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10 ways to turn a good paper into a great one

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Advice on scoring higher marks for analysis and evaluation in AS and A2 economics papers

Advice on scoring higher marks for analysis and evaluation in AS and A2 economics papers


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  • 1. Ten Thoughts on Improving Your Economics Papers
    Economics Revision
    April 2011
  • 2. (1) The Importance of the Margin
    Textbook eco – many decisions are made at the margin
    Marginal revenue = marginal cost (profit max output)
    Marginal social benefit = marginal social cost (social equilibrium)
    Marginal utility of consumption compared to the price
    But few businesses / people have the capacity to reach such precise equilibrium points – or seek to find them
    But……
    Marginal changes in behaviour can have a big effect if enough people make them (e.g. Energy consumption decisions)
    Changing behaviour ‘at the margin’ can have important social effects – social norms can change + policies can have an impact
    The fundamental value of something depends on the value of the marginal unit – important in lots of markets (e.g. oil, food)
  • 3. 2: The Law of Unintended Consequences
    This is aroot cause of ‘government failure’
    All government interventions in a market have at least one and often many unintended consequences
    Easy to have the benefit of hindsight when seeing this!
    Reasons:
    Economics is a social science about behaviour
    Rational agents will look for ways to offset policies that cost them
    Information failure in government when setting policies
    Dynamic nature of markets – markets and the agents that inhabit them move far more quickly than government
    Disintermediation is inevitable in a globalized world
  • 4. 3: Stakeholders matter!
    ‘Any person or organization that has a legitimate interest in a specific project or policy decision.’
    Check to see the sources of information in data response questions
    Identify and comment when value judgements are being made – scores high for evaluation
    Risk of government failure:
    Regulatory capture / powerful lobbying
    Policy decisions made to please a vested interest
    Inequitable impact between one group and another
  • 5. Stakeholders
    Employees of a business
    Communities where a business is located or affected by a decision
    Suppliers further down the supply chain
    Shareholders / owners
    Creditors
    Government (and through them – taxpayers)
    Trade unions (and the workers they represent)
  • 6. Stakeholders
    Employees of a business / organization
    Communities where a business is located or affected by a decision
    Suppliers
    Shareholders
    Creditors
    Government (and through them – taxpayers)
    Trade unions (and the workers they represent)
    NGOs and other advocacy groups (i.e. World Bank, IMF, Pressure Groups)
    Prospective employees
    Prospective customers
    Local communities
    National communities
    International community
    Competitors within a market
    Professional associations
  • 7. 4: Time Periods in Economics
    Be familiar with
    Immediate (momentary) especially in primary sectors
    Short run (at least 1fixed factor, diminishing returns)
    Long run (all factor inputs are variable, economies and diseconomies of scale)
    Applications of time periods in your analysis
    Elasticity of supply (micro and macro supply curves)
    Elasticity of demand (Ped, CPed, Income elasticity)
    ‘Discounting’ the future value of costs and benefits
    Long run macroeconomic policies e.g. supply-side / trade policy
    Long run micro policies – e.g. liberalising a market, nationalisation
  • 8. 5: (a) Demand and supply curves are often non-linear!
    P
    P
    S
    Changing elasticity of supply as output increases
    D
    Q
    Q
  • 9. 5(b): Upward sloping demand and downward-sloping supply!
    P
    P
    S1
    S2
    S2
    Long run supply with EoS
    D
    Q
    Q
  • 10. 6: Change the elasticity to build / develop youranalysis!
    P
    S + tax
    P2
    S
    P1
    D
    Q2
    Q1
  • 11. 6: Change the elasticity to build / develop youranalysis!
    More close substitutes – higher CPED
    P
    P
    S + tax
    S + tax
    P2
    P2
    S
    S
    P1
    P1
    D2
    D
    D1
    Q
    Q
    Q2
    Q2
    Q1
    Q1
  • 12. 7: Most markets are inter-related
    Changes in relative prices / rewards in one market affect resource allocation in others
    Key related-market concepts to revise:
    Substitutes
    Complements
    Derived demand
    Composite demand
    Joint supply
    Competitive supply
    Also important in macroeconomics
    Factor markets and the economic cycle (labour demand)
    Bond markets / currency markets / equity markets
    Macroeconomic effects of external demand/supply shocks
  • 13. 8: Relative prices, preferences and incentives
    Markets are powerful – don’t underestimate them – especially the power of setting the right incentives
    Policy interventions seek to change behaviour of agents
    People do respond to incentives
    Govt failure if the incentives turn out to be perverse
    Govt failure if the incentives are not strong enough (ineffective)
    Behaviour changes when relative costs &benefits alter
    Leads to substitution effects (changes in demand for X and Y)
    Agents react to changes in measured costs and benefits of their actions
    This requires
    A sufficient change in relative prices to make a difference
    Availability of alternative courses of action
    Sufficient time for agents to respond and react
  • 14. Examples of changes in relative prices
    London congestion charge / underground fares
    National minimum wage
    Changes in relative prices of low and high carbon energy
    Relative prices of different crops in farming
    Relative price of ethical-products
    Relative prices and demand for exports / imports e.g. Following an exchange rate change
    Relative prices of legal versus illegal transactions (e.g. crime / organ sales)
  • 15. 9: Expectations matter!
    Expectations of the future drive current behaviour!
    Housing market / property development / decisions on land use
    Capital investment decisions by businesses (expected profits)
    Food supply decisions – expected returns from different crops
    Currency demand and supply – speculative activity in FOREX
    Monetary policy / inflation – inflation expectations and wages
    Fiscal policy / tax cuts / govt borrowing – expectations of changes in taxes
    Formation of expectations:
    Rational expectations
    Adaptive expectations
  • 16. 10: The cost-benefit principle
    The mother of all economic ideas is the cost-benefit principle.
    It says that should take an action if, and only if, the extra benefit from taking it is greater than the extra cost
    The hard part is
    Identifying the relevant costs and benefits
    Measuring and valuing them
    Individual rationality does not always lead to a socially optimum / desirable outcome
    Behavioural economics questions the core rationality embedded into conventional textbook economics
  • 17. And finally….
    Most policy problems require a combination of strategies
    Understand the meaning of efficiency and equity in markets (allocative, productive, dynamic efficiency)
    Have the courage to challenge the conventional wisdom
    Let your diagrams do the work for you – develop the analysis with high quality diagrams
    Pick out bias in extracts – normative economics
    Use the data that is provided but be aware of limitations
    What is rational for individual agents can often leading to outcomes that are damaging for society
    Be cautious about government intervention – markets often find solutions to intractable problems in the long run – if the incentives are strong enough
  • 18. Tutor2u
    Keep up-to-date with economics, resources, quizzes and worksheets for your economics course.