1. Paper Structure & Exam Technique
AS Economics
Paper Structure & Exam Technique

2. Overview Microeconomics 90 minutes 60 marks 15 multi-choice (15 mins)
Case study (5 mins read)
15 marks – short answer questions (15 mins)
10 mark Comment / Evaluation question (15 mins)
20 mark essay – choice – 1 out of 2 (30 mins)
Leaves 10 minutes to check work

3. Multiple Choice Accessible Know definitions
Emphasis on the quantitative elements
This was a weak area last year
You need to be able to manipulate data – e.g. calculate elasticities, percentage changes, move from nominal to real values, use index numbers

4. Short Answer Questions
Explain – more than just a definition required
Accurate –
Example – PED – change in ‘QUANTITY DEMANDED’ not ‘demand’, and the minus sign must be included

5. Data Response Questions
You must be able to link the data – either together if 2 or more sets and/or to the economic theory being asked about
Say what data supports the view
What data does not support the view
What the trend is
Look carefully at the years over which you should be commenting
Look at titles / subtext etc. – is the data estimated, forecasted? – Is it reliable
Provide judgement – overall does the data support the view…

6. Diagram questions Diagrams must be accurate Label
Axes (full words, not just P)
Curves
Equilibria
Micro labels in microeconomics / macro labels in macroeconomics exams
Use the diagram labels in your analysis
Explain why the curve shift (e.g. increase in costs, rise in Consumption which is a component of AD)
Explain what happens to Price / Price Level
Explain what happens to Quantity / Real GDP

7. Analysis This is where you explain Economic Theory
Examiner looking for strong CHAINS OF ARGUMENT
Use correct terminology
Shifts
Extensions / Contractions
Write in short sentences – helps keep focus

8. Evaluation
Counter analysis – why might the economic theory not hold true
On essays aim for 3 points – explained
Make a judgement

9. Guidance from OCR on the new marking system https://www. youtube

10. To what extent are indirect taxes the most effective way to correct the market failure caused by smoking cigarettes?
Knowledge and understanding
Demerit goods – information failure - worse for individual than they realise (causes diseases such as lung cancer) and also imposes externalities on third parties such as illness from passive smoking and increased costs to NHS
Demerit goods – over consumed  over produced  too many scare resources allocated to their production  allocative inefficiency (MSC > MSB) & therefore market failure
Indirect tax – tax imposed on a good via the producer – can be used to discouraged production and consumption

11. To what extent are indirect taxes the most effective way to correct the market failure caused by smoking cigarettes?
Analysis
Diagram (ACCURATE)
Then use labels in diagram
in analysis

12. To what extent are indirect taxes the most effective way to correct the market failure caused by smoking cigarettes?
Analysis (The Economics) continued
Indirect tax imposed by government  increase in costs of production  less willing and able to supply at each price  S to S1 increase price P to P1  contraction in demand and quantity demanded and supplied falls from Q to Q1
This reduces the over-consumption of demerit good and moves the market equilibrium to a more allocatively efficient level where MSB = MSC and thereby correcting the market failure caused by the cigarettes.
Effective if
Demand is price elastic as  P  large fall in Qd
Raises revenue for government which can be hypothecated towards treatment of effects of smoking

13. Analysis continued (counter analysis) However
To what extent are indirect taxes the most effective way to correct the market failure caused by smoking cigarettes?
Analysis continued (counter analysis)
However
Does not tackle information failure
Revenue may not be hypothecated
Not effective of PED inelastic

14. To what extent are indirect taxes the most effective way to correct the market failure caused by smoking cigarettes?
Alternative Methods
Regulation – e.g. banning cigarettes – but this mean government acting in a paternalistic way and not enabling citizens to make their own value judgements
Provision of information – but again this could be ignored

15. To what extent are indirect taxes the most effective way to correct the market failure caused by smoking cigarettes?
Evaluation
Make sure you reference question (use same wording so that it signals to the examiner you are answering the question, and also helps you stay on track)
Indirect taxes can be the most effective way of correcting the market failure caused by smoking cigarettes if demand for them is price elastic. However, given their addictive nature, this is unlikely to be the case. I therefore believe that they would be more effective if combined with information provision from the government (and indeed the tax revenue could be used to fund this).
This combination would reduce quantity demanded through the higher prices reducing over-consumption, and resolve some of the information failure thereby correcting the market failure.