economics a level essay plans

How to Write a Good Economics Essay

Governor November 28, 2019 Real World Applications 3 Comments

Many students ask “How to write an economics essay?” This Guide to Writing a Good Economics Essay is applicable to both IB economics as well as the Singapore JC A-Level H2 economics examinations. Many of the pointers here are also applicable to large-mark case study questions.

6 Steps to Writing a Good Economics Essay

Step 1: dissect the question.

Make sure you analyse and fully understand the KEYWORDS and REQUIREMENTS of the question. This is a very important skill that is taught in our economics tuition classes .

For example, “Best”, “Most Effective” are closely related but mean different things.

Paraphrase the question to make it simpler if necessary.

Take note of the command word (eg: Explain, Discuss) as it determines the approach needed for the essay, for example, whether two sides are needed or one side is sufficient. Below are some common examples found in economics essay questions:

Command Words                                      Action Required

Account for                                                 Explain why

Analyse                                                        Break it down into step-by-step explanations

Assess                                                          For & Against. Consider other factors.

Compare                                                      Identify Similarities & Differences

Distinguish                                                   Point out differences

Discuss                                                        Explore both sides

Evaluate                                                       The Good and The Bad.

Explain                                                          Show why and how

Explain whether                                            Cover both possibilities

Examine                                                        Look closely. How so and how not so?

To What Extent                                              Yes…..But….Judgment

Remember to look out for the context in the question. This is usually given in the form of a country (eg: Singapore). The examples in your essay must be tailored to this particular context (for example, do not suggest interest rate policy for Singapore as that is considered infeasible in the Singapore context). If no context is given, any real-world example can be used.

Keep in mind the question throughout the essay and remember to always answer the question. Don’t go off-point!

Common Examiner’s Comment :  Not Answering Question (NAQ))

Step 2: Plan Your Answer

Take some time to consider what economic framework you will use to approach the question. Scribble down your main thesis and anti-thesis points. Ensure they ANSWER THE QUESTION.

Step 3: Essay Introduction

In the introduction, include definitions of keywords in the question and spell out the economic framework you will employ for your answer as well as key definitions.

Step 4: Body of Essay

In the body , there will be several paragraphs. 

The number of points/paragraphs depends on the question. It is common to require 2 main points for each 10 mark essay and similarly for 15 mark essay questions. Under each main point, there may be 1-2 sub-points.

Use one paragraph for each sub-point you are making.

However, do not be too focussed on the number of points or paragraphs. The key is to answer the question.

For each body paragraph , use TET’s PEEL(ED) structure. Include only one main idea per paragraph.

• Point – Write your point in the first sentence so that markers will know what the paragraph will be about. The topic sentence must directly answer the question!
• Explanation – Explain what you mean
• Elaboration – Provide further analysis with clear step-by-step economic reasoning. This part may be done with examples as well as diagrams.
• Link – Link your explanations back to the Point and to answer the question.
• Exemplification – Give an example to support your reasoning. It can be statistics or real-world examples (for Case Studies, evidences from the Case must be uncovered!)
• Diagram – Where possible, araw an appropriate diagram with correct labelling and refer to it in your answer. This is crucial to show economic reasoning. Diagrams are very important for economics essays!

These are of course much easier said than done! Thus, students in our economics tuition classes are regularly honed to achieve such output including with tips and tricks to spark off the correct thinking process.

Our resources including the Study Guides for A Level and IB economics also provide a very powerful and handy reference on the depth of analysis required to score the highest marks.

Common Examiner’s Comment :  Mere statements and claims. No economic rigour.

Step 5: In-Body Evaluation

This applies especially to the 15 mark essays for A-Level Economics. A total of 5 marks is catered for Evaluation. Students should attempt to achieve about 2-3 in-body evaluation marks by pointing out how the thesis and anti-thesis points may not be true due to certain assumptions made that may not hold. Students may write “However,….may not necessarily happen……It would depend on whether….”. This statement can be written after the associated sub-point has been made.

Step 6: CONCLUDING SECTION

This only applies to the 15 mark essay questions.

Earn more evaluation marks by making a reasoned judgement. Deliver your verdict like a Judge! 

Check back on the question before you embark on this. Ensure your judgement answers the question.

So the question now is, how does a judge arrive at and deliver a verdict? Certainly, you should not be summarising or merely paraphrasing your main points in the conclusion. Obviously, you cannot expect more marks by saying the same thing over and over again!

After a verdict and reasons have been provided, consider providing further relevant insights and/or recommendations.

Common Examiner’s Comment :  Repetitive. Mere Summary.

Here are some quite common types of Concluding Sections 

• Consider the relative importance of thesis and anti-thesis factors. Which factors are most important or pertinent in the given context? For example, certain policies better fit specifc types of economies.
• Consider short-term vs long-term pros and cons. Do the short-term benefits outweigh the long-term costs? Is the policy more effective in the long-term, and if so, how pressing is the problem that needs to be addressed?
• Suggest a multi-policy approach, in which each policy has strengths and weaknesses that allow them to complement each other.

There is no way to really memorise evaluation points as every question and context is different. After all, you are being tested on higher-order thinking!

There are other evaluation tips that our students will receive but the key point here is that the training of the mind to think and apply economics is essential. That is where our weekly economics lessons come into play and that is why our students are often asked questions in class and trained to think on their feet. As ex-student Xue Min from YIJC testified, Chief Tutor Mr. Kelvin Hong does not just spoon-feeds our students but mentors them in their thinking to arrive at the answers. This was different from other tutors that her classmates experienced and eventually this was the key to Xue Min’s A grade.

In your essay, write in simple and clear sentences. Everything you write should be value-adding. You do not have to spend time showing off vocabulary as no extra points are awarded for language. Focus on economic reasoning. Use succinct and effective examples which support the point you are trying to make as well as accurate diagrammatic analyses.

For samples of great economics essays, please check out our free Economics Model Essays and sample Past JC A-Level Economics Questions and Answers .

For our econs publications that are sold worldwide, please check out our A Level & IB Economics Study Guides and Model Essays Publications

About The Economics Tutor

Founded by Kelvin Hong in 1998, The Economics Tutor is one of the leading economics tuition in Singapore . We provide a comprehensive program to guide students in understanding complex economic concepts and applying them through case study analyses, essay writing and discussion of real world events.

For 24 years, the way we teach JC Economics Tuition (A Level Economics Tuition) and  IB Economics Tuition  classes helped learners appreciate economics and everything it entails on a much larger scale. We take things step-by-step, implement effective techniques in memorising frameworks and give every student the chance to nurture their ideas. 

We don’t just solely focus on helping you get stellar grades and perfect scores. We make sure that we also hone the critical thinking skills and investment / business decisions you can use outside the four walls of your classroom.

Looking for a fun, engaging and probably the best economics tutor in Singapore? Look no further—check out our extensive and high quality economics resources on the website such as our IB and A Level Economics Publications

Book your lesson today and master the nuances of economics in our next class!

its good knowledgeable post regarding ib economics commentaries. i just wanted to admin can i use your blog as reference to my students .

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Example 25-Mark Essay in style of AQA Economics A-level

Below is an example model answer to a 25 mark question in the style of AQA Economics A-level.

To practise your AQA exam technique with 2024 practice questions, click the button below:

Question for model answer

Consider the following question. I have written this question in the style of a 25-mark AQA Economics A-level question for section B:

Taking effect from 1st April 2023, the UK Government has committed to increasing the corporation tax rate from 19% to 25% for companies with profits above £250,000 per year. For firms with profits below £50,000, there is no increase in corporation tax rates. But for firms with profits between £50,000 and £250,000 there will be a smaller increase in corporation tax rates.

(Source: here )

Evaluate the effects on the UK economy of increasing corporation tax rates on firms making high profits (25 marks) .

This is a key macroeconomics essay on current affairs. A quick essay plan is here:

• Define key terms.
• Laffer curve – higher government revenue.
• Evaluation – position on Laffer curve.
• AD effect – lower investment and negative multiplier effect.
• Evaluation – proportion of AD that comes from investment.
• LRAS effect – reduced incentives and productivity.
• Evaluation – need to compare corporation tax rates to those of other economies.

Conclusion.

Possible model answer

Corporation tax is a tax on firms’ profits. Aggregate demand (AD) is the total demand in the economy, AD = C+I+G+X-M. 

Increasing corporation tax rates may increase tax revenue for the UK Government. The Laffer curve shows this. An increase in tax rates from T to T1 raises tax revenue from R to R1. This revenue could go towards reducing the budget deficit. The government’s budget deficit is very high at 4.2% of the UK’s GDP in 2023-24. This is because of government spending on Covid support programmes such as the furlough scheme, energy subsidies and other tax cuts. Reducing the budget deficit may lead to government borrowing and hence reduced debt interest payments . With less spending on debt interest the UK Government could choose to spend more money in the future on other priorities such as healthcare spending. Sounder public finances might also make investors more confident in the UK Government’s ability to make bond repayments. This may reduce the interest rates at which investors are willing to buy government bonds and thus reduce future borrowing costs.

Whether the tax increase raises government revenue depends on the position of the UK economy on the Laffer curve. If instead the economy is at point (T1,R1) before raising corporation taxes, then increasing the corporation tax rate to T2 may decrease revenue to R. This is because a corporation tax rise may reduce incentives to start or grow a business, reducing the size of the tax base. The UK Government does predict that tax revenue would rise by over £10bn a year because of the corporation tax rate rise. With corporate tax rates relatively low now, it is likely that there will be higher revenue. But the effect of higher taxes on incentives may reduce the extent to which revenue increases.

Increasing corporation tax rates “from 19% to 25% for companies with profits above £250,000 per year” reduces the post-tax profits of these firms. This leaves reduced funds for investment, so investment may fall. Also as firms know any future profits will be taxed at a higher rate, this will disincentivise investment further. This is because firms will have reduced returns (lower post-tax profits) from any new investment. So investment falls and as investment is a component of aggregate demand (AD=C+I+G+X-M), aggregate demand shifts left from AD to AD1. This may cause a negative multiplier effect . This is where a fall in investment leads to a larger than proportionate fall in A. Lower investment results in lower incomes for firms and cuts in wages, so consumers cut their spending, meaning consumption also falls and so on. So AD shifts further left to AD2. This results in lower real GDP as real GDP falls from Y to Y2. Hence corporation tax may lower real GDP, likely resulting in lower living standards.

However this argument depends on the proportion of AD influenced by the corporation tax rate rise. Only firms making larger profits are facing a corporation tax rise. So firms making lower profits, for example small businesses, are less likely to reduce their investment. Also consumption is the largest component of AD, making up roughly 60% of AD, not investment. So a given percentage fall in investment may have only a smaller effect on AD. Corporation tax is likely to reduce AD leading to lower real GDP. But these impacts are limited by the relative importance of investment to AD and the design of the policy to target high profit firms only.

Decreased investment can also influence the supply side of the economy. Lower investment could mean reduced firm spending on capital goods and human capital. So this could reduce productivity and hence the productive capacity of the economy. This means the LRAS could shift to the left. Higher corporation taxes could mean higher business costs, shifting the short-run aggregate supply curve left too. Lower productivity and higher business costs could lead to a higher price level in the UK economy, reducing the price competitiveness of UK exports which may widen the current account deficit. Productivity for the UK economy is 15% below the average of other G7 economies (as of 2015), so corporate tax rises could further worsen this UK productivity gap with other nations. There may also be fewer businesses choosing to set up in the UK, preferring to set up abroad in locations with lower taxes. This would further reduce the productive potential of the economy, compared to a situation of lower corporation tax rates.

However this depends on the level of corporation tax rates in other economies . The UK has the lowest corporate tax rate among the G7 economies, even after the tax rise. Hence there may be fewer incentives to set up a business abroad, so the effect on competitiveness is reduced. Also many economies have agreed to a global minimum corporation tax of 15%, further reducing the risk to competitiveness from raising corporation taxes. While the corporation tax rate rise may reduce investment, it is less likely to have a significant impact on competitiveness.

Overall raising corporation tax on firms making high profits is likely to be effective in raising revenue. While raising corporation tax will reduce aggregate demand and aggregate supply, by raising taxes only on higher-profit firms, the impact is limited. The impact of the tax rise does depend on how other countries respond – if other countries maintain or reduce their tax rates to attract more businesses, then increasing corporate taxes could significantly reduce the incentive for international businesses to set up in the UK. However, given the increasing degree of tax cooperation globally , as shown by the 15% minimum corporate tax rate agreement, it seems likely that countries will not seek to undercut each other’s corporate tax rates.

Application is throughout using examples from the short extract and from own knowledge to support analysis and evaluation.

Analysis is detailed, using chains of reasoning and graphs to support the answer.

Evaluation is also detailed, making use of chains of reasoning and where relevant, data about the economy. The conclusion addresses the question and justifies the answer.

Note for the conclusion you could have picked another side for this policy too depending on the arguments used. You could also use other possible points – there is no right way of doing this. For example with interest rates at historical lows, how does that impact the cost of government borrowing and the necessity of raising taxes? What other factors may matter for investment beside corporate tax rates?

This essay would likely score level 5 according to AQA Economics A-level criteria.

For more guidance on AQA exam technique (25 markers, 15 markers, 9 markers and more), check out the blue button below:

Other Questions

How many words should there be in a 25 marker economics.

Most 25 mark responses, that can be replicated within exam conditions, are within the range of 700 to 1000 words.

However this is arbitrary. Word count does not matter as much, provided you answer the question and write in depth.

Achieving depth in analysis and evaluation, answering the question – see my economics resources here for more information on essay structures and how to evaluate.

How should you structure a 25 marker economics essay?

Introduction

Depending on depth of your previous points, add another round of analysis and evaluation.

For more information on AQA Economics essay structure, I recommend the following article linked here .

How should you write a conclusion for 25 markers economics?

A conclusion has these key elements:

• Answer the question.
• Justify your answer in step 1.
• Consider other evaluation points, including real-world context, for further justification or that may go against your answer.

How should you evaluate in economics 25 markers?

I recommend the “depends on” structure for AQA Economics style evaluation. For more information on this, see my AQA Economics style evaluation guide here .

More Resources

For AQA style practice questions on recent current affairs, click the blue button below:

If you are interested in more A-level Economics resources, please feel free to click the button below:

For A Level Economics tuition for AQA students, see the link below:

About the author

Helping economics students online since 2015. Previously an economist, I now provide economics resources on tfurber.com and tutor A Level Economics students. Read more about me here .

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How to write economics essays

All Economics exam papers at A-Level will have a 25-mark essay-style question, which requires evaluation .

There are different approaches that can be taken in dealing with essay questions, and there is not one essay writing 'template' or 'wizard' that can deal will all questions. However, a commonly used method is to use the first half of your essay to complete the analysis and the second half to evaluate - this is an easy approach to master, and can be used to answer most microeconomic and macroeconomic essays. More on this later.

What the mark scheme tells us

The mark-scheme for a 25-mark question is typically based on the ' levels ' method, with marks allocated in the following way:

4 marks for correctly demonstrating knowledge and understanding of economic concepts and models

4 marks for applying your knowledge and understanding to the 'context' put before you - this case a chocolate manufacturer

8 marks for providing an analysis of the decision (in this case, to raise price) - i.e. what are the expected effects, consequences and results

9 marks for evaluating a decision (question, issue, policy, or problem) based on your judgment , with reference to the problems or risks associated with the decision (policy, problem etc.)

Points to note

• Exam boards often state that, in a 25-mark question, definitions are not specifically required , but it is good practice to define key economic terms that are specific to economics, and to the question.
• Application does not happen in one section of your answer, but should run throughout your answer . In other words, answers that are purely theoretical and detached from the context will not earn high marks.
• For analysis and evaluation, developing a chain of reasoning is essential - ( read more on chains of reasoning ) you have to show exactly how you arrived at a point, judgment or conclusion. A carefully chosen, well draw, accurately explained and fully integrated diagram is essential for effective analysis. This is only possible if you start out by making your assumptions clear.
• For evaluation, it is essential that you provide an alternative approach , (alternative decision, policy etc.) and that your conclusion is not just a summary but a 'weighted' judgment .
• While you only have 30 minutes to write, it is essential you plan your route through your answer - 4-5 minutes planning is worth its weight in gold!

So, lets have a look at a couple of ways to deal with a 25-mark question. Both have similar openings and conclusions, but start out with different assumptions.

' Evaluate the decision by a chocolate manufacturer to raise the price of its 'luxury' box of chocolates .'

There are several factors a chocolate manufacturer will take into account when making a decision about its price. Factors affecting this decision depend on the market structure it operates in, the level of competition it faces, its size and ownership structure. These will affect its main business objective, which in turn will affect its decision regarding price and non-price factors.

We will assume that the chocolate manufacturer's objective is to maximise profits and that it is a price maker and facing a downward sloping demand curve. This means that it is not operating in a highly competitive market, and can raise price without suffering a complete collapse in sales. Profit maximisation arises at the output where MC=MR, which in the diagram is quantity Q. At profit maximisation, the area of supernormal profits (SNP) is area p a b c.

At this quantity, marginal revenue equals marginal cost, which means that any change in price or quantity produced will move it away from profit maximisation. For example, if the chocolate manufacturer increases price to P1, demand will contract along the demand (AR) curve, from 'a' to 'v', resulting in equilibrium quantity falling to Q1. At Q1, MR is greater than MC, which means there is an opportunity cost because the firm could reduce price and produce more, which would lead to an increase its supernormal profits.  So, reducung price and producing extra marginal units of output will add to SNP until MC=MR is reached. Hence, in terms of achieving its profit maximising objective, an increase in price above 'P' is clearly counter-productive. This is supported by the probability that demand for 'luxury' chocolates is price elastic, and the producer is operating in the elastic range of the AR curve. As a result, any increase in price will reduce total revenue, and also reduce SNP, which falls to area P1 v w x.

However, there are issues with this analysis. Are the assumptions about the chocolate producer and its market valid? Is the chocolate producer targeting profits, or attempting to achieve a different objective? Will  there be negative, and even unexpected consequences of the price rise?

The assumptions regarding the market structure certainly might not hold - in a less competitive market, with fewer firms, the price rise may have a much smaller effect because consumers have less choice. Demand may be more inelastic than predicted, especially if there is loyalty to the brand of chocolate - even though it is a luxury product.

Also, the chocolate producer may have previously been a revenue or sales maximiser and may have decided to change its strategy from revenue or sales maximising to profit maximising. As a revenue or sales maximiser price will be set at a lower level, to stimulate sales or gain more revenue. Management salaries or bonuses may be connected with sales, hence a low price will help the firm achieve this objective. The price increase will move it towards profit maximisation rather than away from it, and help it achieve its new objective. Alternatively, the producer may be a 'profit satisficer' looking to increase its profits but not maximising them. In any of these cases, the price rise might be a rational decision.

It is not known whether rivals will keep their prices on hold, reduce them or raise them to match the firm's price increase. If the firm has a few close competitors, then these firms may be interdependent, meaning it may be more beneficial to keep prices on hold to reduce uncertainty.

Furthermore, the price rise could encourage unwanted new entrants, attracted by the opportunity presented. Raising price could also send a signal to existing producers to launch their own 'luxury' version of the product.

Of course, there may be alternative decisions to consider to help it achieve its objectives, such as changing its non-price activities. So, the price rise could be justified if an effective marketing campaign could help increase demand (AR) and, diagrammatically, shift the AR (and MR) curve to the right, as shown.

In this case, profits are maintained, or even increased, as shown, with lower supernormal profits at area P1 k r m.

Taking a wider view, price rises reduce consumer surplus, and if personal incomes remain constant, consumer will have less income to spend on other goods and services, and the price rise will cause a negative income effect. Of course, a rise in the price of chocolate would not have the same effect as a rise in interest rates or house prices, so the income effect is very small.

In conclusion, the decision to raise prices cannot be judged without understanding the nature of the market, the level of competition and the firm's current objectives, and compared with alternatives. There is also the wider economic context to consider, such as whether the economy is in a recession, with pressure on disposable income, or whether the economy is growing, with consumers feeling confident. There are clearly risks associated with an increase in price, and it might be less risky not to raise price, and put more effort into non-price strategies. However, if the assumptions that the firm is already a profit maximiser, that there are no other changes to its non-price activity, and that the behaviour of other chocolate producers does not change, then a price rise seems unjustifiable as it would fail to achieve its dominant objective - to maximise profits - and raising price would, in this case, be an irrational decision.

Answer two - the alternative answer

We will assume that the chocolate manufacturer's objective is to maximise profits and that it is a price maker and facing a downward sloping demand curve.  We will also assume that it currently is not profit maximising, but producing at an output greater than profit maximisation, at output Q, and a lower price, at P in the following diagram. Profit maximisation arises at the output where MC=MR, which in the diagram is quantity Q1, and price P1.

At the quantity Q, while marginal revenue is negative at 'f' and below marginal cost at 's',  the chocolate manufacturer still makes a supernormal profit, shown as the area SNP (area Pvwx). Also, at the current price of P, price elasticity of demand is inelastic because, in the diagram quantity demanded, Q at price P is to the right of the mid-point of the demand (AR) curve. Given that, at the mid-point, PED equals (-) 1.0, which is where MR=0, at its current output, PED must be inelastic.

Given these assumptions, a decision to increase price above P will help the manufacturer achieve profit maximisation. Because the firm operates in the inelastic portion of its demand (AR) curve, the planned price rise reduces the quantity demanded, to Q1, but increases total revenue - at least up to the output where MR=0. The reduction in output that follows means that the variable costs of production fall, which means that marginal costs fall (from 's' to 't'), while at the same time marginal revenue increases from 'f' to 't'. Assuming profit maximisation is still the dominant objective, the price rise is clearly beneficial, as it leads to increased profits (area P1a b c) resulting from the lower marginal cost and the higher marginal revenue.

However, there issues with this analysis. Firstly, are the assumptions about the chocolate producer valid, secondly, is the chocolate producer wishing to increase profits, and thirdly, will there be any negative, and even unexpected consequences of the price rise?

The assumptions regarding the market structure certainly might not hold - the market could be much more competitive, and approach perfect competition. This would result in a very different outcome for the producer, especially in terms of a price elasticity of demand, which rises with increased competition. In a more competitive market, there are more choices for the consumer, and any price rise by one firm may result in falling revenue. Demand may be more elastic than predicted, especially because the price rise is for the 'luxury' version of the box of chocolates, where demand is likely to be more elastic.

Also, the chocolate producer may not be a profit maximiser, but may instead be a revenue or sales maximiser, in which case the price rise could move it away from maximising sales or revenue points. If the firm is a large producer where there is a separation of ownership and control, it is more likely that other 'managerial' objectives dominate decision making. If, for example, the firm is looking to maximise sales volume, perhaps because management salaries or bonuses are connected with sales, then a price rise would not be beneficial.

It is not known whether rivals will keep their prices on hold, reduce them or raise them to match the firm's price increase. If the firm has a few close competitors, then the fact that these firms may be interdependent means that it may be more beneficial to keep prices on hold and reduce uncertainty.

Of course, there may be alternative decisions to consider to help it achieve its objectives, such as changing its non-price policy. So, if there is also a successful marketing campaign designed to increase sales, or build a brand, price increases could be postponed until the brand is well established.

In conclusion, the decision to raise prices cannot be judged without understanding the nature of the market and competition and the firm's current objectives, and compared with alternatives. There is also the wider economic context to consider, such as whether the economy is in a recession, with pressure on disposable income, or whether the economy is growing, with consumers feeling confident. There are clearly risks associated with an increase in price, and it might be less risky not to raise price, and put more effort into non-price strategies. However, if all the assumptions listed above are fully met, then a price rise seems justifiable in that the firm can achieve its dominant objective - to maximise profits.

These are two answers which use a similar structure, and common introduction and conclusion - but start with different assumptions, and therefore have a different analysis, and evaluation.

There are other several possible approaches to this question, and other evaluative points that could have been included. For example, there could have been more emphasis on what rivals might do, and there could be more robust questioning about exactly how much the price is being increased by, and whether this is just a temporary strategy. The essay could also have raised the question of the possible external effects arising from less output and consumption (namely fewer negative consumption and production externalities). However, with the time constraint in the examination room, it is not possible to cover every 'blade of grass' and some good points may have to be sacrificed.

Finally, the 'starting point' and assumptions could have been different, which would have led to a different analysis.

Conclusion and key takeaways

Having a structure to help you tackle an essay-style question is very important.

Both essays use the same four-part structure :

• Part 1, the analysis - making assumptions, and using the correct diagram to show how a decision or policy will work to achieve an objective.
• Part 2, the evaluation begins with ' the bridge ' of the essay - assumptions are questioned and probably changed.
• Part 3 the full evaluation , where an alternative or alternatives are explained based on the change of assumptions.
• Part 4, the conclusion , where the evidence or strength of argument is assessed, and the decision, policy or assertion is 'accepted in full', 'accepted in part' or 'rejected' in favour of the alternative(s).

Finally, it is clear how important diagrams are in analysis and evaluation, and helping develop a logical chain of reasoning - so ensure that you have undertaken enough practice in constructing, applying and integrating diagrams to a wide range of past questions.

Other tips:

How to study economics

How to write the perfect conclusion

How to answer data response questions

How to include chains of reasoning

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Edexcel Economics A-level: Theme 2 Essay Plans/Exam Responses

Subject: Economics

Age range: 16+

Resource type: Assessment and revision

Last updated

23 February 2020

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This document contains concise, specific exam questions, focused to multiple topics of theme 2, which are also applicable to multiple higher mark questions in section B. These plans are theory or article-driven, and will gurantee an A grade in AS Macroeconomics exam for Edexcel. The exam plans are used as an example to show students how concise answers can be in economics, and how specific mark schemes are for a category of questions. These Plans Cover:

Objectives Policies Conflicts

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Edexcel Economics Year 1: FULL A GRADE REVISION GUIDE

These documents on AS level economics for Edexcel Economics A, are invaluable and helping you attain top grades in your first year of a levels (year 12) exams. These are broad, focusing on every aspect of the specification (in notes), this is specifically outlined in the Theme 2 Notes, where every objective of the specification from Edexcel Exam Board, is explicitly stated and a concise and convincing response (without the long, waffly details, is presented). Furthermore, I have also included essay plans and exam responses for both theme 1 and 2, to give students a live example of what mark schemes demand as a high quality answer or more compelling analysis in terms of responses given by students, along with Mark Scheme definitions, to save time with memorising long-winded key terms. Moreover, I have also provided detailed essay plans for both Theme 1 and 2, with at least 10 essay plan per theme, focusing on a broad range of questions within the unit. Lastly, I have provided some exam structure and logistics, to provide tips on multiple, potential ways examiners may review questions.

Edexcel Economics A: Paper 1-3 AS/A-Level ESSAY PLANS

Essay Plans for Edexcel Economics A AS and A-level 2015: Theme 1 Theme 2 Theme 3 Theme 4 Macro & Micro Essay Plans Covers all/most topics in the specification

Edexcel Economics A: Macroeconomics Bundle

This is a collation of notes that helped me achieve an A* in Paper 2. These notes include all the content for Theme 2 & 4 For Edexcel Economics A * This contains: Detailed specification Notes Detailed comprehensive essay plans for all topics for macroeconomics Challenging topics addressed in critical detail for theme 4. Developing country analysis for Theme 4, which serves specifically useful for developing economies essays. The chosen country is Nigeria, with some additional information on the UK, Germany and China for extra economic application to similar essays.

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lizrose0131

The document is decent if you want to able to achieve a low b/a but for people who need extra assistance, it is difficult to be able to provide this extra context and to follow the structure to achieve this grade or the grade around this.

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Macro Economic Essays

These are a collection of essays written for my economic blogs.

Exchange Rate Essays

• Effects of a falling Dollar
• Why Dollar keeps falling
• Discuss Policies to Stop the Dollar Falling
• Does Devaluation Cause Inflation?
• Benefits and Costs of Falling Dollar
• Reasons for Falling Dollar
• The Dollar as the World’s Reserve Currency

Economic Growth Essays

• Evaluate Benefits of Economic Growth
• Essays on Recessions
• Causes of Recessions
• Problems of Recovering from a Recession
• What can Increase Long-Run Economic Growth?
• Discuss Effect of a fall in the Savings Ratio

Inflation Essays

• Discuss the Difficulties of Controlling Inflation
• Should the aim of the Government be to Attain Low Inflation?
• Explain What Can Cause a Sustained Increase in the Rate of Inflation
• Reasons for low inflation in the UK
• Inflation Explained
• Difficulties of Inflation targeting
• Hyperinflation

Unemployment Essays

• Explain what is meant by Natural Rate of Unemployment?
• Should the Main Macro Economic Aim of the Government be Full Employment?
• The True Level of Unemployment in the UK
• What explains low inflation and low unemployment in the UK?

Demand Side Policies

• Discuss effect of Expansionary demand-side policies on Balance of Payments and Environment
• Effects of a Falling Stock Market
• How do Mortgage Defaults affect and Economy?
• Discuss the effect of increased Government spending on education
• Phillips Curve – Trade-off between Inflation and Unemployment

Development Economics

• Why Growth may not benefit developing countries
• Does Aid Increase Economic Welfare?
• Problems of Free Trade for Developing Economies

Fiscal Policy

• Will US Economy benefit from Tax Cuts?
• Can Fiscal Policy solve Unemployment?
• Explain Reasons for UK Current Account Deficit
• Benefits of Globalisation for Developing and Developed Countries

Monetary Policy

• Discuss Effects of an Increase in Interest Rates
• How MPC set Interest Rates
• Benefits of High-Interest Rates (and recessions)
• Who Sets interest rates – Markets or Bank of England?

Economic History

• Economics of the 1920s
• What Caused Wall Street Crash of 1929?
• UK economy under Mrs Thatcher
• Economy of the 1970s
• Lawson Boom of the 1980s
• UK recession of 1991
• The great recession 2008-13

General Economic Essays

• The Dismal Science
• Difference Between Economists and Non Economists
• War and Recessions
• The Economics of Fear
• The Economics of Happiness
• Can UK and US avoid Recession?
• 3 Of the Worst Economic Policies
• Overvalued Housing Markets
• What Went Wrong with US Economy?
• Problem with Bailing out financial sector
• Problems of Personal Debt
• Problem of Inflation
• National Debt in the UK
• How To Survive a Recession
• Can A recession be a good thing?

Chinese Economy

• Problems of Chinese Economic Growth
• Should we worry about a strong China
• Chinese Growth and Costs of Growth
• Chinese Interest Rates and Economic Growth

Model essays

• A2 model essays
• AS model essays
• Top 10 Reasons For Studying Economics
• Inflation explained by Victor Borge
• Funny Exam Answers
• Humorous look at Subprime crisis

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Free Economics Essays and Economics Help

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Memorise 10-20 pages of your notes on day 1 (depending on how content heavy the set of pages you are memorising are, and also on your personal ability to retain information)

Next, I would make sure that on day 2 I go back over the 10-20 pages from day 1, before I move onto the next (new) 10-20 pages I had planned to memorise on day 2

I would then make sure that on day 3 I go back over the 10-20 pages from day 2, and so on and so forth

Make sure that you understand the concepts and theories early, and ideally learn all of the content well before you ever see it in class (this way lessons become more like revision sessions where you can deal with pinpoint problems). Youtubers like econplusdal, and websites like economicshelp or economicsonline are great for this (learning theory)

Memorise your notes at least a couple of months before exams, not because you have to, but because cramming last minute can be extremely stressful (although it can definitely work if you are willing to do it) - look at my memorisation tips in one of the earlier posts if you need help with that

Practice writing essays as soon as possible. I would aim to try and do about 1 a week (once you have finished the syllabus at home, of course) and maybe even once every three or four days once exams begin closing in

Make sure, particularly in your case (as you are on OCR), to read the specification fully, as the main endorsed book is actually missing quite a lot of content from the specification, which could really come back to screw you over later if you are not careful

Make or join online facebook chats with other people who are determined to do really well in economics (I know this helped me a lot during A2 / A-Level Year 2), because being in a group of like-minded people will make it easier for you to gauge how much work you should be doing at particular points in time

Remember that in exams it is, unfortunately, better to be safe than sorry. This means recognising that you are adhering to a system and that using content outside the specification may actually harm you, rather than aid you. Also make sure you know standard go-to evaluative points in essays such as assumes ceteris paribus (other factors may change), depends on the extent, depends on the level of spare capacity, depends on business and/or consumer confidence, opportunity cost (of government spending), supply-side policies may not work or may take a very long time etc...

Find out the amount of value that the olympics brought in in terms of revenue from tourism, tickets etc..

Or find out what GDP increased by that year, relative to the spending on the olympics

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Essay on Oligopoly and Collusion

Last updated 3 Feb 2019

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Here is what I feel is a superbly clear and well-structured essay answer to a question on the economic and social effects of collusion within an oligopoly.

Evaluate the view that collusion between firms in an oligopoly always works against consumer and society’s interests. Use game theory in your answer.

An oligopoly is where the industry or market is dominated by a few producers/firms with a high level of market concentration, where the component firms have a high level of interdependent decision making. Collusion can be tacit and/or explicit, and the aim of which is to achieve higher supernormal profits, with the firms as a whole achieving joint profit maximisation. Collusion between firms is harmful to consumers. This is because firms collude to raise prices, as mentioned earlier, resulting in the price level seen below. This reduces the consumer surplus available, reducing the welfare of individuals. This can often be highly regressive, if the impact of increased prices, such as with the Big Six Gas Suppliers, has a disproportionate impact on the less well off. Furthermore, because firms are working together, with internal quotas to divide up sales, there is less need to compete, resulting in less dynamic efficiency. This results in less innovation, and thus little improvement in the quality of products available to individuals. Indeed, the UK Competition and Markets Authority supports this claim, arguing that collusion can result in “reductions of output, efficiency, innovation and choice, all of which are harmful to consumers.” An example of this can be seen with Apple, who were sued by consumers for price-fixing with publishers to force consumers to over pay for e-books.

However, collusion between firms can often derive benefits for consumers. For instance, tacit collusion includes firms who monitor what other firms sell to ensure that they are matching the cheapest price in a geographical area, or who market that consumers are “never knowingly undersold” such as John Lewis. This is a case in which firms are technically engaging in tacit collusion, but which may also result in driving down of prices as firms seek to match improvements in cost efficiencies made by other firms. This is also true with products such as mobile phone contracts where it is easy to compare prices.

Collusion in an oligopoly can hugely benefit firms, which can have beneficial consequences for society. For instance, collusion between coffee growers allows small firms to push for fairer prices against more dominant monopsonistic corporations such as Starbucks. Furthermore, because these producer cooperatives like Fairtrade are often based overwhelmingly in less developed regions, this can also be useful in helping to alleviate extreme poverty. Furthermore, collusion allows for firms to lower the costs of competition, that can then be passed onto consumers. Because oligopolies exist in highly concentrated markets dominated by a few firms, there is often a huge degree of branding and differentiation that needs to take place in order for firms to stand out, e.g. with the UK retail banking industry with firms such as Barclays and HSBC. If all firms engage in marketing wars, there is no net societal benefit. However, if firms collude, they can reduce the need to fund these marketing wars, that can allow for cost savings to be passed onto consumers. Additionally, collusion allows for agreed upon industry standards, for instance with procedures in testing on humans in pharmaceutical research, which benefits both consumers and firms.

However, the extent to which this occurs depends on a few factors. Firstly, the vast majority of collusion that takes place isn’t that of poor farmers working together - oligopolies are more concentrated industries with very high barriers to entry, such as the Big Four Accountancy Firms, and pharmaceutical companies. Furthermore, the benefits that accrue from firms working together are dependent on those firms passing those cost savings onto consumers - however, if they are all explicitly colluding, they may decide to spend that money on share buy-back schemes and dividends, which may not benefit society at large. Indeed, in 2017, US firms spent more money on share buy-backs than they did on research and development. Lastly, the benefits from firms agreeing upon industry standards are likely to be very marginal given the government and regulatory bodies, such as the Financial Conduct Authority (FCA) tend to set industry standards centrally.

Conclusion:

In conclusion, the extent of the impact on consumers and firms depends fundamentally on how long the oligopoly is able to carry on collusion - we can analyse this through game theory. Assuming the following pay offs in a cartel such as OPEC, where states agree to collude to reduce production levels and benefit from a higher price:

If all firms cooperate, they will achieve £4bn revenue. However, if one firm decides to defect and to increase production while still gaining from higher prices, they will gain £5bn. The socially optimal equilibrium in this model (for firms) is to cooperate, because the total utility is greater than any other option. However, this is an unstable equilibrium: no matter what the other firm does, each agent is better off by defecting, resulting in a Nash equilibrium of Defect, Defect. Indeed, this model can be shown by how in October 2018, Iran accused Saudi Arabia and Russia of breaking OPEC’s agreement on cutting output. Thus, the effects of collusion are very much dependent on how long it is able to last.

Author: Cary Godsal (February 2019)

More resources available here on the topic of oligopoly

• Tacit Collusion
• Overt collusion
• Game Theory
• Nash Equilibrium

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