Review of jun 11 exam

Course code 10FRE010-2

Course Title

GCE ECONOMICS

ACHIEVING SUCCESS THROUGH FEEDBACK

1

Summary Review of Economics units 1 - 4

June 2011

Unit 1: AS Microeconomics

Mean score: 45.1 /80 marks (46.3 in 2010, 45.3 in 2009).

Standard deviation: 14.4 (compared to 13.9 in June 2010 and 14.0 in June 2009).

‘A’ grade boundary: 58/80 marks‘E’ grade boundary: 29/80 marks

Section A: supported multiple choice

Mean score: 19.88 /32 marks (2010 : 20.32, 2009: 20.00)

Possible to score 3 explanation marks even with wrong answer.

Possible to score 3 explanation marks for rejecting three incorrect options – very hard to do in practice.

Multiple choice questions

Questions varied in difficulty: Q3 Price and income elasticity of demand recorded highest

mean mark of 3.11

Q2 Function of the price mechanism recorded the lowest mean mark of 1.82

Candidates fared better on the market failure questions 7 and 8 compared to previous years.

Q3: Price and income elasticity of demand

Mean score: 3.11 out of 4 marks

Define PED or show formula (1 mark)Define YED or show formula (1 mark)

Application: milk and cheese have positive YED and so are normal goods (1 mark).

Application: milk and cheese have PED below -1 and so are price inelastic in demand (1 mark).

Q3: Price and income elasticity of demand

How to improve – application to the data on milk and cheese.

Rejection – options A or C incorrect since inferior goods have a negative YED.

Slide 7

Q2: Function of the price mechanism


Define price mechanism (mechanism to allocate resources through changes in demand and supply) (1 mark)

Show diagram depicting a surplus and how a fall in price leads to market equilibrium (1+1 marks)

Q2: Function of price mechanism

Slide 9

Price

S

D

0 Q1 Qe Q2 Quantity

P2

Pe

Q2: Function of price mechanism

How to improve – use a demand and supply diagram.

Rejection – option A incorrect since an increase in price acts as a profit incentive to raise supply.

Rejection – option C incorrect as government targets are associated with a centrally planned economy.

Rejection – option D incorrect since prices vary according to changes in conditions of demand and supply.

Slide 10

Summary of good practice for supported multiple choice questions

Define key terms throughout.Consider key concept or model behind question.

Apply the information provided e.g. for Q1 the tax on cigarettes can be tested: is it more than 75% of the price?Annotate diagrams provided: Q4 producer surplus; Q6 ad

valorem tax; Q7 buffer stock scheme.

Summary of good practice for supported multiple choice questions

Draw diagrams e.g. Q2 Price mechanism model to show elimination of a surplus.Calculate percentages.

Show working for calculations e.g. Q6 incidence of producer and consumer tax.

Reject incorrect option(s) if answer is brief or dubious, e.g. Q4 option A is consumer surplus; Q7 option C will require a poor

harvest rather than a good harvest.

Summary of good practice for supported multiple choice answers

Time allocation of c.4 minutes per question.Practice past papers – including papers from old syllabus.

Make use of examiner reports showing candidate responses, the marks awarded and exam tips.

Unit 1 Section B: data response

New format for questions from January 2011

to help maximise candidate performance:

Maximum mark base raised from 12 to 14 marks for individual question.

Number of sub-questions reduced from 6 to 5 parts in each data response.

Evaluation marks

Significant number of evaluation marks (16 out of 48), especially for high mark base questions.

Expect evaluation across three or four of the five sub-questions in the data response.A standard formula for evaluation:

6 from 14 marks 4 from 10 or 12 marks

2 from 8 marks 2 from 6 marks

Data response questions

Both questions were accessible to candidates:

46% selected Q9 on the National Health Service.54% selected Q10 on the Market for copper.

Mean score for Q9: 24.21Mean score for Q10: 26.30

Candidates performed better on Q10e (external costs) than Q9d (external benefits).

Q9 The National Health Service

Health care theme tested for first time in data response in current course – still very popular among candidates.

Candidates often successfully applied concepts to health care e.g. opportunity cost and production possibilities.

Less successful in applying private and external benefits to health care.

Slide 17

Q9(d) Private and external benefits from consuming health care


Many responses made basic errors and so restricted the KAA marks:

- incorrect diagram.- incorrect definition of private and external benefits.

- failure to distinguish between private and external benefits in the discussion.

Slide 18

Q9(d)

Slide 19

MPC=MSC

MSB

MPB

Qe Q2

P2 Pe

M

T

Z

Price

Quantity

Q9(d)

Evaluation (2+2+2 or 3+3 marks)Popular responses discussed:

Magnitude of the private benefits are huge (1m treated every 36 hours).

Difficulty in measuring external benefits.Opportunity cost of the extra spending on health care.

Slide 20

Q9(d)

How to improveDraw and label diagram accurately ( 4 marks).

Define private & external benefits accurately (2+2 marks)Explain private benefits (life expectancy / quality of life /

income) (3 marks).Explain external benefits (healthier workforce / more profits / tax revenue / less spread of contagious diseases) (3 marks).

Slide 21

Q10 Market for copper

A familiar question on commodity prices requiring use of demand and supply analysis.

Generally well answered especially Q10e on external costs; however, many struggled with minimum price diagram in

Q10d.

Slide 22

Q10(d) Guaranteed minimum price

Mean score 6.78 out of 14 marks

Great variety in quality of answers, full mark range used. Some confused minimum price with buffer stock scheme.

KAA 8 marks: Based on diagram and effects: higher output / higher price /

incentives to produce / higher government spending / increase in costs for consumers of copper/


S

D

Minimum PriceP1

Pe

0 Q1 Qe Q2 Quantity of copper

Price

Excess supply


Evaluation: 6 marks (3+3 or 2+2+2)Discussion of:

minimum price relative to free market price.price fluctuations can still occur above minimum price.

price elasticity of demand and supply.government failure / opportunity cost.costs of storage and non-perishability.

some producers may remain outside of scheme.


How to improveEnsure accurate and fully labelled diagram.

Offer at least two evaluative points.Consider both positive and negative effects as this

automatically triggers evaluation.Avoid confusion of minimum price with buffer stocks scheme

– this was a common problem.

Summary of good practice for data response answers

Define key economic concepts in the question.Use the extract information.Calculate percentages / percentage changeDraw diagrams accurately and explain them.Carefully look at question instructions and then attempt to answer, maintaining relevance.Practise past exam questions under timed conditions.


Maintain quality of presentation, especially in high mark base questions.Offer evaluative comments when required (especially since 16 out of 48 marks comprise this.Time allocation – approximately 1 minute a mark.Make use of detailed examiner reports showing candidate responses and examiner guidance.

Unit 2: AS Macroeconomics

Overall Statistics

Mean score: 53 / 80 marks

‘A’ grade boundary: 63 marks‘E’ grade boundary: 36 marks

Data response

Significant number of evaluation marks (20 out of 80) especially for high mark base questions

A standard formula for evaluation:• 12 from 30 marks

• 4 each from two 12 mark questions


Both questions were accessible to candidates:

• 55% chose Q1 (inflation and unemployment)• 45% chose Q2 (interest rates, house prices, savings and

growth)

Mean score for Q1: 53Mean score for Q2: 53

Q1(a)(iii) Usefulness of information when making interest rate decisions

Mean score 6.48 out of 12 marksKAA 8 marks: Most answers identified at least one item of information and considered its potential impact on the price level

However, some candidates Did not explain the impact on the price level

Seemed unaware that the MPC mandate only targets inflation

Q1(a)(iii) Usefulness of information when making interest rate decisions

Evaluation 4 marks:Many evaluated the effectiveness of monetary policy, rather than evaluating the usefulness of the information.

How to improve – Make the explicit link between the items of information in the

extracts and their effect on the price level

*Q1(d) Fiscal and Supply-Side policies to reduce unemployment


KAA 18 marks: Candidates understood the main policies and were able to illustrate their potential impact on unemployment level. A wide range of policies were considered and knowledge of recent events in the UK was applied.

*Q1(d) Fiscal and Supply-Side policies to reduce unemployment

Evaluation 12 marks:Many candidates provided suitable evaluation but some points were not developed

How to improve-Avoid generic evaluation points (ceteris paribus, magnitude,

etc) unless applied to the question.Weigh up relative effectiveness

Consider short term and long term impact such as• threat of default on the national debt

• fairness of burdening future generations with debt

*Q2(c) Conflict between rapid economic growth and at least 2 other objectives


KAA 18 marks: Vast majority of candidates identified 2 or 3 objectives

Good analysis of conflict with other objectives.Excellent use of examples from the current situation

Weaker candidates often wrote about a conflict between low unemployment and high economic growth.

*Q2(c) Conflict between rapid economic growth and at least 2 other objectives

Evaluation 12 marks:Many candidates

• identified that much depended on the state of the economy and how close it was to capacity

• had a good and efficient essay technique

How to improve – • If only two conflicts are identified, then develop each more

fully to earn 6 marks for each point• Include evaluation points within analysis, not just in a

conclusion.


Define key economic concepts in the questionUse the extract information

Use knowledge of recent world events and dataDraw diagrams accurately and explain them

Look carefully at question instructions before writingPractise past exam questions under timed conditions


Offer evaluative comments when required (especially with 20 / 80 marks for evaluation)

Time allocation – around 1 minute per markMake use of detailed examiner reports showing candidate

responses and examiner guidance

Unit 3: A2 Microeconomics

The Paper was seen as difficult, but the mean mark (48.4) was only 0.4 lower than in June 2010.

The mark scheme allowed a wide selection of answers. For example, marking of question 9 was made more generous

to compensate for what were perceived to be more challenging questions.

SD Mean1006 10.4 48.41106 10.7 48.0

A plea from many of the examiners: make handwriting legible. The problems in de-cyphering the scripts this year seemed far more acute than ever before, and students are penalised if their meaning cannot be clearly

Grade boundaries: June 2011

A* 63A 56

B 49C 42D 35E 28N 21

Question 2: Overt collusion KEY: B

There was confusion between tacit and overt collusion – many describing features of

overt but referring to this as tacit.A common mistake was to choose A.

Some candidates referred to oligopoly as having interdependence and therefore

more risk of collaboration.

Question 5: Effect of a change in fixed costs on marginal costsKEY: A

Very few candidates explained this clearly. Definitions of marginal and fixed costs were sound, but many muddled answers linked an

increase in marginal costs to fixed costs.Some top answers used a diagram to show

the position efficiently.

Slide 44

Question 8: Performance targets in the banks KEY: E

Not many showed confidence in this answer, and some used the wording in the question to form their answer – naming “poor service” and “fines” without adding a great deal of explanation. A few attacked banks for “sloppy service” and unwillingness to lend to needy people.

Slide 45

Question 9c Success of competition policy (12)

Most answers included an explicit definition of competition policy.

There was little use of the specifics of any cases beyond those seen in the extracts. The fines for price fixing and predatory

pricing were seen often.

Slide 46

Question 9c continued

Many used patent law as a competition policy. Price capping (limited relevance)

was common, nationalisation, subsidies to start-ups, taxation, the 25% market share threshold and collusion investigations were

all used. Weaker responses tended to describe

institutions and their procedures.

Slide 47

10d Effects on efficiency of the merger(16)

This question was similar to 9d, though game theory gave candidates a base for

their answer. Some candidates had prepared a game

theory matrix but didn’t use it in context; better candidates scored 6 KAA marks

easily and used game theory in evaluation

Slide 48

10 d continued

Evaluation usually took the form of saying that efficiency would worsen (as a counter argument).Better answers linked economies of scale to the context – others gave generic theory. The best answers on efficiency used varied data.

Slide 49

Reasons for disappointing marks:

8 mark questions often had no evaluation12 mark questions often had a lone

evaluation point (game theory is highly appropriate here).

16 mark questions – many did not leave an appropriate amount of time

Slide 50

Final observations

Evaluation earns 50% of marks for the data questions (except the 4 mark questions)Questions 9 and 10 will continue to have the mark distribution 4, 8, 12 & 16, although not always in that order.The number of entries was higher in January 2011 than June 2011 (both higher than 2010).

Review of Unit 6EC04:

The Global economy

June 2011

General observations (1)

Paper proved to be accessible for most candidates

Essay performance was often good but the part (b) questions were quite challenging

Time allocation was mainly good, but there was evidence of some rushing in last parts of the data questions

Illegibility is becoming a more significant problem

Unit 4: Overall statistics

Mean Score: 60.1

Standard deviation: 13.0

A grade boundary: 67/100

A* boundary: 74

E grade boundary: 39

Section A: Essays

Question 3 was the most popular (trading blocs and monetary union)- 47% of candidates attempted it

Question 1 attracted about 30% of the candidates and 23% of the candidates answered question 2

Mean marks:Question 1: 31.4Question 2: 29.9Question 3: 33.3


Question 5 was more popular than question 4 with 57% of candidates attempting Q5

and 43% attempting Q4

Mean marks: Question 4: 29.0Question 5: 27.7

Q2(a): Causes of Absolute Poverty in a developing country

General:Some impressive responses with many using case study

material to good effectWide range of factors included

Some weaker answers saw Africa as a country!

How to improve: Include definition of absolute poverty

Ensure answer is related to a specific countryInclude more evaluative comments e.g. why debt might help to

reduce absolute poverty in the long run

Q2(b): Linking reduction in absolute poverty and economic development

General:Generally unimpressive answers: too many saw development as

synonymous with growth; Too many answers simply focused on ways by which absolute

poverty could be reducedHow to improve:

Begin with definition of economic developmentExplain ways a reduction in absolute poverty could help

development e.g. more healthcare so better life expectancy

ESSAYS: SOME ISSUES

A failure to focus directly on the question set – candidates often wrote all they knew about a topic

Students tried to manipulate questions to answers they had pre-learned

Inadequate knowledge of recent economic history e.g. the banking crisis and recession

A distinct lack of analysis in many responses

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Summary of good practice on essays

Write a brief planDefine key terms included in the titleUse the context: don’t pre-rehearse

Apply key concepts or modelsInclude diagrams integrated into the

analysisInclude evaluation

Summary of good practice on essays

Time allocation: spend no more than 1 hour on the essayUse paragraphs for each separate point

At least 3 points and 1 evaluative comment for part (a) at least 4 points and 2 evaluative comments for part (b)

Make use of detailed report and ResultsPlus showing candidate responses and examiner guidance.

Section B: Data Response

5 part questions – with ‘stretch and challenge’

Part (a): 5 marks for knowledge and applicationPart (b): 8 marks for knowledge, application &

analysisPart (c): 10 marks of which 4 are for evaluation Part (d): 12 marks of which 5 are for evaluationPart (e): 15 marks of which 6 are for evaluation

Q5(a) Role of the WTO

Mean score: 4.18 out of 5Answered well

Most candidates considered WTO role in reducing trade barriers/promoting free trade

2 marks available for data reference e.g. WTO role in settling dispute between US and Brazil

How to improve: Refer to role of WTO in settling disputes; have some knowledge

about WTO rounds of talks

Q5(c) Extent to which higher savings in US might eliminate trade imbalances between China and US

Mean Mark: 4.64 out of 10 – a challenging questionMain weaknesses:

Link between higher savings and lower consumption and imports not established clearly

Little by way of evaluationHigher interest rates seen as the cause of higher savings, followed by discussion of effects of higher interest rates

Q5 (c) continued

Best answers:Used concepts e.g. increase in MPS; link to a fall in C and,

therefore, to a fall in MOr employed AD/AS analysis

Discussed the link between savings and investmentEvaluated well, e.g. on the significance of the size of the US

trade deficit

How to improve:Use concepts; include data reference; comment on

significance of other factors which might correct trade imbalances between US and China

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Q5 (d) Extent to which large trade balances are a cause for concern

Mean mark: 5.94 out of 12This proved to be challenging for many candidates

Weaknesses: ‘Trade imbalances’ did not appear to be a term familiar to

many candidates but it is in the specification! Confusion between trade deficits and budget deficitsToo little analysis and evaluation in many answers

Theoretical answers with no reference to the context

Q5 (d) continued

Better responses often focused on issue of trade deficits -

Lack of competitiveness, implications for unemploymentLoss of comparative advantage

Potential problems of financing trade deficitsEvaluation in terms of surpluses on the financial account;

exchange rate adjustment; imports of capital goods in the short run which might resolve the problem in the long run

How to improve:Start with an explanation of the term ‘trade imbalances’

Consider broader issues e.g. danger of increased protectionism; asset price bubbles

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Data Response Performance – some areas for improvement

A minority failed to answer all parts of the questionMany candidates simply ignore the data

Some evidence of difficulty in comprehending the dataMany responses jump from identification to evaluation with

little or no analysisQuality of Written Communication is an issue in some scripts

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Summary of good practice for Unit 4 data response answers

Define key economic concepts in the questionUse the extract information

Make use of the charts/diagrams providedEnsure analysis goes beyond a superficial outline

Draw diagrams accurately and explain themInclude evaluation in the 3 higher mark questions

Final word on ECO4…….

From the general comments:

“Once again it was pleasing to see some superb responses…….In these answers it was evident that candidates answered the questions in context and had read beyond the

syllabus. Such scripts are not only a credit to the candidates

themselves but also to their teachers whose inspiration and sound teaching must have played a crucial role.”

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TEACHER SUPPORT MATERIALS

www.edexcel.com > qualifications > GCE from 2008 > Economics

SCHEMES OF WORKMore detail on content & timings

References to texts, websites, activities

GETTING STARTEDMajor content/focus areas

Revision sheetsWritten with students in mind

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http://www.edexcel.com/

TEXTBOOKS

Teacher and student preferences vary

Current texts still useable

New editions for this specification

Unit guides and activities

Edexcel materials

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USEFUL WEB RESOURCES

BIZED.CO.UKTUTOR2U & Brynsaseconomicsblog

Anforme.co.ukBBC.co.uk (Steph Flanders)

Gapminder.orgStatistics.gov.uk

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Examples of extra resources:

THE UNDERCOVER ECONOMIST[Tim Harford]

THE ECONOMIC NATURALIST[Robert Frank]Gapminder.com

GLOBALISATION & ITS DISCONTENTS[Joe Stiglitz]

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GCE 2008 – ResultsPlus

Access to marks from your entry group or individuals

Visit our ResultsPlus website for further information on:

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www.edexcel.org.uk/resultsplus75

Answers to your questions

Edexcel’s Ask The Expert Service – you can ask questions of the senior examiners who will get back to you with answers relating to teaching and learning and [email protected]

Edexcel’s Business Subject Advisor Colin Leith will answer your questions about all the Economics and Business specifications. You can contact him on [email protected]

Regular email subject updates to listed teachers from Colin.

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Review of jun 11 exam

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