20- and 25-mark essays

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)

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, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate use of market-based supply-side policies to increase UK employment. Although candidates were able to analyse most of their arguments, they were not able to discuss them in detail. Some answered with interventionist supply-side policies and this was not credited. There were several evaluative comments made, but they lacked chains of reasoning to access higher levels.

Notes from the mark scheme and report

• market-based policies only (NICs cut of £10.4bn and 94 000 extra workers, stricter benefit rules, deregulation, lower income tax)
• interventionist policies are not credited
• evaluate with low-paid part-time jobs, incentives, time lags, inequality

Mark scheme, including the levels grid and indicative content

Examiner's comment

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

Notes from the mark scheme and report

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

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

Notes from the mark scheme and report

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

There are two things to consider when answering this question. Firstly, the starting point for an answer should be from a point of view of seeking to control inflation. So this could, for example, be contractional monetary policies of increasing interest rates in order to reduce inflation. Then, and this is the most important part of an answer, the focus needed to be on how these attempts by the Bank of England or the UK government to control inflation will lead to conflicts with other macroeconomic objectives such as economic growth or unemployment. The evaluation in an answer then needs to be focused on how there might not be a conflict between attempting to control inflation and the macroeconomic objective. Some candidates struggled to focus their answer on the conflict and clearly explaining, step-by-step, about how/why there is a conflict. Arguments using the Phillips curve in particular seemed often to struggle to clearly explain why low inflation would be likely to lead to higher unemployment (or vice versa). Looking at this answer, the first point takes a while to get to, but on the second page, the candidate does eventually get to the point that lowering inflation could lead to lower economic growth. Similarly, the second point is fairly well-explained, but needs more focus specifically on the conflict and why it exists. The answer continues with further KAA, and even more KAA on the last page. There is a limited amount of evaluation on the fourth page, but it lacks much in the way of development of points. Overall, this answer has far too many different points and lacks sufficient development of any of them to reach Level 4 for KAA or to reach beyond Level 1 for evaluation. Therefore, this answer is KAA Level 3 and evaluation Level 1. Candidates should not try to write about as many different conflicts as they can think of. Depth is much more important than breadth. The first point the candidate makes, which takes a while for them to get to across in the first two paragraphs, is that there is a conflict here between controlling inflation and economic growth. The candidate has made good use of the diagram here. The evaluation of it is not quite so well-explained with a slightly circular argument being made. The second point, about a conflict with the current account, is again well-explained, although it is lacking a bit in application. The evaluation makes good use of context although still isn’t quite well- enough explained for top level. Overall, therefore, this answer achieves Level 4 for KAA and top Level 2 for evaluation.

Notes from the mark scheme and report

• start from contractionary policy to control inflation (higher interest rates) then explain step by step the conflict with growth, unemployment (short-run Phillips curve), current account
• evaluate when there is no conflict (supply-side causes, falling energy prices)
• report: some struggled to focus on the conflict and to explain the Phillips curve

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question focused on factors that affect the level of economic development in a developing country. This is a broad question, and there are a wide variety of factors that candidates could write about. The most popular points for candidates to discuss seemed to be primary product dependency and the Harrod-Domar model, although many others were also discussed and effectively explained. It was only an issue in a few cases, but candidates should ensure their answers are focused on developing countries and not developed ones. Some candidates perhaps got a little carried away with this question and answers became too descriptive and not sufficiently analytical to achieve the top levels. It was also noticeable that there were a number of very long answers that scored lower than answers that were less than half their length. The important thing here is not whether candidates can explain everything about a factor but whether they can argue a specific point clearly in answer to the question. Candidates should also make sure that each point they make is clearly focused on one factor. Some answers seemed to be merging together several factors into one point which then meant they probably had not fully explained any one of those factors. The first paragraph here is an introduction, so we can move on and look at the first point which is about over-reliance on trade with the USA for Mexico. There is particularly excellent application in this paragraph along with good chains of reasoning. The evaluation of this point is also effective and of top level quality. The second point is focused on corruption and again with clear step-by-step chains of reasoning and effective application to develop a strong line of argument. This is followed by some highly effective evaluation using the Lewis model. There is also an attempt at a bit of a judgement at the end of the answer. Overall, this is a strong top level answer for both KAA and evaluation. This answer is only 4 pages long (and about 3.5 if you ignore the introduction) yet it is an excellent, top-level answer. Candidates should think about how to effectively answer the question with points that offer developed chains of reasoning like in this answer without ending up being highly descriptive, as was often found in some of the longer answers that did not achieve as highly. The first point in this answer, focusing on a lack of public services, is well-written with clear chains of argument and is of KAA Level 4 quality. The second point isn’t quite so well-explained and the link between a lack of internet access and achieving a fair price for raw materials needs to be more clearly explained. The last paragraph is only offering a summary of what has already been said so doesn’t add anything to the answer. Overall, this answer achieves Level 4 for KAA but there is no evaluation, which significantly limits the mark it can achieve overall. Make sure you are evaluating the points you are making in these questions, otherwise you are placing a ceiling on the overall mark you are going to be able to achieve on a question no matter how well-written your answer is. Remember that you will not gain marks for summarising what you have already said in your answer at the end. You need to offer examiners a judgement in answer to the question.

Notes from the mark scheme and report

• factors: primary product dependency, savings gap (Harrod-Domar), infrastructure, conflict and corruption, health and education, debt, capital flight
• must be a developing country of choice
• report: some answers became descriptive and too long
• argue one factor clearly per paragraph

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question was very similar to one in June 2019 Paper 2. There is a significant difference, however, and the microeconomic effects are very rarely rehearsed. Generally, the micro answer given by candidates was valid, and tended to involve AC/MC diagrams, and when linked to fixed incomes, a decrease in AR/MR. Macro points were either very good, focused on real wage falling, or export competitiveness falling etc was common but many candidates just said AD falls, as consumption falls and drew a diagram. Some candidates talked about factors which were essentially reasons for inflation, some focused on positive impacts of low unemployment but were not well answered. • A few candidates clearly misinterpreted the question and made the classic mistake of switching ‘effects’ with ‘causes’ of inflation. • Most candidates were using indirect chains of analysis rather than direct ones which led to muddled analyses of both macro and micro points. • Often candidates discussed the impact of government or MPC policies to reduce inflation (raising IR etc.) instead of the impact of inflation, failing to really grasp the question. • Evaluation was seen as the weakest area, as candidates were suggesting solutions for inflation and the chains of reasonings were shallow without using any extract. • Many evaluation attempts are weak because they tend to summarise the arguments or merely conclude rather than making a clear judgement with critical distance. Quite a few answers including analysis of the effects of higher interest rates or weaker currency values without explicit link to why inflation might cause these factors in the economy. Every step in the chain of reasoning should be spelt out clearly, and no connections should just be assumed. Make sure the Marshall-Lerner condition is only used for the impact on the current account when the exchange rate changes. Para 1: MIC Level 4 KAA. Clear use of cost/rev diagram to show wage bargaining claims on profits, in context. Just slightly lacks further development of the further consequences. Para 2: Level 3 EV. Clear evaluation of how the extent to which profits falls depends on PED. Para 3: MAC Level 3+ KAA. Clear explanation of the link to current account & FDI. Para 4: Level 2 EV. Depends on elasticity of UK exports (Marshall Lerner not relevant). Judgement - just repetition. KAA Level 4 13 marks and EV Level 2+ 6 marks = 19 marks Level 3 evaluation is not sustained throughout. Your evaluation is not a conclusion or a repeat of your points. It must be critical distance. This candidate makes good use of one MIC point at Level 4 and one MAC point at Level 4. An excellent way to structure an answer for 9EC0 03. Para 1: MIC Level 4 KAA clear link to costs, use of cost/rev diagram and link to profits. Some parts of the development feel bolted together and not fully built/developed as a chain of reasoning. Para 2: Level 2+ EV e.g. depends on PED of product (lots of points that are not linked). Para 3: MAC Level 4 KAA clear link to AD/AS diagram & model. Developed chains of reasoning. Para 4: Level 3 EV positives arising from high interest rates/currency appreciation. Judgement with reasoning and long term issues identified in context Level 3. KAA Level 4 15 marks and EV Level 3 8 marks = 23 marks Level 3 Evaluation awarded as judgement is sufficient to justify Level 3 EV sustained throughout. Look at answers like this to inform your own responses. Often causes and effects are the wrong way round. Para 1: MIC KAA Level 2. Causes & effects muddled, lacks in concepts, mis-application of the data. Para 2: Level 2 EV. Lacks context and development. Para 3: MAC Level 1 KAA. Just simple identification/knowledge. KAA Level 2 5 marks and EV Level 1+ 3 marks = 8 marks Level 1 EV as not sustained throughout. When evaluating, you cannot use effects as an evaluation of cause. Answer the question!

Notes from the mark scheme and report

• Level 4 needs at least one micro and one macro effect with reference to the UK or another developed economy
• micro: costs, revenues and profits of firms
• macro: real wages, competitiveness, uncertainty, investment
• do not discuss causes of inflation or policies to reduce it

Mark scheme, including the levels grid and indicative content

Examiner's comment

Many candidates had a stock or pre-formulated answer. Micro - AR/MR shift right was often well explained, and another common discussion was investment in R and D for example leading to dynamic efficiency. The most effective macro answer tended to have had a fall in tariff or trade creation diagram, and often there were AD shifts right. Very many examiners commented that this was an area with more successful responses Make sure there are plenty of secure steps or links in your chain of reasoning. Para 1: MIC Level 2+ KAA. Static diagram is not used, and short chains of reasoning. Para 2: Level 3- EV. Developed & well applied to the extract. Para 3: MAC Level 3 KAA. Developed chains of reasoning, some concerns over inflation section. No application. Explanation is not secure enough for Level 4. Para 4: Level 2- EV. Very simple development of idea. Para 5: judgement does not add anything new. Level 2 - EV KAA Level 3- 9 marks and EV Level 2+ 6 marks = 15 marks Level 3 evaluation is not sustained hence Level 2. Application is key. Remember that for 9EC0 03 there will be plenty of application in the data provided in the separate booklet. The data is there as a 'friend' to support you! Cost curves are a useful analysis tool, but make sure you are very careful to find the two MC=MR outputs and link to the correct AC in each case, as here. The examiners will check your diagram very carefully. Para 1: MIC Level 4 KAA. Distinction between SR and LR is not clear at the end of the paragraph. Para 2: Level 3 EV. Good explanation and use of extract. Para 3: MAC Level 4+ KAA. Well explained, diagram and further development. Para 4: confused with ER movements Level 2- EV. Only benefit in LR as sense of tied into contracts is worthy of credit. Para 5: Just repetition of previous points (not a judgement). KAA Level 4 16 marks and L2+ EV 6 marks = 22 marks Level 3 evaluation is not sustained throughout. Make sure the evaluation is sustained.

Notes from the mark scheme and report

• Level 4 needs a micro and a macro effect and use of Extract D (rules of origin, administrative costs)
• micro: lower costs, higher revenues and profits, more choice
• macro: trade creation/diversion, AD, growth, employment
• evaluate with rules of origin and the position of the UK outside a customs union

Mark scheme, including the levels grid and indicative content

Examiner's comment

It was good to see that the vast majority of candidates didn’t confuse macro arguments with micro arguments, and that they demonstrated good understanding of the question. Many candidates demonstrated solid analysis in their arguments, but some responses failed to access marks in Level 4 due to skipping chains of analysis and/or limited economic theory shown. Some candidates focused on the impacts of a decrease in poverty rather than reasons for the fall. Many examiners observed that there was too much generic answering of the two essays - sometimes using subsidy and buffer stock arguments from previous answers. Some responses discussed the effects of lowered poverty instead of giving reasons why poverty fell. Although the analysis was well developed, the focus was wrong. Some candidates mixed up reasons and effects from the two essay questions and therefore lost marks. It was very encouraging to see many very effective, dynamic diagrams for both macro and micro analysis. It is very difficult to evaluate reasons. The pitfall is trying to evaluate the effects instead. This is capped at Level 2, and this in itself is generous marking! Para 1: MAC Level 3 KAA. NMW introduced/well developed/diagram/linked at the end to purchasing necessities. Para 2: EV is criticism of NMW not an evaluation of the reason for the fall in poverty. This is capped at Level 2 EV where EV is not of the reason. Para 3: MAC Level 4 KAA. NMC/FDI/hot money flows/AD - chains of reasoning & diagram. Para 4: Developed EV but not of the reason. Cap Level 2 EV. Para 5: Judgement attempted (does not add to EV level). KAA Level 4- 13 marks and Level 2 EV (Cap) 6 = 19 marks Underline the key word, reasons. In your evaluation you should argue whether this is a significant reason, or the reason is likely to change. Do not evaluate the effects. For Level 4 we are looking for substantial chains of reasoning. Para 1: Level 4. Government spending - CORs are substantial and diagram adds to the argument. Level 3 EV Para 2: Mac. Increased MNC investment and FDI, with application to lower corporation taxes and human capital, with data. Para 3: Lack of savings continues the argument (not eval) and gives LRAS shift right, so award Level 4. Eval is eval of MNCs and their side effects, not on how significant this is as a factor reducing poverty, so cap Level 2 EV. Level 4 - 15 marks Eval mid Level 3 - 7 marks Total: 22 marks Diagrams often add to the argument.

Notes from the mark scheme and report

• reasons for the fall in poverty (55.1% to 16.4%), not its effects
• micro: wages/minimum wage, mobility, access to water, food and banking
• macro: growth, FDI, education, infrastructure
• Level 4 needs a micro and a macro reason and reference to India

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Candidates were confident in shifting cost and revenue curves which led to some high scoring. Most of the candidates performed well in this question, the only issue was some analysis lacked details and development. Some very good answers included a labour supply analysis or some other relevant analysis. Many candidates focused on supply side changes in the labour market, without considering the changes in demand. This was also the case when it came to AS/AD analysis and impact on macroeconomy. Some commentators observed that they would have liked a little more data in the question on the macroeconomy to inform their analysis! Examiners use positive marking when choosing KAA between Level 3 and Level 4, so this gets Level 4. Para 1: MAC KAA Level 4. Consumption/AD/application/diagram/chains of reasoning. This is enough for Level 4. Para 2: Level 2+ EV. Needs further development/reason why for Level 3. Para 3: MIC Level 3 KAA. Higher demand, revenues, profit. Diagram is incorrect. Para 4: Level 2 EV. Greater competition (quite generic). Para 5: Not a judgement - just a repeat. Level 4- KAA 13 marks and Level 2+ EV 6 = 19 marks Do not use the evaluation opportunity as a repetition of your previous points. You need to answer the question, with carefully weighed up judgement. The response has outstanding KAA - probably more than you could expect. Para 1: MIC Level 4+ KAA. Developed arguments using labour markets & cost/revenue diagram. Para 2: - Level 3+ EV. Para 3: MAC Level 4+ KAA. Developed argument using AD and LRAS, with accurate diagrams and context. Para 4: Level 3 EV. Discussion about risk of inflation/use of diagram/shape of LRAS argument. Para 5: Judgement - effectively looks at the extent to which they will benefit Level 3 EV. Level 4+ KAA 16 marks and Level 3+ EV 9 marks = 25 marks Look at answers such as this that score full marks as a way to develop your own skills. Outstanding example of KAA - rare to see as much depth as Para 1 Para 1: MAC KAA L4+ higher consumption/AD/diagram/investment/growth arguments - well developed with lots of application Para 2: L3+ EV wage pressures/education arguments Para 3: MIC KAA L4- profit/sales/economies of scale - but context of India is not totally clear Para 4: L3+EV threat of large MNCs to local firms Para 5 - Judgement - link to poverty/macro more significant Level 4 KAA 15 and Level 3+EV 9 = 24 marks Make sure you use the context as clearly as you can.

Notes from the mark scheme and report

• micro: labour supply shifts right, lower wages, higher product demand and revenues
• macro: demographic dividend, AD and LRAS, unemployment, pressure on public services
• consider demand as well as supply
• Level 4 needs a micro and a macro effect for India

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, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate whether expansionary demand- side policies lead to conflicts between macroeconomic objectives. Many candidates were able to effectively answer this question and were able to identify policies and explain the conflicts. They linked this to an AD/AS diagram in context of their explanations. One of the key issues was that many candidates discussed solutions to solving the conflict as evaluation and this was not credited. Those who effectively answered this question explained their arguments in context.

Notes from the mark scheme and report

• expansionary fiscal and monetary policy raise growth and employment but may conflict with inflation, the current account, a balanced budget and the environment (AD/AS diagram)
• evaluate with spare capacity and short-run Phillips curve, not solutions to the conflicts

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate whether the MPC has been successful in meeting the UK’s macroeconomic objectives. Candidates argued why the MPC has not been successful as analysis and the opposite as evaluation. Although candidates were able to analyse most of their arguments, they were not able to discuss them in detail. There were several other evaluative comments made, but they lacked chains of reasoning to access higher levels.

Notes from the mark scheme and report

• success: rate cut of 4.75 points and £375 billion QE averted depression, unemployment fell to 4%, inflation mostly near target
• failure: inflation above target at times, rising household debt, weak growth and real wages
• develop each argument

Mark scheme, including the levels grid and indicative content

Examiner's comment

In this question, candidates were asked to evaluate the microeconomic effects of rising energy bills on the hotel industry or an industry of the candidates' choice. Inevitably, most responses focussed on the hotel industry because the stem provided a location, a specific real world example, and a pathway into a discussion about the buying power of larger hotels. The responses to this question tended to follow the impact of cost and quality of provision, as hotels reduced services in a struggle to balance the books. There were many imaginative responses which discussed the differential impact depending on location, time of year, and whether the hotel was small or part of a large chain. Again, the good use of accurately drawn cost and revenue diagrams often significantly enhanced the quality of many responses. Short run shutdown scenarios were particularly effective. In a 25 mark essay it is good practice to write two developed KAA paragraphs to approach the top level, and to ensure that there is in depth evaluation of both arguments. In this first example we see two KAA paragraphs, the first one regarding the impact of rising energy bills on costs. The candidate explains how rising costs will reduce profits for hotels, which will in turn reduce their ability to expand their operations. This first paragraph was awarded level 2. The candidate then makes a valid evaluative point by explaining that hotels could increase their prices to counter higher costs, but that this would depend on the price elasticity of demand of their customers. This was awarded level 2 evaluation. The candidate then makes a second KAA point about falling customer demand affecting the entire industry because of the scale of the increase in cost. This is not particularly well developed, and was awarded level 2. There was no further evaluation. Overall, this response scored level 2 KAA, 7 marks, and level 2 evaluation, 4 marks. This is 11/25 in total. Writing a 25 mark essay is a crucially important skill. There are 4 across all three papers in the series. There should be at least two KAA paragraphs to develop both the depth and breadth of argument. There should be in depth evaluation of each KAA paragraph. At the end of the essay there should be a conclusion that works towards a justified judgement. In this second example we see a very strong response. The first KAA paragraph explains how rising costs reduce abnormal profits. The analysis is deepened by a carefully drawn diagram which shows the increase in both average and marginal costs, and the reduction in profits. The candidate moves on to explain how this would reduce hotels' quality of service and lead to potential job losses. This was awarded level 4. The next paragraph then develops some strong evaluation, explaining how the negative impacts would depend on where the hotel is located, because the quality of service is less relevant when the location itself is a more important factor. This was awarded level 3 evaluation. The second KAA paragraph discusses the negative impact on competition, explaining that smaller hotels may not benefit from the scale of operations that would allow bigger hotels to absorb cost increases. There is then a discussion of the possibility of oligopolistic collusion which then leads to higher prices for consumers. This was also awarded level 4. The candidate then moves on to evaluate by saying that the government may take measures to offset the negative effects on competition. This was awarded level 2 for evaluation. Finally, the candidate then attempts a conclusion, and prioritises the negative impact on competition. However, this then brings in new material on Airbnb and contestability. Overall this response achieved 16 marks for KAA and 7 for evaluation, so 23 in total.

Notes from the mark scheme and report

• fixed-cost rise shifts AC (variable-cost rise shifts AC and MC)
• losses and shut-down points
• two developed KAA paragraphs each evaluated
• a diagram is not required for Level 4

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question, quite similar to Q6(e) from 2022, expected candidates to evaluate the level of contestability in the fragrance industry. It was asking whether the level of contestability is high or low in that particular industry. Other industries could, of course, be chosen, but the approach was fundamentally the same. This was not a popular question, and the quality of responses was significantly poorer than those seen in Q7. Many candidates did not discuss contestability. A contestable market occurs when there is freedom of entry and exit into the market. It is not the same as the existing level of competition in a market. In a contestable market, it is not the number of firms that is important but the ease with which potential competition can become actual competition. When candidates talked about the extent of barriers to entry or the extent of sunk costs they were able to access marks. However, many candidates talked about perfect and monopolistic competition and neglected to mention sunk costs or hit and run competition at all. The key takeaway from this example is to only attempt questions when the content is fully understood. This first response to the question made a reasonable attempt to address the issues surrounding contestability in the fragrance industry. there is some good context and the discussion of relevant theory such as limit pricing. However, the candidate doesn't really get to grips with what contestability actually is. In this response the candidate has discussed the supermarket industry and how its barriers to entry make it oligopolistic. The evaluation is somewhat confused, hinting that the collusive equilibrium previously discussed may not be achieved because of price wars, but that this now constitutes another barrier to entry. The second KAA paragraph on limit pricing is well developed and achieved level 3 KAA. Tesco is a legal monopoly, though there are multiple large competitors, and some local monopolies. Overall, this essay mixed elements of competitiveness and contestability and struggled to fully answer the question. Overall, this response achieved bottom level 3 KAA, 10 marks, and bottom level 2 for evaluation, 4 marks, so 14 in total. Accurate understanding of theory is crucial. This question is asking whether the level of contestability in the industry is high or low. It is not asking whether the industry is competitive but whether the industry behaves as if it is competitive. This is because of the threat of potential competition becoming actual competition. If new firms can easily enter and exit the industry to compete for any supernormal profits, the industry is contestable. This second response is a much better attempt to answer the question. There is a clear definition of what contestability is. The candidate then discusses sunk coats, limit pricing, and draws a clear diagram to explain how the theory works. There are plenty of good contextual examples which illustrate the theory. There is some discussion of intervention by the competition authorities to increase contestability. A real strength of the response is the way the candidate uses clear signposting to say why their point either increases or reduces contestability. This is certainly evident when the Tesco Clubcard is discussed in the context of brand loyalty and how this constitutes a significant barrier to entry which reduces contestability. Overall, this response achieved level 4 KAA, 15 marks, and level 2 evaluation, 5 marks, giving 20 in total.

Notes from the mark scheme and report

• contestability is about ease of entry and exit (sunk costs), not the number of firms or existing competition
• many answers never discussed contestability
• limit pricing
• report: "the quality of responses was significantly poorer than those seen in Q7"

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was a surprisingly popular and effective question and enabled students to use theory to support their responses. Again those that used examples and models were rewarded with Level 4 marks. It was also notable that some students still confuse the Current Account deficit and Budget deficit. The question and topic area was straightforward and rehearsed in schools, and many answers were based on countries that were drawn from their own knowledge rather that that of Brazil. The context was very helpful as well used, but it should be reminded to all candidates that there is often a request to use knowledge of at least one developed or developing country. No introduction is required in any answers, and candidates are reminded to simply start by answering the question. Definitions can be a useful way to set the groundwork, but they are not required and the knowledge marks are clearly implicit when a strong argument begins. Since the question is about trade, relevant protectionist diagrams must refer to quantity and/or value of imports. Many candidates employed a basic subsidy diagram, for example, illustrating an outward shift in supply but did not reference the quantity imported at the world price, leading to a lower level of analysis. The Marshall-Lerner condition was effectively used to evaluate the impact of currency depreciation. However, candidates need to do more than merely mention the condition. The J-curve appeared in many answers, and was particularly useful in terms of higher-order evaluation. Advice to students: Try to stick to an evaluation point and develop it fully to get to Level 3. Many able candidates analysed a relevant evaluation point up to Level 2 and then introduced another point within the same paragraph. You only need to make two clear L3 evaluation points/arguments overall, and a final judgement, to be able to achieve 9/9 for evaluation. Country of choice to get to L4. Whatever policies you choose are likely to be valid, but it is unwise to discuss fixing of interest rates or exchange rates in countries such as the UK. Context of Brazil is used by many. Very open to the use of policies. You can use more than one country despite the question saying country, for example you could use a different country as your evaluation point. However if you use many different countries, the impact of your application is likely to be weakened. If the economics is correct then this is enough to hit the levels. Eg UK can manipulate the exchange rate but then explain in the eval it isn’t likely to happen. The evaluation does not need to link with the KAA to gain L2 ev. But the best answers link the evaluation to the point being made Current account/ trade deficit can be used interchangeably The essay does need models and diagrams but they need to be in context, analysed and evaluated on a deep a level as possible. Two points is enough, but there needs to be depth of analysis and evaluation. Para 1: L2+ Para 2: E2 Para 3 : L3 Para 4: E2 Para 5 : J E2 This is a barely Level 3 answer, with L2 eval, so 9 L3 – + 6e L2+ (top L2e for being a good sustained example and there is a judgement) = 15/25 The importance of extending your analysis in context of a real world example cannot be stressed enough! You are of course allowed to use Brazil for the data context – but you really must apply everything you can even if you haven't studied that country. The question tells you about the type of exchange rate system (managed) and that should be your starting point. It's not the UK after all! Para 1: L4 Para 2: E3 Diagram is contextualised Para 3: L4 Para 4: E3 Lack of context/application is the reason for the 14/16. There is inconsistency with analysis and diagram. Ev L3 – 7/9 14+7 = 21/25 Make sure you write about the diagram you have drawn, and explain it. Examiners do love diagrams, but they must be integrated into the analysis.

Notes from the mark scheme and report

• policies: depreciation via intervention or lower rates (Marshall-Lerner, J-curve), deflationary fiscal policy, supply-side policies for competitiveness, protectionism
• refer to a country of choice
• report: some still confuse the current account deficit with the budget deficit
• protection diagrams must show the effect on imports

Mark scheme, including the levels grid and indicative content

Examiner's comment

There were a range of responses here. Good responses used plenty of examples and linked to theory. However, others were more descriptive in their nature, not linked to any real-world examples. There was some good knowledge of trading blocs, trade creation and trade diversion, and some excellent diagrams. This was perceived as a more challenging question as many wished to discuss the cons of the factor they discussed, rather than evaluate whether the factors led to globalisation. To evaluate whether globalisation was ‘good’ was not the question, and therefore was not what the mark scheme wanted. The mean score on the second essay was 2 marks lower than on Question 7, largely because it offered limited opportunities for evaluation which was still addressing the question. Benefits were replaced by many as the factors causing globalisation. Diagrams can count as application marks, as well as analysis and of course knowledge. It certainly helped students score well if they showed a falling-tariff diagram, and a rising tariff diagram as part of the evaluation. Level 3+ was the maximum KAA mark if there was no clear application such as reference to countries. Very difficult to get above Level 3 is there is no reference to real-world examples or other context. There was a persistent confusion over absolute and comparative advantage. We marked positively throughout but it would be advised to make sure that the diagrams and explanations fit precisely. Try to keep abreast of changes, such as the disappearance of NAFTA. This of course is awarded because it is on the Specification, but you can add polish to your answers if you are aware of current developments to add. Lots of factors discussed not in as much depth. Para 1 : L3 – Para 2: L2 – Para 3: E2 NAFTA credited as fits time frame. One ev, not sustained but enough for E2. L3 – / E2 9/16 KAA + 4/9 Ev =13/25 Make two well applied and well analysed points, using your own learning about real-world economics. Two points well made and deeply is preferable to a long list of shallower points. This scores 24/25 and needs an overall judgement. Para 1: L4+, Clear application, chain of reasoning para 1. Para 2 : E3 Para 3 : L4 Para 4 : E3 Para 5: Sense of Judgement but not developed E1 but ignored as 2 sustained E3 from previous paragraphs. (Clear consensus on mark amongst the team) Make sure you make an overall judgement for the 25th mark!

Notes from the mark scheme and report

• factors: lower transport and communication costs, trade liberalisation and the WTO, trading blocs, TNCs and FDI, opening of China and former Soviet economies
• evaluate the significance of each factor and deglobalisation, NOT whether globalisation is good
• report: mean 2 marks lower than Q7 as many discussed the costs of globalisation

Mark scheme, including the levels grid and indicative content

Examiner's comment

In this question candidates need to discuss possible factors that explain the gender-based wage differences in the UK oil and gas industry. There is a lot of information that candidates can use to help them with this question in extract C - a good example of where the extract definitely is your friend. There are lots of points that candidates can use in their answer in this extract. Context is also important in this question - answers need to be focused specifically on the UK oil and gas industry, not just generic causes of gender inequality. This answer offers a reasonably good attempt to answer the question. Skipping the introduction, the first point has good application but falls down in terms of analysis - there is room for more detailed explanation here. This point is KAA low level 3. The evaluation is similar - almost there, just needsa little bit more development - this would be marked as low level 3. The second factor, the lack of experience, has the same issue as the first point - pretty good answer, all correct, just not fully developed with the chains of argument. The second evaluation point isn't as good as the first one, it is less well-developed. The last paragraph doesn't really add anything to the mark the answer is going to get and doesn't offer a judgement. Overall this answer is low KAA level 3 and high evaluation level 2. GM ResultsPius —~_) Examiner Tip There is no need to write an introduction to your question - this is just using up valuable exam time that could be put to much better use. <p BesultsPtus This is a high-quality top-level answer. It gets straight into answering the question, which is good exam technique. All the points discussed, both the KAA and evaluation, are all well-explained with step-by-step development ofthe points. There is good use of context, clearly making it speciifc to the UK oil and gas industry. Overall, therefore, this is an excellent example of what is needed to achieve KAA level 4 and evaluation level 3. GF ResultsPlus ~~) Examiner Tip Don't feel you need to fill up all the pages in the exam booklet - this excellent answer is four pages long.

Notes from the mark scheme and report

• micro: discrimination, stereotyping, skills and STEM training, part-time work, career breaks, elasticity of labour supply
• macro: underfunded education, childcare, tax and benefit system, technology
• Level 4 needs both micro and macro and use of Extract C data on oil and gas
• generic gender pay gap answers stay low
• no introduction needed

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question is focused on the advantages of specialisation in energy production using gas. As such, the logical way to answer it is to discuss advantages as KAA and downsides as evaluation. Alternatively, evaluation could discuss the significance or limitations of the advantages, or similar. Again, good answers were focused specifically on gas production and not just on specialisation as a generic concept that could be applied to any industry. <6ResultsPlus The first point, focused on increased competition, is a low KAA level point. The evaluation of this point achieves a level 2. The next point isn't as good, only KAA level 2. There is a lack of a clear chain of argument and rather disconnected points. Overall therefore this answer sits at the top of level 2 for KAA and only level 1 for evaluation. Although the evaluation point in this answer was awarded as level 2, there isn't any more evaluation and therefore it isn't consistent throughout the answer. GEG ResultsPlus Make sure in a 25-mark question you have two KAA points and two evaluation points. <p BesultsPtus Skipping the first paragraph, the candidate's first KAA point starts at the bottom of the first page and extends onto page 3, with a focus on how economic growth is likely to occur as specialisation increases exports. It is good to have the AD/AS diagram to back up the argument. This is a good example of KAA level 4. It is also well- evaluated in the next paragraph with clear step-by-step explanation. The second KAA point is still pretty good but not quite as well- explained. It is good to have a diagram here, but it would have been better if the consumer surplus area(s) had been labelled. This point is top level KAA 3. It is again well-evaluated with top level evaluation. The candidate has then gone on to write a third KAA point, which is also a solid KAA level 3 answer, but this isn't going to increase the overall mark as they have already two points of a similar and slightly better standard. There is also some evidence of a judgement in the final paragraph. Overall this answer achieves top level for both KAA and evaluation, although only just into the top level for the KAA. GM) | Examiner Tip Definitions are not needed for questions such as this. If you do not know what specialisation means, it is highly unlikely that you will be able to write a good answer to this question. If you do, this will be obvious from what you have written, and therefore you don't need to prove that by defining it.

Notes from the mark scheme and report

• micro: economies of scale, lower costs and higher profits, exports
• macro: export-led growth and multiplier, comparative advantage, jobs, tax revenue, energy security
• Level 4 needs both micro and macro applied to gas
• evaluate with finite resource, price volatility, over-dependence, environmental damage

Mark scheme, including the levels grid and indicative content

Examiner's comment

The focus in this question is on effects of HIGH interest rates. That is a key word in the question. Candidates also need to make sure their answers are relevant to Ghana or another developing country. Answers discussing countries such as the UK and monetary policy here whilst still getting credit for relevant points are not going to be able to access the highest marks as this isn't answering the question. As with all the 25-mark questions on paper 3, candidates need to make sure they write about both macroeconomic and microeconomic effects. Common micro effects tended to focus on higher costs for businesses in Ghana, making it harder for them to expand and benefit from economies of scale, or to invest and lower their production costs. Macro effects often focused on either consumers or firms. In terms of consumers, the increase in savings and reduction in borrowing and the subsequent impact on consumption wasa logical chain of argument. Similarly for firms, the lack of investment was a common discussion. These points then led onto a reduction in aggregate demand. Many good answers illustrated this with an AD/AS diagram. Candidates should remember that whilst higher interest rates would be likely to attract increased hot money flows into Ghana's banks, this is not the same thing as foreign direct investment. There were a number of answers that confused these two things as being the same. 4ResultsPlus This is an excellent quality, top level answer. The structure of the answer does what is required in a 25-mark question. There are clearly two KAA points, one macro and one micro, both of which have been evaluated effectively. The first KAA point quotes the extract and makes good use of the cost/revenue diagram to illustrate the impact ona firm's supernormal profits. The second again makes effective use ofa quote from the extract to ground the answer in Ghana and explains the effect on the macroeconomy. The evaluation isn't perfect and is a little repetitive at the end rather than providing a judgement, but nonetheless this is still top level for both KAA and evaluation. GF) ResultsPlus ~~) Examiner Tip Stick to a structure such as in this answer and use paragraphs to make the separate parts of your answer clear to the examiner. Skipping the first paragraph which is simply a definition, the first point in this answer focuses on increased costs of production for firms. It does explain correctly the chain of argument but it is brief and lacks much development. There is also no context. The evaluation of it is present but again rather limited in its development. The second point is of a similar standard - correct but lacking the chains of argument needed to progress beyond level 2 for KAA and evaluation. The candidate has also not used any diagrams to enhance their explanation - whilst not required, this can be a good way to help develop the chains of argument in an answer. Overall this answer is a solid KAA level and a low level 2 for evaluation. GM ResultsPius —~_) Examiner Tip There is no need to explain what an interest rate is in this question - that should go without saying. Put evaluation in a separate paragraph so it is clearly signposted to the examiner.

Notes from the mark scheme and report

• micro: higher costs for firms (cost/revenue diagram), less investment, smaller firms close
• macro: less consumption and investment, AD falls, exchange rate appreciates, inflation falls
• Level 4 needs micro and macro for Ghana or a developing country, not the UK
• hot money inflows are not FDI

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question is focused on the effects of Ghana joining the African Continental Free Trade Area. Common points candidates wrote about include trade creation (often evaluated by discussing trade diversion), increased exports from Ghana to other members of the trade bloc, and possible improved freedom of movement for capital and labour across Africa. Candidates also often drew a diagram showing the impact ofa reduction or removal of tariffs on the price of a country's exports. Common evaluation points often focused on how this is reciprocal - and so whilst firms in Ghana may be able to export more to other countries, firms abroad will also be able to export to Ghana more cheaply than before due to the removal of tariffs. Answers also needed to have a focus on Ghana joining the African Continental Free Trade Area and not just generic benefits of joining any trade bloc. <6ResultsPlus This is an excellent quality, top level answer for both KAA and evaluation. There are two points, the first being micro and the second being macro. Both are really well explained with clear step-by-step explanation and good use of diagrams to illustrate the points, as well as context making it specific to Ghana and the African Continental Free Trade Area. There is more explanation of the points than was needed to get the top level, but nonetheless you can see how clearly argued the points are. Both points are also very effectively evaluated and the candidate offers a clear judgement at the end of the essay, something which many candidates struggle to do, and simply end up with a repetition/summary instead. A\ cms}ResultsPlus You do not need to do an introduction in 25-mark questions, save yourself some time and get straight on with answering the question. <p BesultsPtus The first point in this answer, focused on trade creation, offers a good explanation of the point but the chains of argument could be slightly clearer and there is little application. This is reasonably well evaluated but it should be clear that this isn't to the same level of depth of argument in the other example. The second KAA point, focused on decrease in costs for firms, is very similar to the first - pretty well- explained but not quite there in terms of explanation or application to get to KAA level 4. The evaluation is a bit unclear and vague, so only worthy of level 1. The candidate then goes on to make a third KAA point but, as this is ofa similar standard to the first two, it doesn't gain them any more marks. There is some evaluation in the final paragraph but it's not a clear judgement. Overall this answer achieves level 3 for KAA and level 2 for evaluation. GP ResultsPius —~_) Examiner Tip You should be aiming to do two KAA and two EV points, along with a judgement, in a 25-mark question. Writing a third KAA point of a similar standard to your first two points won't get you any more marks and probably means you haven't had time to write your points in sufficient depth to access the higher marks.

Notes from the mark scheme and report

• micro: lower costs and higher revenue, economies of scale, more choice and consumer surplus
• macro: trade creation, export-led growth, FDI
• Level 4 must refer to Ghana joining the AfCFTA, not trading blocs in general
• evaluate with trade diversion, reciprocal competition from imports, Ghana exporting cocoa outside Africa

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, including the levels grid and indicative content

Examiner's comment

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(f). The question allows candidates to demonstrate their understanding of how a free market approach would lead to a better outcome than through government intervention. Strong candidates made a good attempt to substantiate points diagrammatically and in context. Many recognised the issues relating to a lack of intervention such as how public service broadcasting and educational programming such as CBeebies and Channel 4 would not be produced or would be under produced/ consumed within the free market as they would not generate sufficient demand – partly due to individuals not being as aware as they should be of the private and external benefits. Top level KAA marks required at least two likely reasons why the free market would produce a better overall market. Evaluation marks could be achieved by counter balancing the point(s) made and arguing for government intervention/ free market approach accordingly.

Notes from the mark scheme and report

• free market under-provides public service broadcasting with external benefits (MSB above MPB diagram), excess advertising, no content for minority groups
• evaluate with choice and competition from Netflix and Disney+, government failure
• candidates did substantially worse than on 6(f)

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate main influences on the UK’s net trade balance. Many candidates were not able to effectively answer this question and only identified the influences. One of the key issues was that many candidates discussed solutions to solving the net trade balance as evaluation and this was not credited. Those who effectively answered this question explained their arguments in context of recent UK trends.

Notes from the mark scheme and report

• influences: exchange rate, real income and high MPM, state of the world economy, protectionism, non-price factors
• apply the near £7bn deficit
• report: "Many candidates were not able to effectively answer this question and only identified the influences", and solutions to the deficit were not credited as evaluation

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate how interest rates are used to control UK inflation. Although candidates were able to analyse their arguments, they were not able to analyse its impact on inflation. They linked this to an AD/AS diagram in context of their explanations. Some candidates discussed the opposite approach for evaluation as this was also seen as analysis. There were several evaluative comments, but they lacked chains of reasoning to access higher levels.

Notes from the mark scheme and report

• Bank Rate rise (0.1% to 0.5% in Feb 2022) raises borrowing costs, saving and mortgage payments, cuts C and I and AD, and may raise the pound
• evaluate cost-push causes, time lags, small rises
• report: impact on inflation itself was not analysed and evaluation lacked chains of reasoning

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This first essay question was marginally less popular than question 8, but was, nonetheless, very accessible. Rising energy bills have been a significant issue for UK households, and this question was looking for the most likely methods to control them. The most popular proposals were energy price caps, the use of windfall taxes, and nationalisation of energy suppliers. Strong responses made full use of relevant diagrams and were able to develop them in the context of the UK market and the regulatory framework affecting it. For questions such as this, a good understanding of topical events is very important when it comes to developing chains of reasoned application. This is a strong response, which scored 20/25. This comprised level 4 KAA, at 14/16 and top level 2 evaluation, with 6/9. The candidate discussed a maximum price solution, which is supported by a clearly drawn and well referenced diagram. This achieved level 4. The evaluation of this policy achieved bottom level 3. The second method proposed is a demerger, which would enhance competition by breaking up large energy suppliers. This was well developed, though the reference to increased contestability was slightly unclear. Nonetheless, it just edged into level 4. The evaluation following the paragraph lacked application, so was awarded level 2. The recommendation at the end of the essay adds to its quality but the proposed windfall tax is not explained or evaluated. Given the time constraints affecting this paper, it is only necessary to write two well developed paragraphs to achieve full marks for KAA. Each should then be evaluated separately, so it is clear where the evaluation begins. Good signposting makes it easier for the examiner to follow your arguments and will keep you focused on the question. A conclusion is always necessary to make a justified judgement and therefore enables you to score full marks. Our second example is much weaker, and it illustrates a range of issues. The energy price gap is chosen as a method, but the diagram shows MC rather than supply. This isn't explained. The explanation of consumer surplus just lifts this response into level 2 for KAA. The plan at the top of the page refers to the National Minimum Wage (NMW) but the method is not written about in the main body of the essay. There is no evaluation. Overall, the response scores 6/25.

Notes from the mark scheme and report

• energy price cap (maximum price) with diagram, windfall tax, subsidies or direct support to households, nationalisation, promoting competition
• evaluate with shortages, firms exiting, cost to government and government failure
• topical knowledge helps application

Mark scheme, including the levels grid and indicative content

Examiner's comment

This final essay question explored solutions to another major issue of our time, global warming and the carbon emissions that are a major contributory factor. The question specifically asks about the emissions caused by road transport, so methods had to address this specifically and not wider causes. Many candidates discussed tradable pollution permits, which currently don't cover road transport in the UK but can be applied to it in the future. Some candidates discussed permits applied to car manufacturing. However, the strongest answers discussed the use of the tax system to penalise certain categories of transport or fossil fuel use, together with the subsidisation of alternative forms of transport. Other methods were congestion charging and road pricing. Many candidates used well developed supporting diagrams, which is always good to see. This is a very focused and well developed response that achieves full marks. The candidate discusses the subsidising of electric car manufacturing as the first method, and this is developed using a well- drawn if slightly small diagram. It clearly shows the producer and consumer benefits of the subsidy on the diagram. The second policy chosen is information provision. As with the first method, the analysis is crisp and clear and the contextual development very strong. Finally, the candidate discusses indirect taxation on petrol and diesel alongside ultra-low emission zones. The link back to the tax diagram earlier in the essay is apparent. Again, this is clear and the evaluation very strong. The conclusion makes a justified judgement. This second example is less secure, and achieved 14 marks. The first policy of a subsidy is explained but the diagram has the consumer and producer benefits the wrong way round. This achieved level 3 – and level 2 for evaluation of the effectiveness of the method. The second method, the use of tolls, is again less well developed and scored bottom level 3. The evaluation of the time lag is in context but not developed. The development of train lines is again relevant and gets level 3 for KAA and level 2 for evaluation. Overall, this response achieved the bottom of level 3 for KAA and level 2 for evaluation, 9+5.

Notes from the mark scheme and report

• methods must target road transport: fuel or vehicle taxes, subsidies for public transport and electric vehicles, congestion charging, regulation, tradable permits (not yet covered for road transport)
• negative externality diagrams
• evaluate with PED, valuing the external cost and government failure

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question is about how macroeconomic policies can be used to improve the UK's competitiveness. Candidates were welcome to write about any policies they wanted, but obviously they needed to make sure they could explain how that policy would help to improve competitiveness. Weaker answers could often identify different policies that were potentially relevant, but not clearly explain, with thorough chains of argument, how that policy would help to improve competitiveness. Answers also often lacked application to the real world, which limited the mark they could get. Examiners do not expect candidates to have memorised loads of statistics about the UK economy (or any other country), but candidates are expected to be able to relate the theory behind policies they have learnt to real-world situations and to be aware of key economic issues that have occurred recently and be able to use that knowledge in their answers. Some answers also either didn't fully grasp the concept of competitiveness, or after some time writing their essay, had forgotten that this was the key focus of the question. For example answers that talked about how the UK could engage in protectionism by imposing tariffs on imports weren't relevant to this question, as that isn't going to affect the UK's competitiveness. If anything this would be likely to make it worse if other countries decided to retaliate and impose tariffs on UK exports. Effective evaluation focused on evaluating the policies themselves and how/why they wouldn't help to improve the UK's competitiveness, for example discussing other factors that would affect investment decisions by firms apart from subsidies or tax breaks offered by the government. This answer discusses a number of different policies, far too many really. On the first page we have fiscal policy, then later on it moves to monetary policy, and lastly supply-side policies. Probably because the candidate has tried to write about so many different policies, there is very limited development of the points. The best-developed point is the second one about monetary policy, which manages to get into KAA level 3, but the others are very limited in chains of argument and only fit the criteria for KAA level 2. It is important to remember in a question such as this that there are loads of potential policies to write about, but candidates need to be selective and not try to write about everything. Depth of answers is what examiners are looking to see, not breadth. In terms of evaluation, this is clear throughout the answer, although it is rather brief at the end when supply-side policies are being evaluated. The evaluation here fits clearly into the level 2 criteria (at least for the first two evaluation points). There is some development of the points: they are not simply stated, and so the candidate has gone beyond level 1. However, they could have been further developed with a longer chain of argument, and so they do not meet the level 3 criteria. Overall this answer scores KAA low level 3, Evaluation level 2. There is no need to define the key words in the question. Save yourself time and get straight into answering the question. This is a top-level answer to this question, both for KAA and Evaluation. The KAA points are very clearly broken down and explained in a detailed step-by-step way along with diagrams to illustrate the points being made. For example, in the first point, the candidate hasn't just said that if the pound reduced in value it would make exports more competitive, they have explained how this could come about by starting from the beginning with cutting interest rates, and working thoroughly through to finishing with how this would increase the UK's exports. The evaluation is also very thorough and clearly in the context of the UK economy, for example talking about how 'inflation is already very high' in the first evaluation point and about the very large national debt in the second point. Also, just like with the KAA points, there is clear step-by-step explanation breaking down and explaining the argument they are making. Question In this question the focus is on macroeconomic policies to reduce UK inflation. The question did specify that candidates could not write about monetary policy, and it was pleasing to see that nearly every student understood and followed that point. Most candidates opted to focus on contractionary fiscal policies, although sometimes they wrote about both cutting government spending and raising taxes as one general point which often led to a lack of the detailed explanation required to reach the higher KAA levels. Candidates need to remember to stick to only ONE policy at a time to give themselves the time and space to really fully develop an argument about that particular policy. The other main focus was on different supply-side policies that could help to shift out aggregate supply. Again, good answers drilled down to focus on specific supply-side policies, offering clear examples of how they could work in reality in the UK. In terms of evaluation, as with question 7, the better evaluation points focused on critiquing the policies candidates had written about and explaining why they might not be effective. With supply-side policies, time lag is a common evaluation point, but candidates need to remember that they can't simply state that something like education improvements will have a time lag, they need to explain how and why there would be a time lag, and then link that to the question as who/why it therefore won't help to reduce inflation in the short term, which is particularly important at the moment. Better answers also often appreciated the context the UK economy is in at the moment, with lots of cost-push pressures causing inflation to be so high, and that affecting what policies are likely to be most effective in combatting inflation. This answer discusses contractionary fiscal policy to begin with. It has a diagram clearly illustrating how this would help to bring down inflation and some good context specific to the UK. However, the analysis isn't quite fully developed. The later explanation of supply-side policies is nowhere near as good, failing to really focus on one specific policy and therefore providing a very generic KAA level 2 point. Both evaluation points are reasonably well-developed, but are still lacking the completeness of the argument needed to achieve top level for evaluation. There is a good judgement at the end of this answer which is pleasing to read, but overall it isn't quite enough to get the whole essay into top level for evaluation. Therefore, overall this answer achieves KAA level 3 and Evaluation top of level 2. When writing about supply-side policies, don't discuss them as an overarching concept, focus on an actual, specific policy that the government could use. For example in the UK at the moment there is lots of discussion about the introduction of T-Levels to hopefully improve the quality of vocational education. This is a top-level answer that includes more points than was really needed. The first point isn't quite as well-developed as the rest of the essay, not quite making it into the top level for KAA, but everything else in the essay is clearly top-level writing. There are clear and well-developed chains of argument and it is particularly pleasing to read an answer which is clearly grounded in the real world of the UK economy. There is plenty of context throughout the answer, for example discussing how the UK is nearly at full employment and the impact of the UK leaving the European Union. Whilst this candidate has used nearly all the space provided, please don't feel that you need to do that. This writing is fairly large and also this candidate has written more points than they needed to. They could have stopped earlier and still achieved the same final mark. Examiners are definitely NOT looking for lots of different points in order to award the higher levels: it is all about the quality of the answer.

Notes from the mark scheme and report

• supply-side policies (education, infrastructure, tax cuts), lower non-tariff barriers, depreciation
• explain each with full chains of argument to competitiveness
• apply to the UK
• evaluate with time lags, cost, deficit

Mark scheme, including the levels grid and indicative content

Notes from the mark scheme and report

• monetary policy (interest rates, QE) earns nothing
• contractionary fiscal policy (tax rises, spending cuts) and supply-side policies, public-sector pay restraint, VAT changes
• evaluate with cost-push causes, time lags, effects on growth and unemployment

Mark scheme, including the levels grid and indicative content

Examiner's comment

Despite many attempts to tell the students, it is clear that some still think that a certain number of points must be made, and there are students that make a series of underdeveloped points and run out of time for their evaluation. Clearly at least two policies must be given because the question asks for plural policies, but there is no correct number of policies. The most important skill for candidates to show is that they can develop a sustained chain of reasoning on both the micro and macro side of the economy. This could involve one or more policies on each side and it is not a matter of how many policies but how well they are applied, shown to be relevant, and a chain of reasoning can emerge. One factor that the question could draw out was what type of inequality could be considered, and some of the excellent answers that were seen covered income, wealth, age, geographical, wage or gender-based arguments. Most answers included at least one diagram, and the use of at least one micro and macro diagram was an excellent way to pick up analysis marks. For example there were rises in the national minimum wage, some labelled with 2023 data, and on the macro side there were a large number of AD AS diagrams for example in showing the inflationary effects of expansionary fiscal policy. In evaluation it is certainly an effective approach to say why the policies might or might not be effective, whether there are adverse consequences, and the time lag they involve.

Notes from the mark scheme and report

• Level 4 needs at least one micro and one macro policy and UK data on inequality
• e.g. minimum wage, benefits uprated with inflation, progressive taxes, education
• develop a few policies in depth rather than listing many
• evaluate with incentive effects, time lags, income v wealth inequality

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was a very relevant set of data, and the context could not have been more up to date. The main problem was the change in corporation tax that was mentioned in the passage, and some answers used this in relation to a shift in the cost curves. Of course, corporation tax is post-profit and some answers therefore became off track in their chain of reasoning. In general this question was far more effectively answered, with a mean of 17.74 rather than 16.46 for question 1d. It was also far more popular in a ratio of 4:1 (the split on 2d and e was 1:1). Candidates do find it easier to talk about effects rather than causes or policies, but this is probably because the diagrams are easier to link to each type of tax. The most common micro effect was the potential cut in the top rate of income tax and/or the 19% standard rate, and diagrams showing increases in demand/consumer surplus were common. It was also very common to see the discussion of corporation tax that was in Extract A, and the evaluation was often using the passage to show why at the time this was inadvisable. Many answers used the removal of the cap in bankers’ bonuses, although it was difficult to see why this was a tax. The rise in NICs was used by many although it was not clear that many people could understand the ‘levy’ was a rise in tax rather than the fall in tax asked for in the question. Some were effective in saying that the decision to use the tax was reversed, and the mark scheme allowed for this as a tax cut, although effectively it was not a rise in a tax because it was removed before it was implemented. One of the most effective ways to evaluate on this question was to use the context of the UK today. Since the fiasco described in the passage, inflation rose to over 10% in the UK and there is clearly a link between the fiscal stance and the rate of inflation. Many also discussed that the MPC raised the interest rate even further than the 2.25% mentioned in the passage, and those who showed current knowledge of the macroeconomic position were well rewarded.

Notes from the mark scheme and report

• Level 4 needs micro and macro effects and use of the proposed UK tax changes in Extract A
• corporation tax is levied on profit so it does not shift cost curves
• the national insurance levy was a tax rise
• evaluate with Laffer curve, size of multiplier, inequality, conflict with higher interest rates

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question on house prices falling caused some significant problems. Mean at 14.1 is the lowest any essay has had in the whole specification series. The average mean is 16 to 17. When house prices are learned about, the wealth effect is the most important factor to put in your notes. Of course the effect on confidence and on first time buyers is important. What does NOT happen is that suddenly people buy a lot more houses in general. This scores 23/25. The diagrams are clear, and the answers are in context. What it really needs is a Judgement not a Conclusion. Do not reproduce pre-learned essays, but it is good to have in mind a micro and a macro diagram that you could use in any essay, as here. Make sure the answer is fully embedded in the context. Then evaluate both the micro and macro side – at least one good argument on each side. This answer does not initially look excellent although eventually it achieves a reasonable score of 18/25. Throughout the answer does not get above L3 KAA and it is clear that the chains of reasoning are short. There is some use of data and there are links made to the diagrams, although at times – for example on page 4 – the links are tenuous and the steps in the chains of reasoning are not convincing. The points are negative wealth effects and geographical mobility, both of which work well. It does not reach Level 4 though, as the chains of reasoning have gaps or are too short to be convincing. Therefore the maximum KAA score of 12/16 is given. Throughout the evaluation is L2+Ev which means it cannot earn more than 6/9 for evaluation. Quality in your answer always surpasses quantity. Write a few points really well, and extend the chains of reasoning to make points that you could read in a quality news report. Read the BBC or similar journalism on house prices to see the most common kinds of arguments, and use some diagrams you know from your course.

Notes from the mark scheme and report

• negative wealth effect on consumption and confidence is the key macro link
• micro: builders, estate agents, negative equity and geographical immobility
• people do not suddenly buy many more houses
• evaluate with size of fall (10% to 20%), regional variation
• report: "caused some significant problems. Mean at 14.1 is the lowest any essay has had in the whole specification series"

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

A significant number misunderstood labour shortages as meaning unemployment. In this context it was rare for the answers to access many marks. Hence the standard deviation reached a high of 6.79 which is far higher than ever seen on a 25 mark question in this series. The mean was also significantly low at 14.98. Many answers began with data use, which is very effective. The use of labour market diagrams was also very common, but few (this is an exception) used the leftward shift to explain why wage rates would rise, which was a good approach. Many instead digressed and talked about why there was a shortage of labour, and a huge number wanted to talk about Brexit. Another excellent approach was to move from rising wage costs to an increase in costs, shown on a cost and revenue diagram. This could be either a fixed cost or a variable cost change, as is always the case with labour as a cost, but it must be very carefully explained in the candidate's answer about why the labour is fixed or variable. This answer does it as a fixed cost but it is not really clear why it is fixed apart from 'if firms have to pay employees a higher wage' which does imply a fixed cost by linking it to high street shops and social care. There is really only a hint of evaluation in the answer but it eventually reaches Level 2 evaluation on the fourth page, when discussing what the government might do about the problem. This does reach Level 4 of both micro and macro, and the senior examiners gave this 16/16 for KAA. There is a Judgement (J) but the overall score for evaluation is mid L2 Ev. The final mark is 16+5e = 21. Do not keep repeating diagrams and analysis. Instead devote 9/25 (or 36% of your time) to evaluation. Make an overall judgement – this can be at the start, middle or end of your essay but more often than not it is seen at the end in excellent answers. This answer includes good data, diagrams and development. There is evaluation throughout. It is clearly a top answer 23/25 but it misses out some steps on the macro side – the conclusion at the top of page 4 is reached too quickly, and its corresponding evaluation is generic. You can make just one micro and one macro point and get the top level (L4) as here. A less risky approach might be to add another point if you are at all unsure about your reasoning. Cost and revenue diagrams are a very useful way to show the effects of cost rises. However you must make the link to MC and AC if there is a change in variable costs. Section 1 A reminder to centres that it does not benefit candidates to have stock essay answers as they miss the higher marks by not using the context to guide their analysis and evaluation. It is helpful if the candidate marks the box for the essay chosen (1d or 1e) but if they do not (around 10%) then they are marked in a pool where the examiner has to decide which question has been attempted. The answer usually becomes clear very quickly when candidates put signals in their work and make it clear from the outset that they understand the question. Section 2 The majority of candidates ran short of time on the essay and the advice to candidates is to reserve 30 minutes for the final essay, and to use at least one micro and one macro point, diagrams where possible and all the data that links to the points made. Evaluation is key and we need to see developed and applied chains of reasoning within the evaluation.

Notes from the mark scheme and report

• labour shortages are not unemployment
• supply of labour shifts left so wages rise, then costs rise on a cost and revenue diagram (explain fixed or variable)
• macro: cost-push inflation, LRAS, competitiveness
• focus on effects, not causes such as Brexit
• report: "A significant number misunderstood labour shortages as meaning unemployment" and "the mean was also significantly low at 14.98"

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

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, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate the fiscal policies the UK Government could use if it believes that ‘the UK economy is likely to experience another recession’. Many candidates were able to effectively answer this question and provided arguments on government spending and taxation. They linked this to an AD/AS diagram in context of their explanations. One of the key issues was that many candidates discussed the reverse effect on these policies as evaluation and this was not credited. Those who were able to effectively answer this question explained their arguments in context of recent UK trends.

Notes from the mark scheme and report

• expansionary fiscal policy (spending on schools/infrastructure, tax cuts) with an AD/AS diagram and multiplier
• reversing the policy is not evaluation
• evaluate with time lags, debt, crowding out, size of the multiplier, confidence

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate supply-side policies the UK Government could use to increase the UK’s productivity. Although candidates were able to identify policies, they were not able to analyse its impact on productivity. Some candidates discussed the negative impacts of low productivity or considered the impact of these policies on economic growth. There were several evaluative comments, but they lacked chains of reasoning to access higher levels.

Notes from the mark scheme and report

• supply-side policies (education and training, infrastructure, tax incentives for investment, deregulation) linked to productivity, not just growth
• report: candidates could identify policies but "were not able to analyse its impact on productivity"

Mark scheme, including the levels grid and indicative content

Examiner's comment

The stem pointed students in the direction of Tesla and application of this to the question was popular with good insights into how Tesla may focus on dynamic efficiency but then, due to its dominant position, act in an inefficient manner. Unlike previous essay-based questions students were allowed to discuss other examples of monopolies and this approach was taken up as they moved on to discuss a second efficiency point, often looking at the behaviour of a natural monopoly, such as in the water industry. Students were not required to draw a diagram, but the better analytical responses often did make effective use of a precise cost and revenue diagram. The diagram in the mark scheme is for illustrative purposes and other suitable diagrams were allowed. In terms of evaluation, students did approach the question in different directions, some arguing that monopolies were inefficient and then countering this, and others vice-versa. Either approach was valid. Lastly, there were attempts at a conclusion, but this was often used to summarise points already made rather than making a clear judgement. When the latter was the focus of the conclusion, it was often done well and helped to raise the overall score. This response, whilst being knowledgeable about Tesla, lacks an effective sustained use of economic theory. Application should be anchored to knowledge and understanding, and candidates must be careful that being aware of a firm or industry in detail will not score high marks unless it is showing an ability to link knowledge and understanding in context using appropriate examples. The initial point has perhaps some isolated or imprecise understanding of specialisation and research and development, but this is at Level 1. Again, there is similar coverage of economies of scale at the end of the paragraph on the second page. The focus on infrastructure and land associated with rail being a natural monopoly displayed some elements of knowledge to get to a low Level 2 response. Likewise, the remaining analysis whilst perhaps going back over research and development does enough to lift this point to low Level 2. Lastly the attempt at evaluation makes some linkage to social efficiency. Overall, this response was awarded L2 and L1e = 5 and 1e = 6 marks. Whilst it is good to spend time on case studies looking at a specific firm, market or industry, it is essential that the focus is on showing an ability to link knowledge and understanding in context using appropriate examples. Start with the key concepts and see how they are applied to the case study you are looking at. This response starts with identifying what monopoly power is in the context of Tesla. The first part focuses on efficiency, though it is related to the UK gas and electricity distribution industry as a natural monopoly. The chain of reasoning flows well regarding productive efficiency and there is a link to the concept of productive efficiency as illustrated, although the diagram is missing the LRAC label. This paragraph secures highly at Level 3. The next paragraph attempts to evaluate by making use of x- inefficiency and the principal agent problem and is well written, securing Level 3 evaluation. The response then moves onto looking at the issue of dynamic efficiency in the context of Tesco with some attempt to link the context of Tesco lowering its average cost. Again, this was seen as a top Level 3 response in terms of Knowledge, Analysis and Application (KAA). The following section of evaluation risked being repetitive, but the point regarding diverting profits to shareholders was viewed as enough for sustained Level 3 evaluation. The conclusion adds some judgement. Overall, the response achieves L3+ for KAA (12) and L3ev (7EV) = 19 marks. Spend time planning your essay response in terms of the key points and evaluation that you want to make to avoid the risk of repetition. In terms of context, try to ensure that examples given link tightly to the economic concept you are trying to address. Remember a judgement is expected to get the very top marks for evaluation for the 25 mark questions.

Notes from the mark scheme and report

• define productive, allocative, dynamic and x-efficiency
• economies of scale and reinvested profit against P > MC, x-inefficiency and complacency
• Level 4 must refer to at least one monopoly (e.g. Tesla, a water company)
• a diagram is not required
• conclusions often just summarised

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question drew on candidates’ knowledge from the topic area of Supply of Labour, as indicated on the Advance Information for Paper 1. An accurate drawing of the labour market diagram was not required, but some candidates did identify suitable labour market diagrams to aid their explanation. Candidates did not have to focus on one occupation and answers to any occupation were allowed, as well as to more than one occupation to make both questions equally accessible. This question was very topical, but it was less popular than question 7. On the whole, responses were not as strong for this question. Despite the topic being current, many responses were very context rich, but candidates needed to ensure they spent time on the theory. However, there were some particularly good theoretical answers that were well applied. In some cases, there was evidence of candidates only briefly covering a wide range of factors that influence supply, but with limited evaluation. Candidates do not have to offer three points or more, and typically the best performing responses covered in-depth two points with coherent chains of reasoning that were well evaluated. The first factor in this response concerns training in the NHS and time lags that may result in rational behaviour taking workers elsewhere. This factor secured Level 2 for KAA. The following factor relating to geographical mobility also secured Level 2 for KAA. There is some evidence of evaluation concerning workers wanting to work overseas, but this could have been better phrased and, as such it was awarded Level 1 for evaluation. The reference to barriers to work, such as disability, lacked a detailed theoretical explanation and was therefore awarded Level 2 as it was limited to two stage chains of reasoning. Finally, the response refers to wages but knowledge is imprecise and therefore is awarded Level 1. Overall, this responses was awarded L2 (7 KAA) and L1ev (2EV) = 9 marks. Try to avoid narrow responses or superficial answers by practising going beyond two stage chains of reasoning. Do so both for developing your point (KAA) and evaluation. Ensure you are evaluating what you have written in the context of the question set. Make effective use of a knowledge organiser so that your knowledge and understanding is precise. In this response, factors influencing supply is dealt with richly in terms of precise economic knowledge and understanding using appropriate examples. The first reason is set in the context of the health industry making effective use of a good diagram which was awarded L4 for KAA. The following section evaluates making use of the price elasticity of supply concept. The switch in occupation focus to cleaners is appropriate. The diagram would have been better if it had shown a shift in demand, but the written explanation is secure to achieve Level 3 for evaluation. The second factor regarding the issue of occupational mobility and miners is well addressed, and achieved highly in Level 3. The intervention of government as an evaluation achieved L3 for evaluation. Finally, the consideration to non-monetary factors was awarded Level 4 for KAA. Overall, this response was awarded the full 16 marks for KAA and 8 marks for evaluation. The judgement needed to be more secure to obtain full marks. Ensure that you offer a clear judgement that answers the question. Draw upon your wide-ranging knowledge of economic concepts and terms to provide a coherent chain of reasoning.

Notes from the mark scheme and report

• factors: relative wages, non-wage benefits, skills and training, demographics, migration, housing costs, trade unions
• Level 4 needs application to an occupation
• report: Q8 responses "not as strong", context-rich but light on theory, or a list of factors with little evaluation

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question focused on the impact of protectionism on the global economy. Overall, candidates coped well with this question. They were able to correctly draw and explain a tariff diagram and discuss the impact of tariffs, as well as evaluate those impacts. Some of the better responses related this to real world tariffs, such as the trade dispute between the USA and China. However, the strongest responses were clearly able to effectively relate it to the global economy. Other methods such as quotas or subsidies were also often discussed with a range of efficiency. This response was awarded 16 marks and achieved level 3 for KAA and level 2 for evaluation. The candidate has accurately drawn a tariff diagram and has made a good attempt at explaining the pros and cons of such a protectionist measure. The answer continues to discuss the impact on infant industries. Overall, the content of the response does not meet the criteria for the top levels for either KAA or evaluation. This is a high-quality response that was awarded 22 marks and meets the criteria for KAA level 4 and evaluation level 3. The candidate has clearly discussed the impact of protectionism, relating it to the real world with the reference to the trade dispute between the USA and China. The candidate has also drawn a correct tariff diagram and clearly explained it. The response develops further with a clear discussion on positive and negative impacts of protectionism on the global economy. Answers in the top levels for KAA and Evaluation do not have to be long essays. Take note of the depth of the chains of argument given in this answer as an example of what is needed to meet the criteria for the top levels.

Notes from the mark scheme and report

• tariff diagram
• higher prices and less choice, lost comparative advantage, lower global GDP, deadweight loss
• KAA Level 4 must refer to the global economy
• evaluate with size of tariffs, short-lived trade wars, WTO, infant industries, anti-dumping

Mark scheme, including the levels grid and indicative content

Examiner's comment

The focus in this question was on the impact of globalisation on the global economy. Comparative advantage was frequently discussed by candidates, although many struggled to properly explain how it worked or provided plausible real-world examples. In terms of evaluation of comparative advantage, some of the better responses clearly critiqued it whilst still keeping their focus on globalisation. Weaker responses tended to lose focus and discussed the impact of protectionism on comparative advantage. Other benefits included higher economic growth, more jobs, and more competition between firms leading to lower prices and/or better quality. This is an excellent, high-quality response that was awarded 23 marks and met the criteria for the top levels of both KAA and evaluation. There are excellent chains of argument throughout, earning full marks for KAA. The evaluation is also of a high quality, although there is a lack of an overall judgement which prevents it from gaining full marks for evaluation. This answer is shorter than the exemplar of a top-levels candidate response in question 7, but they both demonstrate what is expected to achieve these levels. Focus on the quality of the argument when reading this example.

Notes from the mark scheme and report

• more trade and output via comparative advantage, MNC investment, lower prices, migration
• KAA Level 4 must refer to the global economy
• many struggled to explain comparative advantage with plausible examples
• evaluate with inequality, structural unemployment, exploitation, pollution, supply chain risk

Mark scheme, including the levels grid and indicative content

Examiner's comment

There were some very good essays which showed good understanding of the microeconomics of an exchange rate depreciation on the price of imported ingredients, with many showing a shift in MC as well as AC and a new profit area highlighted. In the macro context some argued effectively that when there is a depreciation, it is likely that the SRAS curve will shift left to reflect the rising cost of imported inputs. A few candidates made explicit links along the lines that a depreciation might increase the popularity of the UK as a tourist destination and so the demand for restaurant meals might increase. Restaurant meals are not typically internationally traded and so it was surprising to see the number of candidates who argued that UK restaurants will sell more meals abroad following a depreciation, or other reasons for a rise in AD. Nevertheless there were some very well informed candidates who showed excellent knowledge of recent developments in the UK economy with regard to the difficulty of attracting staff to this sector. Micro effects of exchange rate depreciation on the food delivery and/or restaurant sector were well explained and were often supported by an accurately drawn cost and revenue diagram showing a rise in AC and MC. The stronger candidates used type of restaurant to really develop their answers where ingredients would need to be sourced from abroad e.g. Japanese and Asian restaurants. Macro effects were more challenging in terms of application to food delivery and/or restaurant sector. Quite a few candidates wrote about how exchange rate depreciation could lead to food delivery companies increasing their export which was unconvincing. Candidates who developed the macroeconomics effects using the AD/AS model, typically with a well explained diagram, were able to offer more developed responses, which scored higher marks. A reminder to centres that at least one good detailed application to the context provided (i.e. the restaurant or food delivery services) was required to score highly. Generic response to the effects of depreciation, tended to score Level 3 KAA. There was good understanding shown of the Marshall-Lerner condition and J Curve in many responses. The micro side of depreciation was best linked to costs, as here. The candidate then links the costs of food in restaurants to the diagram by making it clear that variable costs shift, and therefore both MC and AC shift. This is a good answer but the candidate keeps crossing out work, which is a problem because of opportunity cost. In this case the chains of reasoning are not extended fully so this does not reach the very top of the top levels for KAA and Eval. But at 22/25 there are lessons to be learned from using the right vocabulary and tools of analysis. The economics student should not aim for perfection either in terms of wording or presentation, but instead purity of logic and strength in the links of the analysis and evaluation. This is similarly a good answer in terms of logic and the link to costs is again strong. But the noticeable difference is in terms of the chains of reasoning which stay in Level 3 KAA and Level 2 Eval. So for example the costs are not linked to the variable costs of food imports for restaurants, and that is merely assumed. 12 KAA marks and 6 Eval. This was the modal score for this question. Do not force the examiner to do the work for you. If your costs shift, say whether they are fixed or variable then link your application to the diagram that you draw.

Notes from the mark scheme and report

• micro: dearer imported ingredients raise variable costs so MC and AC shift up and profit falls
• macro: SRAS shifts left (cost-push inflation), AD effects via net trade and tourism
• restaurant meals are not exported, so do not argue they sell more abroad
• Level 4 needs micro, macro and the restaurant context

Mark scheme, including the levels grid and indicative content

Notes from the mark scheme and report

• micro: minimum wage above equilibrium (a line below equilibrium has no effect) causes excess supply of labour, higher costs and lower profit margins for restaurants
• macro: consumption and AD, cost-push inflation, less inequality and poverty
• evaluate with elasticity of demand for labour and wage share of costs
• avoid pre-learned essays

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was the more popular of the essays where, overall, all students demonstrated the basic knowledge on the impact of low interest rates on AD and costs of borrowing. Only a few of them, though, managed to bring in good economics and to make their answers more relevant to the context with real life examples drawn not only from Kenya but also from other Sub-Saharan countries or BRIC economies. Some mentioned the lengthy process of the transmission mechanism. Most candidates who answered it managed two effects. The main problem was one of timing: some were only able to put down the briefest of answers. Many candidates are selecting too many essay points – they need to use less points and to write in more depth on those specific points. The examiners' advice: that it is better to make one point well rather than a number with brief or incorrect chains of reasoning. Accessible essay which most students responded well to More able students were able to apply a traditional interest rates questions to the LEDC e.g – use of savings gap Good answers used AD/AS diagrams within their macro analysis and cost/revenue diagrams within their micro analysis. This enabled them to analyse effectively and look at the wider impacts. Evaluation was most effective when linked to the data extract and the rates actually available in Kenya Accessible essay which most students responded well to More able students were able to apply a traditional interest rates questions to the LEDC e.g – use of savings gap Good answers used AD/AS diagrams within their macro analysis and cost/revenue diagrams within their micro analysis. This enabled them to analyse effectively and look at the wider impacts. Evaluation was most effective when linked to the data extract and the rates actually available in Kenya Make at least one micro and one macro point. If you have more time then develop the side you think is the weakest with another more convincing point. It is better to make fewer points really well argued than using a scattered approach with several relevant thoughts. Many answers were pre-learned 'interest rate' essays, and having been learnt in the context of macro they could not easily switch to micro. The micro approach is best reinforced using the price/output/profit/externalities points from the Themes 1 and 3 specification, and either D&S or cost and revenue diagrams should be expected. The macro side would probably include an AD AS diagram in a high scoring essay. Use diagrams as much as you can in the microeconomics and macroeconomics Theme 3 essays. Remember to check whether the essay is about causes or effects before you start.

Notes from the mark scheme and report

• micro: lower borrowing costs for firms, more investment and R&D, consumer demand
• macro: C and I raise AD with the multiplier, depreciation, cheaper debt servicing
• without a developing country KAA is capped at Level 3
• evaluate with the gap between the 7% central bank rate and 22% paid by small firms (Extract G), savings gap

Mark scheme, including the levels grid and indicative content

Examiner's comment

Q2e was less popular, with the large majority of students unable to make clear links between growth and development, but many candidates embedded in their answers excellent economics, theories/models (Harrod-Domar; Lewis Model from the extract; Prebisch Singer Hypthesis) and even diagrams not in the specifications such as the MEC diagram, plus a wide range of models from development economics. The weakest candidates could not go beyond corruption or time lag when evaluating (see comments at the end of this report). Some candidates did extremely well. The key point was to choose development strategies rather than to rehearse any macro policy (e.g., monetary policy is not a development policy and could not gain high KAA marks). It was also important to deal with development rather than merely growth. This was a very accessible essay with a huge variety of different strategies chosen Students seemed well prepared for this (very typical style of question used in the past in other contexts, e.g. Mozambique) The best answers not only had depth to their analysis with model/diagrams, but also had good application to LEDCs (rather than simply writing about general supply-side policies) Again lots of candidates writing too many points in insufficient depth. Many candidates ran out of time on the last essay This is Level 4 L3E L4 L3E with a solid structure. It is not too long but instead focused and applied throughout. Diagrams and data are used to good effect. Remember to give an overall judgement. The main problem with this essay was pre-learned essays that were unrelated to developing countries (or one country). Strategies tend to be generic and AD AS diagrams or demand side policies were included which are not relevant in the context. 9 + 4E There are three points made, none which get above L3: Trade liberalisation L3 – E2- FDI L3 – LE1 Tourism L2 L2E- There is no overall judgement. It is better to make two points which are clearly development strategies and not just a continuation of developed countries' macroeconomics.

Notes from the mark scheme and report

• choose development strategies (human capital, infrastructure, trade liberalisation, microfinance, aid) not generic macro policy such as monetary policy
• link to development not just growth
• Level 4 needs Kenyan or other developing-country context
• evaluate beyond corruption and time lags

Mark scheme, including the levels grid and indicative content

Examiner's comment

Question 7 made excellent use of a cost and revenue diagram considering the additional cost as well as a minimum wage diagram displaying the ‘increase in the national living wage’. Another key discriminator in the level of responses was those that engaged in depth their analysis in the context of a specific labour market of their choice. There was clear evidence that some candidates had spent time on studying a specific labour market demonstrating an awareness of current events and policies determining wages in competitive and non-competitive labour markets. The Paper Summary of the 2019 Principal Examiner report advised on this: “Spend time studying current developments in economics that are relevant to your specification.” Top level responses provided a breadth of knowledge deployed with a depth of reasoning in context. Weaker responses tended to focus only on the downsides of a minimum wage with a relevant diagram but ignored the potential case for increasing the wage. Candidates have been advised in the past to pause and think through their response – evidence of planning is not required but clearly can help them to deepen their analysis as well as spending time on ensuring they offer different viewpoint and make an informed judgement.

Notes from the mark scheme and report

• minimum wage above equilibrium causes excess supply of labour (unemployment) in a specific market such as social care
• higher costs shift AC and MC up
• evaluate with elasticity of labour demand, monopsony employers, productivity and incentive gains
• report: weaker answers gave only disadvantages without a counter case and lacked a specific labour market

Mark scheme, including the levels grid and indicative content

Examiner's comment

Question 8 is about evaluating the possible consequences for business decision making of increased market concentration. The specification offers guidance on this in the introduction to Theme 3: “Revenues, costs and profits are explored before linking these ideas to different market structures. Candidates will then be able to analyse and evaluate the pricing and output decisions of firms in different contexts and understand the role of competition in business decision making.” As with question 7, better responses made excellent use of detailed diagrammatic analysis using cost and revenue diagrams and/or accurate use of game theory in a relevant simple two firm/two outcome model. Likewise, a key discriminator was the quality of application by candidates who made relevant use of industries of their choice. There was clear evidence with top level responses of candidates taking an enquiring approach in their preparation of studying an industry or a number of industries in depth that had a high concentration ratio. Where possible this is an advisable approach across the specification to equip candidates to discuss an industry or market of their choice in an exam essay question. Evaluation on this question required candidates to critique the type of business decision making made by firms in a highly concentrated industry i.e. why firms that may engage in collusion or abusing their dominant position may decide not to do so given the risk of regulation or the threat of new entrants.

Notes from the mark scheme and report

• higher concentration means interdependence: game theory, collusion or price leadership, non-price competition, barriers to entry, monopoly pricing
• evaluate with risk of regulation, new entrants and contestability
• better answers used cost and revenue diagrams and a two firm/two outcome model applied to named industries

Mark scheme, including the levels grid and indicative content

Notes from the mark scheme and report

• explain how QE works (asset purchases, liquidity, lower yields, lending, AD)
• limits: banks hoard liquidity, weak confidence, lack of loan demand, fiscal austerity
• weaker answers could not develop the QE mechanism

Mark scheme, including the levels grid and indicative content

Notes from the mark scheme and report

• trade-offs of environmental protection with growth, inflation (higher costs), inequality and unemployment
• trade-offs may not arise (green investment, new jobs)
• report: some answers discussed the importance of the environment rather than the trade-offs

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

• causes of the number of firms: barriers to entry, contestability, economies of scale, regulation
• macro: economic growth, protectionism, exchange rates
• Level 4 needs micro and macro and a named industry linked to the number of firms
• report: "Causes questions are more difficult to access than effects questions"

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

• micro: wage floors raise costs, higher car wash prices, minimum price, health and safety
• macro: equality, inflation, employment
• Level 4 needs micro and macro and a specific industry
• evaluate with government failure (regulatory capture, asymmetric information), PED, WashMark self-regulation

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

• factors determining growth relative to other developed economies (Figure 3), actual or potential
• micro factors (infrastructure, skills, technology, labour costs) were often missing
• Level 4 needs Germany in context
• evaluation must criticise the point, not just state the opposite

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

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

• AD shift with multiplier, LRAS shift from infrastructure investment
• micro links: firms' cost curves, positive consumption externalities of public goods
• Level 4 needs German fiscal policy in context
• evaluate with size of multiplier, low borrowing costs, debt brake rules

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question was reasonably popular and allowed candidates to consider the merits of a free market approach where state intervention is more usually the norm. the free market approach to education is explored throughout the data, and the use of tuition fees is already a move towards that outcome. Greater reliance of differential course fees is another example. Candidates did not have to consider the ‘market’ for tertiary education and could have explored schools just as easily. It is important to note that a diagram showing the price mechanism at work in this sector raises a series of questions. Schools, as we know from Finland and from the Netherlands, do not have to be exclusively state run or privately run. It is crucial, however, that candidates confidently explore the problems of an overreliance on the market in the face of significant positive externalities in consumption. The question of equality of access is also highly significant. The UK’s large independent sector is a good example in this regard.

Notes from the mark scheme and report

• price mechanism, choice, efficiency and fees by value of degree, US model
• can discuss schools as well as universities
• evaluate with positive externalities in consumption, under-consumption, unequal access and the European low-fee model

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was a highly accessible question considering the role of government intervention in education. Nonetheless, perhaps because of its slightly more theoretical premises, it proved to be less popular than 6(f). There are numerous failures alluded to in the extracts, particularly asymmetric information, and inequality. This essay requires a clear exercise of critical analysis and good candidates would be expected to have a developed notion of the positive externalities generated by education and how they may be under-provided in a free market. Good candidates used a positive externalities diagram and used it to intelligently assess why free markets would lead to a sub-optimal allocation of resources in the education sector. This would require government intervention of some kind to correct this market failure. The key concept of government failure could then be used to consider whether governments could actually solve the problem created by the market. Strong candidates could comfortably explore the problems of state education and whether a ‘one size fits all’ approach is appropriate where education is a state monopoly.

Notes from the mark scheme and report

• positive externalities diagram (MSB above MPB, under-consumption at H rather than optimum J)
• state provision, subsidies, information
• evaluate with difficulty of valuing external benefits and government failure (information gaps, unintended consequences, one size fits all)

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate use supply side policies to increase the UK’s rate of economic growth. Many candidates were able to effectively answer this question and provided arguments on improvements in education and infrastructure. They linked this to growth using an AD/AS diagram in context of their explanations. One of the key issues was that many candidates discussed generic points as evaluation, and this was not awarded higher levels. Those who were able to effectively answer this question explained their arguments in context of recent UK trends.

Notes from the mark scheme and report

• supply-side policies (education and training, infrastructure, tax and benefit incentives, deregulation, privatisation) shown with an LRAS shift
• evaluate in UK context (time lags, cost, budget deficit) rather than generic points

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate the macroeconomic effects of the UK government pursuing a policy of reducing its budget deficit. Although candidates were able to identify effects, they were not able to develop their points further in depth. The most common theme was the impact on economic growth and unemployment supported by an AD/AS diagram. There were some evaluative comments but they lacked chains of reasoning to access higher levels.

Notes from the mark scheme and report

• cutting the deficit reduces AD (lower growth, higher unemployment, less inflation) with multiplier effects, may widen inequality (welfare cuts) and hit public investment
• evaluate e.g. lower debt interest, confidence, crowding in
• develop chains of reasoning

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question was more popular than question 8 with better responses overall. Given the synoptic nature of essay questions the better responses made excellent use of Theme 1 and Theme 3 making use of externalities diagrams as well as theory of the firm diagrams. Whilst diagrams were not required better responses over made use of them thus illustrating higher order thinking. The context has had substantial media coverage and stronger candidates were able to provide rich responses in context. The Paper Summary of the 2019 Principal Examiner report advised on this: “Spend time studying current developments in economics that are relevant to your specification. This not only enriches your understanding of key concepts but will enable you to refer to an industry or a firm of your choice if asked in an essay.” In this case following current developments as covered by broadsheet newspapers may have aided responses. This answer scores 12/25. The response secures the top of Level 2 KAA and there are a couple of cases of Level 2 Evaluation. There is a lack of clarity with the diagrams. This answer scores Level 4 KAA and Level 3 Evaluation = 15KAA + 7Ev = 22/25. This is a high-quality answer that fulfils the requirements of the criteria for KAA Level 4 and evaluation Level 3. A breadth of knowledge is deployed and there is a depth of reasoning with a rich use of context. The only downside is that the conclusion is weak.

Notes from the mark scheme and report

• microeconomic effects of switching: positive XED with electricity, demand shifts in car and fuel markets, profits of EV and oil firms, consumer and producer surplus, reduced negative externalities, lost fuel duty
• better answers used externality and theory of the firm diagrams (not required)
• evaluate with uncertain forecasts, charging infrastructure, external costs of battery production

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question drew on knowledge from 3.4.6 Monopsony, concerning a) Characteristics and conditions for a monopsony to operate and b) Costs and benefits of a monopsony to firms, consumers, employees and suppliers. For evaluation responses may have drawn on 3.6.1 d) Government intervention to protect suppliers and employees: restrictions on monopsony power of firms. Whilst a monopsony diagram was not required many responses did attempt to apply such a diagram to the context with solid chains of reasoning well applied. Weaker candidates tended to focus on Amazon as a monopoly firm and did not seem to have understood what a monopsony firm is about. There is a possibility that some centres may have not covered monopsony as Question 8 was less popular than Question 7 and on the whole responses were not as strong. This answer scores 12/25 marks. There are some elements of knowledge at the start regarding the operating of a monopsony in context, but it does not focus on the broad elements of the question and is thus not wholly convincing. The response is too short, and chains of reasoning run out. The evaluation is better with reference to the context. This answer scores Level 4 KAA and Level 3 Evaluation = 14KAA + 7Ev = 21/25. There are lots of angles in this demonstrating precise knowledge and understanding of concepts alongside being critical of the underlying assumptions made. The use of the perfectly elastic demand curve is perhaps not convincing but negative marking does not occur.

Notes from the mark scheme and report

• monopsony is a dominant buyer: costs to suppliers (lower prices, revenue, profit, possible shut-down), employees of suppliers and consumers (less choice)
• Level 4 must refer to a specific market
• report: weaker answers treated Amazon as a monopoly seller and did not understand monopsony
• Q8 answers "not as strong" as Q7

Mark scheme, including the levels grid and indicative content

Examiner's comment

Question 7 focused on fiscal policy and the impact of cutting tax rates as a policy to increase economic growth. Many students did use the information provided about the United States cutting corporation tax and income tax, but it was good to see students also bringing in their own examples from their own knowledge. Students discussed a range of positive and negative impacts, for example reduced corporation tax allowing firms to keep more profits would hopefully encourage them to reinvest into their business, helping to boost productivity. However, to evaluate that, many students suggested that firms might simply increase payments to their shareholders rather than reinvest the money. Most answers were able to provide a reasonable answer to the question, but often lacked something to reach the higher marks. This was sometimes a lack of ‘logical and coherent chains of reasoning’ (from the level 4 criteria on the markscheme). The other thing that was often missing from answers was application- being ‘applied appropriately to economic issues and problems’ (also from the markscheme). Students needed to consider both positive and negative impacts on the economy (for KAA and Evaluation, either way around). Weaker answers sometimes focused only on either benefits or downsides. Sometimes evaluation also became more of a list rather than developed and well-articulated points.

Notes from the mark scheme and report

• lower corporation tax raises retained profit for investment, lower income tax raises disposable income and incentives
• evaluate with saving, payouts to shareholders instead of investment, higher government debt and crowding out, less spending on infrastructure and education
• one side KAA and the other evaluation
• answers often lacked application and developed chains

Mark scheme, including the levels grid and indicative content

Examiner's comment

Question 8 is about the causes of income and wealth inequalities within a country such as Brazil. As with question 7, students often chose to discuss Brazil as they have been given some information on it in the exam paper, but better answers often included information from the students’ own knowledge. Students also needed to make sure they fully answered the question- i.e. that they discussed causes of both income and wealth inequalities. Discussion of both was required in order to be awarded a level 4 mark for KAA. Evaluation on this question required students to critique the causes they have discussed, i.e. why they might not be very important or significant causes of income or wealth inequalities. KAA points on this question could include causes such as corruption, a lack of a redistributive fiscal policy, or high levels of inheritance without much in the way of taxes on it. Evaluation tended to focus on magnitude or time factors. Evaluation could also be considering which of the causes students have discussed in their answer is the most significant.

Notes from the mark scheme and report

• causes of income and wealth inequality (corruption, little redistributive fiscal policy, regressive indirect taxes, unequal education and healthcare, rural-urban divide, weak unions, untaxed inheritance)
• Level 4 KAA requires causes of BOTH income and wealth inequality
• evaluate magnitude and time

Mark scheme, including the levels grid and indicative content

Examiner's comment

Level 3 clear and coherent but a few gaps E2- illogical to increase rates Level 2e fiscal policy would be much better Micro – confuses rise in interest rates with rise in inflation. Businesses are impacted by rising costs. L2- Economies of scale not relevant at all. Could lower interest rates at end is just saying the opposite l1e 14/25 Top L3 – not reliably integrated. and top L2e generic eval

Notes from the mark scheme and report

• micro: higher borrowing and fixed costs for firms, lower consumer demand, less investment and R&D
• macro: AD falls with multiplier effects, lira appreciates, debt servicing costs
• Level 4 needs both micro and macro
• do not confuse a rise in interest rates with a rise in inflation
• evaluate e.g. inflation already peaking

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

Comparative advantage and more competitive, and more efficient. Diagram does not show the change – just shows the effect of free trade. Explanation is so good that the marks are given. Allow L4. Good point that wages will rise, with a correct diagram, so L3e. Changes in income tax as micro point – well linked to labour market effects. Corporation tax has also fallen Diagram showing fall in AC shown (although shift not very clear) – analysis is correct, so L4 Eval slightly weaker as you cannot claim JSA if in labour market Some confusion on data. L2e- L4 for both, L3 + L2 eval so 16 + 7e – we are not penalising but would suggest that shifts are shown arrows.

Notes from the mark scheme and report

• Level 4 needs both micro policies (labour costs and ULCs, investment subsidies, skills, infrastructure) and macro policies (trade liberalisation, tax changes, monetary policy)
• show shifts with arrows on diagrams
• evaluate with relative competitiveness, the exchange rate, Brexit, opportunity cost, government failure

Mark scheme, including the levels grid and indicative content

Examiner's comment

Level 4 Diagram is appropriate, and it is in context and explain with application Level 3 ev – benefits outweighing cost with application Level 4 macro AD shift. Lovely use of context L3 ev crowding out. 24/25 - as it needs not a summary but an overall judgement. Concise and well written. Section B - UK 20/25 – well balanced. Effects on unemployment, growth and productivity Effects on consumer surplus L3- Goes off the question L2e- as goes off track but it says some firms will still employ workers as they do not need these skills. This isn’t developed. Does not distinguish labour as micro or macro, but the point is good – L2 for low wages and low living standards. Eval is about a solution rather than the effect so not given. Last paragraph does develop the point about the skills needed so goes from L2e- to L2e. L3- 10 Le2- 4 23/25

Notes from the mark scheme and report

• micro: lost human capital, unfilled vacancies, training costs, migrant labour
• macro: SRAS/LRAS shift left, weaker current account, fiscal costs
• Level 4 needs both micro and macro and the context of young workers
• evaluation must be about the effect, not a solution

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, including the levels grid and indicative content

Examiner's comment

This was a highly accessible question considering the disadvantages of the free market approach to health provision. Nonetheless, perhaps because of its slightly more theoretical premises, it proved to be much less popular than 6(f). There are numerous failures alluded to in the extracts, particularly asymmetric information. This essay requires a clear exercise of critical analysis and good candidates would be expected to have a developed notion of the positive externalities generated by health care and how they may be under-provided in a free market. Good candidates used a positive externalities diagram and used it to intelligently assess why free markets would lead to a sub-optimal allocation of resources in the health care sector. This would require government intervention of some kind to correct this market failure. Another argument that was developed in relation to the question was the inequality of access to health care developing from the unequal distribution of income in free market economies. Sophisticated responses recognised that government intervention would be required to mitigate the worst excesses of this in the health care sector. There was usually at least one other argument linking in to ideas of asymmetric information alluded to in the extracts. Comparisons may be made between countries such as the UK and the USA. There could be knowledge of Obamacare. To access evaluation marks candidates could use the prompts in the extracts which discuss the advantages of competition such as the potential to drive up standards of provision and the opportunity for consumer choice. Many candidates discussed how the NHS is a state monopoly and how it could be the best case for the expansion of the free market approach to more areas of health provision.

Notes from the mark scheme and report

• free market under-provides health care with external benefits (positive externality diagram), unequal access by income, asymmetric information, missing markets
• evaluate with price signals, choice and competition (Extract B), NHS waiting lists, mixed economy

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate use of interest rate changes as a means of controlling UK inflation. Many candidates were able to effectively answer this question and provided arguments on impact on consumption and investment. They linked this to inflation using an AD/AS diagram in context of their explanations. One of the key issues was that many candidates discussed the reverse effect on these factors as evaluation and this was not credited. Those who were able to effectively answer this question explained their arguments in context of recent UK trends.

Notes from the mark scheme and report

• Bank Rate changes work through borrowing, saving, mortgages, investment and the exchange rate to shift AD
• use Figure 1 (CPI above 3%, Bank Rate raised to 0.5%)
• evaluate time lags, cost-push imported inflation, low rates already, confidence
• report: the reverse effect was not credited as evaluation

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates the potential conflicts between the objective of economic growth and two other UK macroeconomic objectives. Although candidates were able to identify conflicts, they were not able to analyse why that conflict has occurred. Some candidates discussed the negative impacts of the other macroeconomic objectives, for example inflation but did not often explain why economic growth leads to inflation. There were some evaluative comments but they lacked chains of reasoning to access higher levels.

Notes from the mark scheme and report

• growth can conflict with low inflation (bottlenecks near capacity), the current account (high MPM), income equality and the environment
• explain WHY growth causes each conflict
• evaluate with supply-side growth and spare capacity
• report: candidates "were not able to analyse why that conflict has occurred" and evaluation lacked chains of reasoning

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question drew on candidate’s knowledge from 5.5 Labour Markets and/or 3.4.6 Monopsony. An accurate drawing of the monopsony labour market diagram was not required and candidates who answered this well did so using solid chains of reasoning; for example, in the health industry with bilateral monopsony power disputes. Candidates who did well mainly focussed on one industry – with the health industry and from the stem – the entertainment industry – being common responses. Weaker candidates tended not to move beyond basic supply and demand analysis or spoke about discrimination but struggled to develop a line of reasoning beyond saying that women have babies and take breaks from work or choose part-time work. Question 7 was less popular than Question 8 and on the whole responses were not as strong. This answer has many relevant reasons for wage differences. Initially the monopsony reason is theoretically well-structured, but it lacks an industry focus – achieving L3 and L2ev. Education and training are not sufficiently developed to achieve higher than L2 and L2e. Uber raises a relevant point from the specification on current labour market issues surrounding the gig economy and achieves L3 and L1e-. There is some attempt to provide a judgement at the end. Overall the response is awarded L3 (11KAA) and L2ev (5EV) = 16/25 marks . Less is more. Spend a little time planning to focus on one industry with reasons that are fully developed with as many chains of reasoning as possible. This will allow you to achieve much higher marks than simply writing down as many different points as you can think of. Evaluation can draw on examples from other industries. The football industry as a context is dealt with richly in terms of precise economic knowledge and understanding using appropriate examples. The first reason achieves L4KAA and L2 evaluation. The second reason regarding wage elasticity is awarded L3+ KAA mainly for the content on the third page, whereas the fourth page becomes a little unclear. The evaluation of this reason is solid and is awarded L3+. There is some judgement towards the end. Overall the candidate achieves L4- (13KAA) and L3- ev (7EV) = 20/25 marks.

Notes from the mark scheme and report

• wage differences from different demand (derived demand, productivity) and supply (skills, mobility) of labour, monopsony, trade unions, discrimination
• Level 4 needs a specific industry
• report: weaker answers stayed with basic supply and demand and responses were weaker than Question 8

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question was more popular than question 7 with better responses overall. After the truck industry, taken from the stem, supermarkets were the next most common industry, along with the airline and finance industry. The better responses made excellent use of game theory, with an accurate in context pay off matrix, commonly used to illustrate the temptation to collude and to break away. Price rigidity, limit pricing and controlling supply (cartels) were discussed too. Many good candidates linked this to low PED and raising revenue. Some candidates stayed in context, explaining that the high costs of conforming to emission regulation made it necessary. Evaluation was commonly about being caught and fined by the CMA. Stronger candidates illustrated the need for trust and fewer firms for this to work well. The candidate starts with identifying the supermarket industry as prone to collusion given its oligopolistic structure. The kinked demand curve, whilst outside the mark scheme as it is not on the specification, is explained well and moves on to discuss the music streaming industry to a Level 4 standard. The evaluation of this is sophisticated and in context, achieving L3ev. Game theory is then applied to the truck industry – the pay-off matrix is wrong and the reason for collusion is not fully explained – achieving L3- KAA. However, the evaluation is well written – achieving L3ev. The conclusion adds a little judgement. Overall the response achieves L3 KAA (11) and L3ev (8EV) = 19/25 marks. For a Level 4 response, candidates must refer to a specific industry in their answer. You must ensure that most of your response is focussed on one industry. Remember a judgement is expected to get the very top marks for evaluation on the 25 mark question. The first reason concerns interdependence and price rigidity but lacks context and the depth of the previous candidate's response thus achieving a borderline L2+/L3. The evaluation does link to the supermarket industry but is limited – E1+/L2-. Supermarkets collude to obtain spatial monopolies again could do with more theoretical explanation to achieve a secure Level 3 and the evaluation is judged as Level 2ev-. Finally, the sugar industry is used with a correctly drawn pay-off matrix but the candidate does not use the matrix well in their written explanation – again securing a borderline L3/L2. Overall the candidate achieves L3- (9 KAA) and L2ev- (4EV) = 13/25 marks. Less is more. Focus on providing answers that are fully developed in context with as many chains of reasoning as possible.

Notes from the mark scheme and report

• reasons for collusion: interdependence, joint profit maximisation, avoiding price wars, passing on regulation costs
• game theory pay-off matrix shows the incentive to cheat
• evaluate with fines and cheating
• Level 4 needs a specific industry
• kinked demand curve is not on the spec

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question asks candidates to consider the impact of the growth of trading blocs on trading patterns. The question focus is specific in that candidates are expected to consider how trading patterns may change. The TFTA is given as an example of a trading bloc, and whilst many candidates made good use of this context, others chose to discuss other trading blocs such as the European Union to good effect. Unfortunately what held many candidates back from achieving more highly in this question was that they didn't focus their answers specifically on trading patterns, and instead considered the benefits and downsides for a country's economy of joining a trading bloc. Such answers generally gained some marks but obviously couldn't access the higher marks. This is a high quality answer that fulfils the requirements of the criteria for KAA Level 4 and evaluation Level 3. It clearly answers the question - with a focus on the impact on trading patterns specifically. The EU has been used as a case study to good effect and key economic theories such as trade diversion have been discussed. Where relevant, candidates should use diagrams to aid their explanation. This answer achieves 9/25 marks. Right from the start the candidate makes it clear that they are discussing the benefits and downsides of the growth of trading blocs rather than the impact on trading patterns, with a discussion of the impact on GDP and living standards in a country. There are some references to trading patterns throughout the answer, both on positive and negative sides, but with the broad thrust of the answer not being focused on trading patterns it can only score fairly low for both KAA and evaluation. Make sure you answer the question that has been set, not the question you want to answer.

Notes from the mark scheme and report

• focus on trading patterns: trade creation and trade diversion, more trade within the bloc
• many wrote about the costs and benefits of joining a bloc instead and could not reach the top levels
• Level 4 needs real trading bloc examples

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question was generally answered more accurately than question 7 - in the sense that answers were on the whole more focused on the actual question set. Success in this question came from ensuring that clear, in-depth explanation of both KAA and evaluation points were made, with good context to back up answers. Japan was given as a context for the question, and many candidates made good use of this, often adding in their own knowledge of the Japanese economy. Other candidates talked about other countries they were familiar with, the most common being the UK. This is a high-quality, top-level answer that clearly fulfils all the criteria for both KAA Level 4 and evaluation Level 3. The focus is on the Japanese economy, and the candidate makes good use of the context provided to back up points. A diagram is also used to good effect to illustrate the point about crowding out leading to less aggregate demand. The candidate has also ensured that they have discussed issues to do with both the fiscal deficit and the national debt. Ensure you answer both parts of a question like this to reach the top level - e.g. in this case make sure both fiscal deficit and national debt are discussed. This answer scores 11/25 marks. It starts off ok although does take a while to get onto analysis rather than simply knowledge. However, after a while, the candidate appears to have forgotten what the question is asking and they begin to write about imports and exports. As such there is a limit to what mark this answer can achieve. Do not get the fiscal deficit confused with the current account deficit. Remember anything can be 'in deficit' - this word simply means that it's a negative number.

Notes from the mark scheme and report

• multiplier effects of the deficit, crowding out, debt interest costs, future austerity, bond yields, exchange rate
• evaluate who holds the debt (Japan) and use of the borrowing
• Level 4 needs a country example and both the deficit and the debt

Mark scheme, including the levels grid and indicative content

Examiner's comment

The best answers used the economic toolkit of theories and diagrams incorporated into rigorous analysis to score the higher levels. For microeconomic effects, effective answers often looked at the impact on the profits of firms providing healthy and unhealthy products, with the best responses backing this up with costs and revenues diagrams. There was also well-developed analysis of solving the market failure of externalities through the provision of information but confusion between the production and consumption negative externalities diagrams was a common error. Whilst some candidates effectively illustrated negative consumption externalities for a demerit good, this is beyond the specification and often included errors. It is important to note that candidates can bring in from outside the course and will be rewarded but this is not required to achieve the top level. For example, a positive consumption externality diagram could have been an effective way of analysing the impact of the information provided by the government. On the macroeconomics side the best answers ensured they focused on government spending on promoting healthy eating. This often meant going beyond the impact of the spending on aggregate demand but also on aggregate supply through a healthier workforce. Evaluation tended to focus on how effective the government scheme would be in the context of habitual behaviour by consumers and the implications for other objectives such as inflation and the fiscal deficit. Strong informed judgements were also provided that questioned whether the issue was really an information gap or the unaffordability of healthy food, with subsidies suggested. Most candidates provided an answer that was in context to healthy eating but far too many seemed to ignore the context of education. This is a rare good exemplar. Many candidates talked generically about subsidies and assumed it was really a question about increasing government spending. This has sustained development of arguments in context, and makes informed judgements. There is a common inaccuracy shown here, however, that is the assumption that AD is rising if education spending is rising. Clearly this is an assumption and should be considered carefully. The tendency is to make a summary at the end. What is needed, however, is an informed judgement. The difference is critical. A top level response had to engage with the full question, i.e. not just to focus on the likely effects of an increase in government spending, or an increase in government spending on education, but of an increase in government spending on education as to healthy eating. Many candidates were unable to do this and produced far more generic responses, for example, the impact of an increase in government spending on aggregate demand within the UK. Equally, some candidates wrote simply about the likely impacts of healthier eating on the economy; while this was no doubt closely related to the question, a sole focus on this made it very unlikely that candidates would be awarded a Level 4 score for KAA. Perhaps given that the data was more about unhealthy foods, many candidates who chose to write about the potential for correcting market failure focused on education reducing the external costs from the consumption of unhealthy foods, rather than increasing the external benefits from the consumption of healthy foods. While this was just as acceptable a line of argument, it was far easier for candidates to support their written analysis with an externality diagram if they focused on the external benefits in consumption of healthy food. As a diagram to show the external costs in consumption of a good or service in not on the specification, many candidates drew a diagram instead showing external costs in production, which did not match their written analysis and did not therefore add to their response. In terms of macroeconomic analysis, the weakest candidates often confused the government budget/fiscal balance with the trade or current account on the balance of payments balance. Finally, it would have been good to see some appreciation of the likely significance of the impacts. For example, the extent to which this would really increase the UK's labour productivity, make exports more internationally competitive etc. Many candidates presented this policy as a panacea for all of the UK's economic issues without really showing an understanding of issues of magnitude and significance. This scored 9/16 KAA and 5/9 Eval. The KAA is low L3 on micro and macro, and is a very generic answer. It focuses on subsidies rather than spending on education. Label diagrams and make sure you relate to them in your answer, fully. Don't write about G generically if the question is on education.

Notes from the mark scheme and report

• provision of information as intervention: positive consumption externality diagram (MSB above MPB), effects on healthy and HFSS food firms
• macro: G with multiplier shifts AD, healthier workforce shifts LRAS
• Level 4 needs micro and macro
• do not confuse the fiscal balance with the current account
• production externality diagrams were a common error

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was the slightly more popular essay on question 1. As with 1(d), candidates provided diagrams to help improve their analysis and there were a wide variety of diagrams that could be effective on this question to strengthen answers when integrated into valid and carefully explained chains of reasoning. Common microeconomic arguments included the impact on tax revenue and price/quantity for both healthy and unhealthy foods. There was again some confusion with the externality diagrams. Although many candidates correctly reproduced externalities diagram, this was very commonly shown on a negative production externalities diagram, which is not relevant to the context of the question. Healthy eating clearly implies it must be based on consumption, and it was difficult to see how a production diagram would add value to the answer, unless, perhaps, linked via the workforce. For macroeconomics, many candidates effectively used the extracts to develop arguments around inequality or focused on the use of tax revenue to improve UK macroeconomic performance. The best answers used an inward shift in SRAS in order to analyse implications such as inflation and reduced growth, although other logical arguments were accepted for other shifts. There was a lot of evidence of effective use of diagrams in this question including incidence of tax, cost and revenue and AS/AD. However, there was some common inaccuracy in the analysis of how the tax would be applied and the question was intended to be an application of an indirect tax, not a direct tax or tariff. Specific taxes (as in Extract C in Denmark) or ad valorem taxes (as with the UK's so called 'sugar tax') were both valid. This answer does have a good amount of context, but it is too focused on a particular type of tax and the AD arguments are tenuous. We ignored the rubbed out D+tax on the first diagram which still shows (the problem of using pencil is that it shows up well). As stated on 1(d), the best approach is to use the diagrams that candidates know well. Good responses used the tax diagram or a cost/revenue diagram to develop effective, top-level KAA microeconomic effects. Whilst a small minority of candidates could draw a negative consumption externality diagram with a tax, this was an overcomplicated and risky approach to scoring top marks, as shown here, and the first diagram was enough to take the micro to Level 4. The externality diagram did not add any marks on the micro side, being negative in production; the macro diagram is also taking the argument to Level 4. The best evaluation again used the context effectively. Candidates should practise reading the case studies under timed conditions to efficiently pick out key points and quotes that they can used in their answers, including for evaluation, as it really lifts their answers to the higher levels. Use of the Danish fat tax as an example of consumers switching to other unhealthy food could be used to make a case for government failure as an effective counter point. This data also allowed informed judgements about whether an indirect tax like this is really the best way forward. This response has been chosen to reflect the ongoing debate about negative externalities in consumption, that clearly can be used in this answer, but is not required for full marks. Certainly a diagram showing negative consumption externalities is neither expected nor required, although it would be one way to score marks if given. This is not advised as an approach, however, and there are much simpler and more effective ways to bring out analysis marks. Here are the concepts they need to know and the diagrams are the only time when they are narrowed down to consumption/production so we must presume that here we mean both types of externalities: 1.3.2 Externalities a) Distinction between private costs, external costs and social costs. b) Distinction between private benefits, external benefits and social benefits. The reason the diagram wasn’t credited is because the description in the text was about consumption and the diagram about production. If you use the negative in production then the two ideas are confused. It came across to the examiners as a confusion between to the two concepts (negative in consumption and negative in production) which the specification clearly states has to be learned. Negative in consumption has to be learned but not drawn so clearly we are saying that the mark scheme will not expect a diagram at this point. Often candidates learn or are taught more than the specification e.g. Nash equilibria, Rostow etc. The point we are making is that you do not have to know everything and there are diminishing returns in overteaching these four diagrams. A better option is a tax diagram or other diagrams such as positive in consumption of the healthy good, but in no way is anyone at an advantage if they have been taught things which are specifically not expected, and the point the senior examiners want to drive home is that you can teach what you will but the candidate cannot be marked down, ever, for not knowing something that someone in another centre has been taught as an extra.

Notes from the mark scheme and report

• incidence depends on PED (inelastic demand, consumer bears most)
• regressive (Extract B), Denmark tax abandoned after 15 months with cross-border shopping (Extract C)
• use a consumption, not production, externality diagram
• macro: inflation, SRAS, inequality, tax revenue
• Level 4 needs micro and macro

Mark scheme, including the levels grid and indicative content

Examiner's comment

43% chose 2(d) rather than 2(e). Although constraints on growth and development is in the macroeconomic side of the specification, there are clearly microeconomic issues in the country, such as labour market issues from emigration. As with all the synoptic essays in Paper 3 there is flexibility on what a candidate uses as a microeconomic or macroeconomic factor, but candidates should try to make this clear in the structure of their answer. For example, one candidate may deem primary product dependence a microeconomic factor linking it to volatility of prices (using demand and supply), whilst another places emphasis on it as a macroeconomic factor in terms of the structural development of the economy as a whole. Again, some candidates referred to access to finance in their answer and were therefore not rewarded for this. However, many candidates were able to explain one microeconomic and one macroeconomic factor, often drawing this directly from the stimulus material, such as brain drain / loss of FDI / higher interest rates etc. Evaluation was often focused on how these issues could be overcome in future, such as through government intervention in the long-run or improvements in the economy (such as the development of oil and gas fields). The best answers used this as a basis for an informed judgement on the future growth prospects of Mozambique. There were some very good responses to this question, particularly in terms of the likely macroeconomic factors which influenced Mozambique's growth and development. The best candidates tended to develop ideas of primary product dependency, savings gaps, or a lack of human capital/emigration here, although there were many other ways to answer this question. Candidates tended to find it more difficult to identify relevant microeconomic factors, although this was marked leniently, in that labour market issues, primary product price volatility etc. could be used as either micro or macroeconomic factors: they were marked as presented by the candidate. The two main issues with candidate responses here were: candidates wrote about policies which could be used to promote growth and development, rather than the factors which influenced these variables; and that candidates did not explicitly develop links to both growth and development in their responses. For a Level 4 score for KAA, candidates did need to link their chosen factors to both of these at least once. As for all responses to the 25-mark questions, candidates are too often just summarising/repeating their points in their conclusions, rather than making a reasoned judgement. Without this, candidates are able to achieve a Level 3 score for evaluation, but not to be awarded full marks. This answer is all about policies rather than factors, but it was still allowed and reaches Level 4. This answer is in the context of Mozambique, and there is judgement about the importance of education. Diagrams are used as part of the argument. You can get Level 4 by using just one micro and one macro factor, if both are valid. Fewer points done well and in context, with diagrams, makes a good strategy for 25-mark questions. High interest rates are allowed as an answer, as they do not relate to access to finance. We took a very generous approach to the points allowed, in general. The answer never gets above Level 3 as explanations are under-developed, and there is a lack of context. The analysis is weak but L3 overall awarded 10/16, and evaluation L2 mid (5/9) although there is an argument for low Level 2. Do not repeat points in the conclusion. Make a critical, supported judgement.

Notes from the mark scheme and report

• access to credit and banking is excluded from KAA
• Level 4 needs micro and macro factors and both growth and development
• emigration of skilled workers, primary product dependency, drought, falling FDI, high interest rates and inflation (Figure 2), depreciating metical
• micro factors were harder to identify

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Answers must be focused on the effects of inflation and not the causes. The Phillips Curve can be problematic and frequently it added nothing to analysis and often detracted from or contradicted what had been written, for example where candidates argued that inflation causes a fall in AD, an odd approach in itself. Also candidates must ensure that they have strong understanding of the relationship between domestic inflation and export prices. Many candidates confused a fall of the the internal value of a currency (a loss of domestic purchasing power) with a fall in the external value of a currency (a depreciation). In terms of likely microeconomic effects, most strong candidates discussed the likely impact on firms of either increased costs of production (from either higher wage demands from employees, or higher raw material prices) or lower demand from overseas. This was mostly done well, although candidates often wrote about an increase in the cost of raw materials but then illustrated an increase in fixed - rather than variable - costs. The most successful line of reasoning as to a likely macroeconomic effect of high inflation tended to be through reduced international competitiveness and hence the impact on an economy's trade balance or its current account on the balance of payments. As ever, some weaker candidates confused the latter with the government fiscal/budget balance. The most important thing here was for candidates to present a valid chain of reasoning within their arguments; simple assertions that high inflation would cause the currency to depreciate, or unemployment to fall etc., without any explanation of these effects were awarded limited marks (particularly as candidates who asserted the former often then went on to argue that the main effect of this would be increased international competitiveness for the economy experiencing high inflation). As the question was about a range of African economies, we were looking for application/reference to more than just one country in candidates' responses in order for them to receive the highest marks. This could either come from the data or from their own knowledge. This answer is light on context, and there is a huge issue with the Marshall-Lerner argument in that there is no link to the exchange rate. The answer does reach L4 twice, and the mistakes are ignored (positive marking). The evaluation is generic or under-developed, and this is the area in which the answer should be worked on to improve L2e. 14KAA + 5eval. Links to diagrams must be made explicit and used in the argument. Otherwise the examiner will tend to find it hard to credit the diagram. Some very poor answers on this essay were read, and the mean on the essay was two raw marks lower than the other three 25-mark questions. A surprising number of candidates could not form coherent chains of reasoning on the effects of high inflation. Many candidates confused inflation and interest rates, assumed that inflation caused unemployment or AD to fall (without any valid chain of reasoning), and many failed to contextualise answers to African countries. This is typical of an E-grade response. Points are generic, and the analysis under-developed. Terms such as competitiveness and unemployment are not considered carefully, and connections with inflation are just assumed. Use as much economic analysis as possible in your reasoning. Never make logical leaps. Section A Many candidates forgot to state whether they have chosen (d) or (e) in the essay. This means the essays are marked in a separate pool, but has no significance in terms of the mark scored. Teachers can reassure their candidates that they will not be affected by this. Poor handwriting, poor timing, and poor judgements about people or countries were once again a major issue for candidates. This type of answer was worryingly common. Be clear, pace yourself, and never make assumptions. Section B Many candidates forgot to state whether they have chosen (d) or (e) in the essay. This means the essays are marked in a separate pool, but has no significance in terms of the mark scored. Teachers can reassure their candidates that they will not be affected by this. Running out of time, many candidates resort to making many under-developed points. It is better to use a few points or just two, one micro and one macro. Avoid listing points. The effects of high inflation should be a well-rehearsed area for someone who has studied economics for two years. Save 30 minutes for the essays.

Notes from the mark scheme and report

• effects, not causes, of inflation
• fixed incomes and savers lose, firms' costs rise, competitiveness and exports fall
• do not confuse falling purchasing power with depreciation
• Level 4 needs context of African countries
• report: "Some very poor answers on this essay were read, and the mean on the essay was two raw marks lower than the other three 25-mark questions"

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

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)

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate government policies to increase the employment rate in the UK. Many candidates were able to effectively answer this question and provided arguments on spending on education and training, healthcare and infrastructure. They linked this to increasing employment rate using an AD/AS diagram in context of their explanations. One of the key issues was that a few candidates discussed migration policies which the question asks them not to refer to. As such they did not obtain any marks for this policy. This is a more able response which clearly fits the criteria for the top levels of both KAA and Evaluation. There is a thorough explanation of government policies that could be used to increase the employment rate. There is a clear explanation of improving access to apprenticeship schemes, reducing national minimum wage and reducing benefits. This is supported by well-developed evaluative arguments about information gaps and inequality. This response only fits the criteria for Level 2 of both KAA and Evaluation. There is limited explanation of government policies that could be used to increase the employment rate. There is only a two-stage chain of reasoning of the explanation of providing cheaper specialist education, improving infrastructure and reducing corporation tax. This is supported by four brief evaluative comments with a partially developed chain of reasoning. Where relevant, always try to include diagrams to aid the argument you are making. Make sure you refer to these as part of your written answer.

Notes from the mark scheme and report

• migration policies earn nothing
• education and training, apprenticeships, benefit reforms, infrastructure, fiscal stimulus with AD/AS diagrams
• evaluate with cost, time lags, information gaps, inequality

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question required candidates to evaluate the likely impact of high inflation on UK government’s macroeconomic objectives. Although candidates were able to understand the impact of high inflation, they were not able to link it back to the macroeconomic objectives. Some candidates were not able to recall what these government objectives were and hence did not access higher levels. Those who were able to effectively answer this question explained the impact on current account deficit and economic growth in depth, and in context of recent UK inflation trends. This response achieves Level 3 for both KAA and Evaluation. The candidate starts off with an explanation of the impact on economic growth followed by a brief evaluation on the magnitude of inflation. They discuss the impact on fixed income groups/standard of living and evaluates their argument with consideration of time period. The final analysis point discusses the impact on the current account deficit, but there are some errors. The response ends with two well-developed evaluative comments, which take the candidates marks to Level 3. This response starts with a weak opening paragraph. The candidate then moves on to explain the impact on the current account, and this is well developed. It is supported by only one developed evaluative comment on relative inflation rates. There is no balance to the analysis and the evaluation does not consider the broad elements of the question. The answer therefore gets top of Level 2 for KAA and Evaluation. Do not contradict yourself between different points without a clear justification of the point you are making. Include logical and coherent chains of reasoning within your point rather than briefly explaining them.

Notes from the mark scheme and report

• link high inflation to each objective (growth, unemployment, current account, budget, equality)
• report: candidates "were not able to link it back to the macroeconomic objectives" and some could not recall them

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, including the levels grid and indicative content

Examiner's comment

The key word in this question is effects. Candidates are asked to evaluate these, NOT to discuss whether the £23 billion of spending is a good idea or not. This was the main issue for candidates when answering this question – not answering the question they had been set. What was required for success in this question was effects for KAA – these could be either positive or negative. For evaluation candidates should have been critiquing these effects and whether they are significant or not e.g. discussing whether £23 billion is a lot of money or not. Having said that, there were a lot of good answers to this question and candidates generally found it accessible and frequently referred to the effect on aggregate demand and/or aggregate supply of this government spending. This is a good, solid answer to the question which presents clear effects on the economy of the increase in government expenditure and does an equally good job of evaluating them. Overall this answer achieves top Level 3 for KAA and top Level 2 for evaluation. It is just slightly lacking the depth and context to reach the very top levels but nonetheless is a good answer. This answer has many relevant effects of the UK government expenditure. However, this candidate has failed to develop their answers. Hence this answer fits squarely into the Level 2 description for KAA – 'a narrow response or superficial, two stage chains of reasoning only'. In terms of evaluation there is only a limited bit right at the end which achieves Level 1. Less is more. Focus on providing answers that are fully developed with as many chains of reasoning as possible. This will allow you to achieve much higher marks than simply writing down as many different points as you can think of.

Notes from the mark scheme and report

• evaluate the effects (AD and multiplier, productivity and LRAS, exports), not whether the spending is a good idea
• evaluate size of £23 billion over five years, time lags, government efficiency in allocating resources
• a diagram may be used but is not required

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question was accessible to the vast majority of candidates. In particular most candidates picked up on the impact of a depreciation on both the current account and, consequently, on aggregate demand. Strong candidates drew an AD/AS diagram to clearly illustrate their point. Common evaluation points centred on the J-curve and the Marshall-Lerner condition, although some candidates were better able to explain the logic behind these than others. The best answers offered some context to their answers and moved beyond simply theoretical explanations to relate their answers to the current situation of the UK economy, e.g. record low unemployment or the uncertainties surrounding the Brexit negotiations. This answer largely fails to answer the question and therefore is unable to access many of the marks. The candidate has correctly identified the impact of a depreciation on demand for imports and exports. After that the answer drifts off and discusses Brexit, investment, and other issues. There is no logical link from a depreciation of the currency to these impacts so unfortunately the candidate is only going to achieve a low mark of low Level 2 for KAA and Level 1 for evaluation. Always look back at the question whilst you are answering it. In the pressure of an exam, it's easy to forget the precise question asked and start going off in a different direction. This is a high-quality answer to this question that achieves top levels on both KAA and evaluation. The candidate starts with an explanation of the impact on AD, via imports and exports. This is clearly explained both in words and a diagram. It is also convincingly evaluated regarding the elasticity of demand for imports and exports. The answer continues well, discussing in detail other impacts. What is also good here is the candidate has included some context in their answer, for example declining power of trade unions and the ongoing uncertainty in the UK's Brexit negotiations. This was used to particularly good effect at the end of the candidates' answer in their judgement. Remember a judgement is expected to get the very top marks for evaluation on the 25-mark question.

Notes from the mark scheme and report

• depreciation makes exports cheaper and imports dearer, raising net trade and AD
• evaluate with Marshall-Lerner and J curve, imported inflation, temporary vs permanent fall, other exchange rates and the EU
• the question is 'to what extent'
• best answers related it to UK context e.g. low unemployment, Brexit uncertainty

Mark scheme, including the levels grid and indicative content

Examiner's comment

It is important to remember that synoptic essays are broad-ranging and may or may not be focused on economic causes or effects, as has been shown in both Paper 3's since the beginning of the examination series. Preparation of questions with a focus on macroeconomic and microeconomic factors would be good practice; many candidates could not reach the highest level because of the omission of either a convincing micro or macro element in the answer. Answers focused on factors that could explain both microeconomic and macroeconomic factors that would influence decisions. It is worth noting that some of these factors could be considered as either microeconomic or macroeconomic, and if there is doubt, for example in the area of labour markets, the examiner will allow a broader understanding rather than a narrower one. Common themes identified by candidates included the level of demand, competition and costs on the microeconomic side and economic growth, protectionism and taxation on the macroeconomic side. Other effective answers involved sunk costs of advertising and transfer pricing which was heavily indicated in the Extracts. One issue with this question was answers evaluating the economic effects of Starbucks expanding rather than the factors influencing this decision of whether to expand within or into a particular country. Evaluation was often done very well, and almost all answers made some attempt at this if they had left themselves enough time. A very effective answer was to talk about the level of GDP either in the country or globally, and in some cases excellent use was made of Figure 2 showing the fall in the number of shops opened by Starbucks in the years following the 2008 crisis, or the doubling of shops in China to 5000 by 2021, accompanied by own knowledge about growth rates currently experienced in China. Many answers came across as a list of factors. The main problem in this essay was the repeated use of chains of reasoning beyond the context given, often without paragraphs or other structuring, so that the end point of an argument was often very questionable having started from an effective premise at the outset. A surprising number of candidates did not use diagrammatic analysis, and some did not sustain their use of the context given. This starts at Level 1 but then becomes a consistent Level 2. It reaches the top end of Level 2 but only through implicitly recognising the context of a service industry in strong competition with other similar stores. 8/16 KAA. Zero evaluation. Use the context explicitly at all times in your analysis. Fewer well developed points are more likely to score well than a list of relevant 'possibilities'. This answer tries a range of micro and macro approaches and reaches Level 4 on two occasions. Evaluation does link to the points being made. Level 4 15/16 KAA. Level 3 evaluation – just makes Level 3, therefore 7/9 Eval. = 22/25. Use diagrams and data to support your response. Evaluation must try to link to your points made.

Notes from the mark scheme and report

• factors influencing the decision to expand (demand, costs, barriers to entry, corporation tax and transfer pricing, growth and incomes), not the effects of Starbucks expanding
• both micro and macro factors needed for the top level
• use Figure 2 (fewer openings after 2008, China expansion)

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

1(e) was very popular (ratio of almost 2:1 over 1(d)) but there is a huge logical step between a micro change in demand at branded coffee shops to the macro effects (AS, Balance of Payments etc.) – many answers were, however, completely unconvincing in the link between the micro concept of demand and the macro impact. Some consideration of the issues before starting the answers is advised to candidates, as some links were much easier to make, for example those based on the transfer pricing of Starbucks described in the extracts, and the likely impact on IPD in the current account. Many answers were able to explain the effects on firms, with the best answers using monopoly diagrams and knock-on effects (e.g. on labour market, dynamic efficiency) in order to gain the top level. A very effective approach was to discuss the likely cross elasticity of demand with the demand for disposable or reusable cups, and with other non-coffee products such as high calorie cakes and snacks with the resultant externalities. It was a way to develop answers into the long-term effects of government spending on healthcare, and therefore a macro argument could be drawn from micro tools, which was a clever approach to this question where it was clearly challenging for many candidates to bring in valid macro points. The best answers could look at macroeconomic effects too, on what is a microeconomic topic, by linking coffee to the macroeconomic objectives, such as employment, growth and demand-pull inflation and using AD/AS analysis. These answers would often judge that these were much smaller effects on the wider economy, with the branded coffee shop market being only one microeconomic sector. Although the mark scheme clearly allowed an increase in AD as an impact of increased microeconomic demand, and many candidates did effectively argue this, only the stronger answers highlighted the fact that branded coffee prices would have a relatively small input into CPI inflation and have a very small contribution to consumption and this AD. One of the most effective micro approaches was to discuss the externalities approach, developing the micro analysis in 1(c), with arguments developing the material outlined in the data about the Freiberg cup or the problem that only 1 in 400 cups is recycled in the UK. The weaving of data into an argument is the preferred approach. The main problem candidates had was trying to develop macro points using micro analysis. Some of their explanations were tenuous and could be better supported with diagrams and clear use of the context. Diagrams if drawn were not always integrated into the analysis. An effective approach often used was a careful discussion of labour markets, either as a derived demand or in terms of marginal propensity to consume. These were especially effective when used with a diagram showing a change in variable or fixed costs (preferably explicitly linked to whether the costs were seen as fixed or variable) and these answers were sometimes very effectively linked to average and disposable incomes in the countries into which Starbucks might choose to expand. For example, low labour costs might be a good reason to expand, but given that the product cannot be exported, the sales will rely on high incomes. This essay demonstrates a typical response which failed to answer the question and showed real confusion between micro and macro – for example with D on a diagram with LRAS, and many other fundamental errors. There are lots of effects and no context. The evaluation attempt was not regarded by the committee as a valid approach. KAA 7/16 (Level 2) was awarded as there are three instances of Level 2 work in the effects of increased demand. Ev 0/9. 7/25. Build your answer around the data provided in the extracts and figures. This is a wide ranging and carefully reasoned answer. It is fully applied and the diagrams are relevant. There are clear Level 4 passages, with carefully argued chains of reasoning, fully in context. There is a sound judgement after each piece of KAA, and a judgement at the end to consider the overall impact. 25/25 is clearly deserved, even though the answer is not over-long or complex. Simple is good.

Notes from the mark scheme and report

• the step from a micro demand rise to macro effects must be argued convincingly (small share of AD and CPI, transfer pricing and the current account)
• externalities from disposable cups and labour market effects work well
• avoid putting D on an LRAS diagram

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was the less popular of the two essays, in a ratio of 2:3. Many answers failed to access the highest level due to a lack of focus on volatility. The best answers did this by explaining how both microeconomic and macroeconomic effects could vary over time (e.g., growth varying as coal prices change) or linking to the issue of instability of prices leading to issues of underinvestment and market failure. Answers were able to evaluate the problems Indonesia faced as a result of volatile prices, with discussion of buffer stock schemes, futures contracts and comparative advantage adding theoretical content to evaluation points. Some did discuss Prebisch-Singer theory, the problems of sectoral imbalance and primary product dependency, and there were extended discussions by some candidates of the effect on the rupiah and the wider effect that had on exports (Dutch Disease, although the term itself is not required for this explanation). This response contains some good economics about primary product dependency but focuses on price falls rather than volatility. The fall in AD is typical of a response that looks at commodity price falls and not price volatility. All the relevant economic models are used, but they are not applied to the question set. KAA 10/16 and Level 1 Eval 3/9. Answer the question set, not a pre-rehearsed question. This response is full of data, theory and clear development of economic analysis. Although it seems that the answer is going to focus on causes not effects of volatility, it is soon clear that the correct focus is there, and the diagram clearly illustrates the impact of low PED on revenues. This is then clearly explained in the text ('uncertain incomes') and the data on coal prices is central to the answer. The Lewis model is used effectively and there are clear micro and macro points.

Notes from the mark scheme and report

• focus on volatility, not just the fall in coal prices
• low PED and PES make producer revenue unstable
• Level 4 needs Indonesia's context
• evaluate with buffer stocks, futures contracts, fiscal expansion and GDP holding up (Figures 4 and 5)

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

The case study gave several supply side policies to evaluate the economic effects of, with discussion of education/healthcare, deregulation and opening up to FDI commonly used. Many candidates were then able to apply this knowledge to theoretical models, such as AD/AS, demand and supply and monopoly diagrams in order to provide in depth analysis in the context of Indonesia. There were a surprising number of answers that shifted AD rather than LRAS. Whilst the effects of supply side policies can clearly have side effects on AD, the more coherent arguments focused on LRAS for the macroeconomic effects given. Rises in AD while of course valid (and on the mark scheme) were unlikely to be convincing when developed into a rise in inflation (given the increase in AS), and some candidates then went on to discuss the costs of inflation, including menu costs, which was highly ineffectual in the context given. Candidates had clearly learned some downsides of supply side policies, but again the best answers would put these in the context of Indonesia (e.g. the fiscal constraint they face). Extract D clearly spelt out supply side policies (easing regulations, tax incentives and SEZs) and these formed the ideal basis for an essay. In evaluation, one of the most effective answers was to consider the social and fiscal implications of these specific measures. This essay struggles at first to make it into Level 4 as the focus seems to be on the AD shift. However the chains of reasoning are logical, and clearly an AD shift is legitimate for interventionist supply side policies if government revenue remains constant. The AD point needs clearer links, as does the FDI discussion. However the microeconomic argument is better and it is supported by a helpful diagram (Level 4). There is good context but the evaluation tails off on the micro section – time lags are underdeveloped and lose the connection with the thrust of the argument, and it feels as if they are a standard, rehearsed evaluation point that does not convince. The final paragraph contains convincing judgement and is credited with a L3+. The 25-mark essay is an opportunity to show off two years' work in 25-30 minutes of developed analysis. This was a very open question, with the chance to use diagrams and tools to illustrate much of the course. This exemplar is very stilted and limited in its development. This essay never gets above Level 2 KAA. Although it is applied to the data, the chains of reasoning are not any more advanced than the two-stage 'this leads to that' style of argument. The evaluation points are unsupported and undeveloped so cannot rise above Level 1. 7/16 KAA. 2/9 Eval. = 9/25. Start off using a model if you can. Here the obvious place to start is AD/AS with a shift in AS showing a supply side policy. Many candidates then followed this with a possible shift in AD. On the micro side, there is much to be built upon the deregulation described in the passage, and there are the effects on farmers described in the passage. Use the passage to get your argument started. Section A This section refers to the cache that held scripts where the candidate did not indicate whether (d) or (e) was chosen. These questions were treated in exactly the same way as any other essays. Section B This section refers to the cache that held scripts where the candidate did not indicate whether (d) or (e) was chosen. These questions were treated in exactly the same way as any other essays.

Notes from the mark scheme and report

• shift LRAS for the macro effects, not just AD (then arguing demand-pull inflation is weak)
• micro effects of deregulation, tax incentives and special economic zones on firms' costs and competition
• evaluate in Indonesia's context, e.g. the 3% fiscal deficit limit and inflexible labour market

Mark scheme, including the levels grid and indicative content

Examiner's comment

The question required candidates to evaluate the possible advantages of a free market approach to cigarette consumption. The question was significantly less popular than 6(g) and had more polarised responses. Candidates were expected to draw on their own understanding of a free market approach and were aided by the data in Extract B. Top Level 3 or 4 responses provided well-structured balanced responses with often some evidence of planning. They made effective use of the data in Extract B in particular and applied free market theory to non-governmental solutions using market forces, typically covering signals, rationing and incentives. Diagrammatic analysis was not required but when used was accurate and well explained with a solid chain of reasoning. More able answers referred to the substitution effect happening between tobacco and e-cigarettes and made references to utility. Hardly any candidates made a direct reference to Adam Smith or Hayek but their ideas were often implicit in the candidates writing and this was to be expected and awarded a high level. Level 4 answers often drew, in a sophisticated manner, from the broad Theme 1 specification to provide logical chains of reasoning. A key differentiator was the quality of knowledge and understanding of free market approaches, often carefully applied through logical and clear chains of reasoning. Level 2 answers tended to use basic and generic supply and demand analysis or changed the focus of the question to government intervention. Evaluation tended to concentrate on information gaps or the role of government to prevent consumers being exploited and protecting third parties against passive smoking but could often be generic or common-sensical resulting in Level 1 evaluation. Level 2+ evaluation was placed in context and developed with a good chain of reasoning. Best uses of substantiated judgement were sustained throughout in candidates’ responses as they made effective use of positive economics to make judgement calls answering the question by weighing up the free market approach to come to a clear answer to the question set. 20 out of 20 marks awarded. The candidate started by defining free market and after making a confused comment about ‘publicly owned’ provided an accurate definition which was also implicit throughout the essay. The first advantage they focused on was the incentive effect for firms and consumers. The paragraph was well-structured, demonstrating a logical and coherent chain of reasoning in context to a Level 4 standard. The evaluation provided a case for government intervention against the free market which was valid and in context. The second advantage of having a free market was it makes it easier for consumers to switch; there was precise use of theory and focus on context fully integrated to earn top Level 4 (14 KAA). Evaluation was then linked to the need to regulate to prevent consumers switching to unhealthy products and the need to quit to a Level 3 evaluation. The conclusion locks in Level 3 evaluation as it offers a substantiated judgement. By carefully structuring your response it is easier to then offer a sophisticated approach to developing a coherent argument in depth and in context. 8 out of 20 marks awarded. The candidate started with a clear definition and moved on to the first advantage of considering the incentives to firms. This was not explained carefully or in context but there was elements of knowledge and understanding to achieve low Level 2. They then go on to attempt to evaluate by saying the lower cost was not assessed on to consumers but the reason for this was not explained nor was there context, thus achieving a low Level 1 EV. The second advantage provided was consumer sovereignty but this seemed to build on the incentive argument for firms already covered although there was better context here, the response achieved a Level 2 KAA. The attempt to evaluate did not answer the question so was not awarded. Overall they achieved L2 KAA (6 marks) plus Level 1 evaluation (2 EV) = 8/20. The structure is sound but it is essential to use theory and data to ensure you carefully explain it and link your evaluation back to the question.

Notes from the mark scheme and report

• price mechanism (signalling, rationing, incentive), consumer sovereignty and utility, profit motive and competition from e-cigarettes (Extract B), Smith and Hayek
• evaluate with information gaps, externalities, addiction, market power
• far less popular than 6(g) with polarised answers

Mark scheme, including the levels grid and indicative content

Examiner's comment

The question invited candidates to evaluate the impact of government intervention in the cigarette market. This was by far the most popular essay choice and the majority of candidates were able to explain policies and evaluate to a good level. There was much evidence in the data which gave candidates an opportunity to analyse and evaluate possible types of government intervention. Most frequently offered answers were taxation (although often not specified what tax), subsidies (whether of information or for e-cigarettes) and minimum pricing. The most able candidates explained the impact of taxing cigarettes and in most cases moved on to discuss the effects of a minimum price making effective use of mostly Extract A enabling them to access Level 3 and above. Some candidates considered bans in public spaces or subsiding e-cigarettes or nicotine patches. High Level awarding was available for those able to structure their answer and make effective use of the information and accurate well-labelled diagrams where appropriate. Tax and minimum price were usually applied diagrammatically and explained linking to effects on consumption, producer and consumer tax burden, surpluses and effects to consumers. A number of candidates confused minimum and maximum prices and also confused buffer stocks. There was clear differentiation in approach from basic diagrams showing a shift inwards in supply or a minimum price without the surplus identified to fully labelled and annotated diagrams. More candidates would benefit from fully explaining their diagrams. Often candidates illustrated an exkternal cost diagram but did not always succeed in linking it to the question set. Evaluation was often critical of government intervention as ineffective given the price elasticity of demand in the short run or considered it as more effective in the long run if they had already used price inelasticity as part of their analysis typically on taxation. The other main methods of evaluation was considering the unintended consequences of encouraging the hidden economy and missing information on external costs to accurately impose a socially optimum tax. Top level evaluation made effective use of data discussing causes of government failure. Often evaluation was very narrowly focused on unintended consequences focusing on smuggling and thereby not enabling candidates to access Level 3e. Effective sustained judgement balanced government failure against the need for further research and reforms in government intervention and attempted to use positive economics to make the judgement call. 20 out of 20 marks awarded. The candidate started by defining government intervention and decided to focus on the main form of intervention in the cigarette market, ad valorem tax. This was a valid approach as the question did not ask for different methods. The first impact they focused on was internalising the negative externality. The paragraph was well- structured, demonstrating a logical and coherent chain of reasoning in context to a Level 4 standard. The diagram was to a Level 2 standard as it would have been good to see the tax incidence correctly labelled, consideration of the burden and integrated into the answer. The evaluation though does link back to the effectiveness of the tax in internalising the externality in context to a Level 3 evaluation standard. The second impact considered was the use of the tax revenue being hypothecated to subsidise e-cigarettes and an educational campaign; there was precise use of theory and focus in context fully integrated to earn top Level 4 (14 KAA). Evaluation was then linked to the questioning of how much tax revenue would be raised due to the hidden economy and that the negative externalities could be larger due to unintended consequences of government failure (Level 3 EV). The conclusion locked in Level 3 evaluation as it offered a substantiated judgement focused on the effectiveness of the tax depends on how much tax revenue was raised. By linking together precisely and coherently different concepts in context you are more likely to access top level marks in KAA and EV; this candidate exemplifies this. 9 out of 20 marks awarded. After defining government intervention the first impact considered was a basic analysis of supply shifting left and not in context, achieving Level 2 KAA. This was then evaluated well in considering how it could lead to smuggling and whilst it may access low Level 3 evaluation it lacked balance. Another government measure considered was a minimum price but the impact of reducing consumption was not integrated with the incomplete diagram, again achieving Level 2 KAA. Unfortunately the evaluation that then followed repeated the earlier point about smuggling so couldn’t be awarded and became confused at the top of the last page. The conclusion mainly repeated earlier points but there was some application in considering cancer to possibly obtain Level 1. Overall the response achieved Level 2KAA and Level 3Ev – NB (Not Balanced) resulting in 5 & 4e = 9/20. It is important you focus on the key part of the question, in this case the impact of government intervention rather than describing government policies. Ensure your diagrams are carefully labelled and integrated fully into your answers. Finally to avoid repetition a rough plan at the start can help.

Notes from the mark scheme and report

• indirect tax, minimum price, subsidised substitutes, information, regulation and bans with diagrams linked to the negative externality
• evaluate with inelastic demand (PED below 1), smuggling, information gaps on e-cigarettes, government failure
• some confused minimum and maximum prices

Mark scheme, including the levels grid and indicative content

Examiner's comment

This should be a straightforward question, with candidates simply needing to explain supply-side policies to improve productivity. Again candidates needed to ensure they answered the question being asked, as there are quite a few answers where the focus was on 'policies'. Candidates hadn't stopped to consider what types of policies would be suitable as a means to improve productivity. The other key issue with any question about productivity is that candidates too often confuse it with production – the aim here isn't to specifically produce more, it is to produce more efficiently. This answer starts by briefly explaining how unemployment will grow because of economic growth but there is definitely room for a more detailed explanation of this as a benefit of economic growth. The candidate then goes on to suggest that inflation is a downside of this. And here the answer gets a little confusing as they now immediately follow this up by talking about how economic growth will lead to less inflation and all the benefits of this. They are referring to economic growth in the form of increasing aggregate supply, but this is not very clear from what they have written. This is developed further with a link to less inflation making the UK more competitive. Overall there is some good economics in this answer which is accurate and does address the broad elements of the question. However, it is somewhat confusing to understand and there is significant room for more detailed explanation of the points being made. This is therefore KAA Level 3 and evaluation Level 2. Try to make sure you don't contradict yourself between different points without a clear justification of the point you are making. This is a more able response which clearly fits the criteria for the top levels of both KAA and evaluation. There is a thorough explanation of how lower unemployment occurs as a result of rising GDP, along with an AD/AS diagram to illustrate the point. There is also a clear explanation of why this is a benefit with reference to rising living standards. This is followed by a well-developed evaluative argument about the problem of rising inflation and the resultant impact on the current account deficit. Their second point is similarly well-argued and evaluated, focusing this time on the government's finances and whether they will improve or not. Make sure your answers are fully related back to the question – in this case make sure you explain why/how it's a benefit/downside of economic growth, don't just state that it is.

Notes from the mark scheme and report

• benefits: living standards, employment, tax revenue, profits and investment, LRAS growth lowering inflation
• Level 4 needs explicit reference to the 'concerns' (current account deficit, low export growth, household debt)
• evaluate with costs of growth

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question was significantly less popular than 6(f). Despite that the candidates who did answer it were perfectly capable of producing high quality answers. Candidates who achieved highly on this question developed their answers clearly and with high quality chains of reasoning in both their KAA and evaluation. The very best answers included a 'substantiated judgement'. Many good answers also integrated AD/AS diagrams into their arguments to further illustrate and explain the point they were making. As a broad question there are a wide variety of arguments that can be made on both sides of the question. This is a more able response which achieves top levels for both KAA and evaluation (Levels 4 and 3 respectively). The candidate starts off with a very long and detailed explanation of why a further recession is inevitable, encompassing net trade, unemployment, and the government's finances. This is further enhanced by an AD/AS diagram. This argument is clearly and convincingly countered in the following evaluation point. Both of these points have good context to back them up. The next KAA point is not so good and does have a few issues, but the broad thrust of the argument is very sound. This means in terms of an overall mark we would be looking at the lower half of the Level 4 marks. It is also clearly evaluated. Where relevant, always try to include diagrams to aid the argument you are making. Make sure you refer to these as part of your written answer. This candidate has made a reasonable attempt to answer the question but has failed to fully develop their answer and as such is unable to access the higher levels of the mark scheme. They correctly explain the problem of a current account deficit, although it is slightly simplistic and lacks any context. They then evaluate by suggesting that maybe the government will intervene and solve the problem – a somewhat implausible and simple argument. The next point correctly identifies the problem of rising household debt but seems somewhat confused in terms of what the impact of this would be, focusing on it somehow leading to more debt both for consumers and firms. Following on from this is some more relatively straightforward evaluation. Overall this answer is a low Level 3 for KAA (mainly thanks to the first part) and a low Level 2 for the evaluation. You have been given a case study to help you – make the most of it to ensure your answer is applied to the UK economy.

Notes from the mark scheme and report

• for: consumption-led growth (66% of AD), rising household debt, weak exports and the missed £1 trillion target
• against: strong growth, falling unemployment, policy responses
• one side is KAA and the other evaluation
• best answers reach a substantiated judgement

Mark scheme, including the levels grid and indicative content

Examiner's comment

Responses generally focused on a number of relevant microeconomic issues effectively and broke down the various impacts on different agents to provide effective analysis of a range of microeconomic effects. High scoring responses were well structured and at times provided clear evidence of planning. They made effective use of Theme 1 and Theme 3 theory, going beyond the mostly Theme 1 theory of lower scoring candidates. Diagrammatic analysis is not required but when done well was accurate, well labelled and well explained with a solid chain of reasoning. Candidates at the top end used supply and demand diagrams to consider the tax burden or welfare effects and many candidates used theory of the firm diagrams eloquently to explore the cost and revenue implications. In addition candidates who recognised a negative consumption externality and were able to provide a correct diagram provided well developed responses. This answer achieves a mark of 22/25. Whilst still marked as a level based response the analysis marks are much more heavily weighted in the essays compared to other questions. The candidates diagram is to a Level 3+ standard with the shift in tax being ‘ad valorem’ and careful labelling which is then integrated in context to achieve Level 4. The welfare analysis of the tax revenue raised is also impressive. They have also included a number of good evaluative points, including unintended consequences, for example. Overall this answer secures Level 4 KAA (15 marks) and Level 3 evaluation (7 marks). To achieve Level 4 analysis candidates need to offer a depth of thinking which is best secured with two, or three, major points rather than attempting to do so through a wide range of points. This answer achieves a mark of 14/25. In this answer the candidate has used a diagram but it has basic analysis to a Level 2 standard in the written explanation and the evaluation is limited to considering the rice elasticity of demand (Level 2e). The effect of the tax on internalising the external cost, with a benefit of doubt given on deforestation, just secures Level 3 but the evaluation here referring to unintended consequences lacks balance (Level 1e). Overall therefore this answer is a low level 2 for KAA (9 marks) and a mid level 2 for evaluation (5e). Remember if you are going to use a diagram try to ensure it is fully labelled and used in context. Evaluation also needs to be well balanced to offer an alternative viewpoint to the one already made.

Notes from the mark scheme and report

• ad valorem tax shifts supply by a widening gap
• incidence depends on PED
• loss of consumer and producer surplus
• internalises the external cost of sugary drinks
• effects on firms' costs and profits (Theme 3 diagrams)
• evaluate with inelastic demand, regressive effect, substitutes and unintended consequences
• two or three developed points beat a wide list

Mark scheme, including the levels grid and indicative content

Examiner's comment

Diagrams for this were clear as was the concept but beyond the argument that shareholders expect MC=MR because they want dividends and managers want MR=0 because performance bonuses are often linked to turnover, the candidates struggled to think of reasons. Stronger candidates examined the idea that MR=MC was quite hard to calculate and the shareholders wouldn’t really have a clue given their proximity to the daily operation and inside workings of a business. Effective evaluation often went on to be critical of revenue maximisation along the lines indicated in the mark scheme as well as the principal-agent problem. There was clear differentiation in approach from confused diagrams to fully labelled and annotated diagrams. Candidates struggled to develop chains of reasoning which explained why one objective might be more suitable for firms in a specific industry. The lack of effective application to an industry led to a number of responses failing to develop arguments and to build on a technical understanding of the conditions for the two different objectives. This answer achieves a mark of 20/25. This answer focuses primarily on the theoretical arguments to an advanced level. However there needs to be a consistent focus on an industry of choice and this answer was too focussed on ‘Walmart’ in early parts and then later on it focuses on ‘supermarkets’ but not consistently; hence top level 3 KAA (12) plus L3e (8e). An industry focus is key to answering this question. Remember to ensure you answer the question in context i.e. an industry of your choice. This answer achieves a mark of 4/25. The candidate correctly alters the chosen question number. The crossed out work clearly took up some time and the candidate would have been in a better position if they had planned out possible answers and came to a decision before they started their write up. For some candidates it might be effective to briefly look at the essay options at the start of the exam and to consider possible planned approaches before making your decision.

Notes from the mark scheme and report

• revenue max where MR = 0, profit max where MC = MR (diagram may be used)
• principal-agent problem: managers' bonuses linked to sales revenue
• MC and MR hard to know in practice
• report: candidates struggled to give reasons and to apply consistently to one industry of choice

Mark scheme, including the levels grid and indicative content

Examiner's comment

This question was the more popular of the two essay questions. Candidates are asked to evaluate the effects of an increase in protectionism on the economy of a developing country of their choice. One point to note here is that this question asks specifically for an evaluation of the effects. This question is not asking what the benefits and downsides of protectionism are. This is where many candidates struggled with their evaluation points. As always, it is important to read the question carefully and make sure you are precisely answering what you have been asked. Many candidates drew a tariff diagram and used this to help them explain the effects of this method of protectionism. It is also important to note that candidates could answer this question either from the point of view of a developing country imposing protectionist policies on imports or on a developing country having protectionist policies placed on its exports by other countries. 9EC0_02_Q07_1291601_0429_003750899_030.png This answer starts off rather vague with some attempts to make points which are partly relevant to the question. It gets better when we have a tariff diagram and relevant explanation of the effects of a tariff, using the diagram to aid the analysis. There are some errors in this answer, for example the discussion about elasticity. The candidate doesn't fully address the demands of the question; as such this answer overall is a level 2 answer for both KAA and evaluation. It does display elements of knowledge and these are related to the economic problem in context. However it is fairly narrow and not focusing on the broad elements of the question. Similarly for evaluation, there is evidence and it has some supporting reasoning but it is not fully developed. This answer initially focuses on the extra government revenue that a tariff would generate and includes a tariff diagram to back up this point. This is followed by some good evaluation discussing the risk of retaliation. There is also good context in relation specifically to Kenya. The competitiveness point is relevant but not as well-explained as the earlier point and it is followed by an attempt at some relevant evaluation. The answer concludes with a reasonable attempt at a judgement. However the rest of the evaluation is not sufficient to push this answer into level 3 for evaluation. Overall this answer achieves a low level 4 for KAA and level 2 for evaluation. Remember to use relevant diagrams to explain your analysis, like this answer has done.

Notes from the mark scheme and report

• can be a developing country imposing protection or facing it from others
• tariff diagram, comparative advantage, retaliation, prices, efficiency
• evaluate the effects, not the pros and cons of protectionism
• Level 4 needs reference to a developing economy

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. The focus here is on the significant fall in oil prices and how this might affect the macro economy. It is another broad, open question that candidates can approach from a number of different angles. For example, they could consider oil importers and oil exporters and how they would be affected differently. Similarly to question 7, the focus here is on evaluating consequences – so the evaluation needs to be of the consequence. It was also important for candidates to remember that they are asked specifically for macroeconomic consequences and as such microeconomic consequences are not relevant in this question. This is a good answer which starts off discussing the impact of the drop in the oil price on aggregate supply, coupled with a relevant diagram. It drifts off-topic towards the end of the point. The next point is better, clearly explaining what the impact on the current account would be. However, the diagram is not relevant to the point being made. There is some good evaluation regarding alternative fuels to oil and also an attempt at a judgement. Overall this answer is nearly there, but not quite. It achieves level 3 for KAA and level 2 for evaluation. This answer starts with the impact on both consumers and firms of cheaper oil prices and does a good job of explaining these. However it then starts to discuss microeconomic consequences for specific firms. In addition, the idea that oil prices will definitely 'shoot up' just because they've dropped dramatically isn't explained. Increased pollution is another relevant issue as well as the possibility of greener alternatives. Overall this answer is a solid level 2 for both KAA and evaluation. It fails to go beyond the criteria for this level and is too microeconomic in places. Remember this is a macroeconomics paper so your answer needs to focus on this.

Notes from the mark scheme and report

• lower oil prices shift SRAS right (lower inflation, higher real GDP) and affect net trade
• oil importers vs exporters differ
• macro consequences only, micro effects on specific firms earn little
• Level 4 needs a logical link to changes in AD/AS

Mark scheme, including the levels grid and indicative content

Examiner's comment

The essays in general proved problematic for the candidates – often demonstrating a lack of preparation for the structure and content of the new 25 mark essay. Consequently there were many long essays that were lists of L2/3 analysis and E2 evaluative comments. It was common to see candidates trying to make four points, with the chains of reasoning rushed through for each one, when clearly depth as well as breadth was key. A question that allows for so many policy approaches clearly necessitates some selection of salient points. Q1(d) was one that demonstrated this characteristic most frequently. There were many abstract descriptions of different policies rather than two policies analysed in detail and showing a depth of understanding of the micro and macro effects. The few L4 responses managed to develop arguments that were focused on Chile and employed the data provided and their knowledge of economic concepts to evaluate the impacts of two policies that focused successfully on both growth and development. Most candidates gave only a brief acknowledgement that the question was on both growth and development and focused primarily on growth with the effect and development added as an afterthought. This gave rise to many L3 essays. This was a popular question (chosen over 1(e) in a ratio of 3 to 1) in which candidates gained the highest mean across the four 25-mark essays by a factor of 2 marks. This is explained by the opportunity to use a large amount of first-year materials on macro policy, and there were strong indications in the passage regarding monetary, fiscal and supply side policies. Weaker answers used these policies in a generic way, and the stronger ones used the passages to apply these to development. Examples include reference to the 2-4% inflation target being missed and inflation reaching 5%, the relatively low public debt, the secure financial services sector, over-dependence issues, trade union power and 'education is key'. It was clearly better to use a few points well, with data from the extracts, rather than trying to use all the policies and examples that could be used. This answer has very little micro and is limited in its application to development rather than growth. This answer has very little micro and is limited in its application to development rather than growth. This answer is not always Level 4, and at times the judgement is thin, however there was enough there for sustained L4 and L3. The answer uses the data effectively throughout, which makes it stand out as a strong answer. KAA L3 (11): L3, L3, L3 (no economic development) EV L2 (5): 16/25: lack of economic development in KAA, so can’t get to L4 E2, E1 - , E1+. E2 - , conclusion repeat then E2 EV L2 (5): 16/25: lack of economic development in KAA, so can’t get to L4 E2, E1 - , E1+. E2 - , conclusion repeat then E2 Use micro and macro in the essays, in the sense that they are required in the question. In this case it was the impact of policies that was required, not micro and macro policies. L4 (growth and dev), L3+ (generic), L4 (micro macro) so 15/16 EV L3 (9) E3-, E2, E3- informed judgement so mid level 3 8/9 eval 23/25 KAA L (15) Use the context data provided as the springboard for your answer. The passages were full of fiscal, monetary and supply side policies. The evaluation was also strongly indicated in the passages.

Notes from the mark scheme and report

• Level 4 needs effects on both growth and development and micro and macro effects
• two policies analysed in depth beat a list of many
• most answers treated development as an afterthought
• evaluate with conflicts e.g. lower interest rates and inflation

Mark scheme, including the levels grid and indicative content

Examiner's comment

1(e) was not as popular as 1(d). The better candidates were able to demonstrate their understanding of the micro and macro impacts of change in the level of investment in Chile using some degree of analysis from the models they had learned, and kept their response in context employing evidence to support their argument and evaluation. There was effective use of diagrammatic analysis and attempts at judgements, although clearly the skills here were more practised on the macro side. In this question, it was important to focus on "changes in investment", not simply high or low investment. Better candidates were then able to explain the potential multiplier effects of changes in investment for Chile and the likely impacts on both short run and long run growth. It is important to make the links in the chains of reasoning clear in the arguments. In this answer there are gaps in the chains. This is a good answer because it is based firmly in the context provided, that of falling levels of investment in Chile. KAA L2 (9) L2 (lack of COR), L2 (isolated knowledge), L2 (SRAS not LRAS), L3- (LRAS), L3 (applied education); hit L3 twice but on low end EV L1 (3) E1, E1; sustained L2 12/25 Make your answers contextual, and extend your chains of reasoning. KAA L2 (9) L2 (lack of COR), L2 (isolated knowledge), L2 (SRAS not LRAS), L3- (LRAS), L3 (applied education); hit L3 twice but on low end EV L1 (3) E1, E1; sustained L2 12/25 Use the context. Increases in investment are just not relevant in the context and therefore it is very hard to pick up the application marks without reading the data first. Investment can include FDI. Remember that the multiplier in reverse is larger if the leakages are small.

Notes from the mark scheme and report

• focus on changes in investment, not high or low levels
• AD shift with multiplier and LRAS shift from capacity (e.g. education)
• micro effects on workers and firms
• effects only on Chile, not causes of investment
• evaluate Keynesian v classical view, FDI and the balance of payments

Mark scheme, including the levels grid and indicative content

Examiner's comment

An effective question in terms of discrimination, on which well-prepared candidates scored well, responding to the single request rather than having to look at more than one variable as in 2(e). Candidates gave a good amount of evaluation with this question. This was a question about the factors affecting competitiveness, not about the effects of improved competitiveness. However, the advantage of this was that it made it into a question based on Year 13 work, much more in line with 2(e) in terms of difficulty, and one in which the data on productivity and the Living Wage in the passage could be used to great effect. Many answers focused on the Brexit issue, which was clearly on the minds of many candidates, but many failed to realise that at the time of the exam the UK had not actually left the EU and therefore is unable to alter independently its level of protectionism. There were some stronger answers using the prospect of Brexit, and in particular, the effect of exchange rate changes since June 2016, but it should be advised that the data provided is the best place to start in choosing points to make. Better candidates recognised this and were able to discuss both price and non-price factors that impact on competitiveness and particularly refer to the "productivity puzzle" concerning the UK. There was a tendency to provide far too many influences at not sufficient detail but generally there were good responses with evidence based analysis and evaluation of both micro and macro. However, as with the other essays, far too many candidates offer separate influences rather than observing how a micro influence is also linked to a macro influence making their essays longer and time consuming. These responses rarely achieve higher than L3 and are often confused, fragmented and with very limited chains of reasoning. Another frequent problem was misunderstanding of the data on productivity in Figure 6, and answers and evaluation which strayed into the effects rather than the causes of competitiveness. A frequent discussion was the effects of a low exchange rate, for example, with the Marshall-Lerner condition, but it was difficult to see how this related to the question. This answer refers to effects rather than causes in paragraph 3 of the first page, but the benefit of doubt was given as the answer does return to causes several times. There is significant misunderstanding of the data in Figure 6 (very common) and the links made are not extended. This starts as a narrow and repetitive response, but develops into strong L4 on the penultimate page, with some judgement at Level 3 on the final page. KAA L2 (10): L3 (weak data, some errors), L3 - (OMS) EV L2 (3): E2; not sustained 13/25 Read data based on an index very carefully. If countries are at 100 it does not mean they are all the same. KAA L4 (14): L4-, repeat, L3 (too similar), L4 EV L3 (7): E2, E3-, E3- 21/25 Definitions are not required (unless specifically requested in a question) but they are a useful way to keep the answer focused on the question. This candidate left the definition until the end of the final page, but the understanding was clearly there throughout the whole answer.

Notes from the mark scheme and report

• asks for influences on competitiveness, not the effects of it
• productivity (Figure 6, the productivity puzzle), unit labour costs, NLW, real exchange rate, infrastructure, price and non-price factors
• avoid long lists of influences
• UK had not yet left the EU

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

Candidates that recognised this as a question not about austerity but about the policy choice of cutting public expenditure rather than raising taxes scored well. They identified the pros and cons of cuts in public spending using theories such as crowding out and Lorenz curves and then went on to discuss the pros and cons of raising taxes using incentive and investment arguments. The question was quite complex and therefore many responses were shoehorned into a set number of points, and some responses had a fragmented but complex structure. Many responses could not stretch beyond L3, and that was with a generous interpretation of L3. Better responses clearly identified the policy instrument of reduced G and considered the effect of that policy instrument on an economic factor or macroeconomic objective. There was a lack of context in most responses. The best answers disaggregated tax changes, for example those with progressive and those with regressive effects, and discussed the relative size of the multiplier when taxes or spending is changed. Other exceptionally good answers looked at types of government spending and compared the micro or macro impact rather than the effects in general. Weaker answers focused either solely on tax, on more commonly only on the adverse effects of cutting public expenditure, limiting the ability to earn Level 4. Many candidates assumed AD would fall without any rationale for reasons why cutting G would have a larger impact on AD than a rise in T. Many answers took up issues about underfunding of the NHS, the police and social housing, but the main cuts discussed were those in education. Examiners were looking for economic analysis rather than political ones. Some answers confused public expenditure with consumption by the public. KAA L1 (4): Focus on consumer spending, L2 (tax), contradictory argument, L1, EV L2 (2): E1, E16/25 Ensure that arguments are not contradictory. The examiner is looking for extended chains of logic in your answer. This response does actually answer the question, comparing cuts with government spending with the raising of taxes, but there are many questions left in the analysis. Section A Some candidates did not indicate whether they were answering question (d) or (e), which meant that they were diverted to a pool and marked in the usual way. The candidates were only jeopardised for failing to indicate which question was chosen when the answer bore no relation to either question. Most of the answers were clearly responding to the chosen question, but a fair number were left totally blank. Section B Some candidates did not indicate whether they were answering question (d) or (e), which meant that they were diverted to a pool and marked in the usual way. The candidates were only jeopardised for failing to indicate which question was chosen when the answer bore no relation to either question. Most of the answers were clearly responding to the chosen question, but a fair number were left totally blank. Use the data. Give extended chains of reasoning. Fewer strongly argued points score better than lists of undeveloped factors. KAA L3 (11): L3, L3 (both focused on Q), L3 (developed but only G), L3 (tax); no data EV L2 (6) E2, E3; some judgement but not sustained E3 so top E2 17/25

Notes from the mark scheme and report

• a choice between cutting G and raising T, not general austerity
• Level 4 needs both G and T and micro and macro effects
• multiplier sizes, crowding out, inequality, Laffer curve
• evaluate which spending is cut or which tax is raised

Mark scheme, including the levels grid and indicative content

Examiner's comment

The question required candidates to evaluate the likely microeconomic effects of government intervention in the UK housing market. Candidates were expected to draw on their own knowledge of the housing market, a significant market in the UK, or make use of the data to access the top level responses. The main methods of government intervention covered were usually subsidies (Help to Buy), regulating mortgage providers, regulating landlords, direct government provision (building homes) or rent controls. Top Level 4 or 3 responses provided an in depth coverage of the microeconomic effects, this was possible to achieve with one type of government intervention but was usually undertaken by looking at two or three separate measures and evaluating them in depth in turn. Level 4 answers often drew, in a sophisticated manner, from the broad Theme 1 specification to provide logical chains of reasoning. A key differentiator was the quality of knowledge and understanding of micro- economic effects often making effective use of a diagram and carefully applied through logical and clear chains of reasoning. Level 2 answers tended to use a basic and generic supply and demand diagram focusing on one effect such as price; thus not being able to address the broad elements of the question and offer balance. Evaluation took various forms, with many candidates considering the unintended consequence of fuelling a housing boom affecting affordability and inequality. Alternative common evaluative points considered shortages of affordable rented property after carefully analysing the implementation of the scheme and who it would benefit. Where the former was missing this was often seen as analysis offering a negative effect of government intervention. The effectiveness of the government interventions was another popular issue raised with careful consideration of the data and other more significant factors resulting in the awarding of L3ev rather than a thin L1ev coverage of magnitude or opportunity cost. Best uses of substantiated judgement were sustained throughout in candidates’ responses as they made effective use of positive economics to make judgement calls answering the question by weighing up the significance of the effects as to what extent they were positive or negative. 16 out of 20 marks awarded. Two clear and carefully labelled diagrams provides a good start indicating a possible Level 3 or above response which is then confirmed as they are repeatedly used on the next page. To obtain Level 4 a more precise use of the diagrams with more integration would have been helpful. The candidate identifies the effect of Help to Buy as affordability and links this to utility and other effects, obtaining Level 3. They then move on to evaluate this by analysing the effect on demand and offering substantial judgement by indicating the significant increase due to price inelasticity of supply caused by 'government regulations like green belt'. This is worthy of Level 3 evaluation but needs another evaluative point to secure 6 marks and thus offer balance. The incentivised house builders is the next effect and the unemployment reference is allowed as a micro reference as they appear to be looking at the housing market (Level 3). The incentivised house builders is then well evaluated with a link to the disincentivised landlords (Level 3e). The time limit and opportunity cost evaluation is relevant but limited to Level 2 evaluation. Finally the candidate provides a conclusion which offers a clear substantiated judgement consolidating the time scale and opportunity cost issues (L3e). Overall they achieve Level 3+ KAA (10 marks) plus L3+ Ev (6marks) = 16/20. Be prepared to offer a suitable diagram even when not prompted by the question. The candidate is successful in applying two relevant diagrams to the context. To obtain Level 4 a more precise use of the diagrams making use of the labels with more integration to micro-effects, such home-owners consumer surplus or property developers’ revenue would have been helpful. There was an opportunity here to offer sophistication, linking the house builders as providing properties for sale or to rent which the candidate came close to. 12 out of 20 marks awarded. Producers benefiting from the subsidy on mortgage loans is well covered and in context (Level 3- KAA). This is then carefully evaluated using a data reference and theory (level 3 Ev). The candidate then moves on to considering the effect on consumers with a clear understanding and application but this is not evaluated (Level 3 KAA). Finally they consider the micro effect on government which is allowed since it is linked to rent (Level 2) and then well evaluated using theory (Level2 Ev). The opportunity cost evaluation then offered is well explained (Level 2Ev). The crowding out argument has potential but is not explained carefully enough to obtain Level 3 evaluation. Overall the candidate achieves a low Level 3 response for KAA (8 marks). They just escape two-stage chain reasoning but would benefit from a slightly wider use of the economic concepts. For evaluation they achieve Level 2 evaluation (4 Ev marks) as the Level 3 evaluation initially offered is not balanced with a similar attempt. In addition there is a lack of substantiated judgement. Offer at least two evaluative points with substantiated judgements on 20 mark base essay questions. This promising response is limited by having just one substantial piece of evaluation.

Notes from the mark scheme and report

• micro effects of subsidies (Help to Buy), regulation, rent controls (maximum price) or direct provision on prices, rents, supply and welfare
• one measure can suffice if effects are wide
• evaluate with government failure, unintended consequences such as higher prices, opportunity cost

Mark scheme, including the levels grid and indicative content

Examiner's comment

The question invited candidates to discuss the case for government provision of goods and services such as flood defence schemes or housing. In suggesting flood defence scheme or housing candidates could draw on the data available and their own knowledge but were also free to discuss the provision of other goods or services by government and a minority did so. There was much evidence in the data which gave candidates an opportunity to analyse and evaluate possible cases. As with 6(f) it proved to be another question which differentiated well between the quality of responses with the mean score being 10.70 from a total of 20 marks. . High Level awarding was available for those able to structure their answer and make effective use of the information. The most popular case was missing market associated with public goods and the associated free rider problem. Affordability and wider economic cases were made for intervening in the housing market. The most able responses evaluated effectively, in particular, by questioning the effectiveness of government intervention or the law of unintended consequences. Effective sustained judgement balanced government failure against market failure and attempted to use positive economics to make the judgement call. 18 out of 20 marks awarded. The candidate develops their first case on the under-provision and non-provision of goods and services if left to market forces. They use an accurate positive externality diagram, albeit missing a divergent MPB and MSB, to make the case for under provision and link it to the data provided. For public goods they again place in context and link to the wider benefits of government provision in this case. The second case is certainty for builders, as derived demand, encouraging them to invest. The third linked case is employment in the housing market linking back to the initial diagram. It would have been good to see more use of the diagram but there is precise use of theory and focus on context fully integrated here to earn top Level 4 (14 KAA). Evaluation was then separately addressed coming in the form of: the opportunity cost carefully explained (L2e); difficulty in measuring negative externalities (L2e+) which if they had linked back to the diagram may have obtained L3e and time lags (L2e). Since all evaluative comments are at Level 2 the candidate is awarded 4 evaluative marks not 6. Overall they achieved L4 KAA (14) and L2e (4) = 18/20. Some candidates do say they find it easier to complete their knowledge, analysis and application first and then move on to the evaluation. The risk with this is that the evaluation may lack the sufficient depth, application and sustained judgement that can be offered against each case made. For sustained judgement by immediately evaluating the evaluative comments they are able to weigh their arguments using positive economics. This is a sophisticated approach to developing a coherent argument. 6 out of 20 marks awarded. The candidate considers public goods by defining the concept on the first page and using the data but does not clearly make the case for government provision thus achieving a low Level 2 for knowledge, analysis and application (L2-KAA = 4). They then go onto identify a problem with public goods and seem to link it to the government provision but the response could do with further development (Level 1 evaluation = 2e). Overall they achieve L2-Kaa (4 marks) pus Level 1 evaluation (2 ev) = 6/20. It is essential in using theory and data to ensure you are directly answering the question and inking evaluation back to the question.

Notes from the mark scheme and report

• flood defences are public goods (non-rival, non-excludable, free rider)
• housing case via externalities and information gaps
• evaluate with government failure, opportunity cost, non-beneficiaries pay
• report mean 10.70 out of 20

Mark scheme, including the levels grid and indicative content

Examiner's comment

The key word in this question is 'successful'. Candidates are expected to discuss arguments that the MPC has and has not been successful in keeping inflation on target since 2011. Less able answers failed to truly address this specific demand of the question, and instead focused simply on explaining the monetary policy transmission mechanisms. This is obviously an important part of it but to access top levels there also needed to be a clear answer to the question. In both (f) and (g) candidates need to remember that their answer should include a 'substantiated judgement' as part of level 3 evaluation. This answer focuses primarily on the data in figure 2 to discuss whether the MPC have or have not been successful in controlling inflation. This is important and should be a part of the answer to this question. However this should really be going along with some economic concepts to explain how monetary policy works to achieve a higher level. Overall this answer is a level 3 for KAA and a level 2 for evaluation. Remember to make use of transmission mechanisms when explaining key concepts such as monetary policy. This is a more able response than the previous one. While it has some of the same points about referring to figure 2 it takes this a step further and discusses, for example, the current state of the world economy and the multiplier effect. The evaluation in particular in this question is more developed than in the first answer. Overall therefore, this answer achieves a high level 3 for its KAA and a low level 3 for evaluation.

Notes from the mark scheme and report

• judge success against the 2% CPI target (plus or minus 1%) using Figure 2: above 5% in 2011, under 1% by late 2014
• Bank Rate, QE and forward guidance
• supply-side shocks the MPC cannot control
• report: weaker answers only described the transmission mechanism
• a substantiated judgement is needed for Level 3 evaluation

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

Mark scheme, including the levels grid and indicative content

Examiner's comment

This was the more popular of the two essay questions. There tended to be less answers to this question that didn't focus on answering it. However, what did hold back a lot of candidates was that the question did not ask them to evaluate demand-side policies. The question specifically refers to the Global Financial Crisis of 2008. To get top marks candidates' answers needed to be in the appropriate context. For example a discussion of using high interest rates to combat high inflation is clearly not in the context of the UK economy over the last few years. As mentioned on section (f), it is important that candidates remember that their answer should include a 'substantiated judgement' as part of the criteria for level 3 evaluation. This is a more able answer where the candidate has discussed both expansionary fiscal and monetary policies. There is also a lot of context to their points, where they have clearly tried to relate what they are writing to the Global Financial Crisis of 2008. They have also included a number of good evaluative points, including about the elasticity of the AS curve, for example. Overall this answer achieved a high level 4 for KAA and a high level 2 for evaluation. In essay questions it is always good practice to break up your points into separate paragraphs so the structure of your argument is clearer. In this answer the candidate has explained the concepts of both fiscal and monetary policy and explained how they could help to boost aggregate demand in the economy. However, there is no context in terms of relating it to the Global Financial Crisis of 2008, and the analysis could be more developed. They also try to bring in the exchange rate but do not really explain it correctly. There are evaluation comments here but they are of a somewhat brief nature and, again, could do with a bit more development. Overall therefore this answer is a high level 2 for KAA and a low level 2 for evaluation. Remember to ensure your answer is focused on the specific context given by the question.

Notes from the mark scheme and report

• policies must be linked to the 2008 crisis: cuts in Bank Rate to 0.5%, QE, bank bailouts, fiscal stimulus and tax cuts, in the UK and/or US
• evaluate liquidity trap, debt and deficits, time lags
• report: answers about high rates to fight inflation are out of context
• substantiated judgement needed