Effective Economics Exam Strategies for AS Micro Paper

1. Friday’s Unit 1 (AS) Micro Paper AS Micro Unit 1 May 2011

2. Grade Boundaries for AS Micro • Data is from the Jan 2011 paper (raw mark out of a total of 75) • For the paper as a whole – these were the grade boundaries • A: 54 • B: 47 • C: 40 • D: 34 • E: 28

5. Obey key instruction words such as define, compare, significant, explain and evaluate. • Start a new paragraph on each occasion that a new argument or line of reasoning is introduced into the answer

7. Data Question (8 marks) • Start each point of comparison or identification with a separate paragraph • Always give unit of measurement (e.g. $billion or % of GDP) • Avoid simple “data trawling” • Take note of the question - e.g. “take note of the word significant” • Look for trends / volatility / convergence / divergence / correlation • Always put data into your answer • Alwaysmake at least one calculation

8. Explanation questions (12 marks) • E.g. With the help of a demand and supply diagram, explain how a tax on the plastic bags distributed by shops and supermarkets might affect the use of plastic bags • Quality of diagrams matters a lot (labelling, clarity, accuracy – size – at least 1/3rd of a side of A4) • Draw from prompts in the data when explaining • Double diagrams often work well • Remember the importance of elasticity of demand and supply in shaping the analysis • Explanation requires building a “chain of reasoning”

9. Evaluation Question (25 marks) • Max mark of 15/25 if there is no evaluation • Analysis comes first! “good evaluation first requires sound economic analysis of the issue or problem posed by the question.” • Examiners are keen to reward good awareness of recent or current economic events • Make good use of the extracts (including the data) to score marks for application • Go back to the charts / tables in the 25 mark question – they are there for a reason! • “Candidates do need to use the data explicitly when responding to the context questions”

10. OK ... What to revise – what really matters in the next 24 hrs? • Be really prepared with knowledge of key definitions • The power of market forces (crucial) – i.e. the role of signals and incentives in driving resource allocation • Elasticity of demand and supply and price volatility in markets – and the consequences of this • State provision versus the market • Health care • Public goods issues • Benefits and costs of monopoly power / competitive forces • Economic welfare and efficiency (including externalities) • Supply and demand side interventions and their impact • Government failure (crucial) – in the short and long run

11. Government failure • Decisions made in pure political self interest • Poor value for money from public sector investment • Government policy myopia • Regulatory capture • Disincentives arising from specific policies • Information failures in government policies • The “law of unintended consequences” • The costs of regulation may outweigh the benefits

12. Unintended consequences • Higher capital gains tax – reduces new house building - worsens housing shortages /affordability • Bank bail-outs – raises the problem of moral hazard • Bio-fuel subsidy – causes food price inflation and hits the poorest in society • Smoking ban – increases demand for and use of energy inefficient patio-heaters • Windfall tax on North Sea oil and gas companies led to a huge fall in investment and exploration – just years before oil prices surged • Tariffs on steel – hits domestic car and construction firms • Targets for treating patients – leads to reduction in the quality of care e.g. Staffordshire General scandal

14. Above all ...... • Be strict on timing • Develop one argument per paragraph + evaluate • Use lots of supporting examples • Make sure handwriting and diagrams are legible • Use more paper rather than less • Always finish with a reasoned final paragraph – but don’t repeat points already made • Give the examiner plenty of current context