimum) shifts MPC down to reach Q1 (B)
• a tax of VT would reduce consumption
• maximum and minimum prices at 0P1 do not reach the optimum

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

Mark scheme

Examiner's comment

More able candidates had little trouble in making effective annotations of the diagram by shading in the welfare gain area as VRT with a suitable arrow and circling Q1 with an arrow indicating the new social optimum. Variations on this were also allowed with just shading VRT and circling R, S, P1 or Q1. A significant number of candidates had trouble identifying the welfare gain area – a common mistake being shading it as RST. In addition candidates that did not perform well on this question tended to add a subsidy shift outwards in MPC= MSC and ignoring the need to identify the new social optimum. This candidate achieved 2 out of 2 marks. Clear and confident annotations are provided identifying the welfare gain and new social optimum. Shading and circling to answer questions is always aided by clear written annotations to ensure full marks for diagrams. This answer achieved 0 out of 2 marks. Unfortunately the inaccurate shading of the welfare gain/loss box was evident among a significant minority of candidate. What was more common was no attempt to identify the new social optimum. Ensure you learn in full the externalities diagrams and understand the demands of the question - in this case to earn 1+1 mark for indicating the welfare gain and the new social optimum output, no attempt was made at the latter. It is worth spending time thinking through what the externalities diagram means rather than attempting to use a photographic memory.

Notes from the mark scheme and report

• shade the welfare gain triangle VTR (not RST) and mark the social optimum output Q1 (or R or S)
• many shaded the wrong area or forgot the new optimum

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

Mark scheme

Examiner's comment

The question on explaining the likely impact on producer surplus of an increase in the demand for housing was awarded as a low cognitive question balanced against the challenge questions asked elsewhere. Candidates were asked to draw a diagram to illustrate their answer. The more able responses could to quickly access full marks by defining producer surplus and then using a carefully labelled diagram explain how the increase in demand resulted in a change in producer surplus in the housing market. Less able responses provided poorly labelled diagrams and often were not confident in identifying what producer surplus was. 6 out of 6 marks. The candidate has provided a secure understanding of the theory and applied the diagram well to the question. Knowledge marks are secured with an initial accurate definition of producer surplus and a diagram, which is well annotated and explained, showing the original equilibrium and producer surplus. The candidate is then able to analyse through explaining their diagram, the increased producer surplus resulting from demand shifting out. For application marks they pick up the 2 marks by applying the diagram to illustrate there is an increase in prices and producer surplus as demand for houses rises. The answer is a full and accurate response and as a result deserves full marks. Application can be secured through applying theory and diagrams to answer questions but has in Economics more traditionally been associated with application of data and context. To guarantee full marks candidates are still to be encouraged to write in context and to try to use data when available. In this case there was the opportunity to explain house builders would extend supply by building new houses up to the new market prices of new houses at P2. The technical nature of existing housing stock not being referred to as increasing producer surplus, as the seller still has to find a home to live in, meant that application was more theoretical in this question. Secure application marks can be obtained by applying theory, diagrams and data to the context of the question.

Notes from the mark scheme and report

• define producer surplus
• diagram with demand shifting right, higher price and quantity, larger area above supply and below price
• it applies to new housing (builders), not existing owners who must buy again

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

Mark scheme

Examiner's comment

This was a straightforward question that the majority of candidates annotated correctly. One issue that some candidates faced was where they did not show economic growth on the diagram, to get the mark there needed to be an outward shift of real output. This correct answer achieves 1/1- AD has been correctly shifted out and the new equilibrium point has been shown, with Y2 further out than Y1. Do remember to use a black pen throughout your exam paper, including for diagrams. This answer is incorrect as they have not labelled the new equilibrium point at the correct place, where the new AS curve crosses the original AD curve.

Notes from the mark scheme and report

• shift AD (or LRAS) right and mark the new equilibrium with real output Y2 beyond Y1
• report: some placed the new equilibrium wrongly

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

Answer

D

Mark scheme

Notes from the mark scheme and report

• answer D (options not shown in the crop and the mark scheme gives only the letter)
• read the seasonally adjusted goods deficit, services surplus and total balance in Figure 1

Quantitative skills: QS 12 (understand the meaning of seasonally adjusted figures); QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

Many candidates performed very well on this relatively simple calculation question which centred on the understanding of index numbers, which is an area that has not been tested as frequently as other concepts. Most candidates completed this effectively using the correct information and scored well. Section B: Data response questions Responses to 6(a) This question focused on revenue increases as a result of the change to meat- substitute products and generally there was very good use of the extract, however limited further understanding of the link to why and how revenue would increase. Strong responses demonstrated understanding of the inelastic nature of such products as mentioned and made clear within the extract.

Notes from the mark scheme and report

• index for 2023 = 287 825 / 400 000 x 100 = 71.96 (2010 = 100)
• giving 28.04 (the % fall) scores maximum 2 marks

Quantitative skills: QS 5 (calculate and interpret index numbers); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)

Mark scheme

Examiner's comment

This question simply asked candidates 'what is meant by'. It did not ask for any application to the graph or any analysis of a point. The correct formula or written explanation of what 'terms of trade' are is all that was needed to get two marks. Candidates who knew what 'terms of trade' meant easily achieved two marks here, but it was clear that many candidates did not know what it meant. This is the correct formula for terms of trade and so gets full marks. This is all that candidates needed to do on this question. Being concise on questions like this can save candidates valuable time which they can then spend on the longer questions towards the end of the exam paper. This answer scores 1/2. The candidate clearly has some idea about what the terms of trade is, referring to 'price of exports minus price of imports', but does not fully understand what it is.

Notes from the mark scheme and report

• terms of trade = index of average export prices / index of average import prices x 100
• no application needed
• report: "it was clear that many candidates did not know what it meant"

Quantitative skills: QS 5 (calculate and interpret index numbers)

Answer

C

Mark scheme

Notes from the mark scheme and report

• (92 - 80) / 80 x 100 = 15% (C)
• A is the 12-point change, B divides 12 by the 2020 value 92, D is the 2020 index

Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 5 (calculate and interpret index numbers); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)