With first exams starting soon. Now is a good time to focus on key areas which can help
- Core diagrams needed
- Chains of analysis you need for standard questions.
- Reliable evaluation Points
Micro Evaluation
Elasticity
Good evaluation compares and contrasts. So elasticity makes a perfect contrast. In diagram on left, demand is price elastic so fall in price leads to bigger percentage increase in quantity demanded. In digram on right, demand is price inelastic, so only a smaller percentage rise.
Elasticity is a great fallback option for all kinds of evaluation points
- Time Lags. In short-term demand is more likely to be price inelastic, but over time, people can find alternatives, so demand becomes more price elastic
- Depends on the industry in question, big difference between industries with high fixed costs and economies of scale
- Depends on business objective. If profit maximisation may lead to collusion, if sales maximisation may lead to price war.
- Magnitude/significance. The rise in price of oil, has a significant impact on transport firms, though, if they can switch to EVs then oil becomes less significant.
- Unintended consequences – Maximum rent controls could lead to lower supply and make renters worse off
- More microevaluation
Chain of reason
- Avoid: “Demand rises so firms make more profit.”
- Better: “Demand rises → higher prices/revenue → greater profitability → increased retained profit → higher investment.”
- Always push analysis one step further. And explain every step, even if it seems simple
Essential revision for microeconomics
- Government intervention to overcome market failure – tax and subsidies
- Market mechanism – impact of changes in supply and demand
- Business economics – how firms behave in different market structures
- Monopoly Pros and cons (mirror image of competition)
Essay structure matters
Introduction
- define key terms
- answer question directly
How many points?
2KAA + 2 Evalution
Main paragraphs
- point
- analysis
- application
- evaluation
Conclusion
- final judgement
- explain “depends on”
Use the extract constantly
Many students write generic economics.
Instead:
- Quote data. The above diagram shows that Real house prices have fallen 17% since 2007 – real prices have fallen £335,000 to £278,000
- refer to businesses/countries in extract
Application marks are essential.
Avoid common mistakes
Don’t:
- Describe instead of analyse
- Forget evaluation or weak ‘however’
- Copy the extract – integrate
- Write everything you know without thinking of question
- Leave diagrams unexplained
Do:
- Answer the exact question. End of the paragraph answer the question.
- Focus on command words – evaluation, discuss, explain
- Make judgments. “In conclusion, the strongest policy to solve congestion is to place a congestion charge, combined with improving quality of alternatives.
If a question looks unfamiliar:
- Break it into keywords
- Use basic economic logic
- Apply chains of reasoning
- Keep evaluating
- Make your best effort to answer. Don’t forget you don’t need the ‘perfect’ answer. You may not know about water industry, but you can use ideas on nationalisation/natural monopolies.
- If it is very hard exam, don’t panic, it will be hard for everyone, and they will probably reduce grade boundary.
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