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TRANSCRIPT
Edexcel GCE
Teachers� Guide
Edexcel Advanced Subsidiary GCE in EconomicsFirst examination June 2001Edexcel Advanced GCE in EconomicsFirst examination June 2002
July 2000
Edexcel is one of the leading examining and awarding bodies in the UK and throughout theworld. We provide a wide range of qualifications including academic, vocational, occupationaland specific programmes for employers.
Through a network of UK and overseas offices, Edexcel�s centres receive the support they needto help them deliver their education and training programmes to learners.
For further information please call our Customer Response Centre on 020 7393 4500, or visit ourwebsite at www.edexcel.org.uk
Authorised by Sue Parker
Publications Code UA007567
All the material in this publication is copyright© Edexcel Foundation 2000
Contents
SECTION 1 � INTRODUCING THE NEW SPECIFICATION PAGE
Introduction��������������������������� 1
The new specification: A perspective by Peter Maunder, Chief Examiner��.... 2
QCA Subject Criteria�����������������������.. 4
SECTION 2 � ADDITIONAL GUIDANCE ON CONTENT
AS: Additional Guidance on specification content of Units 1-3������� 11
A2: Additional Guidance on specification content of Units 4-6������� 19
SECTION 3 - SCHEMES OF WORK
AS/Advanced GCE Economics by Andrew Moth (outline)���������. 30
AS/Advanced GCE Economics by Andrew Moth (full)���������.. 34
AS/Advanced GCE Economics by Quintin Brewer�����������.. 47
AS/Advanced GCE Economics for 2 teachers by Peter Newton-Lewis���� 51
AS/Advanced GCE Economics by Nick O�Flynn������������ 61
The Options - Units 5A and 5B by Dr Roy Bowden����������� 64
SECTION 4 � READING LIST, RESOURCES AND WEBSITES
Reading list and resources��������������������� 72
Websites���������������������������� 76
SECTION 5 � FURTHER GUIDANCE ON IT, KEY SKILLS AND SUPPORTEDCHOICE QUESTIONS
IT in Advanced GCE Economics Teaching � Some Suggestions by RussellDudley-Smith�������������������������� 78
Key Skills in AS/Advanced GCE Economics by Kiran Chopra��.����.. 84
Notes of Guidance for supported choice questions by Bob Wright�����. 92
UA007567 � Edexcel AS/Advanced GCE Economics Teachers� Guide 1
SECTION 1 � INTRODUCING THE NEW SPECIFICATION
Introduction to the Curriculum 2000 Teachers� Guide
The production of this Teachers� Guide replicates what appeared in August 1994 when a new
syllabus was last introduced. Many teachers have commented how helpful they found the
material in that earlier guide in preparing themselves for teaching new areas of subject content
and making their students fully aware of the changes in examination assessment. We have
pursued very much the same approach as in 1994 but, given the fundamental replacement of a
linear syllabus by one structured into six units of content and assessment, we are highlighting this
time the schemes of work providing different ways of delivering the new specification. These
schemes of work provide teachers with a number of alternative ways of covering the subject
content for both the new AS and A2 examinations.
It is the intention that this guide will have subsequent updates provided in various forms e.g.,
revised reading lists and reports issued at teachers' conferences. Each Edexcel centre that is
preparing candidates for the new examinations in 2001 and 2002 will receive one copy of this
guide free of charge. Further copies are available upon application to Edexcel Publications at a
cost of £5.50 plus Postage and Packing.
July 2000
2 UA007567 − Edexcel AS/Advanced GCE Economics Teachers� Guide
The New Specification: A Perspective
Peter Maunder
The 1994 Briefing Guide began by indicating how the then new syllabus had to conform to theSubject Core for Economics issued by the School Curriculum and Assessment Authority (SCAA).That syllabus incorporated a core and options model with, for the first time, a choice of twooptions, Product and Labour Markets or Economic Development. To help those adopting the newsyllabus, the briefing guide reproduced the Subject Core to show how the syllabus put moreemphasis on some parts of that core.
This new Guide again emphasizes to teachers how the new specification relates to a documentpublished by the current 'regulator' for the industry, the Qualifications and Curriculum Authority(QCA). The relevant document is the Subject Criteria for Economics published in 1998. Inparticular, whereas in 1994 the Board had considerable flexibility in how it proposed toincorporate the then Subject Core, in 1999 Edexcel was explicitly required to meet severalrequirements. The main constraints that needed to be met were:
(a) to arrange the subject content into six units where the assessment of each unit wasweighted between 15% and 20%.
(b) to arrange that subject content with a 50:50 weighting for a one year course of study (AS)and for a further one year course of study (A2).
(c) to ensure that a least 20% synoptic assessment was included at the end of the second yearof the A2 course.
Moreover, in the determination of subject content, the new Subject Criteria required examinationboards to include two themes within both the AS and A2:
♦ economic choices and markets;
♦ the national and international economy.
The Subject Criteria document is reproduced below since it shows how Edexcel had to satisfy allthese minimum requirements concerning both of these themes relating to microeconomics andmacroeconomics.
In meeting these new requirements, Edexcel submitted its proposals which aimed to satisfy whatwere considered vital aspects of its approach to the study and examination of economics. In shortthese were:
♦ a continuing need to emphasize the relevance of economics to real world issues.
♦ a belief in the continuing relevance of well-established assessment techniques.
♦ an enthusiasm that students should have considerable choice of questions such that they canreveal what they know and thus be appropriately assessed.
UA007567 � Edexcel AS/Advanced GCE Economics Teachers� Guide 3
QCA approved both the specification and specimen papers which incorporated all of theseprinciples. The major difference in content between the 9120 syllabus and the new 9121 A2specification is that the two options forming Unit 5 are now called Labour Markets and EconomicDevelopment. In the former case there is no longer any of the product market material that hasbeen part of Product and Labour Markets. Most of the product market content now appears inUnit 4 - Industrial Economics. The Unit 5A Labour Markets content now incorporates whollynew material relating to aspects of inequality.
In terms of assessment, the AS/A2 specification retains the use of structured essays and dataresponse questions. The stimulus question format used in the 9120 option papers has beenretained but with a choice of topics instead of a compulsory single question. Multiple choicequestions have been retained but in both Units 1 and 4 candidates are now required to justify theirchosen key. This 'innovation' brings the use of �supported� choice questions in examinations intoline with how such questions are used in classroom teaching. This new briefing guide includessome illustrations of how Edexcel will mark responses to the ten supported choice questions inboth Units 1 and 4.
The new specification does not include a component based on internal assessment.
4 UA007567 − Edexcel AS/Advanced GCE Economics Teachers� Guide
ACCACACCACACCACACCAC CCEACCEACCEACCEA QCAQCAQCAQCA
GCE ADVANCED SUBSIDIARY (AS) AND ADVANCED (A) LEVEL SPECIFICATIONSGCE ADVANCED SUBSIDIARY (AS) AND ADVANCED (A) LEVEL SPECIFICATIONSGCE ADVANCED SUBSIDIARY (AS) AND ADVANCED (A) LEVEL SPECIFICATIONSGCE ADVANCED SUBSIDIARY (AS) AND ADVANCED (A) LEVEL SPECIFICATIONS
SUBJECT CRITERIASUBJECT CRITERIASUBJECT CRITERIASUBJECT CRITERIAFORFORFORFOR
ECONOMICSECONOMICSECONOMICSECONOMICS
1.1.1.1. IntroductionIntroductionIntroductionIntroduction
1.1 AS and A level subject criteria set out the knowledge, understanding, skills andassessment objectives common to all AS and A level specifications in a given subject.They provide the framework within which the awarding body creates the detail of thespecification.
Subject criteria are intended to:
• help ensure consistent and comparable standards in the same subject across theawarding bodies;
• define the relationship between the AS and A level specifications, with the AS as a
subset of the A level;
• ensure that the rigour of A level is maintained;
• help higher education institutions and employers know what has been studied andassessed.
Any specification which contains significant elements of the subject Economics must beconsistent with the relevant parts of these subject criteria.
2. Aims
2.1 AS and A level specifications in Economics should encourage students to:
• develop an understanding of economic concepts and theories through a criticalconsideration of current economic issues, problems and institutions that affecteveryday life;
• apply economic concepts and theories in a range of contexts and to appreciate their
value and limitations in explaining real-world phenomena;
• analyse, explain and evaluate the strengths and weaknesses of the market economyand the role of government within it.
3.3.3.3. Specification ContentSpecification ContentSpecification ContentSpecification Content
3.1 There are no prior knowledge requirements for AS and A level specifications inEconomics.
UA007567 � Edexcel AS/Advanced GCE Economics Teachers� Guide 5
3.2 AS and A level specifications in Economics should:
• provide a coherent combination of micro and macro content and methods of enquiry;• allow students to explore a range of economic issues and to draw on data from local,
national and international sources;• develop a critical approach to economic models and methods of enquiry.
AS specifications will require the use of basic models to explore current economicbehaviour, whilst A level specifications will require the use and evaluation of morecomplex modelling and its application to a wider range of contexts.
Knowledge, Understanding and SkillsKnowledge, Understanding and SkillsKnowledge, Understanding and SkillsKnowledge, Understanding and Skills
3.3 The knowledge and understanding is set out in a two-column format. The essentialknowledge and understanding is set out on the left-hand side of the page together with acommentary, where appropriate, on the right-hand side of each section. A preface to eachsection sets out how expected progression in students� knowledge, understanding andskills should be reflected in AS and A level specifications.
3.4 AS and A level specifications should require students to study:
• Economic choices and markets
• The national and international economy.
3.4.13.4.13.4.13.4.1 Economic choices and marketsEconomic choices and marketsEconomic choices and marketsEconomic choices and markets
The emphasis should be on the market model of resource allocation. Students shouldunderstand the economic behaviour of consumers, producers and governments incompetitive and non-competitive markets. The impact of technological innovation,environmental change, globalisation and of better informed consumers on present andfuture economic behaviour should be considered.
AS students should be aware of the assumptions of the market model and be able to useit, for example to explore the impact of a new product and new supplier in a competitivemarket. They should be able to analyse the implications for consumers and governmentof a market dominated by one supplier.
In addition, A level students should be able to evaluate economic models as representedin written, numerical and graphical forms. They should be able to use and evaluatemethods of enquiry, interpret different types of data from multiple sources and be able topropose possible solutions to problems.
• The reason for individuals,organisations and societieshaving to make choices
Students should understand:
- the basic economic problem and the way itgives rise to the need to make choices andexchange;
- the concepts of opportunity cost, productionpossibility curve, specialisation, division oflabour and exchange.
6 UA007567 − Edexcel AS/Advanced GCE Economics Teachers� Guide
• How competitive marketswork
Students should understand:
- the role of markets in influencing choicesand allocating resources;
- the objectives of consumers and producersas participants in a market;
- the basic model of supply and demand andprice determination in product, factor andmoney markets; (a knowledge of thetheoretical derivation of the demand andsupply curve is not required.)
- the concepts of price, income and crosselasticity of demand, price elasticity ofsupply and their applications;
- the concepts of consumer and producersurplus;
- the conditions for both productive andallocative efficiency.
• The spectrum ofcompetition andcompetitive behaviour
Students should understand:
- the importance of the profit motive and otherobjectives in determining the competitivebehaviour of firms;
- the significance of freedom of entry and exitof firms into markets;
- the models of perfect competition andmonopoly, their limitations and relationshipto the way in which firms behave in realworld markets;
- other market structures and theirimplications for the way resources areallocated.
• Why markets may notwork efficiently
Students should understand:
- that externalities, market dominance, publicgoods, merit goods and an unequaldistribution of income are significant causesand consequences of market failure.
• The impact of governmentintervention on marketoutcomes and efficiency
Students should understand:
- the way governments, in pursuit of theireconomic, social and distributionalobjectives, intervene in markets to correctmarket failure, for example through taxation,subsidies, price controls, state provision and
UA007567 � Edexcel AS/Advanced GCE Economics Teachers� Guide 7
regulations;
- that, in certain cases, governments createrather than remove distortions, for examplein agriculture and housing;
- the reasons for, and consequences of, priceand non-price competition, including cartels,price agreements and price wars;
- the nature and consequences of barriers tocompetition;
- competition policy and its impact.
3.4.2 The national and international economy
The emphasis should be on the use of economic models to develop critical understandingof macroeconomic and international issues. AS and A level specifications should usecontemporary and recent historical data. [Awarding bodies should define �recenthistorical� in their AS and A level specifications.] Students should understandgovernment objectives and policies as they relate to economic growth and employmentand to the stability of prices and the balance of payments.
AS students should be able to use the basic AS/AD model and data to understand whysupply side and/or demand side policies may be seen as appropriate ways of managing aneconomy. They should be able to predict the possible impact of such policies and torecognise the assumptions involved. They should be able to argue for differentapproaches and identify success criteria.
In addition, A level students should understand the relationships and linkages whichunderpin macroeconomic models and be able to predict the possible impact of policychanges on local, national and international markets. They should be able to evaluate theeffectiveness of government policies across a wide range of contexts.
• Government policyobjectives and indicators ofnational economicperformance
Students should understand:
- governments� objectives as they relate toeconomic growth, employment, inflation andthe balance of payments;
- how data relating to these objectives can beused to make comparisons with othereconomies.
• The reasons for, andcompatibility of,government policyobjectives
Students should understand:
- the consequences of inflation, unemployment,instability of exchange rates and a balance ofpayments deficit;
- the costs, benefits and sustainability ofeconomic growth;
- possible conflicts between policy objectives.
8 UA007567 − Edexcel AS/Advanced GCE Economics Teachers� Guide
• Aggregate demand andaggregate supply; thedetermination of output,employment and prices
Students should understand:
- the constituents of, and influences upon,aggregate demand;
- the factors which influence aggregate supply;
- how aggregate demand and supply analysiscan be used to illustrate macro-economicproblems and issues.
• The application of macro-economic policyinstruments
Students should understand:
- the nature and impact of fiscal, monetary,exchange rate and supply side policies;
- the theories of interest rate and exchangerate determination.
• Structure and essentialdeterminants ofinternational transactions
Students should understand:
- the general pattern of trade between the UKand the rest of the world;
- trade with developing economies;
- the principle of comparative advantage andits limitations;
- the reasons for, methods and consequencesof, protection against non-EU competition;
- the determination of exchange rates;European Monetary Union.
4.4.4.4. Key SkillsKey SkillsKey SkillsKey Skills
4.1 AS and A level specifications in Economics should provide opportunities for developingand generating evidence for assessing the Key Skills listed below. Where appropriate,these opportunities should be directly cross-referenced, at specified level(s), to thecriteria listed in Part B of the Key Skills specification.
• Communication
• Information Technology
• Application of Number
• Improving Own Learning and Performance
• Working with Others
• Problem Solving
UA007567 � Edexcel AS/Advanced GCE Economics Teachers� Guide 9
5.5.5.5. Assessment ObjectivesAssessment ObjectivesAssessment ObjectivesAssessment Objectives
5.1 The assessment objectives for AS and A level are the same.
5.2 All candidates must be required to meet the following assessment objectives. Theassessment objectives are to be weighted in all specifications as indicated. Assessmentobjectives 3 and 4 should be given a greater weighting for A level than for AS (at least25% for A level).
Assessment Objectives WeightingAO1 demonstrate knowledge and understanding of the
specified content;20-30%
AO2 apply knowledge and critical understanding to problemsand issues arising from both familiar and unfamiliarsituations;
20-30%
AO3 analyse economic problems and issues; 20-30%
AO4 evaluate economic arguments and evidence, makinginformed judgements.
20-30%
6. Scheme of Assessment
Internal Assessment6.1 All A level specifications in Economics may have a maximum internal assessment
weighting of 30%.
Synoptic Assessment6.2 All specifications should include a minimum of 20% synoptic assessment. All synoptic
assessment units should be taken at the end of the course and be externally assessed.Synoptic assessment in Economics will test candidates� understanding of the connectionsbetween different elements of the subject. It will relate to all the assessment objectives.In particular, synoptic assessment should test candidates� ability to:
• understand the inter-relatedness of many economic issues, problems and institutions;
• understand how certain economic concepts, theories and techniques may be relevantto a range of different contexts;
• apply such concepts, theories and techniques in analysing economic issues andproblems and in evaluating arguments and evidence.
Synoptic assessment may be based on one section of the specification content providedthat the tasks set allow candidates to demonstrate their ability in relation to the above.The emphasis in synoptic assessment should be on candidates� ability to think aseconomists and to use effectively the economist�s �tool kit� of concepts, theories andtechniques which they have built up during their course of study.
Synoptic assessment could be conducted through the use of an extended case study oressay questions.
10 UA007567 − Edexcel AS/Advanced GCE Economics Teachers� Guide
Key Skills AssessmentKey Skills AssessmentKey Skills AssessmentKey Skills Assessment6.3 The Key Skill of Communication must contribute to the assessment of Economics at AS
and A level as stated in paragraph 13 of the Advanced Subsidiary and Advanced levelqualification-specific criteria.
The requirement for all AS and A level specifications to assess candidates� quality ofwritten communication will be met through all four assessment objectives.
7.7.7.7. Grade DescriptionsGrade DescriptionsGrade DescriptionsGrade Descriptions
7.1 The following grade descriptions indicate the level of attainment characteristic of thegiven grade at A level. They give a general indication of the required learning outcomesat each specified grade. The descriptions should be interpreted in relation to the contentoutlined in the specification; they are not designed to define that content. The gradeawarded will depend in practice upon the extent to which the candidate has met theassessment objectives overall. Shortcomings in some aspects of the examination may bebalanced by better performances in others.
7.2 Grade A
Candidates will demonstrate in-depth knowledge and critical understanding of a widerange of economic theories and concepts. They will apply this knowledge andunderstanding to analyse familiar and unfamiliar situations, issues and problems, usingappropriate numerical and non-numerical techniques accurately. They will effectivelyevaluate evidence and arguments, making reasoned judgements to present appropriateand well supported conclusions.
7.3 Grade C
Candidates will demonstrate knowledge and understanding of a range of economictheories and concepts. They will apply this knowledge and understanding to analysefamiliar and unfamiliar situations, issues and problems, using appropriate numerical andnon-numerical techniques. They will evaluate evidence and arguments to presentreasoned conclusions.
7.4 Grade E
Candidates will demonstrate knowledge and understanding of a limited range ofeconomic theories and concepts. They will show some ability to use this knowledge andunderstanding in order to analyse familiar and unfamiliar situations, issues and problemsmaking use of numerical and/or non-numerical techniques. Candidates� evaluation ofevidence and arguments will be limited.
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Add
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and
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furth
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e sp
ecifi
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nten
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the
first
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colu
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e th
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n at
tem
pts t
o pi
ck u
p an
dre
solv
e as
far a
s pos
sibl
e is
sues
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t the
man
y IN
SET
mee
tings
hel
d ar
ound
the
coun
try o
ver t
he la
st y
ear o
r so.
It i
s rec
ogni
sed
that
this
type
of g
uida
nce
can
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com
plet
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com
preh
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ve b
ut it
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ned
to m
ake
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e ex
plic
it th
e br
oad
limits
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he c
onte
nt o
f eac
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the
six
units
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rther
gui
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e m
ay b
e pr
oduc
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futu
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f req
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AS:
Add
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al G
uida
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on sp
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nits
1-3
In a
ll th
ree
AS
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, it i
s exp
ecte
d th
at c
andi
date
s will
hav
e an
und
erst
andi
ng o
f ind
ex n
umbe
rs a
nd th
eir u
se in
tim
e se
ries.
Un
it 1
:Mar
kets
� h
ow
th
ey w
ork
This
uni
t pro
vide
s an
intro
duct
ion
to th
e na
ture
of e
cono
mic
s and
exa
min
es th
e op
erat
ion
of m
arke
ts fo
r goo
ds a
nd se
rvic
es. A
t the
end
of t
his
unit,
stud
ents
shou
ld b
e ab
le to
und
erst
and
the
pric
e m
echa
nism
as a
mea
ns o
f allo
catin
g re
sour
ces a
nd b
e ab
le to
app
ly su
pply
and
dem
and
anal
ysis
to re
al w
orld
situ
atio
ns.
Con
tent
Stud
ents
shou
ld b
e ab
le to
:A
dditi
onal
Gui
danc
e
Posit
ive
and
norm
ativ
eec
onom
ics.
Dis
tingu
ish
betw
een
obje
ctiv
e st
atem
ents
and
valu
e ju
dgem
ents
.Sc
arci
ty a
nd o
ppor
tuni
ty c
ost.
Und
erst
and
the
prob
lem
of u
nlim
ited
wan
tsan
d fin
ite re
sour
ces.
Und
erst
and
the
fund
amen
tal p
robl
ems f
acin
g an
y ec
onom
y.K
now
ledg
e of
fact
ors o
f pro
duct
ion.
The
prod
uctio
n po
ssib
ility
boun
dary
or
fron
tier.
Use
this
ana
lysi
s to
illus
trate
the
conc
ept o
fop
portu
nity
cos
t and
the
effic
ient
allo
catio
nof
reso
urce
s.
Und
erst
and
the
dist
inct
ion
betw
een
capi
tal g
oods
and
cons
umer
s goo
ds.
Kno
w th
at p
oint
s with
in th
e PP
F in
dica
teun
empl
oym
ent o
f res
ourc
es a
nd th
at e
cono
mic
gro
wth
cau
ses
an o
utw
ard
shift
in th
e PP
F.
Spec
ialis
atio
n an
d th
e di
visio
nof
labo
ur.
Und
erst
and
the
bene
fits o
f spe
cial
isat
ion
and
its si
gnifi
canc
e fo
r tra
de b
etw
een
coun
tries
.
A c
onsi
dera
tion
of th
e ris
ks a
ssoc
iate
d w
ith sp
ecia
lisat
ion
isre
quire
d.
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Eco
nom
ies o
f sca
le.
Giv
e ex
ampl
es o
f eco
nom
ies o
f sca
le a
ndun
ders
tand
that
they
will
resu
lt in
low
erav
erag
e co
sts.
Kno
wle
dge
of in
tern
al e
cono
mie
s of s
cale
and
und
erst
and
the
sour
ces o
f suc
h ec
onom
ies e
.g. t
echn
ical
, mar
ketin
g.D
eriv
atio
n of
the
long
run
aver
age
cost
cur
ve is
NO
T re
quire
d.
The
adv
anta
ges o
fin
tern
atio
nal t
rade
: the
prin
cipl
e of
com
para
tive
adva
ntag
e.
Und
erst
and
the
gain
s fro
m tr
ade,
eg
incr
ease
d ch
oice
for c
onsu
mer
s, la
rger
mar
kets
for f
irms,
and
be a
ble
to d
istin
guis
hbe
twee
n ab
solu
te a
nd c
ompa
rativ
ead
vant
age.
Und
erst
andi
ng o
f opp
ortu
nity
cos
t, sp
ecia
lisat
ion
and
the
divi
sion
of l
abou
r in
dete
rmin
ing
trade
is e
xpec
ted
but t
heab
ility
to e
xpla
in th
e la
w o
f com
para
tive
adva
ntag
ear
ithm
etic
ally
is N
OT
requ
ired.
Con
sum
er a
nd p
rodu
cer
surp
lus.
Def
ine
and
dist
ingu
ish
betw
een
thes
eco
ncep
ts a
nd b
e ab
le to
illu
stra
te th
em.
The
abili
ty to
show
con
sum
er a
nd p
rodu
cer s
urpl
us o
n su
pply
and
dem
and
diag
ram
s is r
equi
red.
The
pric
e m
echa
nism
as a
mea
ns o
f allo
catin
g re
sour
ces.
Expl
ain
the
func
tions
of t
he p
rice
mec
hani
sm. E
xam
ine
how
pric
es re
spon
d to
chan
ges i
n co
nsum
er p
refe
renc
es a
ndpr
ovid
e in
cent
ives
to p
rodu
cers
.
The
role
of t
he p
rice
mec
hani
sm in
res
ourc
eal
loca
tion
in fr
ee m
arke
t and
mix
ed e
cono
mie
s.
Ana
lyse
the
adva
ntag
es a
nd d
isad
vant
ages
of th
e fr
ee m
arke
t eco
nom
y an
d w
hy th
ere
are
mix
ed e
cono
mie
s.
Und
erst
and
the
econ
omic
eff
ects
of t
hetra
nsiti
on o
f Eas
tern
Eur
opea
n ec
onom
ies
away
from
cen
tral p
lann
ing.
Det
aile
d kn
owle
dge
of E
aste
rn E
urop
ean
econ
omie
s is N
OT
requ
ired.
The
supp
ly o
f, an
d de
man
dfo
r, g
oods
and
serv
ices
.U
nder
stan
d th
e di
stin
ctio
n be
twee
n a
shift
of, a
nd m
ovem
ent a
long
, dem
and
and
supp
ly c
urve
s. Th
ey sh
ould
als
o un
ders
tand
the
caus
es o
f suc
h m
ovem
ents
and
shift
s.
Und
erst
and
the
sign
ifica
nce
of p
rice
chan
ges a
nd c
hang
es in
cond
ition
s of s
uppl
y an
d de
man
d e.
g. c
osts
of p
rodu
ctio
n; re
alin
com
e; d
emog
raph
ic c
hang
es.
An
unde
rsta
ndin
g of
the
basi
sof
the
dem
and
curv
e e.
g. m
argi
nal u
tility
theo
ry is
NO
Tre
quire
d.
A00
7567
− E
dexc
el A
S/A
dvan
ced
GC
E Ec
onom
ics T
each
ers�
Gui
de13
The
conc
ept o
f ela
stic
ity w
ithre
spec
t to
both
supp
ly a
ndde
man
d.
Def
ine,
mea
sure
and
inte
rpre
t pric
eel
astic
ity o
f sup
ply,
pric
e, in
com
e an
d cr
oss
elas
ticity
of d
eman
d. T
hey
shou
ldun
ders
tand
the
dist
inct
ion
betw
een
norm
alan
d in
ferio
r goo
ds.
Expl
ain
the
sign
ifica
nce
and
uses
of e
last
iciti
es fo
r con
sum
ers,
firm
s and
the
gove
rnm
ent.
App
licat
ions
of s
uppl
y an
dde
man
d an
alys
is in
the
prod
uct a
nd fa
ctor
mar
kets
.
App
ly th
e pr
ice
mec
hani
sm in
mar
kets
,su
ch a
s com
mod
ities
, agr
icul
ture
, hou
sing
,la
bour
and
exc
hang
e ra
tes.
Det
aile
d kn
owle
dge
of th
ese
mar
kets
is N
OT
requ
ired.
App
licat
ions
of t
he p
rice
mec
hani
sm, o
ther
than
thos
em
entio
ned
are
also
rele
vant
.
Ent
ry a
nd e
xit o
f fir
ms.
Und
erst
and
the
impa
ct o
f a n
ew su
pplie
ran
d/or
new
pro
duct
on
pric
e an
d ou
tput
.U
nder
stan
ding
of c
onte
stab
le m
arke
ts is
NO
T re
quire
d in
this
Uni
t.
Gov
ernm
ent i
nter
vent
ion
inm
arke
ts: r
atio
nale
for
such
inte
rven
tion
and
the
effe
cts o
nco
nsum
ers,
prod
ucer
s and
the
gove
rnm
ent.
Expl
ain
the
reas
ons f
or g
over
nmen
tin
terv
entio
n in
diff
eren
t mar
kets
. In
the
case
of c
omm
odity
mar
kets
, the
ana
lysi
s of
buff
er st
ocks
to o
ffse
t flu
ctua
tions
in p
rices
and
outp
ut; i
n th
e ca
se o
f agr
icul
tura
lm
arke
ts, m
easu
res t
o st
abili
se fa
rm in
com
es�
the
anal
ysis
of t
he im
pact
of m
inim
umgu
aran
teed
pric
es in
agr
icul
tura
l mar
kets
; in
the
case
of l
abou
r mar
kets
, the
ana
lysi
s of
the
effe
cts o
f a n
atio
nal m
inim
um w
age.
Emph
asis
shou
ld b
e on
the
reas
ons f
or, a
nd m
etho
ds o
f,go
vern
men
t int
erve
ntio
n in
clud
ing
a di
agra
mm
atic
trea
tmen
t.A
n un
ders
tand
ing
of th
e C
obw
eb a
naly
sis i
s req
uire
d.C
onsi
dera
tion
of g
over
nmen
t fai
lure
app
ears
in U
nit 2
.
Indi
rect
taxe
s and
subs
idie
s.U
se su
pply
and
dem
and
anal
ysis
tode
mon
stra
te th
e im
pact
and
inci
denc
e of
taxe
s and
subs
idie
s on
cons
umer
s,pr
oduc
ers a
nd th
e go
vern
men
t.
Link
age
with
Uni
t 2 i.
e. re
spon
ses t
o m
arke
t fai
lure
.
14U
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7567
−Ed
exce
l AS/
Adv
ance
d G
CE
Econ
omic
s Tea
cher
s� G
uide
Un
it 2
:M
arke
ts �
wh
y th
ey f
ail
This
uni
t exa
min
es th
e na
ture
of m
arke
t fai
lure
, its
cau
ses a
nd p
ossi
ble
polic
y re
med
ies.
At t
he e
nd o
f thi
s uni
t, st
uden
ts sh
ould
be
able
toun
ders
tand
why
mar
kets
mig
ht n
ot a
lloca
te re
sour
ces e
ffic
ient
ly a
nd th
e m
etho
ds o
f dea
ling
with
mar
ket f
ailu
re, t
oget
her w
ith a
n ev
alua
tion
ofth
eir e
ffec
tiven
ess.
Con
tent
Stud
ents
shou
ld b
e ab
le to
:A
dditi
onal
Gui
danc
e:
Mar
ket f
ailu
re.
Expl
ain
reas
ons w
hy th
e pr
ice
mec
hani
sm m
ayno
t allo
cate
reso
urce
s eff
icie
ntly
, eg
whe
n th
ere
is o
nly
one
supp
lier o
r whe
n ex
tern
aliti
es a
repr
esen
t. (D
etai
led
know
ledg
e of
pro
duct
ive
and
allo
cativ
e ef
ficie
ncy
is n
ot re
quire
d.)
An
outli
ne k
now
ledg
e of
pro
duct
ive
and
allo
cativ
e ef
ficie
ncy
is re
quire
d in
clud
ing
anaw
aren
ess o
f ave
rage
and
mar
gina
l cos
t.H
owev
er, a
dia
gram
mat
ic tr
eatm
ent o
f the
seco
ncep
ts is
NO
T ex
pect
ed.
Type
s of m
arke
t fai
lure
:
♦
Mon
opol
y: re
ason
s for
mar
ket
dom
inan
ce.
Expl
ain
barr
iers
to e
ntry
of n
ew fi
rms,
egow
ners
hip
of ra
w m
ater
ials
, pat
ents
, eco
nom
ies
of sc
ale.
Ana
lyse
the
impl
icat
ions
of t
heex
iste
nce
of a
sing
le su
pplie
r and
abs
ence
of
com
petit
ion
for t
he fi
rm a
nd fo
r con
sum
ers.
Adi
agra
mm
atic
trea
tmen
t is N
OT
requ
ired.
Und
erst
andi
ng o
f con
test
able
mar
kets
is N
OT
requ
ired
in th
is U
nit.
• Pu
blic
, mer
it an
d de
mer
it go
ods.
Def
ine
and
give
app
ropr
iate
exa
mpl
es o
fgo
vern
men
t pro
visi
on.
• Ex
tern
aliti
es. T
he d
istin
ctio
n be
twee
npr
ivat
e co
sts a
nd so
cial
cos
ts (=
exte
rnal
cos
ts).
The
dist
inct
ion
betw
een
priv
ate
bene
fits a
nd so
cial
ben
efits
(=ex
tern
al b
enef
its).
The
reas
ons f
orgo
vern
men
t int
erve
ntio
n in
mar
kets
,su
ch a
s tra
nspo
rt an
d th
e en
viro
nmen
t,he
alth
and
edu
catio
n. T
he c
ase
for a
ndag
ains
t an
expa
nsio
n of
the
priv
ate
sect
or in
such
mar
kets
.
Expl
ain
the
impa
ct o
f pro
duct
ion
and
cons
umpt
ion
on th
ird p
artie
s. C
onsi
der e
xam
ples
such
as r
oad
cong
estio
n, e
nviro
nmen
tal
pollu
tion,
hea
lth c
are
and
prov
isio
n of
educ
atio
n.
Exam
ine
fact
ors t
hat m
ight
cau
se m
arke
t fai
lure
in th
e m
arke
ts fo
r hea
lth a
nd e
duca
tion,
eg
info
rmat
ion
prob
lem
s, un
equa
l inc
ome
dist
ribut
ion.
Ill
ustra
te e
xter
nal c
osts
and
bene
fits w
ith a
ppro
pria
te d
iagr
ams.
An
abili
ty to
use
a d
iagr
amm
atic
app
roac
hw
ith p
rivat
e an
d so
cial
mar
gina
l cos
t cur
ves
and
priv
ate
and
soci
al m
argi
nal b
enef
it cu
rves
is e
xpec
ted.
The
wel
fare
loss
to so
ciet
y co
uld
then
be
iden
tifie
d.
Und
erst
and
the
rela
tions
hip
betw
een
exte
rnal
cost
s and
dis
econ
omie
s of s
cale
. U
nder
stan
dth
e re
latio
nshi
p be
twee
n ex
tern
al b
enef
its a
ndex
tern
al e
cono
mie
s of s
cale
.
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dexc
el A
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dvan
ced
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E Ec
onom
ics T
each
ers�
Gui
de15
Det
aile
d kn
owle
dge
of th
e ex
ampl
esm
entio
ned
is N
OT
expe
cted
. O
ther
appl
icat
ions
are
als
o re
leva
nt e
.g. w
aste
disp
osal
, tou
rism
.
Rem
edie
s for
mar
ket f
ailu
re:
♦
for m
onop
oly:
regu
latio
n an
den
cour
agem
ent o
f ent
ry o
f new
firm
s
Und
erst
and
the
broa
d m
etho
ds o
f reg
ulat
ing
mon
opol
ies,
eg b
y re
gula
tions
rela
ting
to m
arke
tsh
are
and
mer
gers
; by
gove
rnm
ent m
easu
res t
opr
omot
e th
e gr
owth
of n
ew fi
rms.
How
ever
,de
taile
d kn
owle
dge
of le
gisl
atio
n co
ncer
ning
UK
and
EU
com
petit
ion
polic
y is
NO
T re
quire
d.
• fo
r ext
erna
l cos
ts a
nd d
emer
it go
ods:
regu
latio
n; ta
xatio
n; e
xten
sion
of
prop
erty
righ
ts; t
rada
ble
perm
its.
• fo
r ext
erna
l ben
efits
and
mer
it go
ods:
subs
idie
s to
prod
ucer
s and
con
sum
ers.
Ana
lyse
the
appl
icat
ion
of th
ese
polic
ies u
sing
supp
ly a
nd d
eman
d di
agra
ms w
here
app
ropr
iate
.Ev
alua
te th
e ar
gum
ents
for a
nd a
gain
st p
ublic
trans
port
prov
isio
n.
Und
erst
and
the
effe
ctiv
enes
s of e
ach
polic
y in
redu
cing
ext
erna
l cos
ts: e
.g. p
robl
em o
fen
forc
ing
legi
slat
ion;
the
impa
ct o
f ind
irect
taxa
tion
on p
rodu
cers
and
con
sum
ers a
nd th
esi
gnifi
canc
e of
ela
stic
ities
(lin
k w
ith U
nit 1
);th
e pr
actic
al p
robl
ems o
f ext
endi
ng o
wne
rshi
prig
hts;
and
the
use
of a
syst
em o
f per
mits
allo
win
g fir
ms t
o po
llute
, whi
ch c
an b
e tra
ded.
Con
side
ratio
n of
issu
es a
ssoc
iate
d w
ithsu
bsid
ies e
.g. i
mpa
ct o
n co
nsum
ers a
ndpr
oduc
ers;
cos
t to
the
gove
rnm
ent (
link
with
Uni
t 1).
Gov
ernm
ent f
ailu
re.
Und
erst
and
how
gov
ernm
ent a
ctio
n m
ay re
duce
econ
omic
eff
icie
ncy
by in
appr
opria
te re
spon
ses
or le
ad to
uni
nten
ded
resu
lts, e
g ou
tcom
es o
fag
ricul
tura
l sta
bilis
atio
n po
licie
s. Th
ey sh
ould
also
exa
min
e ot
her s
ourc
es o
f gov
ernm
ent
failu
re, e
g ad
min
istra
tive
cost
s; h
ow su
bsid
ies
mig
ht p
reve
nt e
xit f
rom
the
indu
stry
.
Expl
ain
why
gov
ernm
ent i
nter
vent
ion
mig
htle
ad to
mar
ket d
isto
rtion
s.
16U
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7567
−Ed
exce
l AS/
Adv
ance
d G
CE
Econ
omic
s Tea
cher
s� G
uide
Un
it 3
: Man
agin
g t
he
eco
no
my
This
uni
t pro
vide
s an
intro
duct
ion
to th
e ke
y m
easu
res o
f eco
nom
ic p
erfo
rman
ce a
nd th
e m
ain
obje
ctiv
es a
nd in
stru
men
ts o
f gov
ernm
ent p
olic
y.A
t the
end
of t
his u
nit,
stud
ents
shou
ld h
ave
an u
nder
stan
ding
of t
he k
ey g
oals
of g
over
nmen
t pol
icy,
the
basi
c ag
greg
ate
dem
and/
aggr
egat
esu
pply
mod
el a
nd th
e po
licie
s tha
t can
be
used
in th
e m
anag
emen
t of t
he e
cono
my.
Con
tent
Stud
ents
shou
ld b
e ab
le to
:A
dditi
onal
Gui
danc
e
Mea
sure
s of t
he e
cono
mic
perf
orm
ance
of c
ount
ries
:Th
ese
are
indi
cato
rs o
f the
hea
lth o
f the
econ
omy.
An
unde
rsta
ndin
g of
inde
xnu
mbe
rs; t
he d
istin
ctio
n be
twee
n re
al a
ndno
min
al v
alue
s; a
nd ti
me
serie
s is r
equi
red.
• Th
e R
etai
l Pric
e In
dex
Und
erst
and
how
the
rate
of i
nfla
tion
is m
easu
red
by th
eR
etai
l Pric
e In
dex
and
cons
ider
its l
imita
tions
.K
now
ledg
e of
the
dist
inct
ion
betw
een
RPI
and
RPI
X is
requ
ired.
• Th
e Le
vel o
f Une
mpl
oym
ent
Und
erst
and
alte
rnat
ive
met
hods
of m
easu
ring
unem
ploy
men
t and
con
side
r the
ir lim
itatio
ns.
Kno
wle
dge
of th
e di
stin
ctio
n be
twee
nm
easu
res s
uch
as th
e cl
aim
ant c
ount
and
the
Labo
ur F
orce
Sur
vey
is e
xpec
ted.
• Th
e B
alan
ce o
f Pay
men
tsU
nder
stan
d th
e m
ain
com
pone
nts o
f the
Bal
ance
of
Paym
ents
with
spec
ial r
efer
ence
to th
e cu
rren
t acc
ount
(trad
e in
goo
ds, t
rade
in se
rvic
es, i
nves
tmen
t inc
ome)
.
• G
ross
Dom
estic
Pro
duct
Und
erst
and
the
mea
ning
of G
DP
and
be a
ble
to d
istin
guis
hbe
twee
n no
min
al a
nd re
al G
DP.
(Det
aile
d kn
owle
dge
of th
em
easu
rem
ent o
f GD
P is
NO
T re
quire
d.) U
nder
stan
d th
elim
itatio
ns o
f GD
P as
an
indi
cato
r of c
ompa
rativ
e liv
ing
stan
dard
s bet
wee
n co
untri
es a
nd o
ver t
ime.
Eco
nom
ic g
row
th:
• ca
uses
of d
iffer
ence
s of g
row
thra
tes b
etw
een
coun
tries
.
Con
trast
gro
wth
rate
s bet
wee
n th
e ric
h an
d po
or c
ount
ries.
Link
with
Uni
t 1 (P
rodu
ctio
n po
ssib
ility
Fron
tiers
)
Con
side
ratio
n of
the
sign
ifica
nce
of fa
ctor
s
A00
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dexc
el A
S/A
dvan
ced
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E Ec
onom
ics T
each
ers�
Gui
de17
• th
e de
sira
bilit
y an
d co
sts o
fec
onom
ic g
row
th.
desi
gned
to in
crea
se p
rodu
ctiv
ity is
expe
cted
e.g
. cap
ital i
nves
tmen
t,in
nova
tion.
Und
erst
andi
ng o
f the
sign
ifica
nce
ofex
port-
led
grow
th.
Link
with
Uni
t 2 (e
xter
nal c
osts
of g
row
th).
Agg
rega
te d
eman
d:
• co
mpo
nent
s of a
ggre
gate
dem
and
� co
nsum
ptio
n,in
vest
men
t, go
vern
men
tex
pend
iture
, exp
orts
-impo
rts.
Und
erst
and
the
mea
ning
of e
ach
of th
ese
com
pone
nts o
fag
greg
ate
dem
and
and
of th
e fa
ctor
s inf
luen
cing
thei
r siz
e.(T
he in
com
e/ex
pend
iture
app
roac
h of
the
basi
c K
eyne
sian
mod
el is
NO
T re
quire
d.) T
he m
ultip
lier e
ffec
t sho
uld
also
be u
nder
stoo
d us
ing
a de
scrip
tive
appr
oach
.
Kno
w th
e di
stin
ctio
n be
twee
n in
ject
ions
and
with
draw
als.
Und
erst
and
the
fact
ors i
nflu
enci
ng th
e si
zeof
thes
e co
mpo
nent
s of a
ggre
gate
dem
and
e.g.
inco
me,
wea
lth, i
nter
est r
ates
, exc
hang
era
tes.
Agg
rega
te su
pply
: The
shor
t-run
and
long
-run
aggr
egat
e su
pply
curv
es.
Expl
ain
the
fact
ors i
nflu
enci
ng a
ggre
gate
supp
ly, s
uch
aste
chno
logi
cal a
dvan
ces,
impr
ovem
ent i
n sk
ills o
f the
wor
kfor
ce.
Kno
w th
at th
e ag
greg
ate
supp
ly c
urve
show
s the
rela
tions
hip
betw
een
real
out
put
and
the
pric
e le
vel.
Und
erst
and
the
dist
inct
ion
betw
een
shor
t and
long
run
aggr
egat
e su
pply
cur
ves.
The
rela
tions
hip
betw
een
aggr
egat
e de
man
d an
d th
e pr
ice
leve
l and
bet
wee
n ag
greg
ate
supp
ly a
nd th
e pr
ice
leve
l.
Und
erst
and
the
dist
inct
ion
betw
een
shift
s of,
and
mov
emen
ts a
long
, the
agg
rega
te d
eman
d cu
rve
and
betw
een
shift
s of,
and
mov
emen
ts a
long
, the
agg
rega
te su
pply
cur
ve.
The
equi
libri
um le
vel o
f rea
lou
tput
.Ill
ustra
te a
nd e
xpla
in th
e in
tera
ctio
n of
agg
rega
te d
eman
dan
d ag
greg
ate
supp
ly. A
naly
se c
ause
s of c
hang
es in
the
equi
libriu
m le
vel o
f rea
l out
put,
eg c
hang
es in
wor
ld o
ilpr
ices
, fin
anci
al c
rises
with
in th
e gl
obal
eco
nom
y.
Abi
lity
to e
xpla
in a
nd a
naly
se th
e ef
fect
s of
chan
ges i
n fa
ctor
s suc
h as
gov
ernm
ent
expe
nditu
re a
nd in
vest
men
t on
aggr
egat
ede
man
d an
d ag
greg
ate
supp
ly.
18U
A00
7567
−Ed
exce
l AS/
Adv
ance
d G
CE
Econ
omic
s Tea
cher
s� G
uide
Mac
roec
onom
ic p
olic
y ob
ject
ives
in a
n E
U c
onte
xt: F
ull
empl
oym
ent,
pric
e st
abili
ty,
econ
omic
gro
wth
, Bal
ance
of
Paym
ents
equ
ilibr
ium
, inc
ome
redi
strib
utio
n an
d co
ncer
n fo
r the
envi
ronm
ent.
Rea
sons
why
thes
eob
ject
ives
mig
ht n
ot b
e ac
hiev
ed.
Und
erst
and
the
caus
es, c
osts
and
eff
ects
of u
nem
ploy
men
t,in
flatio
n, B
alan
ce o
f Pay
men
ts d
iseq
uilib
rium
and
ineq
ualit
y in
inco
me
dist
ribut
ion.
Link
with
the
mea
sure
men
t of t
he e
cono
mic
perf
orm
ance
of c
ount
ries a
t the
star
t of t
his
Uni
t.
Expl
ain
the
reas
ons w
hy th
ese
obje
ctiv
esar
e pu
rsue
d by
gov
ernm
ents
.
Und
erst
andi
ng o
f the
con
cept
of f
ull
empl
oym
ent.
Con
flict
s bet
wee
n th
ese
obje
ctiv
es.
Expl
ain
poss
ible
trad
e-of
fs b
etw
een
infla
tion
and
unem
ploy
men
t with
the
appl
icat
ion
of th
e si
mpl
e Ph
illip
scu
rve.
Oth
er p
ossi
ble
conf
licts
shou
ld a
lso
be c
onsi
dere
d,eg
bet
wee
n ec
onom
ic g
row
th a
nd B
alan
ce o
f Pay
men
tseq
uilib
rium
.
The
expe
ctat
ions
aug
men
ted
Phili
ps c
urve
is N
OT
requ
ired.
The
rela
tive
mer
its o
f sup
ply
side
and/
or d
eman
d si
de p
olic
ies a
sm
eans
of r
ealis
ing
polic
yob
ject
ives
:
Supp
ly si
de p
olic
ies t
o in
clud
ere
fere
nce
to e
duca
tion
and
train
ing,
redu
ctio
n in
trad
e un
ion
pow
er,
redu
ctio
n in
une
mpl
oym
ent
bene
fits.
Dem
and
side
pol
icie
s to
incl
ude
refe
renc
e to
fisc
al p
olic
y, m
onet
ary
polic
y (u
se o
f int
eres
t rat
es),
and
exch
ange
rate
s.
Ana
lyse
the
shor
t-run
and
long
-run
effe
cts o
f sup
ply
side
and
dem
and
side
pol
icie
s on
the
rate
of i
nfla
tion,
the
leve
lof
une
mpl
oym
ent,
the
rate
of g
row
th a
nd o
n th
e B
alan
ce o
fPa
ymen
ts.
Use
the
aggr
egat
e de
man
d/ag
greg
ate
supp
ly m
odel
inan
alys
is.
Und
erst
and
that
supp
ly si
de p
olic
ies a
reai
med
at i
ncre
asin
g ag
greg
ate
supp
lyth
roug
h in
crea
sing
com
petit
ion,
prod
uctiv
ity a
nd fl
exib
ility
in p
rodu
ct a
ndla
bour
mar
kets
.
Und
erst
and
the
impa
ct o
f exc
hang
e ra
teflu
ctua
tions
on
aggr
egat
e de
man
d.
A00
7567
− E
dexc
el A
S/A
dvan
ced
GC
E Ec
onom
ics T
each
ers�
Gui
de19
A2:
Add
ition
al G
uida
nce
on sp
ecifi
catio
n co
nten
t of U
nits
4-6
Un
it 4
: In
du
stri
al e
con
om
ics
This
uni
t dev
elop
s the
con
tent
of U
nits
1 a
nd 2
and
exa
min
es h
ow th
e pr
icin
g of
, and
nat
ure
of c
ompe
titio
n be
twee
n, fi
rms i
s aff
ecte
d by
the
num
ber
and
size
of m
arke
t par
ticip
ants
. At t
he e
nd o
f thi
s uni
t, st
uden
ts sh
ould
be
able
to a
naly
se th
e pr
icin
g an
d ou
tput
dec
isio
ns o
f firm
s in
diff
eren
tco
ntex
ts. T
hey
shou
ld a
lso
be c
apab
le o
f mak
ing
an a
ppra
isal
of g
over
nmen
t int
erve
ntio
n ai
med
at p
rom
otin
g co
mpe
titiv
e m
arke
ts.
Con
tent
Stud
ents
shou
ld b
e ab
le to
:A
dditi
onal
Gui
danc
eTh
e bi
rth
and
grow
th o
f fir
ms.
Und
erst
and
how
firm
s beg
in a
nd th
eco
nstra
ints
on
thei
r dev
elop
men
t.Th
e m
otiv
es fo
r th
e gr
owth
of
firm
s.U
nder
stan
d th
e re
ason
s why
firm
s see
k an
expa
nsio
n in
mar
ket s
hare
s and
may
der
ive
mon
opol
y po
wer
.
An
unde
rsta
ndin
g th
at m
arke
t pow
er is
exp
ress
ed in
term
sof
a fi
rm's
abili
ty to
be
a pr
ice
mak
er a
nd h
ave
an in
fluen
ceon
the
mar
ket p
rice.
Inte
rnal
and
ext
erna
l gro
wth
:•
inte
rnal
exp
ansi
on: v
ertic
al,
horiz
onta
l and
con
glom
erat
em
erge
rs.
Dis
tingu
ish
betw
een
diff
eren
t met
hods
of t
hegr
owth
of f
irms.
Expl
ain
the
dist
inct
ion
betw
een
com
pany
gro
wth
bro
ught
abou
t by
rein
vest
men
t of p
rofit
s or t
hrou
gh c
orpo
rate
acqu
isiti
on i.
e. ta
keov
er b
ids a
nd m
erge
rs. U
nder
stan
ding
of
the
dist
inct
ion
betw
een
forw
ard
and
back
war
d in
tegr
atio
n.•
the
incr
ease
d im
porta
nce
ofm
ultin
atio
nal/t
rans
natio
nal f
irms
(MN
Cs)
.
Und
erst
and
the
sign
ifica
nce
of M
NC
s as m
ajor
sour
ces o
f the
out
put o
f goo
ds a
nd se
rvic
es in
agl
obal
con
text
.
Link
age
with
Uni
t 5B
and
Uni
t 6.
Alte
rnat
ive
mot
ives
of f
irm
s:Pr
ofit
max
imis
atio
n, re
venu
em
axim
isat
ion
and
sale
sm
axim
isat
ion.
Dis
tingu
ish
betw
een
diff
eren
t cor
pora
teob
ject
ives
and
exe
mpl
ify th
ese
diag
ram
mat
ical
ly.
Prof
it m
axim
isat
ion
is d
efin
ed a
s tha
t out
put l
evel
whe
rem
argi
nal r
even
ue e
qual
s mar
gina
l cos
t. R
even
uem
axim
isat
ion
is d
efin
ed a
s tha
t out
put l
evel
whe
re m
argi
nal
reve
nue
is z
ero.
Sal
es m
axim
isat
ion
is d
efin
ed a
s the
max
imum
leve
l of o
utpu
t whi
ch c
an b
e pr
oduc
ed w
ithou
tm
akin
g a
loss
, ie,
whe
re a
vera
ge re
venu
e eq
uals
ave
rage
cost
.
20U
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7567
−Ed
exce
l AS/
Adv
ance
d G
CE
Econ
omic
s Tea
cher
s� G
uide
Prod
uctiv
e ef
ficie
ncy.
Und
erst
and
that
a m
arke
t is p
rodu
ctiv
ely
effic
ient
whe
n ou
tput
is p
rodu
ced
at lo
wes
tpo
ssib
le a
vera
ge c
ost.
Allo
cativ
e ef
ficie
ncy.
Und
erst
and
that
a m
arke
t is a
lloca
tivel
yef
ficie
nt w
hen
outp
ut is
pro
duce
d at
a p
rice
paid
by
cons
umer
s tha
t is e
qual
to th
e m
argi
nal
cost
incu
rred
in p
rodu
cing
that
out
put.
An
abili
ty to
show
bot
h th
ese
conc
epts
of e
ffic
ienc
y is
requ
ired.
In d
istin
guis
hing
bet
wee
n th
ese
effic
ienc
yco
ncep
ts it
is a
ssum
ed th
at c
andi
date
s will
hav
e an
unde
rsta
ndin
g of
cos
t cur
ves.
They
shou
ld b
e ab
le to
calc
ulat
e, d
raw
and
inte
rpre
t mar
gina
l and
ave
rage
cos
tcu
rves
. The
law
of d
imin
ishi
ng re
turn
s may
be
intro
duce
din
exp
lain
ing
shor
t run
cos
t cur
ves b
ut a
n un
ders
tand
ing
ofth
is c
once
pt w
ill n
ot b
e ex
amin
ed.
Mea
sure
s of m
arke
t con
cent
ratio
n.In
terp
ret t
he m
eani
ng o
f con
cent
ratio
n ra
tios.
Con
cent
ratio
n ra
tios s
houl
d be
def
ined
with
refe
renc
e to
both
sale
s and
em
ploy
men
t.Pr
icin
g an
d ou
tput
dec
isio
ns u
nder
diff
eren
t mar
ket s
truc
ture
s and
diff
eren
t mot
ives
.♦
pe
rfec
t com
petit
ion
♦
impe
rfec
t com
petit
ion
♦
olig
opol
y♦
m
onop
oly.
Com
pare
diff
eren
t mar
ket s
truct
ures
with
refe
renc
e to
eco
nom
ic e
ffici
ency
and
mar
ket
perf
orm
ance
.
Can
dida
tes s
houl
d be
abl
e to
dis
cuss
the
impl
icat
ions
of t
hefo
llow
ing
aspe
cts i
n af
fect
ing
the
beha
viou
r of f
irms:
the
num
ber o
f firm
s; p
rodu
ct h
omog
enei
ty; t
he e
ase
ordi
ffic
ulty
of m
arke
t ent
ry a
nd e
xit.
Cand
idat
es sh
ould
als
obe
abl
e to
dis
cuss
how
the
mar
ket p
erfo
rman
ce o
f firm
s i.e
.,pr
ofita
bilit
y an
d ef
ficie
ncy,
diff
ers t
hrou
ghou
t the
spec
trum
of m
arke
t stru
ctur
es. B
y co
mpa
ring
diff
eren
t mar
ket
stru
ctur
es c
andi
date
s sho
uld
be a
ble
to e
valu
ate
thes
eou
tcom
es.
The
cond
ition
s nec
essa
ry fo
r pr
ice
disc
rim
inat
ion
in m
onop
oly.
Ana
lyse
the
cond
ition
s for
, and
the
impl
icat
ions
of,
pric
e di
scrim
inat
ion
for b
oth
prod
ucer
and
con
sum
er su
rplu
s.
An
abili
ty to
dem
onst
rate
pric
e di
scrim
inat
ion
diag
ram
mat
ical
ly is
requ
ired.
.
A00
7567
− E
dexc
el A
S/A
dvan
ced
GC
E Ec
onom
ics T
each
ers�
Gui
de21
Pric
ing
and
Non
-pri
cing
stra
tegi
es:
♦
cost
-plu
s pric
ing
♦
pred
ator
y pr
icin
g♦
lim
it pr
icin
g♦
ad
verti
sing
and
sale
s pro
mot
ion
polic
ies
♦
collu
sion
and
car
tels
.
Rec
ogni
se th
e di
stin
ctio
n be
twee
n va
rious
form
s of m
arke
t beh
avio
ur a
nd th
e co
ntex
ts in
whi
ch th
ey m
ight
be
empl
oyed
.
Can
dida
tes s
houl
d be
aw
are
of th
ese
diff
eren
t stra
tegi
es.
Ave
rage
cos
t pric
ing
can
be d
efin
ed a
s whe
re a
firm
char
ges a
pric
e ex
plic
itly
with
refe
renc
e to
ave
rage
cos
tspl
us a
per
cent
age
prof
it m
ark-
up.
Pred
ator
y pr
icin
g ca
n be
def
ined
as a
situ
atio
n w
here
a fi
rmis
pre
pare
d to
del
iber
atel
y m
ake
a lo
ss in
the
shor
t run
with
the
aim
of d
rivin
g a
rival
(s) o
ut o
f the
mar
ket.
In th
e lo
ngru
n th
is w
ill e
nabl
e th
e fir
m to
rais
e its
pric
e m
ore
than
itha
s pre
viou
sly
been
redu
ced.
Lim
it pr
icin
g ca
n be
def
ined
as a
situ
atio
n w
here
an
esta
blis
hed
firm
trie
s to
fore
stal
l new
ent
ry in
a si
tuat
ion
typi
cally
whe
re e
cono
mie
s of s
cale
exi
st.
Can
dida
tes s
houl
d be
abl
e to
exp
lain
the
requ
irem
ents
for
succ
essf
ul c
arte
l act
ion
and
the
diff
icul
ties t
hat c
arte
lsex
perie
nce
in p
ract
ice.
Bar
rier
s to
entr
y an
d ex
it.Ex
plai
n fa
ctor
s tha
t may
inhi
bit t
he e
ntry
of
firm
s int
o a
mar
ket a
nd a
lso
exit,
eg
sunk
cos
ts(li
nks w
ith U
nit 2
).C
onte
stab
le m
arke
ts.
Und
erst
and
how
the
thre
at o
f new
ent
ry m
ayin
fluen
ce b
ehav
iour
and
mar
ket p
erfo
rman
ceof
exi
stin
g fir
ms.
An
unde
rsta
ndin
g of
how
the
poss
ibili
ty o
f 'hi
t and
run'
com
petit
ion
can
affe
ct p
rice
dete
rmin
atio
n by
est
ablis
hed
firm
s.C
ompe
titio
n po
licy
in th
e U
K a
ndEU
.A
naly
se th
e ef
fect
s of m
easu
res a
imed
at
enha
ncin
g co
mpe
titiv
e m
arke
ts o
n bo
thco
nsum
ers a
nd p
rodu
cers
. Det
aile
d kn
owle
dge
of le
gisl
atio
n co
ncer
ning
UK
and
EU
com
petit
ion
polic
y is
NO
T re
quire
d.
An
abili
ty to
eva
luat
e th
e co
sts a
nd b
enef
its o
f com
petit
ion
polic
y is
exp
ecte
d.
Reg
ulat
ion
of p
riva
tised
indu
stri
es.
Ana
lyse
how
the
crea
tion
of re
gula
tory
agen
cies
, eg
Ofte
l and
Ofw
at, a
im to
influ
ence
the
beha
viou
r of s
uppl
iers
inm
arke
ts w
here
ther
e w
ere
form
erly
stat
e-ow
ned
unde
rtaki
ngs.
Emph
asis
shou
ld b
e gi
ven
to th
e ef
fect
s of r
egul
atin
g th
epr
ivat
ised
indu
strie
s.
22U
A00
7567
−Ed
exce
l AS/
Adv
ance
d G
CE
Econ
omic
s Tea
cher
s� G
uide
Un
it 5
A: L
abo
ur
mar
kets
This
uni
t pro
vide
s a fr
amew
ork
for t
he a
naly
sis o
f lab
our m
arke
ts w
ith p
artic
ular
refe
renc
e to
the
UK
and
EU
. It a
lso
exam
ines
the
asso
ciat
ed is
sues
of th
e di
strib
utio
n of
inco
me
and
wea
lth. A
t the
end
of t
his u
nit,
stud
ents
shou
ld b
e ab
le to
ana
lyse
wag
e de
term
inat
ion
and
unde
rsta
nd th
e re
ason
s for
wag
e di
ffer
entia
ls a
nd fa
ctor
s tha
t det
erm
ine
diff
eren
ces i
n th
e di
strib
utio
n of
bot
h in
com
e an
d ca
pita
l in
the
UK
.C
onte
ntSt
uden
ts sh
ould
be
able
to:
Add
ition
al G
uida
nce
The
supp
ly o
f lab
our:
the
wor
king
popu
latio
n.U
nder
stan
d th
e fa
ctor
s aff
ectin
g th
e si
ze, a
ge p
rofil
ean
d se
x di
strib
utio
n of
the
wor
king
pop
ulat
ion.
Expl
ain
the
deriv
atio
n of
the
supp
ly c
urve
of
labo
ur.
The
choi
ce b
etw
een
wor
k an
d le
isur
e:in
com
e an
d su
bstit
utio
n ef
fect
s.D
escr
ibe
thes
e ef
fect
s but
kno
wle
dge
of in
diff
eren
cecu
rves
is N
OT
requ
ired.
The
dem
and
for
labo
ur. L
abou
r as
ade
rive
d de
man
d.U
nder
stan
d th
e fa
ctor
s inf
luen
cing
the
dem
and
for
labo
ur, i
nclu
ding
mar
gina
l pro
duct
ivity
theo
ry a
ndal
so th
e el
astic
ity o
f dem
and
for l
abou
r.W
age
dete
rmin
atio
n in
com
petit
ive
mar
kets
.Ex
plai
n th
e in
tera
ctio
n of
the
supp
ly o
f, an
d de
man
dfo
r, la
bour
in th
e de
term
inat
ion
of w
age
rate
s.D
iffer
entia
ls in
diff
eren
t occ
upat
ions
;be
twee
n m
en a
nd w
omen
;sk
illed
/uns
kille
d w
orke
rs: e
thni
cgr
oups
. Disc
rim
inat
ion.
Expl
ain
wag
e di
ffer
entia
ls in
term
s of a
var
iety
of
cont
exts
, eg
prod
uctiv
ity, e
duca
tiona
l qua
lific
atio
nsan
d en
viro
nmen
t.
Und
erst
and
the
role
of m
arke
t for
ces i
nde
term
inin
g re
lativ
e w
age
rate
s rec
ogni
sing
the
rele
vanc
e of
the
elas
ticiti
es o
f bot
h th
e de
man
dfo
r, an
d su
pply
of,
labo
ur.
The
role
of t
rade
uni
ons.
Ana
lyse
the
impa
ct o
f lab
our o
rgan
isat
ions
on
wag
esan
d th
e le
vel o
f em
ploy
men
t.K
now
ledg
e of
tren
ds in
trad
e un
ion
mem
bers
hip
and
the
reas
ons f
or th
ese
trend
s. U
nder
stan
d th
ena
ture
of c
olle
ctiv
e ba
rgai
ning
at l
ocal
and
natio
nal l
evel
s.G
over
nmen
t int
erve
ntio
n in
labo
urm
arke
ts.
The
effe
cts o
f equ
al p
ay a
nd o
ther
legi
slat
ion
on la
bour
mar
kets
such
as
the
Min
imum
Wor
king
Tim
e D
irect
ive.
Ana
lyse
the
repe
rcus
sion
s of s
uch
gove
rnm
ent
polic
ies i
n th
e lig
ht o
f the
ir in
tend
ed o
bjec
tives
An
abili
ty to
eva
luat
e th
e im
plic
atio
ns o
f aN
atio
nal M
inim
um W
age
and
the
Wor
king
Tim
eD
irect
ive
.Th
e ca
se o
f mon
opso
ny.
Ana
lyse
the
impl
icat
ions
of a
sing
le b
uyer
of l
abou
ron
wag
e ra
tes a
nd le
vel o
f em
ploy
men
t.Ill
ustra
te th
e ca
se o
f a m
onop
soni
stic
em
ploy
er o
fla
bour
in c
ontra
st w
ith c
ompe
titiv
e la
bour
mar
kets
.
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ers�
Gui
de23
Une
mpl
oym
ent a
nd la
bour
mar
ket
impe
rfec
tions
.Ex
plai
n th
e st
ruct
ure,
dur
atio
n an
d in
cide
nce
ofun
empl
oym
ent i
n th
e U
K.
Link
age
with
Uni
t 3.
Gov
ernm
ent p
olic
ies t
o in
fluen
cege
ogra
phic
al m
obili
ty a
ndoc
cupa
tiona
l mob
ility
.
Und
erst
and
the
impl
icat
ions
of t
rain
ing
sche
mes
and
othe
r mea
sure
s to
enha
nce
labo
ur m
obili
ty in
the
UK
.U
nder
stan
d th
e na
ture
and
impl
icat
ions
of l
abou
rm
arke
t fle
xibi
lity
for t
he w
ay la
bour
mar
kets
wor
k. A
naly
se h
ow b
oth
dem
and
and
supp
lyfa
ctor
s will
influ
ence
the
wor
king
of l
abou
rm
arke
ts.
A d
etai
led
know
ledg
e of
the
legi
slat
ion
rela
ted
to re
gion
al p
olic
ies i
s not
exp
ecte
d.Th
e ch
angi
ng st
ruct
ure
and
flexi
bilit
yof
UK
and
EU
labo
ur m
arke
ts.
Expl
ain
chan
ges i
n la
bour
par
ticip
atio
n ra
tes a
nd th
efa
ctor
s inf
luen
cing
cha
nge
in la
bour
mar
kets
, eg
the
impa
ct o
f new
tech
nolo
gy; m
igra
tion;
the
Soci
alC
hapt
er; r
egio
nal p
olic
ies.
Ana
lyse
how
the
wor
king
labo
ur m
arke
ts c
hang
ein
the
light
of f
acto
rs b
oth
on th
e de
man
d si
de a
ndth
e su
pply
side
incl
udin
g th
e ra
tiona
le o
fgo
vern
men
t pol
icie
s in
an E
U c
onte
xt. A
det
aile
dkn
owle
dge
of th
e le
gisl
atio
n re
latin
g to
regi
onal
polic
ies i
s not
exp
ecte
d.A
gein
g po
pula
tions
in d
evel
oped
econ
omie
s.Ex
amin
e th
e si
gnifi
canc
e of
an
agei
ng p
opul
atio
n fo
rbo
th la
bour
mar
kets
(fle
xibi
lity)
and
gov
ernm
ents
(pub
lic e
xpen
ditu
res)
.
Und
erst
and
the
proc
esse
s of d
emog
raph
ic c
hang
ean
d th
e 'd
emog
raph
ic ti
me
bom
b' o
f age
ing
popu
latio
ns in
man
y de
velo
ped
econ
omie
s.Fa
ctor
s inf
luen
cing
the
dist
ribu
tion
ofin
com
e an
d w
ealth
.Ex
plai
n in
equa
litie
s res
ultin
g fr
om in
herit
ance
of
owne
r-occ
upat
ion,
age
, edu
catio
n, p
ensi
ons,
stat
ebe
nefit
s and
exp
endi
ture
s.
Und
erst
and
the
caus
es o
f ine
qual
ity a
nd p
over
tyw
ith re
fere
nce
to th
e U
K. A
kno
wle
dge
isex
pect
ed o
f the
dis
tribu
tion
of in
com
e an
d w
ealth
of h
ouse
hold
s in
the
UK
.C
hang
es in
the
dist
ribu
tion
of in
com
ean
d w
ealth
.Ev
alua
te th
e si
gnifi
canc
e of
gov
ernm
ent p
olic
ies
affe
ctin
g in
com
e an
d w
ealth
dis
tribu
tion.
Und
erst
and
how
gov
ernm
ent p
olic
ies r
elat
ing
tota
xes a
nd b
enef
its a
im to
influ
ence
the
hous
ehol
ddi
strib
utio
n of
inco
me
and
wea
lth. C
andi
date
ssh
ould
be
able
to a
naly
se a
nd e
valu
ate
such
polic
ies.
Mea
sure
men
t of i
nequ
ality
. The
Lore
nz c
urve
.In
terp
ret t
he si
gnifi
canc
e of
a L
oren
z cu
rve
diag
ram
.
Agg
rega
te a
nd d
isag
greg
ated
dat
a.In
terp
ret t
he m
eani
ng o
f dat
a in
diff
eren
t inc
ome
situ
atio
ns, e
g de
cile
s, qu
intil
es.
Polic
y iss
ues a
ssoc
iate
d w
ith p
over
tyan
d in
equa
lity.
Ana
lyse
and
exp
lain
the
impa
ct o
f inc
entiv
es, e
glo
wer
ing
mar
gina
l tax
rate
s.
24U
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E Ec
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ics T
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ers�
Gui
de
Un
it 5
B: E
con
om
ic d
evel
op
men
tTh
is u
nit e
xplo
res i
ssue
s ass
ocia
ted
with
eco
nom
ic d
evel
opm
ent o
f tho
se c
ount
ries m
ainl
y in
the
sout
hern
hem
isph
ere
seek
ing
to a
chie
ve fa
ster
econ
omic
gro
wth
and
an
enha
nced
qua
lity
of li
fe fo
r rap
idly
gro
win
g po
pula
tions
. At t
he e
nd o
f thi
s uni
t, st
uden
ts sh
ould
be
able
to u
nder
stan
d th
eca
uses
, cos
ts a
nd b
enef
its o
f eco
nom
ic g
row
th in
dev
elop
ing
coun
tries
. The
y sh
ould
als
o be
abl
e to
app
rais
e th
e be
nefit
s and
dis
adva
ntag
es to
thos
eco
untri
es o
f alte
rnat
ive
sour
ces o
f fin
ance
from
dev
elop
ed c
ount
ries.
Con
tent
Stud
ents
shou
ld b
e ab
le to
:A
dditi
onal
Gui
danc
eIn
dica
tors
of d
evel
opm
ent i
nde
velo
ping
cou
ntri
es in
sub-
Saha
ran
Afr
ica,
Asia
and
Lat
in A
mer
ica.
Com
pare
and
con
trast
GD
P pe
r cap
ita a
nd o
ther
mea
sure
sof
eco
nom
ic a
nd so
cial
dev
elop
men
t, eg
life
exp
ecta
ncy,
liter
acy
rate
s, th
e pr
opor
tion
of p
opul
atio
n em
ploy
ed in
agric
ultu
re.
Und
erst
and
the
limita
tions
of n
atio
nal i
ncom
est
atis
tics a
s ind
icat
ors o
f dev
elop
men
t. E
xpla
inth
e in
terr
elat
ions
hips
bet
wee
n th
ese
indi
cato
rs.
Abs
olut
e an
d re
lativ
e po
verty
.U
nder
stan
d th
e di
stin
ctio
n be
twee
n th
ese
term
s.Th
e ca
uses
of e
cono
mic
gro
wth
inde
velo
ping
cou
ntri
es.
Exam
ine
the
sour
ces o
f eco
nom
ic g
row
th a
nd th
e ex
tent
tow
hich
they
can
be
affe
cted
by
gove
rnm
ent i
nter
vent
ion.
Eval
uatio
n of
the
impa
ct o
f gov
ernm
ent p
olic
ies.
The
sign
ifica
nce
of e
cono
mic
gro
wth
for d
evel
opm
ent:
♦
the
role
of b
oth
phys
ical
and
hum
an c
apita
l•
tech
nolo
gica
l pro
gres
sD
iffer
ence
s bet
wee
n de
velo
ping
coun
trie
s.C
ompa
re h
ow th
e re
cord
of e
cono
mic
dev
elop
men
t diff
ers
in su
b-Sa
hara
n A
fric
a, A
sia
and
Latin
Am
eric
a an
dex
plai
n re
ason
s for
thes
e di
ffer
ence
s.
Und
erst
and
how
ther
e ar
e di
ffer
ence
s in
coun
tries
both
bet
wee
n an
d w
ithin
the
thre
e co
ntin
ents
and
a co
nsid
erat
ion
of th
ese
diff
eren
ces.
The
cost
s of e
cono
mic
gro
wth
.A
naly
se th
e ex
tern
al c
osts
ass
ocia
ted
with
dev
elop
men
t,eg
def
ores
tatio
n, e
nviro
nmen
tal d
egra
datio
n.Li
nkag
e w
ith U
nit 2
.
Con
stra
ints
on
econ
omic
gro
wth
.Ev
alua
te th
e im
pact
of d
iffer
ent o
bsta
cles
to e
cono
mic
grow
th, e
g ra
pid
popu
latio
n gr
owth
, lac
k of
fina
nce
depe
nden
cy o
n pr
imar
y pr
oduc
ts, d
ebt,
corr
uptio
n.
Ana
lyse
the
caus
es o
f the
pro
blem
s fac
ing
deve
lopi
ng c
ount
ries b
oth
of a
n in
tern
al a
ndex
tern
al n
atur
e. A
n ab
ility
to a
ppra
ise
the
rela
tive
sign
ifica
nce
of th
e co
nstra
ints
faci
ng d
evel
opin
gco
untri
es is
exp
ecte
d.
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ics T
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ers�
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Dev
elop
men
t str
ateg
ies.
The
deve
lopm
ent o
f par
ticul
ar se
ctor
sof
the
econ
omy:
• ag
ricul
ture
Ana
lyse
the
prob
lem
of p
rimar
y pr
oduc
t dep
ende
ncy.
Con
side
ratio
n of
how
the
grow
th o
f the
se th
ree
sect
ors i
s in
vario
us w
ays d
epen
dent
on
rela
tions
hips
with
oth
er c
ount
ries.
• in
dust
ryEx
amin
e th
e na
ture
and
impa
ct o
f inw
ard-
and
out
war
d-lo
okin
g tra
de st
rate
gies
; im
port
subs
titut
ion
and
expo
rtpr
omot
ion
polic
ies.
• to
uris
m.
Ana
lyse
the
bene
fits a
nd c
osts
of d
evel
opin
g to
uris
m.
Sour
ces o
f ext
erna
l fin
ance
.Pr
ivat
e se
ctor
fina
nce
espe
cial
ly fr
omm
ultin
atio
nal f
irms.
Eval
uate
the
role
, ben
efits
and
dis
adva
ntag
es o
f for
eign
dire
ct in
vest
men
t (FD
I) by
MN
Cs i
n th
e de
velo
ping
coun
tries
.
Und
erst
and
that
this
sect
ion
focu
ses o
n ou
twar
din
vest
men
t by
MN
Cs i
n de
velo
ping
cou
ntrie
s in
cont
rast
with
MN
Cs i
n de
velo
ped
coun
tries
inU
nit 6
.G
over
nmen
t ass
ista
nce.
Eval
uate
the
role
, ben
efits
and
dis
adva
ntag
es o
f off
icia
lde
velo
pmen
t ass
ista
nce
(aid
). Ex
amin
e th
e ca
se fo
r and
agai
nst d
ebt f
orgi
vene
ss.
An
abili
ty to
com
pare
how
gov
ernm
ents
inde
velo
ped
coun
tries
can
try
to a
ssis
t dev
elop
ing
coun
tries
in c
ontra
st w
ith p
rivat
e se
ctor
inst
itutio
ns.
The
IMF
and
IBR
D (W
orld
Ban
k).
Eval
uate
the
role
s of b
oth
of th
e B
retto
n W
oods
inst
itutio
ns in
pro
vidi
ng fi
nanc
ial a
ssis
tanc
e to
dev
elop
ing
coun
tries
.
Ana
lyse
the
role
s of t
hese
inte
rnat
iona
lin
stitu
tions
in d
evel
opin
g co
untri
es a
nd a
ppra
ise
the
effe
ctiv
enes
s of t
heir
polic
ies.
Stru
ctur
al a
djus
tmen
t pol
icie
s.Ex
plai
n th
e re
perc
ussi
ons o
f suc
h po
licie
s, eg
trad
elib
eral
isat
ion
and
expe
nditu
re re
duct
ions
on
the
econ
omy
and
hum
an w
elfa
re.
Und
erst
and
the
inte
rven
tion
of th
ese
polic
ies t
oen
hanc
e th
e ro
le o
f mar
kets
and
app
rais
e th
eir
effe
ctiv
enes
s in
term
s of r
esou
rce
allo
catio
n an
dra
isin
g th
e ra
te o
f eco
nom
ic g
row
th..
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ics T
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ers�
Gui
de
Un
it 6
: Th
e U
K in
th
e g
lob
al e
con
om
y
This
uni
t dev
elop
s the
con
tent
of U
nits
1 a
nd 3
by
exam
inin
g th
e po
sitio
n of
the
UK
in th
e co
ntex
t of t
he w
orld
eco
nom
y. It
focu
ses o
n in
tern
atio
nal
trade
and
exc
hang
e ra
te is
sues
. At t
he e
nd o
f thi
s uni
t, st
uden
ts sh
ould
be
able
to e
valu
ate
the
mac
roec
onom
ic p
erfo
rman
ce o
f the
UK
in a
Eur
opea
nU
nion
and
glo
bal p
ersp
ectiv
e.
Con
tent
Stud
ents
shou
ld b
e ab
le to
:A
dditi
onal
Gui
danc
eFa
ctor
s con
trib
utin
g to
glo
balis
atio
nU
nder
stan
d th
e si
gnifi
canc
e of
the
fact
ors t
hat
have
enh
ance
d th
e in
terd
epen
denc
e of
eco
nom
ies,
eg th
e re
duct
ion
in tr
ade
barr
iers
, cap
ital m
obili
ty,
the
grow
th o
f MN
Cs a
nd te
chno
logi
cal
deve
lopm
ents
, eg
the
Inte
rnet
.
The
star
t of t
his u
nit c
onsi
ders
the
glob
al e
cono
my
inits
bro
ades
t sen
se a
nd se
ts a
con
text
with
in w
hich
late
r sec
tions
focu
s on
the
UK
in p
artic
ular
.
Inte
rnat
iona
l exc
hang
eU
nder
stan
d th
e im
porta
nce
of tr
ade
betw
een
deve
lope
d ec
onom
ies,
rela
tive
to w
orld
trad
e as
aw
hole
.Tr
ade
liber
alis
atio
n an
d pr
otec
tioni
sm.
Rea
sons
for t
ariff
s, qu
otas
and
non
-tarif
fba
rrie
rs a
nd th
e co
nseq
uenc
es o
f the
ir us
e.
Expl
ain
the
glob
al e
ffor
ts to
redu
ce ta
riff b
arrie
rsan
d an
alys
e th
e im
pact
of p
rote
ctio
nist
mea
sure
son
reso
urce
use
in a
n in
tern
atio
nal c
onte
xt, e
g th
eim
pact
of t
he C
AP
on w
orld
trad
e in
com
mod
ities
.
Ana
lyse
tarif
f and
non
-tarif
f mea
sure
s of p
rote
ctio
nan
d de
mon
stra
te th
ese
diag
ram
mat
ical
ly.
Sour
ces o
f pos
sible
con
flict
bet
wee
ntr
adin
g bl
ocs a
nd th
e ro
le o
f the
Wor
ldT
rade
Org
anis
atio
n (W
TO
).
Expl
ain
how
mem
bers
hip
of th
e W
TO c
onst
rain
sth
e us
e of
pro
tect
ioni
st p
olic
ies b
y co
untri
espa
rticu
larly
in ti
mes
of g
loba
l rec
essi
on.
Und
erst
andi
ng o
f the
dis
tinct
ion
betw
een
free
trad
ear
eas a
nd c
usto
ms u
nion
s. A
naly
se h
ow tr
adin
g bl
ocs
can
purs
ue o
bjec
tives
and
pol
icie
s whi
ch m
ay b
e in
conf
lict w
ith th
e ai
ms o
f the
WTO
.Th
e B
alan
ce o
f Pay
men
ts.
Und
erst
and
the
mai
n el
emen
ts o
f the
cur
rent
acco
unt.
Onl
y a
brie
f kno
wle
dge
of c
apita
ltra
nsac
tions
is re
quire
d.U
nder
stan
d re
cent
tren
ds in
the
UK
�s a
ccou
nts
(link
s with
Uni
t 3).
A00
7567
− E
dexc
el A
S/A
dvan
ced
GC
E Ec
onom
ics T
each
ers�
Gui
de27
Inte
rnat
iona
l com
petit
iven
ess.
Und
erst
and
vario
us m
easu
res o
f the
com
petit
ive
posi
tion
of th
e le
adin
g co
untri
es in
inte
rnat
iona
ltra
de, e
g un
it co
sts a
nd re
lativ
e ex
port
pric
es.
The
UK
�s c
hang
ing
inte
rnat
iona
lco
mpe
titiv
e sit
uatio
n.M
ake
an a
ppra
isal
of t
he c
ompe
titiv
enes
s of
Brit
ish
indu
stry
in b
oth
hom
e an
d ov
erse
asm
arke
ts.
Expl
ain
the
UK
�s e
xpor
t per
form
ance
and
impo
rtpe
netra
tion.
Fact
ors a
ffec
ting
inte
rnat
iona
lco
mpe
titiv
enes
s and
gov
ernm
ent p
olic
ies
to e
nhan
ce th
e U
K�s
rela
tive
posi
tion.
Und
erst
and
how
succ
essi
ve U
K g
over
nmen
tsha
ve ta
ken
mea
sure
s to
enha
nce
com
petit
iven
ess,
eg th
roug
h de
regu
latio
n m
easu
res,
enco
urag
emen
tof
inw
ard
inve
stm
ent a
nd th
e en
hanc
emen
t of
labo
ur sk
ills.
Link
age
with
Uni
t 3 a
nd U
nit 5
A.
Bal
ance
of p
aym
ents
dise
quili
briu
m.
Polic
y re
med
ies i
nclu
ding
:•
exch
ange
rate
adj
ustm
ent
• de
man
d m
anag
emen
t•
supp
ly si
de p
olic
ies.
} Eva
luat
e th
e im
pact
of t
hese
alte
rnat
ive
p
olic
y m
easu
res (
links
with
Uni
t 3).
Exc
hang
e ra
te sy
stem
s.
Fixe
d an
d flo
atin
g ra
tes.
Expl
ain
how
exc
hang
e ra
tes a
re d
eter
min
ed u
nder
a sy
stem
of f
loat
ing
rate
s (lin
ks w
ith U
nit 1
).A
com
paris
on a
nd e
valu
atio
n of
fixe
d an
d flo
atin
gex
chan
ge ra
tes.
Fact
ors a
ffec
ting
exch
ange
rate
s.U
nder
stan
d in
fluen
ces o
n ex
chan
ge ra
tes s
uch
asre
lativ
e in
tere
st ra
tes,
rela
tive
infla
tion
rate
s and
spec
ulat
ive
capi
tal f
low
s.Ex
chan
ge ra
tes a
s a p
olic
y in
stru
men
t.Ex
plai
n th
e ef
fect
s of c
hang
es in
exc
hang
e ra
tes
on th
e le
vel o
f eco
nom
ic a
ctiv
ity in
diff
eren
tco
untri
es.
Euro
pean
Mon
etar
y U
nion
.Th
e co
sts a
nd b
enef
its o
f mon
etar
y un
ion
in th
e EU
.Ev
alua
te th
e im
plic
atio
ns o
f mon
etar
y un
ion
for
the
cond
uct o
f mon
etar
y an
d fis
cal p
olic
ies b
yin
divi
dual
cou
ntrie
s in
Euro
pe.
28U
A00
7567
− E
dexc
el A
S/A
dvan
ced
GC
E Ec
onom
ics T
each
ers�
Gui
de
Inw
ard
fore
ign
inve
stm
ent b
y M
NC
s.A
naly
se th
e ro
le, b
enef
its a
nd d
isad
vant
ages
of
capi
tal i
nflo
ws f
rom
MN
Cs i
n an
EU
con
text
.Li
nkag
e w
ith U
nit 5
A.
Ext
erna
l sho
cks t
o th
e gl
obal
eco
nom
y.Ex
amin
e ad
vers
e im
pact
s on
the
wor
ld le
vel o
fec
onom
ic a
ctiv
ity, e
g hi
gher
oil
pric
es.
Publ
ic e
xpen
ditu
re a
nd ta
xatio
n.Ex
plai
n re
ason
s for
the
chan
ging
size
and
com
posi
tion
of p
ublic
exp
endi
ture
in th
e U
K.
Diff
eren
t typ
es o
f tax
es.
The
impa
ct o
f pub
lic e
xpen
ditu
re a
ndta
xatio
n on
inco
me
dist
ribut
ion.
Eval
uate
the
rela
tive
mer
its o
f dire
ct a
nd in
dire
ctta
xatio
n an
d ex
amin
e th
e ef
fect
s of c
hang
es in
fisca
l pol
icy
for d
iffer
ent g
roup
s in
the
UK
.
Und
erst
and
the
dist
inct
ion
betw
een
auto
mat
ic a
nddi
scre
tiona
ry fi
scal
pol
icy.
Publ
ic se
ctor
bor
row
ing.
Expl
ain
the
fact
ors i
nflu
enci
ng th
e si
ze o
f pub
licse
ctor
bor
row
ing.
Inte
rnat
iona
l com
paris
ons o
f pub
licfin
ance
s.Ex
plai
n an
d ev
alua
te th
e im
plic
atio
ns o
fdi
ffer
ence
s bet
wee
n co
untri
es in
thei
r pub
licfin
ance
s.
Det
aile
d kn
owle
dge
of th
e pu
blic
fina
nces
of
coun
tries
is n
ot e
xpec
ted
but c
andi
date
s sho
uld
beab
le to
com
pare
the
UK
with
oth
er E
urop
ean
coun
tries
and
mem
bers
of t
he O
ECD
.Th
e w
orki
ng o
f fisc
al, m
onet
ary
and
supp
ly si
de p
olic
ies.
App
rais
e po
licy
inst
rum
ents
in a
chie
ving
pol
icy
obje
ctiv
es a
nd e
valu
ate
asso
ciat
ed p
robl
ems t
hat
may
be
enco
unte
red,
eg
time
lags
; the
acc
urac
y of
econ
omic
dat
a on
the
stat
e of
the
econ
omy.
Eval
uatio
n of
the
exte
nt to
whi
ch p
olic
y in
stru
men
tsm
eet t
heir
inte
nded
aim
s..
Une
mpl
oym
ent a
nd in
flatio
n in
an
EUan
d gl
obal
con
text
.U
nder
stan
d th
e ca
uses
and
con
sequ
ence
s of
trend
s in
the
num
bers
out
of w
ork
and
the
rate
of
incr
ease
in th
e pr
ice
leve
l with
in th
e EU
(lin
ksw
ith U
nit 3
).Th
e re
latio
nshi
p be
twee
n re
al o
utpu
tan
d th
e no
n-ac
cele
ratin
g in
flatio
n ra
te o
fun
empl
oym
ent (
NA
IRU
).
Und
erst
and
the
dist
inct
ion
betw
een
the
shor
t-run
Phill
ips c
urve
and
the
long
-run
Phill
ips c
urve
.
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 29
SECTION 3 - SCHEMES OF WORK
The Schemes of Work on the following pages have been produced by a number of teachers, many ofwhom have been delivering the current syllabus for a number of years and have been keen to look atways of delivering the new specification. These are all provided to help teachers decide what thestarting point could be and how the content of the 6 units can be broken down. They are clearly notprescriptive in any way. Many teachers will want to adapt these schemes to suit their ownindividual circumstances.
30 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Scheme of Work for AS/Advanced GCE Economics (8121/9121),produced by Andrew Moth, Westcliffe High School for Boys
Basic assumptions
It is assumed that:
1 the whole course is taught by one teacher.
2 approximately three and a half hours of teaching time is available in each week.
3 students will be taking their three AS units at the end of Year 12 and their three A2 units at theend of Year 13.
4 option 5A Labour Markets is chosen.
5 the course is divided into two distinct halves - the AS course is assumed to last two terms with the first weeks of the summer term available for revision. The A2 course is assumed to last slightly longer than two terms because some three/four weeks are available in the summer term for thestudy of these units. Again, it is assumed that revision will take place in the summer term, thistime of Year 13.
6 major internal examinations are set twice - both are mock examinations set in the later part of theSpring Term.
7 the first three units are taught in the order unit 1, unit 3 and unit 2 - this gives a basic introductionto both micro and macro-economics in the first instance.
Changes which are brought about by the new specifications for AS and A2
A Whilst the overall content of the new specification is very similar to the current syllabus, it isdivided up in quite a different way.
B Whilst it is possible to teach across the six different units, mixing elements from differentsections, it must be remembered that each unit is being examined separately.
Principle objectives:
Not to allow students to lose sight of the fact that, despite the splitting up of the content into six units,economics is very much a circular subject with everything depending on everything else. This isespecially important in the preparation for the teaching of Unit 6.
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 31
AS COURSE: UNITS 1-3
The following is a possible scheme for teaching the three units of the AS Economics course:
September 2000
Topic 1 Basic Introduction: What economics is about (Unit 1) (1 week)
Topic 2 Specialisation & Economies of Scale (Unit 1) (1 week)
Topic 3 Supply & Demand Analysis (Unit 1) (2 weeks)
October 2000
Topic 4 Elasticity (Unit 1) (2 weeks)
Topic 5 Indirect taxes and subsidies (Unit 1) (1 week)
November 2000
Topic 6 The Application of supply and demand analysis indifferent markets including governmentintervention in markets (Unit 1) (2 weeks)
Topic 7 Overview - The Free Market Economy (Unit 1/2) (1 week)
December 2000
Topic 8 Introduction to Macro-economics (Unit 3) (1 week)
Topic 9 Aggregate Demand (Unit 3) (1 week)
Topic 10 Aggregate Supply (Unit 3) (1 week)
Topic 11 Putting the aggregate supply and demandcurves together (Unit 3) (1 week)
January 2001
Topic 12 Inflation (Unit 3) (1 week)
Topic 13 Unemployment (Unit 3) (1 week)
Topic 14 The Balance of Payments (Unit 3) (1 week)
Topic 15 Economic Growth (Unit 3) (1 week)
32 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
February 2001
Topic 16 Policies to achieve macro-economic policy goals (Unit 3) (1½ weeks)
Topic 17 Conflicts between the different macro-economicpolicy objectives (Unit 3) (1½ weeks)
March 2001
Topic 18 Externalities (Unit 2) (1 week)
Topic 19 The practical application of externalities (Unit 2) (1 week)
Topic 20 Monopoly (Unit 2) (1 week)
Topic 21 Market Failure (Unit 2) (1 week)
April 2001 Mock examination andanalysis of papers
May 2001 Revision
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 33
A2 COURSE � UNITS 4 TO 6
June/July 2001
Topic 1 Market structures I (Unit 4) (3 weeks)
September 2001
Topic 2 Market structures II (Unit 4) (2 weeks)
Topic 3 Competition Policy andprivatised industry regulation (Unit 4) (1 week)
Topic 4 Growth of firms and mergers andtake-overs (Unit 4) (1 week)
October 2001
Topic 5 Pricing and marketing strategies including pricediscrimination (Unit 4) (1 week)
Topic 6 The supply of and demand for labour (Unit 5) (1 week)
Topic 7 Wage Determination, wage differentials andGovernment policy on the labour market (Unit 5) (3 weeks)
Topic 8 The effects of an ageing population (Unit 5) (1 Week)
December 2001
Topic 9 Distribution of income and wealth and theLorenz Curve (Unit 5) (1 week)
Topic 10 International trade (Unit 6) (2 weeks)
January 2002
Topic 11 The Balance of Payments (Unit 6) (2 weeks)
Topic 12 Exchange rates and European MonetaryUnion (Unit 6) (2 weeks)
February 2002
Topic 13 Public expenditure and Taxation (Unit 6) (2 weeks)
Topic 14 Unemployment and Inflation (Unit 6) (2 weeks)
March 2002 Mock Examination
April/May 2002 Revision
34U
A00
7567
− E
dexc
el A
S/St
anda
rd G
CE
Econ
omic
s Tea
cher
s' G
uide
Sche
me
of W
ork
with
topi
cs a
nd r
efer
ence
s exp
ande
d fr
om th
e ou
tline
giv
en a
bove
, pro
duce
d by
And
rew
Mot
h, W
estc
liff H
igh
Scho
ol fo
r Bo
ys
SPE
CIF
ICA
TIO
N A
RE
A:
TO
PIC
1: B
ASI
CIN
TR
OD
UC
TIO
NU
nit 1
� 1
wee
k
TO
PIC
2: S
PEC
IAL
ISA
TIO
NA
ND
TH
E D
IVIS
ION
OF
LA
BO
UR
Uni
t 1 �
1 w
eek
TO
PIC
3: S
UPP
LY
& D
EM
AN
DA
NA
LY
SIS
Uni
t 1 �
2 w
eeks
KE
Y C
ON
CE
PTS
AN
D ID
EA
S T
O B
EC
OV
ER
ED
Scar
city
Cho
ice
Opp
ortu
nity
cos
tPr
oduc
tion
poss
ibili
ty c
urve
sD
imin
ishi
ng re
turn
sPo
sitiv
e ec
onom
ics
Nor
mat
ive
Econ
omic
sM
argi
nal a
naly
sis
The
dist
inct
ion
betw
een
mic
ro a
nd m
acro
eco
nom
ics
Sim
ple
intro
duct
ion
to th
e id
ea o
f eff
icie
ncy
The
divi
sion
of l
abou
rSp
ecia
lisat
ion
Abs
olut
e ad
vant
age
Com
para
tive
adva
ntag
e
Dem
and
sche
dule
Dem
and
curv
eD
eman
d fu
nctio
nSu
pply
sche
dule
Supp
ly fu
nctio
nSu
pply
cur
ve
RE
FER
EN
CE
S
And
erto
n U
nits
1 &
114
Mau
nder
et a
l Cha
pter
1Sl
oman
Cha
pter
1
And
erto
n U
nits
1, 2
0 &
84
Mau
nder
Cha
pter
s 3 &
4Sl
oman
Cha
pter
2
And
erto
n U
nits
4, 5
, 6 &
7M
aund
er e
t al C
hapt
ers 3
& 4
Slom
an C
hapt
er 2
UA
0075
67 −
Ede
xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de35
TO
PIC
4: E
LA
STIC
ITY
Uni
t 1 �
2 w
eeks
TO
PIC
5: I
ND
IRE
CT
TA
XE
SA
ND
SU
BSI
DIE
SU
nit 1
� 1
wee
k
Incr
ease
/dec
reas
e in
supp
ly/d
eman
dEx
tens
ion/
Con
tract
ion
of su
pply
/dem
and
Equi
libriu
mEf
fect
s of c
hang
es in
dem
and
and
supp
ly o
neq
uilib
rium
pric
e an
d qu
antit
y
Pric
e el
astic
ity o
f dem
and
Form
ula
& d
eter
min
ants
Mea
ning
of e
last
ic, i
nela
stic
& u
nita
ryPE
D/T
otal
reve
nue
rela
tions
hip
PED
and
the
dem
and
curv
eIn
com
e el
astic
ity o
f dem
and
Form
ula
Nor
mal
& in
ferio
r goo
dsTh
e si
gnifi
canc
e of
inco
me
elas
ticity
of d
eman
d to
prod
ucer
s.C
ross
ela
stic
ity o
f dem
and
Form
ula
Com
plem
ents
& su
bstit
utes
Pric
e el
astic
ity o
f sup
ply
Form
ula
& d
eter
min
ants
PES
and
the
supp
ly c
urve
The
effe
cts o
n th
e su
pply
cur
ve o
f a p
er u
nit s
ales
tax
and
of a
subs
idy
The
inci
denc
e of
taxa
tion
The
impo
rtanc
e of
PED
and
PES
in d
eter
min
ing
the
inci
denc
e of
taxa
tion
The
effe
cts o
f an
ad v
alor
em ta
x
And
erto
n U
nits
9&
10
Mau
nder
et a
l Cha
pter
5Sl
oman
Cha
pter
2.4
And
erto
n U
nit 1
3M
aund
er e
t al C
hapt
er 9
Slom
an C
hapt
er 3
.2
36U
A00
7567
− E
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PIC
6: T
HE
APP
LIC
AT
ION
OF
SUPP
LY
& D
EM
AN
DA
NA
LY
SIS
IN D
IFFE
RE
NT
MA
RK
ET
S, IN
CL
UD
ING
GO
VE
RN
ME
NT
INT
ER
VE
NT
ION
IN M
AR
KE
TS
Uni
t 1 �
2 w
eeks
TO
PIC
7: O
VE
RV
IEW
: TH
EFR
EE
MA
RK
ET
EC
ON
OM
YU
nits
1/2
- 1
wee
k
TO
PIC
8:
INT
RO
DU
CT
ION
TO
MA
CR
O-E
CO
NO
MIC
SU
nit 3
� 1
wee
k
Max
imum
& m
inim
um p
rice
cont
rols
Prim
ary
prod
ucts
Thei
r low
pric
e el
astic
ities
of d
eman
d an
d of
supp
lyTh
e ca
uses
of f
luct
uatio
ns in
dem
and
and/
or su
pply
The
cobw
eb th
eory
Met
hods
to tr
y an
d st
abili
se th
e pr
ices
of p
rimar
ypr
oduc
ts a
nd th
e lim
itatio
ns o
f suc
h sc
hem
esEg
com
mod
ity a
gree
men
ts; b
uffe
r sto
ck sc
hem
es
The
hou
sing
mar
ket
The
dete
rmin
ants
of d
eman
d an
d su
pply
in th
ism
arke
t and
the
fact
ors a
ffec
ting
hous
e pr
ices
The
effe
cts o
f ren
t con
trols
The
Lab
our
mar
ket
Bas
ic in
trodu
ctio
n to
the
labo
ur m
arke
t and
the
reas
ons f
or it
s mai
n im
perf
ectio
nsG
eogr
aphi
cal a
nd o
ccup
atio
nal i
mm
obili
ty o
f lab
our
The
natio
nal m
inim
um w
age
and
its im
pact
The
adva
ntag
es &
dis
adva
ntag
es o
f the
free
mar
ket
econ
omy
The
trans
ition
to a
free
mar
ket e
cono
my
in E
aste
rnEu
rope
The
wor
king
of t
he p
rice
mec
hani
sm in
allo
catin
gre
sour
ces
The
four
trad
ition
al a
ims o
f gov
ernm
ent e
cono
mic
polic
y.O
utlin
e an
d de
finiti
ons o
f the
bal
ance
of p
aym
ents
,
And
erto
n U
nits
11
& 1
2M
aund
er e
t al C
hapt
ers 6
& 9
Slom
an C
hapt
ers 3
.4
Mau
nder
et a
l Cha
pter
11
Slom
an C
hapt
er 2
.3
Mau
nder
et a
l Cha
pter
9
And
erto
n U
nits
111
&| 1
13M
aund
er e
t al c
hapt
ers 2
and
4
Mau
nder
et a
l Cha
pter
8Sl
oman
Cha
pter
s 13
& 1
4
UA
0075
67 −
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xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de37
TO
PIC
9: A
GG
RE
GA
TE
DE
MA
ND
Uni
t 3 �
1 w
eek
unem
ploy
men
t, ec
onom
ic g
row
th a
nd in
flatio
n.B
rief c
onsi
dera
tion
of w
hy it
has
ofte
n pr
oved
diff
icul
t to
achi
eve
them
sim
ulta
neou
sly.
Brie
f con
side
ratio
n of
how
the
EU is
bec
omin
gin
crea
sing
ly im
porta
nt in
the
exec
utio
n of
mac
ro-
econ
omic
pol
icy.
The
shap
e of
the
aggr
egat
e de
man
d cu
rve.
Mov
emen
ts a
long
the
aggr
egat
e de
man
d cu
rve
and
shift
s in
the
aggr
egat
e de
man
d cu
rve.
Con
sum
ptio
n:Th
e de
term
inan
ts o
f con
sum
ptio
n sp
endi
ngTh
e av
erag
e an
d m
argi
nal p
rope
nsiti
es to
con
sum
ean
d to
save
Inve
stm
ent:
The
dete
rmin
ants
of i
nves
tmen
t inc
ludi
ng th
eac
cele
rato
r mod
el
Gov
ernm
ent E
xpen
ditu
re:
The
dete
rmin
ants
of g
over
nmen
t exp
endi
ture
incl
udin
g si
mpl
e tre
atm
ent o
f the
aut
omat
icst
abili
sers
Exp
orts
and
Impo
rts:
The
dete
rmin
ants
of d
eman
d fo
r exp
orts
and
impo
rts
And
erto
n U
nit 6
4M
aund
er e
t al C
hapt
er 1
4
Mau
nder
et a
l Cha
pter
15
And
erto
n U
nit 6
2G
riffit
hs &
Wal
l Cha
pter
13
Grif
fiths
& W
all C
hapt
er 1
4A
nder
ton
Uni
t 63
Mau
nder
et a
l Cha
pter
15
Grif
fiths
& W
all C
hapt
er 1
5Sl
oman
Cha
pter
17
And
erto
n U
nit 4
4
Grif
fiths
& W
all C
hapt
er 2
5A
nder
ton
Uni
t 83
Mau
nder
et a
l Cha
pter
s 6 a
nd 1
7Sl
oman
Cha
pter
14
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Econ
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TO
PIC
10:
AG
GR
EG
AT
ESU
PPL
YU
nit 3
� 1
wee
k
TO
PIC
11:
PU
TT
ING
TO
GE
TH
ER
TH
E A
GG
RE
GA
TE
SUPP
LY
AN
D D
EM
AN
DC
UR
VE
SU
nit 3
� 1
wee
k
TO
PIC
12:
INFL
AT
ION
Uni
t 3 �
1 w
eek
TO
PIC
13:
UN
EM
PLO
YM
EN
TU
nit 3
� 1
wee
k
TO
PIC
14:
TH
E B
AL
AN
CE
OF
PAY
ME
NT
SU
nit 3
� 1
wee
k
The
Mul
tiplie
r E
ffec
t
The
diff
eren
ce b
etw
een
the
shor
t run
and
the
long
run
in th
e m
acro
-eco
nom
yTh
e ag
greg
ate
supp
ly c
urve
Det
erm
inan
ts o
f agg
rega
te su
pply
Fact
ors a
ffec
ting
the
mov
emen
t of t
he a
ggre
gate
supp
ly c
urve
The
equi
libriu
m le
vel o
f rea
l out
put
The
effe
ct o
f sup
ply
side
shoc
ks o
n th
e ec
onom
yTh
e ca
uses
and
eff
ects
of s
hifts
in th
e ag
greg
ate
dem
and
curv
e
The
reta
il pr
ice
inde
x an
d its
lim
itatio
nsTh
e co
sts o
f inf
latio
nTh
e ca
uses
of i
nfla
tion
- cos
t pus
h, d
eman
d pu
ll an
dm
onet
ary
caus
es
The
vario
us w
ays o
f mea
surin
g un
empl
oym
ent a
ndth
eir l
imita
tions
The
cost
s of u
nem
ploy
men
tTh
e ty
pes a
nd c
ause
s of u
nem
ploy
men
t
The
com
pone
nts o
f the
cur
rent
acc
ount
Surp
luse
s & d
efic
itsIn
trodu
ctio
n to
the
capi
tal a
ccou
nt
And
erto
n U
nit 8
1Sl
oman
Cha
pter
16
Mau
nder
et a
l Cha
pter
16
And
erto
n U
nit 6
5M
aund
er C
hapt
er 1
4Sl
oman
Cha
pter
21
And
erto
n U
nit 6
6Sl
oman
Cha
pter
s 20
& 2
1M
aund
er e
t al C
hapt
er 1
4
And
erto
n U
nits
93
& 9
4M
aund
er e
t al C
hapt
ers 8
and
28
Grif
fiths
& W
all C
hapt
er 1
9Sl
oman
Cha
pter
13.
4
And
erto
n U
nit 8
9M
aund
er C
hapt
er 8
Grif
fiths
& W
all C
hapt
er 2
0Sl
oman
Cha
pter
13.
3
And
erto
n U
nit 8
6Sl
oman
Cha
pter
14.
1M
aund
er e
t al C
hapt
ers 6
& 3
0
UA
0075
67 −
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xcel
AS/
Stan
dard
GC
E Ec
onom
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each
ers'
Gui
de39
TO
PIC
15:
EC
ON
OM
ICG
RO
WT
HU
nit 3
� 1
wee
k
TO
PIC
16:
PO
LIC
IES
TO
AC
HIE
VE
MA
CR
O-E
CO
NO
MIC
POL
ICY
GO
AL
SU
nit 3
� 1
.5 w
eeks
TO
PIC
17:
CO
NFL
ICT
SB
ET
WE
EN
TH
E D
IFFE
RE
NT
MA
CR
O-E
CO
NO
MIC
PO
LIC
YO
BJE
CT
IVE
SU
nit 3
� 1
.5 w
eeks
TO
PIC
18:
EX
TE
RN
AL
ITIE
SU
nit 2
� 1
wee
k
Gro
ss d
omes
tic p
rodu
ctTh
e di
ffer
ence
bet
wee
n no
min
al G
DP
and
real
GD
PTh
e us
e of
GD
P st
atis
tics a
s a m
easu
re o
f the
stan
dard
of l
ivin
gTh
e lim
itatio
ns o
f suc
h us
es b
oth
over
tim
e an
d as
am
easu
re o
f the
com
para
tive
livin
g st
anda
rds b
etw
een
coun
tries
.D
efin
ition
& m
easu
rem
ent o
f eco
nom
ic g
row
th
Mon
etar
y po
licy
Fisc
al p
olic
yEx
chan
ge ra
te p
olic
ySu
pply
side
pol
icie
sTh
e us
e of
eac
h of
thes
e to
ach
ieve
mac
ro-e
cono
mic
polic
y ob
ject
ives
The
polic
y co
nflic
ts -
For e
xam
ple,
the
conf
lict
betw
een
the
purs
uit o
f eco
nom
ic g
row
th a
ndin
flatio
n or
the
conf
lict b
etw
een
the
purs
uit o
f low
unem
ploy
men
t and
low
infla
tion.
The
Phill
ips C
urve
Priv
ate
cost
s & b
enef
itsEx
tern
al c
osts
& b
enef
itsSo
cial
cos
t and
soci
al b
enef
itEx
ampl
es o
f bot
h po
sitiv
e &
neg
ativ
e ex
tern
aliti
esPu
blic
Goo
ds
Grif
fiths
& W
all C
hapt
er 2
5A
nder
ton
Uni
t 99
Mau
nder
et a
l Cha
pter
26
Slom
an C
hapt
er 1
3.2
And
erto
n U
nits
44,
47
& 7
7M
aund
er e
t all
Cha
pter
s 14,
17,
28, 2
9 &
30.
Slom
an C
hapt
ers 2
0.1
& 2
0.2
And
erto
n U
nits
91
& 1
03M
aund
er e
t al C
hapt
er 1
7Sl
oman
Cha
pter
15
And
erto
n U
nits
36
& 4
4M
aund
er e
t al C
hapt
er 1
0Sl
oman
Cha
pter
11
40U
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dexc
el A
S/St
anda
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CE
Econ
omic
s Tea
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s' G
uide
TO
PIC
19:
TH
E P
RA
CT
ICA
LA
PPL
ICA
TIO
N O
FE
XT
ER
NA
LIT
IES
Uni
t 2 �
1 w
eek
TO
PIC
20:
MO
NO
POL
YU
nit 2
� 1
wee
k
TO
PIC
21:
MA
RK
ET
FA
ILU
RE
Uni
t 2 �
1 w
eek
Neg
ativ
e ex
tern
aliti
esR
oad
cong
estio
nPo
llutio
nPo
licie
s to
deal
with
neg
ativ
e ex
tern
aliti
es
Posi
tive
Ext
erna
litie
sM
erit
and
dem
erit
good
sH
ealth
care
& e
duca
tion
The
caus
es o
f mar
ket f
ailu
re in
thes
e ar
eas
Publ
ic tr
ansp
ort p
rovi
sion
The
reas
ons f
or m
onop
oly
Bar
riers
to e
ntry
The
effe
cts o
n fir
ms &
con
sum
ers o
f mon
opol
yR
egul
atio
n &
con
trol o
f mon
opol
y
Exte
rnal
ities
& m
onop
oly
as e
xam
ples
of m
arke
tfa
ilure
The
idea
of g
over
nmen
t fai
lure
And
erto
n U
nits
36
& 3
7M
aund
er e
t al C
hapt
er 1
0G
riffit
hs &
Wal
l Cha
pter
10
Slom
an C
hapt
er 1
1
Mau
nder
et a
l cha
pter
11
Grif
fiths
& W
all C
hapt
er 1
1 &
12 Slom
an C
hapt
er 1
1A
nder
ton
Uni
ts 3
6 &
44
And
erto
n U
nit 2
8M
aund
er e
t al C
hapt
er 2
2Sl
oman
Cha
pter
s 6.3
& 1
2.3
Mau
nder
et a
l Cha
pter
7Sl
oman
Cha
pter
11
And
erto
n U
nit 3
7
UA
0075
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Ede
xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de41
A2
- Uni
ts 4
-6
TO
PIC
1: M
AR
KE
TST
RU
CT
UR
ES
IU
nit 4
� 3
wee
ks
TO
PIC
2: M
AR
KE
TST
RU
CT
UR
ES
IIU
nit 4
� 2
wee
ks
KE
Y C
ON
CE
PTS
AN
D ID
EA
S T
O B
EC
OV
ER
ED
Cos
ts:
The
law
of d
imin
ishi
ng re
turn
sTo
tal f
ixed
cos
tsTo
tal v
aria
ble
cost
sTo
tal c
osts
Ave
rage
tota
l cos
tsTo
tal c
osts
Ave
rage
tota
l cos
tM
argi
nal c
ost
Ave
rage
var
iabl
e co
stA
vera
ge fi
xed
cost
Lon
g ru
n co
sts &
Eco
nom
ies o
f sca
le
Tot
al &
Mar
gina
l rev
enue
Perf
ect c
ompe
titio
n:N
orm
al p
rofit
Abn
orm
al p
rofit
Prof
it m
axim
isat
ion
poin
tSh
ort &
long
run
equi
libria
Ass
umpt
ions
& w
orki
ng o
f the
mod
elPr
oduc
tive
& a
lloca
tive
effic
ienc
y
Mon
opol
istic
com
petit
ion:
Shor
t & lo
ng ru
n eq
uilib
ria
RE
FER
EN
CE
S
And
erto
n U
nits
17,
18,
19
& 2
0M
aund
er e
t al C
hapt
er 2
0Sl
oman
Cha
pter
s 5.1
, 5.2
, 5.3
,5.
4, 5
.5
And
erto
n U
nits
27
& 3
4M
aund
er e
t al C
hapt
er 2
1Sl
oman
Cha
pter
s 5.6
& 6
.2
And
erto
n U
nit 2
8M
aund
er C
hapt
er 2
3Sl
oman
Cha
pter
7.1
42U
A00
7567
− E
dexc
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S/St
anda
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Econ
omic
s Tea
cher
s' G
uide
TO
PIC
3: T
HE
GR
OW
TH
OF
FIR
MS
AN
D M
ER
GE
RS
&T
AK
EO
VE
RS
Uni
t 4 �
1 w
eek
Mon
opol
yB
arrie
rs to
ent
rySh
ort &
long
run
equi
libria
Pric
e di
scrim
inat
ion
Pred
ator
y pr
icin
gLi
mit
pric
ing
Cos
t plu
s pric
ing
Olig
opol
yIn
terd
epen
denc
eK
inke
d de
man
d cu
rve
Sim
ple
gam
e th
eory
& th
e pr
ison
ers�
dile
mm
aN
on-p
rice
com
petit
ion
- its
nat
ure
& o
pera
tion
Con
test
abili
tyTh
e th
reat
of e
ffec
tive
com
petit
ion
as a
rest
rain
t on
the
beha
viou
r of f
irms
The
impo
rtanc
e of
the
lack
of s
unk
cost
s
Mar
ket s
yste
ms c
ompa
red
& a
ltern
ativ
e th
eori
esof
the
firm
Com
petit
ion
vs m
onop
oly
- The
adv
anta
ges &
disa
dvan
tage
s of e
ach
mar
ket f
orm
Entre
pren
eurs
hip
& th
e bi
rth o
f firm
sM
erge
rs -
mot
ives
& c
onse
quen
ces
Mul
ti-na
tiona
l com
pani
es
And
erto
n U
nit 2
8M
aund
er e
t al C
hapt
er 2
2Sl
oman
Cha
pter
s 6.3
, 7.3
& 8
.4G
riffit
hs &
Wal
l Cha
pter
9
And
erto
n U
nits
30
& 3
1M
aund
er e
t al C
hapt
er 2
3Sl
oman
Cha
pter
7.2
Grif
fiths
& W
all C
hapt
er 6
And
erto
n U
nit 3
2Sl
oman
Uni
t 6.4
And
erto
n U
nit 3
3Sl
oman
Cha
pter
8
And
erto
n U
nit 4
0Sl
oman
Cha
pter
8G
riffit
hs &
Wal
l Cha
pter
s 4,5
, 6
UA
0075
67 −
Ede
xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de43
TO
PIC
4:
CO
MPE
TIT
ION
POL
ICY
& P
RIV
AT
ISE
DIN
DU
STR
Y R
EG
UL
AT
ION
Uni
t 4 �
1 w
eek
TO
PIC
5: T
HE
SU
PPL
Y O
F A
ND
DE
MA
ND
FO
R L
AB
OU
RU
nit 4
� 1
wee
k
TO
PIC
6: W
AG
ED
ET
ER
MIN
AT
ION
, WA
GE
DIF
FER
EN
TIA
LS
AN
DG
OV
ER
NM
EN
T P
OL
ICY
ON
TH
E L
AB
OU
R M
AR
KE
TU
nit 5
� 3
wee
ks
Out
line
of U
K &
EU
pol
icy
on c
ompe
titio
n &
mer
gers
The
stra
tegy
in p
ract
ice
- th
e be
lief i
n th
e vi
rtues
of
the
free
mar
ket
The
regu
latio
n of
the
priv
atis
ed u
tiliti
es &
the
role
of
the
regu
lato
r as a
n im
itato
r of c
ompe
titio
nY
ards
tick
com
petit
ion
The
RPI
-X id
ea o
f reg
ulat
ion
Mar
gina
l rev
enue
pro
duct
theo
ryTh
e de
man
d fo
r lab
our a
s a d
eriv
ed d
eman
dFa
ctor
s aff
ectin
g th
e si
ze o
f the
wor
king
pop
ulat
ion
�ag
e di
strib
utio
n, b
irth
& d
eath
rate
s, re
tirem
ent a
ges,
gend
er b
alan
ceFa
ctor
s aff
ectin
g th
e su
pply
to a
par
ticul
aroc
cupa
tion
eg e
duca
tiona
l req
uire
men
ts; p
hysi
cal
requ
irem
ents
.
The
role
of d
iffer
ent s
uppl
y &
dem
and
fact
ors i
nde
term
inin
g w
age
diff
eren
tials
incl
udin
g th
eim
porta
nce
of th
e el
astic
ities
of d
eman
d an
d of
supp
ly fo
r lab
our
Dis
crim
inat
ion
on th
e gr
ound
s of g
ende
r and
of
ethn
ic o
rigin
and
its e
ffec
t on
wag
e ra
tes
The
role
of t
rade
uni
ons
The
impa
ct o
f the
min
imum
wag
e an
d of
the
wor
king
time
dire
ctiv
eO
ther
gov
ernm
ent p
olic
ies o
n th
e la
bour
mar
ket
The
effe
ct o
n w
ages
of a
mon
opso
nist
ic e
mpl
oyer
And
erto
n U
nits
39
& 4
5M
aund
er C
hapt
er 2
7Sl
oman
Cha
pter
s 12.
3 &
12.
4G
riffit
hs &
Wal
l Cha
pter
8
And
erto
n U
nits
48
& 4
9M
aund
er e
t al C
hapt
er 2
4Sl
oman
Cha
pter
9
And
erto
n U
nits
50,
51
& 5
2M
aund
er e
t al C
hapt
er 2
4Sl
oman
Cha
pter
9G
riffit
hs &
Wal
l Cha
pter
22
44U
A00
7567
− E
dexc
el A
S/St
anda
rd G
CE
Econ
omic
s Tea
cher
s' G
uide
TO
PIC
7: T
HE
EFF
EC
TS
OF
AN
AG
EIN
G P
OPU
LA
TIO
NU
nit 5
� 1
wee
k
TO
PIC
8: T
HE
DIS
TR
IBU
TIO
NO
F IN
CO
ME
& T
HE
LO
RE
NZ
CU
RV
EU
nit 5
� 1
wee
k
TO
PIC
9: I
NT
ER
NA
TIO
NA
LT
RA
DE
Uni
t 5 �
1 w
eek
The
effe
cts o
n pu
blic
exp
endi
ture
& ta
x re
venu
e of
an a
gein
g po
pula
tion
The
effe
cts o
n th
e la
bour
& p
rodu
cts m
arke
ts o
f an
agei
ng p
opul
atio
n
The
prin
cipa
l fac
tors
aff
ectin
g th
e di
strib
utio
n of
wea
lth a
nd o
f inc
ome
incl
udin
g in
herit
ed w
ealth
,ow
ners
hip
of h
ousi
ng, s
tate
ben
efits
, pen
sion
s,pr
ovis
ion
of fr
ee st
ate
serv
ices
.
The
Lore
nz c
urve
The
pove
rty tr
apG
over
nmen
t pol
icie
s to
deal
with
pov
erty
trap
and
ineq
ualit
y.
Furth
er d
evel
opm
ent o
f the
reas
ons f
or in
tern
atio
nal
trade
and
the
incr
easi
ng tr
end
of g
loba
lisat
ion.
eg g
row
th o
f mul
ti-na
tiona
l com
pani
es a
nd th
e fr
eem
ovem
ent o
f cap
ital.
Prot
ectio
nism
:Ta
riffs
, quo
tas &
non
-tarif
f bar
riers
Thei
r eff
ects
and
the
incr
easi
ng tr
end
tow
ards
the
redu
ctio
n of
tarif
f bar
riers
Trad
ing
bloc
sTh
e W
orld
Tra
de O
rgan
isat
ion
And
erto
n U
nit 5
3
And
erto
n U
nits
43
Mau
nder
et a
l Cha
pter
7Sl
oman
Cha
pter
10
Grif
fiths
& W
all C
hapt
er 2
3
And
erto
n U
nits
84,
85
& 8
8M
aund
er e
t al C
hapt
ers 6
& 3
0Sl
oman
Cha
pter
23
Grif
fiths
& W
all C
hapt
er 2
6
UA
0075
67 −
Ede
xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de45
TO
PIC
10:
EX
CH
AN
GE
RA
TE
S&
EU
RO
PEA
N M
ON
ET
AR
YU
NIO
NU
nit 6
� 2
wee
ks
TO
PIC
11:
TH
E B
AL
AN
CE
OF
PAY
ME
NT
SU
nit 6
� 2
wee
ks
Fixe
d ex
chan
ge r
ates
:Th
eir o
pera
tion
and
thei
r adv
anta
ges &
disa
dvan
tage
s
Floa
ting
exch
ange
rat
esTh
eir o
pera
tion
and
thei
r adv
anta
ges &
disa
dvan
tage
s
Mon
etar
y U
nion
The
argu
men
ts fo
r and
aga
inst
mon
etar
y un
ion
with
in th
e EU
The
eff
ects
of e
xcha
nge
rate
s on
the
mac
ro-
econ
omy
The
diff
eren
t par
ts o
f the
cur
rent
acc
ount
The
capi
tal a
ccou
ntIn
war
d in
vest
men
t by
mul
ti-na
tiona
l com
pani
esR
ecen
t tre
nds i
n th
e U
K�s
trad
ing
posi
tion
Mea
sure
s of i
nter
natio
nal c
ompe
titiv
enes
s and
the
UK
�s re
lativ
e co
mpe
titiv
enes
s in
wor
ld m
arke
tsM
easu
res t
aken
to tr
y an
d in
crea
se U
Kco
mpe
titiv
enes
s.Po
licie
s to
cure
a c
urre
nt a
ccou
nt d
iseq
uilib
rium
:Ex
chan
ge ra
te a
djus
tmen
t & th
e M
arsh
all L
erne
rco
nditi
onD
efla
tiona
ry p
olic
ies
Supp
ly si
de p
olic
ies
Prot
ectio
nism
con
side
red
in a
mod
ern
cont
ext
The
effe
cts o
n th
e m
acro
-eco
nom
y of
ext
erna
lsh
ocks
And
erto
n U
nits
88,
97
& 9
8M
aund
er e
t al C
hapt
er 3
0Sl
oman
Cha
pter
s 14.
2, 2
4 &
25
Grif
fiths
& W
all C
hapt
er 2
4
And
erto
n U
nits
86
& 9
6Sl
oman
Uni
ts 1
4.1
& 2
4M
aund
er e
t al C
hapt
er 3
0G
riffit
hs &
Wal
l Cha
pter
25
46U
A00
7567
− E
dexc
el A
S/St
anda
rd G
CE
Econ
omic
s Tea
cher
s' G
uide
TO
PIC
12:
PU
BL
ICE
XPE
ND
ITU
RE
& T
AX
AT
ION
Uni
t 6 �
2 w
eeks
TO
PIC
13:
UN
EM
PLO
YM
EN
T,
INFL
AT
ION
& T
HE
WO
RK
ING
S O
F E
CO
NO
MIC
POL
ICY
Uni
t 6 �
2 w
eeks
Tax
atio
n:Th
e di
ffer
ent f
orm
s of d
irect
& in
dire
ct ta
xatio
nta
xatio
nR
egre
ssiv
e &
pro
gres
sive
taxa
tion
The
rela
tive
mer
its o
f dire
ct &
indi
rect
taxa
tion
Publ
ic e
xpen
ditu
reIts
size
& c
ompo
sitio
nC
hang
es in
pub
lic e
xpen
ditu
re in
rece
nt y
ears
The
Pub
lic S
ecto
r B
orro
win
g R
equi
rem
ent
Its si
ze a
nd si
gnifi
canc
eTh
e au
tom
atic
stab
ilise
rsPu
blic
sect
or su
rplu
ses
Inte
rnat
iona
l com
pari
sons
of p
ublic
fina
nces
The
Phi
llips
cur
ve b
oth
in th
e sh
ort r
un a
nd th
elo
ng r
un
Une
mpl
oym
ent &
Infla
tion
in a
n E
U c
onte
xtR
elat
ive
infla
tion
& U
nem
ploy
men
t rat
es in
the
coun
tries
of t
he E
U a
nd o
ther
maj
or W
este
rnec
onom
ies e
g th
e U
SA
The
ach
ieve
men
t of d
iffer
ent p
olic
y ob
ject
ives
usin
g fis
cal,
mon
etar
y &
supp
ly si
de p
olic
ies
And
erto
n U
nits
44
& 4
7M
aund
er e
t al C
hapt
ers 7
& 2
9Sl
oman
Cha
pter
s 10.
2 &
17
Grif
fiths
& W
all
Cha
pter
s 15
&16 A
nder
ton
Uni
ts 9
1 &
103
Mau
nder
et a
l Cha
pter
28
Slom
an C
hapt
ers 2
0 &
21
Grif
fiths
& W
all C
hapt
er 2
7
Not
e: W
ith th
e ex
cept
ion
of th
e Sl
oman
boo
k, a
ll th
e ab
ove
refe
renc
es a
re b
ased
on
the
editi
ons o
f the
se b
ooks
whi
ch e
xist
ed b
efor
e re
vise
ded
ition
s wer
e pr
oduc
ed in
200
0, e
.g.,
in th
e ca
se o
f And
erto
n, th
e 2nd
edi
tion
rath
er th
an th
e 3rd
edi
tion.
The
boo
klis
t on
page
71
refe
rs to
the
next
rece
nt e
ditio
ns o
f all
of th
ese
book
s.
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 47
Scheme of Work for GCE AS Economics (8121) - An alternativeapproach by Quintin Brewer, The Alice Ottley School and PrincipalExaminer
Assumptions
1 This scheme of work is designed to be taught by one teacher but it could easily be adapted for twoteachers.
2 Students will take the 3 AS units in June of the Lower Sixth (end of Year 12) and the 3 A2 units inJune of the Upper Sixth (end of Year 13).
Rationale
Evidence from teachers� conferences suggests that many centres are likely to be working under Assumption2. This makes it possible to integrate material from units 1-3 in the AS. In this scheme, therefore, the firstunit taught will be unit 3. This has certain benefits:
• The material is immediately engaging i.e. the current state of the UK economy is an interesting andstimulating starting point
• The subject content is relatively straightforward
• It provides good possibilities for independent learning at the beginning of the course eg research onrecent performance of the UK economy; research on methods of measuring key variables such asunemployment and the rate of inflation.
• It enables other key skills to be developed from the start eg making a presentation on the state of theUK economy, with the use of ICT
• It should be easy for students to move from basic macro analysis (AD/AS) to micro supply anddemand analysis.
48 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
TERM 1 CONTENTWEEKS 1-2(Unit 3)
WEEK 3-4(Unit 3)
WEEK 5-7(Unit 3)
WEEK 8-10(Unit 3)
WEEK 11-13(Unit 3)
WEEK 14
The state of the economy:Key indicators for the UK economy (using real data).Explanation of measurement and significance:• Retail Price Index• Unemployment• Balance of Payments• GDP/Economic growth (plus PPFs from Unit 1)
How wealth is created:Economic growth: causesInter-country comparisonsWho benefits and who suffers from economic growthGDP and living standards
Determinants of the level of economic activity:Factors influencing the level of aggregate demand:Consumption: e.g. interest ratesInvestment: e.g. expectations, interest rates, profitsGovernment expenditure: e.g. level of economicactivityExports and imports: e.g. the exchange rate.Distinction between movements along, and shifts of,the AD curve.
Factors influencing aggregate supply e.g.improvements in skills of the workforce.Distinction between movements along, and shifts of,the AS curve.
Inflation and unemployment:Costs, causes and effects
Conflicts between economic objectives:The Phillips CurveGrowth and the Balance of Payments
Policy solutions:Use of AD/AS analysis to examine the effects ofdemand-side and supply-side policies onunemployment, inflation, the Balance of Paymentsand economic growth.Include reference to the multiplier effect
Revision and test
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 49
TERMS 2 & 3
WEEK 1-2(Unit 1)
WEEK 3-4(Unit 1)
WEEK 5-6(Unit 1)
WEEK 7-8(Unit 1)
WEEK 9-11(Unit 2)
WEEK 12(Unit 2)
Scarcity:Use of real examples to illustrate the basic economicproblem in EU countries and in Eastern Europe.Scarcity and choice.Opportunity cost.Specialisation and trade. The benefits of tradeincluding reference to the law of comparativeadvantage.How trade might enable firms to benefit fromeconomies of scale.
Introduction to the free market:Use of topical case studies to examine causes of pricechanges e.g. commodities.The microeconomic toolkit:Demand: conditions of demand and movements alongthe demand curveSupply: conditions of supply and movements alongthe supply curveInteraction of supply and demand and explanation ofprice changes.The impact on supply and price of entry and exit offirms into and out of the market.
Elasticities:Measurement, determinants, interpretation andsignificance of elasticity of supply; price elasticity ofdemand; income elasticity of demand and crosselasticity of demand.Consumer and producer surplus.
Applications of supply and demand analysis:Housing, agriculture, exchange rates.
Market failure:Introduction: case study of a topical example e.g.analysis of reasons for market failure in health careincluding the distinction between private and externalbenefits.Distinction between private and external costs.Application e.g. road congestion.Monopoly.Public goods.
Policies to deal with market failure: Taxation and subsidiesRegulation, Extension of property rights;Tradeable permits.
50 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
WEEK 13(Units 1/2)
WEEK 14-15(Units 1/2)
WEEK 16
Other reasons for government intervention inmarkets:Case study in agriculture.Government failure.
Overview/Revision of Units 1 & 2:The advantages and disadvantages of the free marketeconomy.Transition of Eastern European economies away fromcentral planning.
Revision
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 51
Scheme of work for AS/Advanced GCE Economics (8121/9121)produced by Peter Newton-Lewis, Worcester Royal Grammar School
Basic assumptions
1 The whole course is taught by 2 teachers. Option 5A is chosen.
2 We calculated that we had about 32 weeks to deliver Units 1, 2, 3 and assumed 28weeks for Units 4, 5, 6, (including crucially two/three weeks after the AS exam).
3 Given the weighting of the units, we agreed that Unit 3 and Unit 6 needed moretime allocated.
4 We are planning to timetable 4 lessons of 35 minutes and 4 lessons of 40 minutesfor each AS/A2 chosen, totalling 5 hours per subject per week.
Our planning also involved time allocated for developing exam skills in �supported choicequestions� in data response and in structured essay work. Ideally, time will be availablefor Unit tests, for a possible subject - related visit and for computer-based simulations inline for key skills.
We would expect to deliver Economics on a 4/4 basis. Sometimes timetable constraintsrequire three teachers so we have had to design a delivery system that will allow us tooperate a 4/2/2 allocation.
The first two Units are obviously closely connected and in effect sequential so we couldnot teach each in parallel. This meant that we had to divide each Unit into balanced,almost self-contained �modules�.
In planning our delivery we also had to cross-check the specification with the subjectcriteria, the specimen papers and the existing A level syllabus to check what was �in� andwhat was �out�, e.g. Economic Rent?
52 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Teaching Unit 1 Markets : how they work
Time 9 weeks plus one further week for key skills tests, �supported choice questions�, dataresponse, visit (?), ICT simulation/task
Teacher 1 Teacher 2
Philosophy and Concepts4 lessons 35-40 minutes
Weeks 1-4
IntroductionDefinition of subjectPositive and normative statementsScarcity - Opportunity CostUtilitySpecialisation - Division of LabourProduction PossibilitiesEconomies of Scale/Average cost-curves
Weeks 5-9
Price Mechanism as a conceptFree Market economiesEntry and Exit of firmsImpact of new suppliers/new pricesAdvantages/DisadvantagesCommand economiesAdvantages/DisadvantagesMixed EconomiesApplication to real worldWhich mixed economy?Problems of transition in Eastern Europe
Price Theory4 lessons x 35/40 minutes
Weeks 1-2
Demand - Laws - Factors affecting anddeterminingDerivation of curvesShifts, Extension, ContractionsSupply - As abovePrice determination
Weeks 3-4
Consumer and producer surplusesElasticity : PED, ES, XED, YED
Weeks 5-6
PED, ES, XED, YEDNormal and inferior goodsApplying the price mechanismCommodities : Housing : Exchange Ratesand Labour
Weeks 7-8
Government intervention in marketse.g. (i) agriculture (minimum prices, buffer stocks)
(ii) impact/incidence of taxes and subsidies and (iii) labour e.g. minimum wage
Week 9
Advantages of international trade/comparativeadvantageGains from trade
Extension work/activities in week 10?Note: Drawing out the price mechanism at about the same time, from two different perspectives.
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 53
Teaching Unit 2 Markets : why they fail
Time 7 weeks, plus one further week for exam skills, key skills, ICT simulation task, test.
Teacher 1 Teacher 2
Misallocation of the Market
4 lessons x 35/40 minutes
Weeks 1-4
Meaning of Market FailureOptimalityMonopoly and its implicationsthe failure of competitionGovernment remediesRegulation, reducing barriersEncouraging enterprise
Weeks 5-7
Public, Merit and De-merit goodsDefined - Examples. Is this market failure?Government involvement/explainede.g. health, educationRemedies e.g. taxation, subsidies
Misallocation of production
4 lessons x 35/40 minutes
Weeks 1-5 or 6
Externalities DefinedSocial, external costsSocial, external benefitsDiagrams - EffectsExamples : transport and the environmentRemedies : by market e.g. coase and bygovernment e.g. taxation, property rights andtradeable permitsSubsidies to producers/consumers (effect onmarket exit)
Weeks 6 and 7
Government failure/involvementProvision of public transportCan it affect economic efficiencye.g. agricultural stabilisationAdministration costs
54 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Teaching Unit 3 Managing the Economy
The content for this Unit looks quite extensive. Until we know better, we will allocate about 14weeks for the �Macro� course. With experience, we may find that Unit 3 could be taught as onehalf of the AS Course and Units 1 and 2 as consecutive �modules� taught by the second colleague.
Teacher 1 Teacher 2
4 lessons x 35/40 minutes
Weeks 1-4
The Macro economyMeasuring economic performancePolicy objectives in an EU contextGDP and living standardsLimitations of GDPInequality and redistributionAlternative measures of living standards
Weeks 5-8
Environmental concernRear and nominalEconomic growth. Why does it differ?Desirability and costs of growthEffects of growthComparing/contrasting developed anddeveloping countries� growth
Weeks 9-11
Balance of PaymentsSpecifically current account
Weeks 12-14
Disequilibrium EffectsConflicts between objectives: growth and thebalance of paymentsEquilibrium
Policy solutions discussed :Supply-side and Demand-sideComparison of relative meritsFiscal policyMonetary policyExchange - ratesImpacts and effects of policy on Growth,Living Standards, Balance of Payments
4 lessons x 35/40 minutes
Weeks 1-6
Macro theory
Inflation : Causes, costs and effects of inflationRPI and its limitationsInflation objectivesUnemploymentCosts, causes, effects of unemploymentAlternative approaches to measuringunemploymentUnemployment objectivesConflicts/trade-off between inflation andunemploymentPhillips curve
Weeks 7-10
AS-AD ModelAggregate Demand and its components (CIGX-M)Aggregate supply : short and long runFactors affecting size of AS-ADDifferent views of curve shapeMultiplier : descriptionShifts, extensions, contractionsImpact of technology, labour qualityApplication to price levelCauses of change in AS-ADEquilibriumApplication to UK government policy
Weeks 1-14
Policy solutionsSupply-side and Demand-sideFiscal policyMonetary policyExchange ratesImpacts of each on inflation, unemployment,
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 55
AS-ADRelationship to inflation, unemployment,aggregate demand and supply
It is possible to consider teaching AS-AD independently. For a �Macro� specialist, Unit 3 couldbe taught opposite Units 1 and 2 with a consequent change in the implementation of thespecification. Any imbalance in the weighting and timing could be balanced by how the end ofunit tests and activities are implemented.
56 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Teaching the A2 Edexcel Economics (9121)
The �A2� specification will take many of us a long time to adjust to. Unit 6 involves a possible re-iteration of some of the AS ideas. What is taught in Unit 6 may well depend very much on whataspects of theory were covered in depth in the AS course. Units 4 and 5 seemed to us verydifficult to �break-down� into subsets. We concluded that in a 4-4 allocation that they could betaught by different colleagues. The problem really involved the subdivision of Unit 6 into discreteteachable blocks. We have agreed a compromise. Much will also depend upon whether we willhave to teach the A2 course on 4 � 2 � 2 allocation. The compromise on this, we feel, would be toteach Unit 6 as one half of the whole course, given that there is a lot in it! We felt we may be ableto cope with Units 4 and 5 taught in a �double� every week for the assumed 28 weeks available(including at least two weeks after the AS Unit exams at the end of the first year).
An alternative scenario might be to teach Unit 6 first, taking about 14 weeks to complete.
One real complication for us was the overlap with work covered in Units 1 and 3. Our planningreview again involved a discussion of whether to include some coverage of economics seeminglyomitted from the new specification e.g. financial economics, some monetary theory, economic rentand industrial structure.
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 57
Teaching Unit 4 : Industrial Economics : Teacher 1 4 lessons
We decided that this Unit could be covered in 11 weeks teaching, assuming 4 lessons a weektotalling about 2½ hours per week. A week could also be made available for extension work onexam techniques especially on �supported choice questions�. Other activities might include tests,visits and ICT applications. This Unit could commence in June/July of AS course.
1 week Birth and growth of firms Business motives : Alternative theories, pricing
and support
Theory of the Firm: Perfect competition : Pricing and output4 weeks Productive and allocative efficiency
Monopoly ; pricing and outputComparisons with efficiencyHow monopolies are createdImperfect competition modelOligopolyContrast the Pricing and output decisions/behaviourConditions for discrimination
1 week Links with producer and consumer surplusesCross Elasticity
1 week Barriers to entry and exit - Sunk costsContestable markets : The threat of competitionPricing and non-pricing strategies : Collusion -Cartels
1 week Internal and external growth of firmsIntegration - Mergers
1 week Rôle of transnational corporations
1 week Competition policy : Effects of measures toenhance competition
1 week Regulation of privatised industries : aims andobjectives. Regulatory capture?
1 week for extension strategies = 12 weeks
58 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Teaching Unit 5A Labour Markets
Again, assuming 11 teaching weeks of 4 lessons (about 2½ hours per week). commencing inJune/July following the AS course. Our planning includes one week for enhancement/extensionwork. There is a lot to do in 11 weeks!
3 weeks Supply of labour. Factors affecting the workingpopulation. Work-leisure trade-off. Income andsubstitution effects. Demand for labour.Derived demand
Elasticity Marginal revenue productivity theory
Wage determination - interaction of supplyand demand
Wage rates - Differentials - Economic andnon-economic reasons
1 week Trade UnionsEffect on wages and employmentNew unionismRecognition
2 weeks Government interventionLegislation e.g. equal pay working time directive, minimumwageEffects of government intervention e.g. onflexibility and mobility in the labour force
(geographical/occupational) Monopsony - Effect on wages and employment of a single buyer
1 week Unemployment and labour market imperfectionsUnemployment in practice : Structure, durationand incidence
2 weeks Government policies: Training; New Deal/Workfare: BenefitsChanging UK labour marketComparisons with EuropeParticipation rates: New technology:MigrationRegional policySocial chapter
2 weeks Significance of ageing population on flexibilityand public financesDistribution of income: Inequality: Causes:Lorenz curvesChanges in distribution: Income data/decilesquintiles: Poverty: Impact of fiscal policyMinimum wage : Benefits
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 59
Teaching Unit 6: The UK in the global economy
We consider that 15 weeks is all the time that is available to teach this key Unit.The theme is cohesive but it is evident that we will have to start collecting material nowto supplement text material. This will be taught for 8 periods a week (maximum 5 hours)and will be split rather arbitrarily for a 4 - 4 teaching load.
Teacher 1 Teacher 2
International Economics
4 lessons x 35/40 minutes
Weeks 1-2
Factors contributing to globalisationInterdependence : Trade : Falling barriersCapital mobility : MNC�s, TechnologyInternet WTO
Weeks 3-4
Importance of trade/exchangeProtectionism vs liberalisationReasons/Policies e.g. CAPConflict between trading blocs
Weeks 5-7
Rôle of WTOBalance of PaymentsComposition : Recent Trends
Weeks 8-9
Disequilibrium : Policy remedies evaluatedInternational competitivenessChanging UK situation : ReasonsFactors affecting : DeregulationInward Investment. Flexible Labour
Weeks 10-12
Exchange Rate SystemsExchange rate determination : theory andpractice : Factors affectingExchange rate as a policy instrumentEffects on the economy
Global performance
4 lessons x 35/40 minutes
Weeks 1-5
Public expenditure : Size : CompositionFiscal policyMerits and effects of Direct and IndirectBorrowing and debt repaymentFactors influencing. Opportunity costComparing public sectors
Week 6
Fiscal, monetary and supply-side as policyInstrumentsRelative merits and effectsProblems of data and planning
Weeks 7-8
Unemployment and inflation in an EU andglobal contextCauses and consequences
Weeks 9-10
NAIRU - Relationship to outputApplied to AS-AD : Long/Short run
Weeks 11-12
EMU : Costs and benefits of unionImplications/Effects
60 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
The timetable above has been planned for 12 weeks leaving 3 weeks for extension workfor this Unit. This could be integrated into the schedule with a week between sectionse.g. between trade and the balance of payments. This will allow more concentratedextension work on topics and on exam skills. This would be ideal for evaluation ofperformance. It ensures an element of teacher flexibility to allow for discussion ofcurrent economic events. It might even allow teachers to consider more group-workactivities, research, debate, ICT simulations or even tests! At least a 27/28 week courseought to allow enough time for revision and for working on exam techniques.
UA
0075
67 −
Ede
xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de61
Sche
me
of w
ork
(3) f
or A
S/A
dvan
ced
GC
E E
cono
mic
s (81
21/9
121)
prod
uced
by
Nic
k O
�Fly
nn, O
xted
Cou
nty
Scho
ol
This
sche
me
of w
ork
is d
esig
ned
for t
wo
teac
hers
, with
5 h
ours
� tea
chin
g tim
e in
yea
r 12
and
4 ho
urs t
each
ing
time
in y
ear 1
3. A
lthou
gh th
e m
odel
is d
esig
ned
for e
xam
s to
be ta
ken
at th
e en
d of
June
in y
ears
12
and
13, i
t cou
ld b
e re
desi
gned
to ta
ke th
e Ja
nuar
y se
ssio
n in
to a
ccou
nt.
AS
ECO
NO
MIC
S Y
12TE
RM
1 T
EAC
HER
A: U
NIT
S 1
AN
D 2
(3 x
1 h
our)
TEA
CH
ER B
: UN
IT 3
(2 x
1 h
our)
THE
PURP
OSE
OF
ECO
NO
MIC
STh
e ob
ject
ive
of e
cono
mic
s is t
o in
crea
se e
cono
mic
wel
fare
. H
ow c
an th
is b
e ac
hiev
ed.
The
prob
lem
s(s
carc
ity, c
hoic
e PP
F co
mpa
rativ
e ad
vant
age
etc)
THE
PURP
OSE
OF
MA
CR
OEC
ON
OM
ICS
Wha
t is m
eant
by
the
term
�Eco
nom
y� a
nd h
ow to
judg
epe
rform
ance
of a
n ec
onom
y, v
ia it
s eco
nom
ic o
bjec
tives
. H
owth
ese
obje
ctiv
es a
re m
easu
red
and
the
relia
bilit
y of
thei
rm
easu
rem
ent.
ECO
NO
MIC
SYST
EMS
The
choi
ces a
vaila
ble
to e
cono
mie
s reg
ardi
ng th
e Pu
blic
V P
rivat
e de
bate
.Pr
oble
ms o
f tra
nsiti
on fr
om P
lann
ed to
Fre
e M
arke
tec
onom
y.
HO
W T
HE
ECO
NO
MY
WO
RK
SIn
trodu
ctio
n to
AD
+ A
S m
odel
of h
ow th
e ec
onom
y op
erat
es.
HO
W F
REE
MA
RK
ETS
WO
RK
How
reso
urce
allo
catio
n w
orks
in a
free
mar
ket.
D+S
anal
ysis
, shi
fts a
nd m
ovem
ent a
long
the
D+S
cur
ves.
Elas
ticiti
es o
f D+
S. A
pplic
atio
n of
D+
S eg
. in
Hou
sing
, tra
nspo
rt an
d la
bour
mar
kets
.
AD
AN
D H
OW
TH
EEC
ON
OM
Y W
OR
KS
IN T
HE
SHO
RT
RU
N
Cau
ses o
f cha
nges
in th
e Ec
onom
y in
the
Shor
t run
.In
vest
igat
ion
into
the
role
of A
D d
urin
g th
e Tr
ade
Cyc
le(a
ssum
ing
shor
t run
AS)
and
fact
ors t
hat i
nflu
ence
its
com
pone
nts.
The
effe
ct th
ese
chan
ges h
ave
on th
e eq
uilib
rium
leve
l of r
eal o
utpu
t.TE
RM
2 A
ND
3W
HY
MA
RK
ETS
FAIL
The
role
of t
he p
rice
mec
hani
sm in
free
mar
kets
and
effic
ienc
y. I
ntro
duct
ion
to th
e ne
ed fo
r sta
tein
terv
entio
n. E
xter
nalit
ies,
publ
ic g
oods
, mix
ed g
oods
,m
erit
good
s, m
onop
oly
and
pric
e in
stab
ility
.
AS
AN
D H
OW
TH
EEC
ON
OM
Y W
OR
KS
IN T
HE
LON
G R
UN
Expl
ain
the
fact
ors t
hat i
nflu
ence
AS.
The
cau
ses o
f eco
nom
icgr
owth
and
the
effe
ct th
ese
chan
ges h
ave
on th
e eq
uilib
rium
leve
l of r
eal o
utpu
t. T
he c
onse
quen
ces o
f gro
wth
.
STA
TEIN
TER
VEN
TIO
NA
ND
ITS
EFFE
CTS
Inve
stig
ate
case
stud
ies o
n m
arke
t fai
lure
eg.
pol
lutio
n,ed
ucat
ion,
com
mod
ity a
gree
men
ts, m
onop
olie
s, et
c.Ex
amin
e ca
uses
and
con
sequ
ence
s (w
inne
rs/lo
sers
).Fo
rms o
f gov
ernm
ent i
nter
vent
ion
- reg
ulat
ion,
taxa
tion,
subs
idie
s, et
c. a
nd th
eir e
ffect
on
effic
ienc
y. C
once
pt o
fG
over
nmen
t fai
lure
.
MA
CR
OEC
ON
OM
IC P
OLI
CY
ISSU
ES
The
caus
es o
f inf
latio
n, u
nem
ploy
men
t, in
equa
lity,
Bof
Pdi
esqu
ilibr
ium
and
the
conf
lict b
etw
een
obje
ctiv
es.
The
use
ofan
d th
e ef
fect
of d
eman
d si
de a
nd su
pply
side
inst
rum
ents
toac
hiev
e ec
onom
ic o
bjec
tives
.
4 W
eeks
Rev
ision
62U
A00
7567
− E
dexc
el A
S/St
anda
rd G
CE
Econ
omic
s Tea
cher
s' G
uide
A2
ECO
NO
MIC
S Y
12/1
3TE
RM
3 T
EAC
HE
R A
: uni
ts 5
+ 6
(2 x
1 h
our)
TEA
CH
ER B
: uni
t 6 (2
x 1
hou
r)TH
E R
OLE
OF
THE
FIR
MW
hy fi
rms e
xist
and
thei
r rol
e in
a m
arke
t eco
nom
y.
WH
Y A
ND
HO
WFI
RM
S G
RO
WEx
amin
atio
n of
the
reas
ons w
hy fi
rms w
ant t
o gr
ow,
met
hods
by
whi
ch fi
rms a
chie
ve g
row
th a
nd w
hyso
me
firm
s rem
ain
smal
l. T
he ro
le o
f the
MN
C in
the
glob
al m
arke
t.
INTE
RN
ATI
ON
AL
EXC
HA
NG
ETh
e re
ason
s for
inte
rnat
iona
l tra
de a
nd th
e fa
ctor
sth
at h
ave
led
to g
loba
lisat
ion
and
the
rise
of th
eM
NC
. Ex
amin
atio
n of
the
sign
ifica
nce
of th
ese
chan
ges.
TER
M 4
DET
ERM
INA
TIO
NO
F M
AR
KET
STR
UC
TUR
ES
Fact
ors t
hat d
eter
min
e m
arke
t stru
ctur
e eg
. bar
riers
toen
try a
nd e
xit,
prod
uct d
iffer
entia
tion
and
cont
esta
ble
mar
kets
. In
trodu
ctio
n to
diff
eren
t mar
ket s
truct
ures
.M
easu
res o
f mar
ket c
once
ntra
tion.
FREE
TR
AD
E V
PRO
TECT
ION
ISM
Rea
son
for p
rote
ctio
nism
and
its c
onse
quen
ce.
The
role
of i
nter
natio
nal i
nstit
utio
ns su
ch a
s EU
and
WTO
in p
rom
otin
g fr
ee tr
ade.
PRIC
ING
AN
DO
UTP
UT
DEC
ISIO
NS
IN A
PER
FEC
T M
AR
KET
Prof
it m
axim
isat
ion
obje
ctiv
e an
d th
e pe
rfec
tlyco
mpe
titiv
e m
arke
t. P
rice
outp
ut a
nd e
ffic
ienc
y in
afr
ee m
arke
t. T
he c
once
pts o
f allo
cativ
e an
dpr
oduc
tive
effic
ienc
y.
INTE
RN
ATI
ON
AL
CO
MPE
TITI
VEN
ESS
Exam
inat
ion
of U
K�s
Bof
P an
d re
cent
tren
ds in
its
trade
per
form
ance
. A
n ap
prai
sal o
f the
UK
�sco
mpe
titiv
e po
sitio
n an
d fa
ctor
s whi
ch c
ould
exp
lain
this
pos
ition
. eg.
how
rela
tive
unit
labo
ur c
osts
.PR
ICIN
G A
ND
OU
TPU
TD
ECIS
ION
S IN
IMPE
RFE
CT
MA
RK
ETS
The
perf
orm
ance
of f
irms i
n th
e im
perf
ect m
arke
t ie
pric
ing
and
non
pric
ing
stra
tegi
es a
nd a
ltern
ativ
eob
ject
ives
to p
rofit
mai
xim
isat
ion.
How
thes
eac
tions
will
aff
ect c
onsu
mer
s, pr
oduc
ers a
ndef
ficie
ncy.
POLI
CY
ISSU
ESEv
alua
tion
of p
olic
ies t
o im
prov
e in
tern
atio
nal
com
petit
iven
ess a
nd B
ofP
dise
quili
briu
m
TER
M 5
THE
RO
LE O
F TH
EST
ATE
AN
D T
HE
FIR
MEx
amin
atio
n of
UK
and
EU
gov
ernm
ent p
olic
ies
to p
rom
ote
com
petit
ion
in th
e pr
oduc
t mar
ket.
EXC
HA
NG
ER
ATE
SD
eter
min
atio
n of
exc
hang
e ra
tes a
nd th
e ef
fect
of
thei
r cha
nges
on
the
econ
omy.
Fre
e V
Fix
edEx
chan
ge ra
tes a
nd th
e co
sts a
nd b
enef
its o
f EM
U.
WA
GES
AN
D T
HE
FREE
MA
RK
ETD
+S a
naly
sis o
f det
erm
inat
ion
of w
ages
in a
free
mar
ket.
Fac
tors
that
cau
se sh
ifts i
n D
+S a
ndin
fluen
ce th
e el
astic
ity o
f D+S
.
PUB
LIC
EXPE
ND
ITU
RE
AN
D T
AX
ATI
ON
Exam
ine
the
fact
ors t
hat h
ave
influ
ence
d th
e si
ze a
ndco
mpo
sitio
n of
pub
lic e
xpen
ditu
re a
nd ta
xatio
n an
dth
e ef
fect
of t
hese
cha
nges
on
diff
eren
ce h
ouse
hold
san
d th
e U
K e
cono
my.
Int
erna
tiona
l com
paris
ons o
fPu
blic
fina
nce.
WA
GES
AN
D T
HE
IMPE
RFE
CT
MA
RK
ETFa
ctor
s tha
t im
pede
the
wor
king
of t
he fr
eem
arke
t. B
arrie
rs to
ent
ry/e
xits
; the
role
of t
rade
unio
ns; m
onop
sony
pow
er a
nd d
iscr
imin
atio
n.
UA
0075
67 −
Ede
xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de63
LAB
OU
RM
AR
KET
ISSU
ESA
naly
sis o
f maj
or tr
ends
in la
bour
mar
ket i
eun
empl
oym
ent,
labo
ur fl
exib
ility
, age
ing
popu
latio
n an
d in
equa
lity
in in
com
e an
d w
ealth
.Ex
amin
e ca
uses
and
con
sequ
ence
s.PO
LIC
Y IS
SUES
Exam
inat
ion
of G
over
nmen
t act
ion
to d
eal w
ithso
me
of th
e ab
ove
issu
es e
g. S
ocia
l Cha
pter
,m
inim
um w
age,
edu
catio
n an
d tra
inin
g, ta
xatio
nan
d be
nefit
s.
MA
CR
OM
AN
AG
EMEN
TPR
OB
LEM
S
App
rais
e th
e di
ffic
ultie
s in
achi
evin
g ec
onom
icob
ject
ives
. Pr
actic
al p
robl
ems,
eg d
iffic
ultie
s of
cutti
ng p
ublic
spen
ding
; tec
hnic
al p
robl
ems,
eg ti
me
lags
and
theo
retic
al p
robl
ems,
eg tr
ade
off b
etw
een
infla
tion
and
unem
ploy
men
t (N
AIR
U).
Exa
min
eN
AIR
U in
EU
con
text
.
East
er5
WEE
KS
REV
ISIO
N
64 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Schemes of work for Advanced GCE Economics, Units 5A (LabourMarkets) and 5B (Economic Development) produced by Dr Roy Bowden,Churcher�s College
UNIT 5A - LABOUR MARKETS
The scheme is based on a ten-week period of 8 x 40 minute periods per week.Words in bold type refer to specification content headings for unit 5A.
WEEK 1 The supply of, and demand for, labour. There are some good linkageshere with the AS units: the labour market can be used to illustrate theapplication of supply and demand analysis, together with elasticity (unit 1)with analysis able to be taken further in this later module. Consideration ofthe income/substitution effects can be related closely to the work done onsupply-side policies (unit 3) and also be relevant to that part of the synopticunit.
Basic References Include:Dataset�99 (charts 95-118,175-184); Maunder Ch 12/24;Simpson/Paterson Ch1; Core Unit5/10/15;
Anderton Units 48,49,52,53; Parkin/King Ch14,29;Begg Ch11; Mackintosh et al Ch 21; BES Autumn�96 (section 6)
WEEK 2 The use of supply and demand analysis can now be extended intoexplaining wage determination in competitive markets and to someextent will be useful in the consideration of wage differentials. Given theneed to appraise the qualities, weaknesses, general characteristics of variousgroups within the labour market, the relevance of some of the supply-sidework in unit 3 will become clearer to students e.g. how education/trainingmay strengthen the position of some in the labour market. Teachers mayalso wish to refer back to one of the opening issues of unit 1 - specialisationand division of labour.
Basic References IncludeDataset�99 (charts 119-136); BES Aut�97(sect.6);BESSpr�96 (sect 6); ]ER Sept�97(wage inequality);Maunder Ch 24;Simpson/Paterson Ch 2; Core Unit 15;Anderton Unit 50; Parkin/King pp138-40;
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 65
WEEK 3 The role of trade unions can be taken as a strong example of how marketscan become imperfect but considering also the idea that they might verywell achieve a balancing of the power of employers and employees to allowwage bargaining to be a much more meaningful exercise. It would certainlybe pertinent at this point to consider trade unions� possible significance inthe case of monopsony. A similarly balanced view needs also to be takenof their impact on employment. Their impact on wages and thereforepossibly inflation provides links with unit 3, as does the reduction of theirpowers as part of supply-side policies. Their impact on efficiency andcompetitiveness would contribute to the synopticity of unit 6.
Basic References Include:Dataset�99 (charts 151-162); Annual Review Vol 11 Ch 6:Maunder pp434-7; Simpson/Paterson pp15-6 Ch 3;Core pp174-6, 337-9; Anderton Unit 51;Parkin/King pp411-6; Begg pp179-181, Ch 12-3;Griffiths/Wall Ch 15; Mackintosh pp595-7,719-22,735-6;
WEEK 4 When considering government intervention in labour markets supportcan be drawn from the work done in unit 1 and at the end of unit 2(government failure) in that its work in the labour market may not alwayshave the results intended or, if it does, may also lead to unanticipatedconsequences e.g. the protection of labour is an obvious key theme in someof the legislation but the potential impact on labour costs may be a concernnot given full consideration. In this sense there are links, for example, withthe work done on macro-economic objectives of unit 3 and with issues to becovered in unit 6.The issue of linkage of labour market policy andsupply-side considerations seems better placed in weeks 5-6 (see below).Clearly, careful consideration needs to be given to which aspects ofgovernment will be dealt with here and which in weeks 5-6.
Basic References Include:BES Spr�97 (sect 6), Spr�99 (sect 11); ER April�97 (min wage);Maunder pp230-4; Simpson/Paterson Ch 2/4; Core Unit 5;Anderton Unit 52; Parkin/King pp138-41, 416-25;Annual Review Vol 10/16; Begg Ch 12-2;Griffiths/Wall pp335, 662;
WEEKS 5-6 A good starting point in looking at unemployment and labour marketimperfections would be to make reference back to unit 3 and themacro-economic objective of full employment. This could lead on to adiscussion of the problems in achieving this goal, thus allowing analysis ofthe structure of unemployment and other aspects of the unemploymentpicture. The work of week 4 can then be extended with emphasis on theimportance of government�s role in securing a faster rate of job creation/
66 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
unemployment reduction/better quality of labour with particular referenceto government policies intended to influence geographical andoccupational mobility. Again the linkages with units 3 and 6 need to benoted.
Possible References Include:Annual Review Vol 16 (Brooksbank); EBEA Aut�95;ER (data supp) Sept�99; ER Sept�96, Feb�98;Simpson/Paterson Ch6; Maunder Ch12; Core Unit 10;Anderton Units 89-90; Parkin/King Ch21, 29;Begg Ch27; Griffiths/Wall Ch23; Dataset�99 (charts 83-94)
WEEK 7 It is important to convey to students the quite rapid pace of changeoccurring in the labour market - the changing structure and flexibility inboth the UK and the EU. This is another opportunity to make studentsaware of the European theme within the specification e.g. references can bemade back to unit 3 (macro-economic objectives in the EU context) and tounit 4 (EU competition policy) and will be relevant to some aspects of thesynoptic unit. It would then be desirable to make reference at EU level toageing populations in developed economies.
Possible References Include:ER (Sept�99); Annual Review Vol 16 (Nolan);Annual Review Vol 10 (ch4); BES Spr�98 (sect 6,10)Spr�99 (sect 6,10), Aut�99 (sect 6,10); Maunder 221-3;Simpson/Paterson Ch 7/8;Parkin/King pp842-7; Griffiths/Wall pp543-4; Anderton Unit53; Glanville Unit 22
WEEKS 8-9 When looking at income distribution and associated issues it may beappropriate to first consider the measurement of inequality, with referenceto the Lorenz Curve and aggregate/disaggregated data. This allows alogical development of references in unit 3 to income distribution as amacro-economic objective and allow greater understanding amongststudents of the analysis of changes in the distribution of income andwealth and factors influencing the distribution of income and wealth inthis unit. There is opportunity for reference back to earlier work in thismodule e.g. the government�s role, to units 1 and 3 and for preparing forpart of the synoptic unit.
Basic References Include: see week 10
WEEK 10 A study of policy issues associated with poverty and inequality allows aneffective conclusion to be drawn to this unit in drawing on some of theissues considered in earlier weeks. Through a consideration of incentives, alink can be made to supply-side references in unit 3 and to the role of
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government in unit 1. Again, the groundwork being laid for unit 6 with itsreference to government policy and income distribution.
Basic References Include:Dataset�99 (charts 185-188); ER (data supp) Sept�99;Maunder Ch 9/12; Anderton Unit 102;Parkin/King Ch14, 18; Begg Ch 13-10;Griffiths/Wall Ch 14,pp 412-20,711-13;Mackintosh Ch 22/23
68 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
UNIT 5B - ECONOMIC DEVELOPMENT
The scheme is based on a 10-week period assuming 8 x 40 minute periods per week.Words in bold type refer to specification content headings for unit 5B.
WEEK 1 It will be important for students to be aware of the characteristics commonto many LCD�s but at the outset to be aware also of the diversity ofexperience amongst these countries. The Indicators of Development willprovide a basis on which to build this understanding. A consideration ofAbsolute and Relative Poverty will be central to this section, allowingsome comparisons to be drawn with the advanced world to help emphasisefor students the contrasting experiences. It would also be appropriate hereto clarify the distinction between growth and development.
Basic References Include:Nixson EBEA, 1995 no.10; Nixson Annual Review vol. 10;HDI: ER Data Supp: 1998; Poverty: ER Data Supp.1999;Poverty: ER April 1999; Nixson 1996 Ch 1&2;Griffiths/Wall Ch.30; Maunder Ch 31;Anderton Unit 104; Todaro Ch2/5;Glanville Units 1-8 Allen/Thomas Ch 13
WEEK 2 The causes of economic growth and its significance for development.This section allows the work on economic growth in Unit 3 to be built uponwith special reference to the experience of LCD�s and will cause studentsalso to consider the particular difficulties developing countries face in thelight of the work of week 1. The specification�s requirement forgovernment intervention to be appraised gives the opportunity for the roleof government in the advanced and developing countries to be compared.Again, building on week 1, the contribution of growth to development canbe considered.
Basic References Include:Glanville Units 14/15; Todaro Ch 3/4; Begg Ch 30;Parkin Ch 36; Allen & Thomas Ch 31; Anderton Unit 99;Maunder Ch26; ER Nov 1997(Africa);ER Feb 1997(Tiger Economies)
WEEK 3 Consideration of the varying experiences of developing countries and thedifferences between them will provide some preparation for the synopticUnit 6 and again reflects some of the work covered in Unit 3. Goodopportunities for case studies here e.g. contrasting one of the poorestAfrican countries with one success story from each of Latin America andAsia. Where appropriate choices are made for Asia and Latin America
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 69
some contrast can be drawn in terms of growth experiences and difficultiesencountered.
Basic References Include:ER references for week 2; EBEA Summer 1999: China;Todaro case studies: pp129, 177, 179, 521, 559;Oxfam Publications (various case studies)
WEEK 4 A consideration of the constraints on economic growth allows some ofthe least developed countries to be brought to centre-stage. Some of theobstacles allow the teacher to build upon some of the micro-economic workin unit 1 (e.g. elasticity in relation to primary producers). Similarly, anassessment of the possible costs of economic growth will take teachersback to relevant work from unit 2.
Basic References Include:Glanville Units 16/17;Maunder Ch 26;Anderton Unit 100;Begg Ch 30; Griffiths/Wall Ch 10;Mackintosh Ch 27;ER Sept 1998(sustainable development);Core: Unit 14; Allen/Thomas Ch 5;
WEEKS 5-7 The scheme devotes three weeks to the study of development strategies.This would allow teachers, as a precursor to looking at the sectors cited inthe specification, to give some introductory ideas on development strategiese.g. the Big-Push view, Hirschman�s ideas on Unbalanced Growth andLinkages. Strategies for agriculture, industry and tourism need to beconsidered in the light of what will have been covered already in earlierweeks of this scheme and in the AS units, eg a strategy for tourism whichincluded control of potential external costs but also development of theexternal benefits; a strategy for some countries which allows exploitation ofcomparative advantage (as explored in unit 1).
Basic References Include:Core: Unit 14; Nixson Ch 3; Todaro Ch 3/9/18; Glanville Unit 25;Nixson Ch 7; Allen/Thomas pp118-124,Ch 20; Begg Ch 36;Oxfam Publishing: Country Profiles; Anderton Unit 107
WEEKS 8-9 Private Sector (MNC)/Government Finance. Unit 3 will have givenstudents some idea of the financial role of government as it occurs in theUK through fiscal policy. This can now be extended to a consideration ofwhat advanced countries� governments can do in the international arena(ODA, writing-off debts) and can also be linked to how all this mightfacilitate/hinder the execution of the strategies covered in weeks 5-7.Evaluation would allow some comparison with a policy oftrade-promotion. Note that government finance issues and the role ofMNCs are returned to in the synoptic Unit 6.
70 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Some Basic References:ER Sept 1998; ER Nov 1999 (Bangladesh); ER Feb 1999;EBEA Sum 1996; Glanville Units 29-33; Todaro Ch 14/15;Griffiths/Wall Ch 30; Nixson Ch9/10; Maunder Ch 31;Mackintosh Ch 12
WEEK 10 This part of the scheme will continue the theme of Sources of ExternalFinance with reference to IMF/IBRD and Structural AdjustmentPolicies. Consideration can be given to the issue of development strategies (weeks 5-7), sometimes and importantly having to be put intothe context of IMF/IBRD involvement in a country�s domestic policiesand the degree of help being given. Links can also be made with the workof the WTO in Unit 6.The �synoptic� nature of SAPs in the context of Unit5B is also worth emphasising to students e.g. the impact on some of thedevelopment indicators covered in week 1; the potential impact on theanticipated success of the strategies studied in weeks 5-7. In this sense it isa good topic on which to conclude the work for 5B.
Some Basic References:Griffiths/Wall Ch30; Todaro Ch14/17;SAPs Allen/Thomas Ch 11/15; Oxfam Publications: Woodward1998; Griffiths/Wall pp727-30; BES Aut�99 (sect 9)
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REFERENCES CITED IN SCHEME OF WORK FOR UNIT 5
OPTIONS A AND B:
Allen T, Thomas A Poverty and Development1990s
OUP 0-19-877331-5
Anderton A Economics (2nd ed) Causeway 1-873929-37-4
Begg D et al Economics (4th ed) McGraw-Hill 0-07-707831-4
Glanville A Introduction toDevelopment Economics
Glanville 0-9524746-0-3
Griffiths A, Wall S Applied Economics(8th ed)
Longman 0-582-41454-7
MacKintosh M andBrown V et al (eds)
Economics and ChangingEconomies
Thomson 0-412-62840-6
Maunder P et al Economics Explained(3rd ed)
Collins 0-00-327503-5
Nixson F Development Economics Heinemann 0-435-33033-0
Parkin M, King D Economics (2nd ed) Addison-Wesley 0-201-59397-1
Simpson L, Paterson I The UK Labour Market Heinemann 0-435-33030-6
Todaro M Economic Development(6th ed)
Longman 0-582-30257-9
ALSO:Core Economics, Heinemann, 1995, 0-435-33101-916-19 Project Dataset, 1999, Trigon
REFERENCE MADE TO:Oxfam Publishing Mail Order, Bournemouth Book Centre, PO Box 1496,Parkstone, Dorset, BH12 3YD, Tel: 01202 712933
PERIODICALS:
BES = British Economy Survey;EBEA = Journal of the Economics and Business Education Association;ER = Economic Review;Annual Review = Developments in Economics;
An Annual Review (Causeway)
72 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
SECTION 4 � READING LIST, RESOURCES AND WEBSITES
Reading List and Resources
The specification approved by QCA contained a selected list of reading materials that cover therequirements of the AS and A2 specifications (pp.27-28). As promised, what follows is a longerlist of suggested materials.
Texts
Anderton, A., Economics (Third edition) (Causeway Press, 2000)ISBN 1 902796 10 1
Anderton, A., Economics AS Level (Causeway Press, 2000)ISBN 1 902796 12 8
Anderton, A., The Students' Economy in Focus 1997/98 (Causeway Press, 1998).ISBN 1 873929 38 2
Atkinson, G.B.J., Economics: Themes and Perspectives (2nd edition)(Causeway Press, 1997).ISBN 1 873929 27 7.
Beardshaw, J. et al., Economics: A Student's Guide (4th edition) (Pitman, 1998).ISBN 0582 303486.
Davies, B. et al., Investigating Economics (Macmillan, 1996).ISBN 0 333 63808 5.
Grant, S.& Vidler, C, Economics in Context (Heinemann,June 2000)ISBN 435 33111 6.
Maunder P. et al., Economics Explained. Revised Third Ed (Collins, June 2000).ISSN 0 00 327758 5.
Reference Texts
The reference sources listed here will contain material that is in greater depth than is needed forAS/A2 but nonetheless some sections may be felt of considerable value.
Begg, D. et al., Economics (McGraw Hill, 2000).ISBN 0 07709615 0.
Case, K.E. et al., Economics (Prentice Hall Europe,1999).ISBN 0 13 095815 8.
Lipsey, R.G., Principles of Economics, 9th Edition (OUP, 1999).Crystal, K.A., ISBN 0 19 877588 1.
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 73
Parkin, M., Economics (Pearson Education,2000). ISBN 020159608 3.
Sexton, R., Exploring Economics (Dryden Press, 1999).ISSN 0 03 018329 4.
Sloman, J., Economics, 4th Ed (Pearson Education,2000). ISBN 0 13085342 9.
Stiglitz, J.E., Economics (W.W. Norton, 2000).Driffill, J., ISBN 0 393 97584 3.
Sources on particular aspects of economics corresponding to parts of the specifications
Allen, T., Thomas, A. (eds), Poverty and Development in the 1990s (Oxford UniversityPress, 1992). ISBN 019877331 5.
Atkinson, B. (ed.), Applied Economics (Macmillan, 1998).ISBN 0 333 67382 4.
Atkinson, G.B.J. (ed.), Developments in Economics.
An annual volume that reviews about eight topics outlining the latest developments in thesubject and policy issues in a loose leaf format suitable for photocopying. Volume 16 waspublished in April 2000. ISBN 1 902796 08 X.
Cook, G., The Single European Currency (Hidcote Press, 60 MillRise, Swanland HU143PW, 2000) ISBN 1898837 45 7.
Cook, G., The Student Guide to the Economy
Economics Update 2000 (Sterling Books, 32 Shirley Road, Leicester LE2 3LJ, 2000).A 45pp publication reviewing macroeconomic and international issues containing manyillustrative charts.
Cramp, P., Product and Labour Markets (Anforme Ltd, 1997).ISBN 0 907529 42 9.
Cramp, P., Understanding Economic Data (Anforme Ltd, 2000).A guide for students on handling economic data with particular reference to data responsequestions. ISBN 0 907529 56 9.
Curwen, P., Understanding the Economy, 3rd edition (MacMillan, 1994).ISSN 0 333 61526 3.
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Dataset, Trigon Publishing, 6 Sermon Road, Winchester, SO22 5NU.Annual publication of charts and graphs on a number of economics issues. There is no ISBN.
Glanville, A., Introduction to Development Economics (1995).Available direct from the author: 31 Hobson Road, Summertown, Oxford OX2 7JX.
Griffiths, A. & Applied Economics, 8th Edition (Longman, 1999).Hall, S., ISSN 0582414547.
Hearn, J., Markets and Market Failure (Philip Allan Updates, 2000).ISBN 0860032493
Littlechild, S.C., Privatisation, Competition and Regulation,Occasional Paper 110 (Institute of Economic Affairs, 2000). ISBN 0 255 36413-X.
Nixson, F., Development Economics (Heinemann, 1996).ISSN 0 435 33033 0.
Nutter, R., The National Economy and Its Management (Philip Allan Updates,2000). ISBN 086003247 7.
Riley, G., The UK Economy, 1988-98 (Anforme Ltd, 1998).ISBN 0 907529445.
Riley, G., The UK Economy, 1990-2000, (Anforme Ltd,Stocksfield Hall, Stocksfield, Northumberland NE43 7TN, 2000). The fourth edition of apublication reviewing aspects of the UK economy containing many coloured graphics.
Romer, S., Understanding the European Union (Anforme Ltd, 2000).A 72pp review of a dozen aspects of European issues. ISBN 0 907529 52 6.
Simpson, L. & Paterson, I., The UK Labour Market (Heinemann, 1995).ISBN 0 435 33030 6.
Sloman, J., Economics (3rd edition) (Prentice Hall, 1999).ISBN 0 15 568058 5.
Smith, C., Understanding International Trade (Anforme Ltd, 2000).A 60pp review of trade, exchange rate and globalisation issues. ISBN 0 907529 51 8.
Todaro, M., Economic Development, 7th Edition (Addison WesleyLongman, 2000).ISBN 0 201 64858 X.
Tree, N., The Year in Review and Revision Guide 1999-2000 (AnformeLtd, 2000). A retrospective review of recent economic events. ISBN 907529 54 2.
Wilkinson, M., Economy, Efficiency and Market Failure (Heinemann, 1998).ISBN 0 435 33037 3.
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Revision sources for students
Hearn, J., Exam Revision Notes (Philip Allan Updates,1997), ISBN 0 86003430 5.
Riley, G. & Keefe, J., A Revision Guide to A-Level Economics (Anforme Ltd, 1999).ISBN 0 907529 47 X.
Resources published by Oxfam Publishing
Oxfam issue a catalogue containing books and journals on development issues. Oxfam Publishing2000 contains 37pp of materials. In January 2000 it also published another catalogue EducationResources for Schools containing over 30pp of books, maps, video packs, posters, games andteachers' packs. The following two videos have been highly rated by economics teachers.
The Bank, the President and the Pearl of Africa. These are two Channel 4 documentaries onthe policy of the World Bank.
Oxfam publishes a series of Country Profiles, Working Papers and Briefing Papers. Detailsof the Briefing Papers can be found on the Oxfam web site (see list below).
Periodicals and Magazines
Bank of England Quarterly Bulletin and The Inflation Report, Bank of England, four issuesper year.
CentrePiece, the magazine of economic performance (Centre for Economic Performance,London School of Economics and Political Science). A magazine that was launched in 1995containing several articles looking at contemporary economics issues.
Economic Affairs, published quarterly by Blackwell Publishers for the Institute ofEconomic Affairs.
Economic Review, Philip Allan Updates, four issues per year.
Economics Today, Anforme Ltd, four issues per year.
National Institute Economic Review (National Institute of Economic and Social Research).A Quarterly Review which in each issue contains a general survey of the current economicsituation in the UK and the world economy. The Review also includes articles on topicaleconomic problems and a statistical appendix on macroeconomic indicators.
The Economist, The Economist Newspaper Ltd, weekly.
76 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Websites
The contribution by Russell Dudley-Smith starting on page 80 reviews the growing number of ITsources now available. Here we bring all those listed in his article plus some others:
Website address Published by
www.hm-treasury.gov.uk HM Treasury.
www.euro.gov.uk HM Treasury.
www.ft.com The Financial Times � a list of resources.
www.newsunlimited.co.uk a fully searchable site established by the Guardian andObserver newspapers.
www.bankofengland.co.uk the Bank of England.
www.statistics.gov.uk the Office for National Statistics.
www.europa.eu.int the European Union's server.
www.worldbank.org The World Bank.
www.updates.co.uk Economics Update.
www.ecb.int The European Central Bank.
www.imf.org The International Monetary Fund.
www.statistics.gov.uk: The Office for National Statistics (UK).
www.oecd.org The OECD.
www.news.bbc.co.uk BBC News.
www.economist.com The Economist.
www.itn.co.uk ITN Business News.
www.Sunday-times.co.uk The Sunday Times.
www.telegraph.co.uk The Daily Telegraph.
www.independent.co.uk The Independent.
www.observer.co.uk The Observer.
www.the-times.co.uk The Times.
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www.bized.ac.uk Biz Ed.
ve.ifs.org.uk Bized/IFS.
http://www.ebea.org.uk The Economics and Business Education Association.
www.oheschools.org Office of Health Economics.
www.oxfam.org.uk Oxfam.
www.cep.lse.ac.uk The Centre for Economic Performance.
www.economicsuk.com David Smith's Economics UK.
www.dti.gov.uk The Department of Trade and Industry.
www.euro-emu.co.uk Euro Net.
www.ifs.org.uk The Institute for Fiscal Studies.
www.jrf.org.uk The Joseph Rowntree Foundation.
www.lowpay.gov.uk The Low Pay Commission.
www.newdeal.gov.uk New Deal.
www.tutor2u.com Tutor2u Economics.
www.wto.org The World Trade Organisation.
www.aleveleconomics.co.uk Contains interactive exercises on micro, macro andinternational topics.
www.keynes.westminster.org.uk Westminster School.
www.mmc.gov.uk The Competition Commission.
http://web.mit.edu/krugman/www Paul Krugman
www.yardeni.com. Dr Ed Yardeni.
www.bibliomania.com/NonFiction/Smith/Wealth/index.html Biblomania.com ltd.
www.altavista.com Altavista
www.economist.com/editorial/freeforall/focus/bigmac.html The Economist Big Mac site
www.vensim.com Vensim
sysdyn.mit.edu/ System Dynamics in Education
78 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
SECTION 5 � FURTHER GUIDANCE ON IT, KEY SKILLS ANDSUPPORTED CHOICE QUESTIONS
IT in Advanced GCE Economics Teaching � Some suggestions
by Russell Dudley-Smith, Head of Economics, Westminster School andPrincipal Examiner
Introduction
Information technology has already begun to have a significant effect on economics teaching inthose schools lucky enough to be adequately resourced. What follows is a brief summary of someof these developments. My first goal is to suggest ways in which IT can be used to enhance thedelivery of the Edexcel Curriculum 2000 specification and to enable the achievement of thevarious Key Skills at level 3, especially those for IT but also many of the other Key Skillobjectives. My second aim is to report on some of the ways in which using IT in my own schoolhas allowed pupils to gain access to ideas, cross-curricular in content, which may serve to integrateeconomics with other courses of study and, perhaps, gain a deeper understanding and a better�feel� for the real world issues emphasised by the Edexcel specification.
This document is available online at http://keynes.westminster.org.uk/doc.asp which the reader isrecommended to visit as a convenient way of viewing the suggested web links within the text.
Delivering the Edexcel SpecificationIt is important to bear in mind that, for each of the following suggested uses of IT, there will becosts as well as benefits. It is possible for the use of IT to consume extraordinary amounts of timeand energy to little end result, and this is particularly true for teachers who have first to learn thenuts and bolts of the technology before thinking up ways to use it to enhance learning. My adviceis for teachers to encourage the emergence of computer experts among the pupils and to feelconfident that pupils will almost always find a way of solving an IT related problem if it arises inthe classroom. The teacher is then free to concentrate on the economic application.
The following are the areas where I have found some welfare gain, often after considerable trialand error:
Extension of Source Material
The specification requires candidates to be familiar with �recent historical data�. By far the mostcomplete source for this is the digital ONS publication of Economic Trends. The data comes ondiskette every three months in a format readily importable into Microsoft Excel. This in turnallows the data to be made available to pupils on a school network � if your school has a goodnetwork manager ask him or her to put the data into a relational database (we use SQL 7) to enablepersonalised web access through a technology such as active server pages. The network license forschool use is about £200 � but I found that you have to negotiate individually with the ONS about
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 79
this. Thus, my pupils can now choose from a drop down list of some 60 reasonably reliable and upto date data series on the school intranet, and automatically load the information into spreadsheetsfor analysis, graphing, or for incorporation into projects.
The internet is very much a mixed blessing, partly because of the extraordinary quantity ofinformation available much of which is unreliable. However, there are some indispensable sites:
The Competition Commission website at http://www.mmc.gov.uk includes details of UK andEuropean competition policy, together with summaries of recent judgements. This site isabsolutely essential for Unit 4 and is probably worth a look to motivate some of the discussions inUnit 2.
The Bank of England�s web site at http://www.bankofengland.co.uk makes available minutes fromthe MPC�s interest rate deliberations together with the full text and graphics of the InflationReport. This site has some first rate material and is particularly relevant to Units 3 and 6. Otherkey macroeconomic sites include http://www.hm-treasury.gov.uk,http://web.mit.edu/krugman/www, and http://www.yardeni.com.
The internet is useful for giving pupils scope to conduct their own detailed investigations into aspecification topic, but it is a good idea to limit the field of enquiry by pre-selecting the web sitesavailable for study. For example, for Unit 5 pupils might be asked to investigate the impact ofminimum wages. Typing �minimum wages� into http://www.altavista.com or an equivalent searchengine will yield tens of thousands of links. This is pretty useless as a research tool and makesclear that it is now part of the job of an economics department to provide a �portal� ofrecommended sites.
However, creating such a portal is beyond the means of an individual teacher. The �link wizard�facility at http://keynes.westminster.org.uk conducts a keyword search on a large number of websites submitted to our database by pupils as they do IT based economics projects; but eachproposed link is filtered, graded and indexed for keywords by teachers to reduce the search costsfor future pupils. From time to time a member of staff goes through the database of links to ensurethat they are all still �live�, deleting from the database those which are not.
Finally, I have always liked the idea of pointing pupils to some of the original texts in thedevelopment of economic ideas. For example, for Unit 1 pupils can visithttp://www.bibliomania.com/NonFiction/Smith/Wealth/index.html and read some of the Wealth ofNations.
Reinforcement of Basic Concepts
One thing computers do unambiguously well is to provide a framework for repetitive practice ofbasic ideas (machines never get tired and can be programmed to be endlessly patient.) It is possibletherefore to try to make use of IT from the perspective of a behaviourist approach to learning.
Multiple Choice Testing is possible via the internet. There are examples on my web site athttp://keynes.westminster.org.uk under Utilities/Multiple Choice Tests. It is likely that pupils willdo better in supported choice question elements of the Curriculum 2000 exams if they have had theopportunity to practise on similar questions with appropriate feedback. At the end of each on-linetest the pupil can go through his or her wrong answers and view the explanation of the correctresponse.
80 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Incidentally, a long term potential of such tests is that they make a first attempt to map theconcepts of the candidate, reporting to the teacher relative strengths and weaknesses. As yet thisarea is quite undeveloped; but the potential is quite clear if the database which records responses tothe tests can be intelligently �mined� for information about the current conceptual state of thepupil.
Another first stab at reinforcement learning is the Interactive Economics Dictionary available athttp://keynes.westminster.org.uk under Utilities/Dictionary. Only a working model is presented.However, with further refinement this might eventually constitute a useful resource.
A more mainstream use of IT for reinforcement is the provision of revision notes - e.g. GeoffRiley�s site at http://www.tutor2u.com offers a wealth of material (you have to register to see thefull resource).
Deepening the Understanding of Concepts 1 - Modelling
One of the most thought provoking aspects of using computers to model economic theories is theimmediate realisation of how little understanding pupils usually attain from a theoreticalpresentation of ideas. As teachers we know our models too well. Their self-evidence to us is suchthat we believe that a clear explanation will automatically transmit. Pupils are adept at simulatingunderstanding of these models to keep us feeling good about the effectiveness of our teaching. Alarge part of pupil �understanding� is in the form of memorised pictures or key explanatorysentences.
In the work I have done with pupils at Westminster using Excel to construct quantitative versionsof elementary economic models the prevalence of this simulated understanding has greatlysurprised me. The act of forcing pupils to make explicit representations of economic theory on aspreadsheet forces the issue of whether they have truly taken on board the key definitions,accounting constraints, and relationships between variables embodied in a particular model. Timeand again I have found that making the modelling process explicit by using computers creates abetter feel for the issues at stake.
Areas of economics which lend themselves to this kind of modelling include basic ideas about thecircular flow essential as background for the aggregate demand and supply analysis for Unit 3, andunderstanding the elementary theory of the firm in Unit 4.
Deepening the Understanding of Concepts 2 - Simulation
A major component of the new specification in Units 3 and 6 is the emphasis on the potentialconflict between a government�s macroeconomic policy objectives. The IFS virtual economy siteat http://ve.ifs.org.uk offers a full scale model of the UK economy (based on the Treasury Model)which allows pupils to simulate budget measures and to see their anticipated effect on keymacroeconomic variables.
I found that this site captures pupils� imaginations � there is a strong narrative element. Pupils canthink of themselves as being the Chancellor of the Exchequer and play with the UK economy byvarying a wide array of tax rates and spending policies. However, to get the most out of the modela colour printer is useful: each policy change creates graphs comparing the forecast future state ofthe economy with and without the change. I have found that it is extremely valuable to get pupilsto write explanations for the resulting divergence for each main macroeconomic variable. This has
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exposed a great deal of misunderstanding both about the nature of each variable and of thelinkages between policy and result. As always with computers, it is no good just letting pupils playwith these new resources on a wet Wednesday afternoon � active teacher involvement is essential.
Deepening the Understanding of Concepts 3 - Project Work
I try to encourage discussions in my classroom on the assumption that pupils learn a good dealfrom listening to each other and from being encouraged to explain their ideas in public, and on theprinciple that there are many aspects of a topic that will not have occurred to me. The notion ofcollaborative work is controversial � certainly I would not want to play down the role of theteacher in any way (pupils are quite capable of merely reinforcing each other�s everydayunderstanding, the conventional wisdom of which economics - like physics, geography, art - is asubversion, a new and unexpected way of reading the world). However, pupils may feel morerelaxed discussing issues with their peer group, if only vicariously. The power of the teacher may,in certain circumstances, seem a threat and thus inhibit intellectual development.
Here are two suggestions for collaborative work. The first is using PowerPoint for creating classpresentations. It does not seem to take long for pupils to learn how to use this software. It has animmediate appeal because it allows the creation of quite complex multi-media. It is well suited fortwo pupils to work on at the same time. The software creates an environment for pupils to organisetheir ideas and present professional looking work. This can lead to some spectacular results if adata projector is available - pupils can use this to present their work to the rest of the class.
The second suggestion involves Microsoft FrontPage. The 2000 edition of this is a significantimprovement on earlier versions. This software offers a fairly transparent environment throughwhich quite large groups of pupils can collaborate on building a web site. On our network I useVisual Interdev 6.0 to create a web project and to assign network permissions exclusively to thosepupils I want to be able to author the site. The pupils then create links to this project throughFrontPage and can have a collective discussion about content and design.
Key Skills
The Edexcel specification incorporates elements designed to allow pupils to meet the Key Skillscriteria for Information Technology at Level 3.
For the Key Skills evidence requirement IT3.1, pupils could use any of the web sites listed above:they need to be able to show that they have thought about a search strategy for getting information,filtered out unnecessary material and made selections �based on judgements of relevance andquality.� Individual homework or class assignments based on the pupil researching topics on theinternet and from at least one other data source (CD ROM, official data series, etc.) and movingbeyond the �cut and paste� stage of using such data would seem to satisfy the requirement.
IT3.2 is concerned with �developing information.� The most obvious way into this requirementfrom the point of view of economics teaching is to use Excel. Pupils can be asked to enter data in aformat suitable for charting. The charts then need to be interpreted. This requirement also has amodelling component: �change values and rules in a model to make predictions and testhypotheses.� So, for example, an Excel simulation of profit maximisation could have a variable forfixed costs, and pupils could be asked to predict the effect on the output choice of a change infixed costs. Few will come up with the right answer of �no change� � the spreadsheet may thenprovoke them into reconsidering their conceptualisation of costs and profit.
82 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Microsoft PowerPoint is an ideal medium through which pupils can achieve IT3.3 because it lendsitself well to class presentations. A projector, and better still an interactive whiteboard, seemalmost essential to achieve this requirement. Pupils will quickly come to see the pitfalls of certainstyles of presentation � too many graphics, too much text on each slide � and can easily adapt theirPowerPoint file for second attempts.
IT also allows the achievement of many of the other Key Skills. For example, the Communicationelement requires pupils to contribute to a group discussion about a complex subject and to make apresentation about it. This is by no means mutually exclusive with IT3.3. The �Application ofnumber� element involving working with a �large data set� can be satisfied by asking pupils towork on ONS data for GDP in Excel, for example making an output gap calculation (calculateaverage real GDP growth, determine a base year where the economy is near full capacity,compound average growth forward to the present, and compare with actual real GDP. Theninterpret the results.) Computers also provide an ideal medium for the �Working with others� keyskill component.
Cross-Curricular IdeasI think it would be fair to say that all of the above suggestions explore ways of improving existingways of working around a traditional conception of the specification. This is all well and good.However, my own experience has been that using computers provokes a fundamentalreconsideration of economics teaching, taking it into exciting and challenging cross-curricularareas. A few of these are discussed here.
Computers make possible the development of systems concepts. Economics is interesting in thatits arguments ultimately rest on what might be called semi-quantitative modelling. There is someuseful software available. Link-It, a public domain program (email me if you would like a copy,)allows pupils to chain together causal loop diagrams in a very flexible manner. If you find thisenvironment too loose, then Excel can be used by turning off auto-calculation and establishingcircular cell references. Examples would include modelling the circular flow and simulatingfeedback loops in the presence of asymmetric information. There is a public domain version of themodelling software Vensim available at http://www.vensim.com and a great deal of systemsliterature available at http://sysdyn.mit.edu/ if you want to take systems thinking further.
Another area of interest is emergence � the patterning that can result from processes governed bysimple rules. A good book on this area, which contains code for computer simulations is Epsteinand Axtell�s �Growing Artificial Societies: Social Science From The Bottom Up.� (The MIT Press1998) Linked to ideas of emergence are ideas based on chaos theory� for example, pupils caninvestigate the Logistic equation when studying market failure, using it to gain insight into thepredictable nature of unpredictability in some deterministic systems. An excellent and accessibletext which tries to integrate the many ideas which have been made available through computersimulations is Gary Flake�s recent �The Computational Beauty of Nature: Computer Explorationsof Fractals, Chaos, Complex Systems and Adaptation.� (The MIT Press 1998).
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 83
ConclusionWe are still experiencing the birth of the use of IT in schools and we do not know what willbecome of it. New ideas will come from the engagement between pupils and teachers not fromabstract theory. The potential of IT lies in mediating that engagement. Personally, I am findingsome of the uses of IT extremely rewarding. Please do contact me and let me know your ownexperiences.
84 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Key Skills in AS/Advanced Economics Teaching � Kiran Chopra,Watford Grammar School for Girls
The suggestions that follow build on the possibilities highlighted in the specification for deliveringportfolio evidence for Key Skills with the Advanced Subsidiary and Advanced GCE Economicscourse. Key Skills are important because they enhance employability, they facilitate theopportunity for Economics to become a lively interactive subject and, not least, because they arebeginning to be recognised by Higher Education institutions for progression purposes. Theseexamples concentrate on the first three Key Skills (Communication, Application of Number andInformation Technology) which make up the Key Skills Qualification. All the examples quotedare from Level 3.
UA
0075
67 −
Ede
xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de85
UN
ITO
UTL
INE
CO
NTE
NT
OPP
OR
TUN
ITIE
S FO
R D
EVEL
OPM
ENT
OF
KEY
SK
ILLS
1
Mar
kets
� h
ow
th
ey w
ork
Posi
tive
& n
orm
ativ
e ec
onom
ics
Scar
city
and
opp
ortu
nity
cos
t.Pr
oduc
tion
poss
ibili
ty fr
ontie
rSp
ecia
lisat
ion
and
divi
sion
of l
abou
rEc
onom
ies o
f sca
leTh
e ad
vant
ages
of i
nter
natio
nal t
rade
Con
sum
er a
nd p
rodu
cer s
urpl
usPr
ice
Mec
hani
sm a
s a m
eans
of
allo
catin
g re
sour
ces.
The
role
of p
rice
mec
hani
sm a
s am
eans
of a
lloca
ting
reso
urce
sTh
e ro
le o
f pric
e m
echa
nism
inre
sour
ce a
lloca
tion
in fr
ee m
arke
t and
mix
ed e
cono
mie
sTh
e su
pply
of a
nd d
eman
d fo
r, go
ods
and
serv
ices
Con
cept
of e
last
icity
with
resp
ect t
obo
th su
pply
and
dem
and
App
licat
ion
of d
eman
d an
d su
pply
anal
ysis
in th
e pr
oduc
t and
fact
orm
arke
tsEn
try a
nd e
xit o
f firm
sG
over
nmen
t int
erve
ntio
n in
mar
kets
Indi
rect
and
dire
ct ta
xes.
Com
mun
icat
ion
-C
3.1a
Disc
ussio
n w
ith te
ache
r / p
eers
on
alte
rnat
ive
way
s of u
nder
stan
ding
the
diffe
renc
e be
twee
n po
sitiv
e (s
cien
tific
) nor
mat
ive
(val
ue ju
dgem
ent)
econ
omic
s e.g
.su
bjec
t con
tent
of M
aths
is sc
ient
ific
Vs S
ocio
logy
whi
ch in
volv
es m
akin
g a
lot o
f val
ueju
dgem
ents
.C
3.1b
O
ral p
rese
ntat
ions
by
two
pupi
ls o
n th
e ro
le o
f pric
e m
echa
nism
in fr
ee a
ndco
mm
and
mar
kets
-pup
ils c
ould
use
OH
Ps, a
nd c
reat
e a
visu
al d
ispl
ay to
hel
p ex
plai
nfig
ures
, con
cept
s and
theo
ry to
the
clas
s/gr
oup.
C3.
2 R
eadi
ng a
nd sy
nthe
sisin
g in
form
atio
n pu
pils
pro
duce
a F
anta
sy B
udge
t fro
m th
epr
e bu
dget
repo
rt pu
blis
hed
in th
e ne
wsp
aper
.C
3.3
Tw
o do
cum
ents
on
com
plex
subj
ect -
Ess
ay o
n ci
rcum
stan
ces w
hen
PPF
mov
esto
the
left
or to
the
right
incl
udin
g lim
itatio
ns o
f the
mod
el. A
pplic
atio
n of
the
mod
el to
the
UK
eco
nom
y.
Info
rmat
ion
tech
nolo
gy -
IT3.
1 U
sing
diff
eren
t sou
rces
e.g
. use
of t
able
s and
gra
phs t
o sh
ow s
uppl
y an
d de
man
dcu
rves
.IT
3.2
Expl
ore,
dev
elop
and
exc
hang
e in
form
atio
n e.
g. u
se o
f im
ages
to m
ake
theo
ryof
PPF
com
e al
ive
Appl
icat
ion
of n
umbe
r -N
3.1
Plan
ning
and
inte
rpre
ting
info
rmat
ion
- Und
erst
andi
ng a
dvan
tage
s of t
rade
and
inte
rpre
ting
grap
h of
UK
's B
alan
ce o
f tra
de.
N3.
2 M
ultis
tage
cal
cula
tions
e.g
. Cal
cula
tion
of ra
tios w
hen
expl
aini
ng c
ompa
rativ
ead
vant
age
N3.
3 In
terp
retin
g re
sults
and
just
ifyin
g fin
ding
s eg
Pupi
ls c
ould
be
show
n ho
w to
use
char
t and
dra
w P
PF; a
nd e
xpla
in h
ow th
ey c
ould
use
the
prin
cipl
e of
PPF
in e
xpla
inin
gho
w th
ey c
ould
max
imis
e th
eir g
rade
s thr
ough
man
agin
g th
eir t
ime
mor
e ef
ficie
ntly
.
86U
A00
7567
− E
dexc
el A
S/St
anda
rd G
CE
Econ
omic
s Tea
cher
s' G
uide
UN
ITO
UTL
INE
CO
NTE
NT
OPP
OR
TUN
ITIE
S FO
R D
EVEL
OPM
ENT
OF
KEY
SK
ILLS
2
Mar
kets
� w
hy
th
ey fa
ilM
arke
t fai
lure
Type
s of m
arke
t fai
lure
Publ
ic, m
erit
and
dem
erit
good
sR
emed
ies f
or m
arke
t fai
lure
Gov
ernm
ent f
ailu
re
Com
mun
icat
ion
-C
3.1a
Disc
ussio
n w
ith te
ache
r on
alte
rnat
ive
way
s of u
nder
stan
ding
mar
ket f
ailu
re e
.g.
perf
ect V
s im
perf
ect c
ompe
titio
n, e
xter
nalit
ies a
nd m
issi
ng m
arke
tsC
3.1b
O
ral p
rese
ntat
ions
by
pupi
ls in
pai
rs o
n ty
pes o
f goo
ds -p
upils
cou
ld u
sear
tifac
ts, O
HPs
, or c
reat
e a
visu
al d
ispl
ay to
hel
p ex
plai
n fr
ee /
econ
omic
, nor
mal
/in
ferio
r, pr
ivat
e / p
ublic
, mer
it / d
emer
it go
ods t
o th
e cl
ass/
grou
p.C
3.2
Rea
ding
and
synt
hesis
ing
info
rmat
ion
in o
rder
to p
rodu
ce a
n es
say
on m
arke
t /go
vern
men
t fai
lure
C3.
3 T
wo
docu
men
ts o
n co
mpl
ex su
bjec
t - P
upils
cre
ate
a 'M
ind
map
' in
orde
r to
writ
ean
ess
ay o
n 'R
oad
cong
estio
n is
a re
sult
of m
arke
t fai
lure
and
how
gov
ernm
ents
mig
htpu
rsue
pol
icie
s dea
l to
with
it.'
Info
rmat
ion
tech
nolo
gy -
IT3.
1 U
sing
diff
eren
t sou
rces
e.g
. use
of i
mag
es, p
ictu
res,
diag
ram
s to
show
cos
t /be
nefit
ana
lysi
sIT
3.2
Expl
ore,
dev
elop
and
exc
hang
e in
form
atio
n e.
g. U
se o
f cha
rts a
nd d
iagr
ams o
fel
astic
ity o
f dem
and
and
supp
ly to
exp
lain
'The
eff
ect o
f pet
rol t
ax o
n re
duci
ng n
egat
ive
exte
rnal
ities
.'
Appl
icat
ion
of n
umbe
r -N
3.1
Plan
ning
and
inte
rpre
ting
info
rmat
ion
- Und
erst
andi
ng th
e ca
se fo
r and
aga
inst
publ
ic tr
ansp
ort p
rovi
sion
.N
3.2
Mul
tista
ge c
alcu
latio
ns e
.g. c
ompa
rison
of p
erce
ntag
e fig
ures
of g
over
nmen
tbu
dget
spen
t on
redu
cing
mar
ket f
ailu
re in
hea
lth, e
duca
tion,
and
tran
spor
t with
pre
viou
sfin
anci
al y
ear.
N3.
3 In
terp
retin
g re
sults
and
just
ifyin
g fin
ding
s e.g
. Pup
ils c
ould
exp
lain
how
UK
com
pare
s with
oth
er E
U c
ount
ries i
n in
equa
lity
of in
com
e di
strib
utio
n.
UA
0075
67 −
Ede
xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de87
UN
ITO
UTL
INE
CO
NTE
NT
OPP
OR
TUN
ITIE
S FO
R D
EVEL
OPM
ENT
OF
KEY
SK
ILLS
3
Man
agin
g th
e
e
cono
my
Mea
sure
s of e
cono
mic
per
form
ance
of
coun
tries
Econ
omic
gro
wth
Agg
rega
te d
eman
dA
ggre
gate
supp
lyR
elat
ions
hip
betw
een
aggr
egat
e de
man
dan
d th
e pr
ice
leve
l and
bet
wee
nag
greg
ate
supp
ly a
nd p
rice
leve
l.Th
e eq
uilib
rium
leve
l of r
eal o
utpu
tM
acro
econ
omic
pol
icy
obje
ctiv
es in
an
EU c
onte
xtC
onfli
ct b
etw
een
thes
e ob
ject
ives
The
rela
tive
mer
its o
f dem
and
side
and
supp
ly si
de p
olic
ies a
s mea
ns o
f rea
lisin
gpo
licy
obje
ctiv
es
Com
mun
icat
ion
-C
3.1a
Disc
ussio
n w
ith te
ache
r on
alte
rnat
ive
way
s of
calc
ulat
ing
econ
omic
per
form
ance
of a
n ec
onom
y - e
.g. R
etai
l pric
e in
dex,
leve
l of u
nem
ploy
men
t, ba
lanc
e of
pay
men
ts,
gros
s dom
estic
pro
duct
C3.
1b
Ora
l pre
sent
atio
ns o
n 'T
he c
ase
of o
il an
d th
e ef
fect
on
long
run
and
shor
t run
aggr
egat
e su
pply
and
equ
ilibr
ium
.' Pu
pils
wor
k in
pai
rs to
cre
ate
a vi
sual
dis
play
to h
elp
expl
ain
figur
es, c
once
pts a
nd th
eory
to th
e cl
ass /
gro
up.
C3.
2 R
eadi
ng a
nd sy
nthe
sisin
g in
form
atio
n on
the
uses
and
lim
itatio
ns o
f GD
P as
an
indi
cato
r of s
tand
ard
of li
ving
C3.
3 T
wo
docu
men
ts o
n co
mpl
ex su
bjec
t - P
upils
cre
ate
a 'M
ind
map
' on
the
idea
lm
acro
ecno
mic
obj
ectiv
es m
odel
of a
n ec
onom
y fo
llow
ed b
y an
ess
ay o
n ap
plic
atio
n of
the
mod
el to
the
UK
eco
nom
y.
Info
rmat
ion
tech
nolo
gy -
IT3.
1 U
sing
diff
eren
t sou
rces
e.g
. rea
ding
tabl
es a
nd g
raph
s tha
t mea
sure
eco
nom
icpe
rfor
man
ce o
f the
cou
ntrie
s with
in th
e EU
on
the
CD
-RO
M.
IT3.
2 Ex
plor
e, d
evel
op a
nd e
xcha
nge
info
rmat
ion
e.g.
pup
ils e
xtra
ctin
g fig
ures
on
grow
th a
nd u
nem
ploy
men
t fro
m th
e C
D-R
OM
and
Enc
arta
on
Pola
nd a
nd H
unga
ry a
ndco
nver
ting
info
rmat
ion
into
gra
phs.
Appl
icat
ion
of n
umbe
r -N
3.1
Plan
ning
and
inte
rpre
ting
info
rmat
ion
- Und
erst
andi
ng th
e ec
onom
icco
nseq
uenc
es o
f the
fall
of th
e B
erlin
wal
l and
inte
rpre
ting
the
effe
ct o
n gr
owth
rate
s of a
unifi
ed G
erm
any.
N3.
2 M
ultis
tage
cal
cula
tions
e.g
. Diff
eren
tiatin
g be
twee
n re
al a
nd n
omin
al fi
gure
s of
GD
PN
3.3
Inte
rpre
ting
resu
lts a
nd ju
stify
ing
findi
ngs e
.g. S
elec
ting
appr
opria
te d
ata,
devi
sing
a sp
read
shee
t and
con
verti
ng in
form
atio
n in
to g
raph
s to
expl
ain
trend
s in
grow
th,
infla
tion,
une
mpl
oym
ent a
nd B
alan
ce o
f pay
men
ts.
88U
A00
7567
− E
dexc
el A
S/St
anda
rd G
CE
Econ
omic
s Tea
cher
s' G
uide
UN
ITO
UTL
INE
CO
NTE
NT
OPP
OR
TUN
ITIE
S FO
R D
EVEL
OPM
ENT
OF
KEY
SK
ILLS
4
Indu
stri
al
Ec
onom
ics
The
birth
and
gro
wth
of f
irms
The
mot
ives
for t
he g
row
th o
f the
firm
sIn
tern
al a
nd e
xter
nal g
row
thA
ltern
ativ
e m
otiv
es o
f firm
sPr
oduc
tive
effic
ienc
yA
lloca
tive
effic
ienc
yM
easu
res o
f mar
ket c
once
ntra
tion
Pric
ing
and
outp
ut d
ecis
ions
und
erdi
ffere
nt m
arke
t stru
ctur
es a
nd d
iffer
ent
mot
ives
The
cond
ition
s nec
essa
ry fo
r pric
edi
scrim
inat
ion
in m
onop
oly
Pric
ing
and
non-
pric
ing
stra
tegi
esB
arrie
rs to
ent
ry a
nd e
xit
Con
test
able
mar
kets
Com
petit
ion
polic
y in
the
UK
and
the
EU Reg
ulat
ion
of p
rivat
ised
indu
strie
s
Com
mun
icat
ion
-C
3.1a
Disc
ussio
n w
ith te
ache
r / p
eers
on
why
star
t a fi
rm, m
etho
ds o
f gro
wth
(int
erna
lV
s ext
erna
l.) a
nd p
robl
ems a
nd c
halle
nges
as t
he fi
rm g
row
s.C
3.1b
O
ral p
rese
ntat
ions
- pu
pils
wat
ch B
ritis
h Em
pire
s pro
gram
me
on B
P an
d re
port
to th
e cl
ass o
n th
e gr
owth
of t
he fi
rm si
nce
its b
irth
( ear
ly 1
900)
C3.
2 R
eadi
ng a
nd sy
nthe
sisin
g in
form
atio
n fr
om th
e ne
wsp
aper
arti
cles
on
the
mer
ger o
f MN
Cs e
.g. B
P an
d A
moc
o, A
OL
and
War
ner B
roth
ers i
n or
der t
o pr
oduc
e a
repo
rt.C
3.3
Tw
o do
cum
ents
on
a co
mpl
ex su
bjec
t - E
ssay
on
pric
ing
and
non-
pric
ing
stra
tegi
es e
mpl
oyed
by
Ric
hard
Bra
nson
i.e.
his
inte
rest
in b
uyin
g th
e N
atio
nal l
otte
ry,
buyi
ng a
shar
e in
the
Brit
ish
Rai
l and
tryi
ng to
mak
e a
diff
eren
ce a
t a n
atio
nal l
evel
, and
mak
ing
a na
me
for h
imse
lf in
pro
mot
ing
his o
ther
bus
ines
ses.
Info
rmat
ion
tech
nolo
gy -
IT3.
1 U
sing
diff
eren
t sou
rces
e.g
. dia
gram
s to
show
cos
t and
reve
nue
curv
es in
the
shor
t and
long
run
of p
erfe
ct c
ompe
titio
n an
d m
onop
oly
IT3.
2 Ex
plor
e, d
evel
op a
nd e
xcha
nge
info
rmat
ion
e.g.
Dra
w u
p a
tabl
e of
per
fect
and
impe
rfec
t mar
kets
with
info
rmat
ion
on a
bilit
y to
pric
e, n
umbe
r of f
irms,
free
ent
ry/e
xit,
natu
re o
f com
mod
ity, d
iagr
ams
mer
ger a
nd ta
ke-o
ver a
ctiv
ity, e
tc.
Appl
icat
ion
of n
umbe
r -N
3.1
Plan
ning
and
inte
rpre
ting
info
rmat
ion
- Cal
cula
tean
d un
ders
tand
tot
al, a
vera
ge a
nd m
argi
nal c
osts
and
reve
nue.
N3.
2 M
ultis
tage
cal
cula
tions
e.g
. Cal
cula
tion
of c
once
ntra
tion
ratio
s whe
n ex
plai
ning
mar
ket c
once
ntra
tion
N3.
3 In
terp
retin
g re
sults
and
just
ifyin
g fin
ding
s e.g
. Pup
ilsle
arn
the
impo
rtanc
e of
regu
lato
ry a
genc
ies a
nd th
eir r
ole
inin
fluen
cing
the
beha
viou
r of s
uppl
iers
thro
ugh
insp
ectio
n of
thei
r acc
ount
s and
pre
mis
es.
UA
0075
67 −
Ede
xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de89
UN
ITO
UTL
INE
CO
NTE
NT
OPP
OR
TUN
ITIE
S FO
R D
EVEL
OPM
ENT
OF
KEY
SK
ILLS
5A L
abou
r M
arke
tsTh
e su
pply
of l
abou
r: th
e w
orki
ngpo
pula
tion
The
dem
and
for l
abou
rLa
bour
as a
der
ived
dem
and.
Wag
e de
term
inat
ion
in c
ompe
titiv
em
arke
tsD
iffer
entia
ls in
diff
eren
t occ
upat
ions
:be
twee
n m
en a
nd w
omen
: ski
lled
/un
skill
ed w
orke
rs: e
thni
c gr
oups
.D
iscr
imin
atio
n.Th
e ro
le o
f tra
de u
nion
sG
over
nmen
t int
erve
ntio
n in
Lab
our
mar
kets
The
case
of m
onop
sony
Une
mpl
oym
ent a
nd la
bour
mar
ket
impe
rfec
tions
Gov
ernm
ent p
olic
ies t
o in
fluen
cege
ogra
phic
al m
obili
ty a
nd o
ccup
atio
nal
mob
ility
The
chan
ging
stru
ctur
e an
d fle
xibi
lity
ofU
K a
nd E
U la
bour
mar
kets
Com
mun
icat
ion
-C
3.1a
Disc
ussio
n w
ith te
ache
r / p
eers
on
alte
rnat
ive
way
s of u
nder
stan
ding
DD
and
SS
of la
bour
with
resp
ect t
o sh
ort r
un a
nd lo
ng ru
nC
3.1b
O
ral p
rese
ntat
ions
by
pupi
ls in
sm
all g
roup
s on
the
cont
empo
rary
cha
nges
inth
e U
K la
bour
mar
ket a
nd th
e im
porta
nce
of h
avin
g a
broa
der b
ase
at A
leve
l (m
ore
subj
ects
at A
S le
vel +
Key
skill
s) w
ith a
vie
w to
pro
vidi
ng g
reat
er fl
exib
ility
in th
ela
bour
forc
e of
the
futu
re!
C3.
2 R
eadi
ng a
nd sy
nthe
sisin
g in
form
atio
n on
wag
e di
ffer
entia
ls in
term
s of
prod
uctiv
ity, e
duca
tiona
l qua
lific
atio
ns a
nd e
nviro
nmen
t.C
3.3
Tw
o do
cum
ents
on
a co
mpl
ex su
bjec
t - E
ssay
on
idea
l gov
ernm
ent p
olic
ies t
oin
fluen
ce g
eogr
aphi
cal a
nd o
ccup
atio
nal m
obili
ty o
f lab
our.
App
licat
ion
of th
e m
odel
toth
e U
K e
cono
my.
Info
rmat
ion
tech
nolo
gy -
IT3.
1 U
sing
diff
eren
t sou
rces
e.g
. tab
les a
nd b
ar g
raph
s to
show
ann
ual n
umbe
r of
hour
s wor
ked
per e
mpl
oyee
in S
inga
pore
, USA
, UK
, Nor
way
.IT
3.2
Expl
ore,
dev
elop
and
exc
hang
e in
form
atio
n e.
g. U
se k
ey in
dica
tors
of t
heLa
bour
mar
ket f
rom
ILO
to c
ompa
re g
loba
l man
ufac
turin
g pr
oduc
tivity
usi
ng a
bar
char
t.
Appl
icat
ion
of n
umbe
r -N
3.1
Plan
ning
and
inte
rpre
ting
info
rmat
ion
- Und
erst
andi
ng th
e ar
gum
ent f
or se
tting
a na
tiona
l min
imum
wag
e in
pro
porti
on to
the
perc
enta
ge o
f lab
our f
orce
that
it w
ould
bene
fit.
N3.
2 M
ultis
tage
cal
cula
tions
e.g
. Cal
cula
tion
of u
nem
ploy
men
t as a
per
cent
age
ofla
bour
forc
e in
the
EU c
ount
ries i
n try
ing
to e
xpla
in "
Whe
re th
e jo
bs a
ren'
t'N
3.3
Inte
rpre
ting
resu
lts a
nd ju
stify
ing
findi
ngs e
.g. P
upils
cou
ld in
terp
ret g
raph
s on
'How
Eur
ope
slip
ped
behi
nd U
SA a
nd Ja
pan
in it
s une
mpl
oym
ent f
igur
es 1
950-
95'
and
expl
ain
the
UK
�s p
ositi
on to
day
rega
rdin
g lo
w le
vel o
f une
mpl
oym
ent t
hrou
gh c
urre
ntre
adin
g of
arti
cles
in th
e ne
wsp
aper
s.
90U
A00
7567
− E
dexc
el A
S/St
anda
rd G
CE
Econ
omic
s Tea
cher
s' G
uide
UN
ITO
UTL
INE
CO
NTE
NT
OPP
OR
TUN
ITIE
S FO
R D
EVEL
OPM
ENT
OF
KEY
SK
ILLS
5B E
cono
mic
Dev
elop
men
tIn
dica
tors
of d
evel
opm
ent i
n de
velo
ping
coun
tries
in su
b-Sa
hara
n A
fric
a, A
sia
and
Latin
Am
eric
aA
bsol
ute
and
rela
tive
pove
rtyTh
e ca
uses
of e
cono
mic
gro
wth
inde
velo
ping
cou
ntrie
sD
iffer
ence
s bet
wee
n de
velo
ping
coun
tries
The
cost
s of e
cono
mic
gro
wth
Con
stra
ints
on
econ
omic
gro
wth
Dev
elop
men
t stra
tegi
esSo
urce
s of e
xter
nal f
inan
ce
Com
mun
icat
ion
-C
3.1a
Disc
ussio
n w
ith te
ache
r on
alte
rnat
ive
way
s of m
easu
ring
dev
elop
men
t e.g
.G
DP,
HD
I, H
uman
suff
erin
g in
dex
etc.
C3.
1b
Ora
l pre
sent
atio
ns b
y tw
o pu
pils
on
econ
omic
stat
istic
s tab
les/
grap
hs o
f tw
oco
untri
es e
.g. Z
aire
Vs B
angl
ades
h -
pupi
ls c
ould
use
OH
Ps, a
nd c
reat
e a
wal
l cha
rt to
help
exp
lain
figu
res,
to th
e cl
ass/
grou
p.C
3.2
Rea
ding
and
synt
hesis
ing
info
rmat
ion
on th
e di
ffer
ence
bet
wee
n re
lativ
e an
dab
solu
te p
over
ty th
roug
h a
case
stud
y of
a L
DC
and
a D
C e
.g. M
ozam
biqu
e V
s UK
C3.
3 T
wo
docu
men
ts o
n a
com
plex
subj
ect -
Ess
ay o
n co
sts a
nd c
onst
rain
ts o
fec
onom
ic g
row
th a
nd th
e ro
le o
f ext
erna
l fin
ance
in so
lvin
g th
e pr
oble
ms i
n So
uth
Kor
ea.
Info
rmat
ion
tech
nolo
gy -
IT3.
1 U
sing
diff
eren
t sou
rces
e.g
. use
of i
nter
net t
o ob
tain
dat
a on
Mex
ico
or P
akis
tan
conv
ertin
g ta
bles
into
gra
phs t
o fin
d tre
nds i
n gr
owth
of G
DP,
infla
tion,
and
unem
ploy
men
t in
the
role
of d
omes
tic in
vest
men
t.IT
3.2
Expl
ore,
dev
elop
and
exc
hang
e in
form
atio
n e.
g. U
sing
imag
es to
und
erst
and
bene
fits a
nd c
osts
of t
ouris
m.
Appl
icat
ion
of n
umbe
r -N
3.1
Plan
ning
and
inte
rpre
ting
info
rmat
ion
- Und
erst
andi
ng a
dvan
tage
s and
disa
dvan
tage
s of f
orei
gn d
irect
inve
stm
ent b
y M
NC
s in
LDC
'sN
3.2
Mul
tista
ge c
alcu
latio
ns e
.g. C
alcu
latio
n of
per
cent
age
of la
bour
forc
e in
prim
ary,
man
ufac
turin
g an
d te
rtiar
y se
ctor
and
illu
stra
tion
with
the
use
of p
ie c
harts
.N
3.3
Inte
rpre
ting
resu
lts a
nd ju
stify
ing
findi
ngs o
f stru
ctur
al a
djus
tmen
t pol
icie
sen
forc
ed b
y th
e IM
F an
d W
orld
Ban
k on
LD
Cs.
UA
0075
67 −
Ede
xcel
AS/
Stan
dard
GC
E Ec
onom
ics T
each
ers'
Gui
de91
UN
ITO
UTL
INE
CO
NTE
NT
OPP
OR
TUN
ITIE
S FO
R D
EVEL
OPM
ENT
OF
KEY
SK
ILLS
6
UK
in th
e gl
obal
econ
omy
Fact
ors c
ontri
butin
g to
glo
balis
atio
nIn
tern
atio
nal e
xcha
nge
Trad
e lib
eral
isat
ion
and
prot
ectio
nism
Sour
ces o
f pos
sibl
e co
nflic
t bet
wee
ntra
ding
blo
cs a
nd th
e ro
le o
f the
Wor
ldTr
ade
orga
nisa
tion
The
Bal
ance
of p
aym
ents
Inte
rnat
iona
l com
petit
iven
ess
The
UK
's ch
angi
ng in
tern
atio
nal
com
petit
ive
situ
atio
n.B
alan
ce o
f pay
men
ts d
iseq
uilib
rium
Exch
ange
rate
syst
ems
Euro
pean
mon
etar
y un
ion
Inw
ard
fore
ign
inve
stm
ent b
y M
NC
sEx
tern
al sh
ocks
to th
e gl
obal
eco
nom
yPu
blic
exp
endi
ture
and
taxa
tion
The
wor
king
of f
isca
l, m
onet
ary
and
supp
ly si
de p
olic
ies
Une
mpl
oym
ent a
nd in
flatio
n in
an
EUan
d th
e gl
obal
con
text
The
rela
tions
hip
betw
een
real
out
put a
ndth
e no
n-ac
cele
ratin
g in
flatio
n ra
te o
fun
empl
oym
ent.
Com
mun
icat
ion
-C
3.1a
Disc
ussio
n w
ith te
ache
r / p
eers
on
'Is fr
ee tr
ade
desi
rabl
e?'
C3.
1b
Ora
l pre
sent
atio
ns b
y pu
pils
in p
airs
on
trade
pol
icie
s im
plem
ente
d by
the
gove
rnm
ents
of S
outh
Kor
ea V
s Sr
i Lan
ka i.
e. e
xpor
t orie
ntat
ion
Vs i
mpo
rtsu
bstit
utio
n.- p
upils
cou
ld u
se O
HPs
, and
cre
ate
a vi
sual
dis
play
to h
elp
expl
ain
the
outc
ome
of u
sing
diff
eren
t pol
icie
s to
the
clas
s/gr
oup.
C3.
2 R
eadi
ng a
nd sy
nthe
sisin
g in
form
atio
n -
pupi
ls p
rodu
ce a
min
d m
ap u
sing
the
text
and
arti
cles
from
the
Econ
omic
revi
ew o
n th
e im
pact
of t
heC
AP
on w
orld
trad
e co
mm
oditi
es.
C3.
3 T
wo
docu
men
ts o
n co
mpl
ex su
bjec
t - C
reat
e an
ess
ay p
lan
in th
e fo
rm o
f a m
ind
map
on
the
seve
n ag
es o
f the
mon
etar
y po
licy
1979
to d
ate
and
use
it to
writ
e up
an
essa
y on
succ
esse
s and
failu
res o
f UK
's m
onet
ary
polic
y.In
form
atio
n te
chno
logy
-IT
3.1
Usin
g di
ffer
ent s
ourc
es e
.g. c
onve
rt go
vern
men
t spe
ndin
g an
d go
vern
men
tex
pend
iture
figu
res f
rom
the
Bud
get i
nto
a pi
e ch
art
IT3.
2 Ex
plor
e, d
evel
op a
nd e
xcha
nge
info
rmat
ion
e.g.
Use
tabl
es a
nd d
iagr
ams t
oill
ustra
te th
e re
latio
nshi
p be
twee
n re
al o
utpu
t and
NA
IRU
.
Appl
icat
ion
of n
umbe
r -N
3.1
Plan
ning
and
inte
rpre
ting
info
rmat
ion
- Und
erst
andi
ng a
dvan
tage
s and
disa
dvan
tage
s of f
isca
l Vs m
onet
ary
polic
y in
the
UK
con
text
.N
3.2
Mul
tista
ge c
alcu
latio
ns e
.g. f
rom
a ta
ble
of c
apita
l inf
low
s the
pup
ils c
ould
anal
yse
the
sign
ifica
nce
of th
e M
NC
s in
an E
U c
onte
xt.
N3.
3 In
terp
retin
g re
sults
and
just
ifyin
g fin
ding
s e.g
. Pup
ils c
ould
the
anal
yse
the
role
,be
nefit
s and
dis
adva
ntag
es o
f cap
ital i
nflo
ws f
rom
MN
Cs i
n an
EU
con
text
. Pup
ils c
ould
use
the
inte
rnet
to a
cces
s eco
nom
ic st
atis
tics o
n M
NC
s whe
n w
ritin
g es
says
on
the
topi
c.
92 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide
Notes of Guidance: Supported Choice Questions,produced by Bob Wright, Principal Examiner
AS Economics (8121) Unit 1
In Section A of Unit 1, each supported choice answer must be justified by a brief explanation. Inaddition to one mark for a correct answer, up to three marks may be awarded for an explanation,giving a total of four marks for each question.
The answers below relate to supported choice Questions 3, 4 and 7 in Section A of the Unit 1Specimen Examination Paper. For each question, examples are given of possible answers thatmight gain 1, 2 or 3 marks.
Question 3. Definitions of a mixed economy - interpreting written statements.
1 mark A mixed economy is a mixture of the market and planned economies.
2 marks In the mixed economy there is a private sector and also a public sector. The privatesector operates as a free market and the public sector is owned and controlled bythe government.
3 marks Mixed economies combine private enterprise and public enterprise. There is aprivate sector and also a public sector. In the former, scarce resources are allocatedby the price mechanism and in the latter, the state allocates resources.
Question 4. Shifts in demand and supply-interpreting a diagram
1 mark Both demand and supply increase.
2 marks Higher incomes and government subsidies cause increases in both demand andsupply and there are new demand and supply curves.
3 marks A rise in real income will cause an increase in demand, shown by a shift to theright of the demand curve. A government subsidy will cause an increase in supply,shown by a shift to the right of the supply curve.
Question 7. Income elasticity of demand calculation
1 mark When income increases, demand increases and vice-versa
2 marks YED = % change in quantity demanded% change in real income
The change in demand is less than the change in income.
3 marks YED = % change in quantity demanded% change in real income
If YED has a value of +0.3 (i.e., less than 1) then YED is inelastic.A change in real income leads to a proportionately smaller change in quantitydemanded.
UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 93
A2 Economics (9121) Unit 4
In Section A of Unit 4, each supported choice answer must be justified by a brief explanation. Inaddition to one mark for a correct answer, up to three marks may be awarded for an explanation,giving a total of four marks for each question.
The answers below relate to supported choice Questions 1, 3 and 10 in Section A of the Unit 4Specimen Examination Paper. For each question, examples are given of possible answers thatmight gain 1, 2 or 3 marks.
Question 1. Monopoly output and price elasticity of demand � interpreting a diagram.
1 mark PED is one where revenue is largest.
2 marks At OC, MR is zero and immediately above it AR has a PED of one.
3 marks PED is equal to one at OC, because at this level of output MR is zero and totalrevenue is maximised. Any change in output will cause total revenue to fall.
Question 3. Market structures � interpreting written statements.
1 mark Branding, non-price competition and barriers to entry are characteristics ofoligopoly, i.e., an industry with a few large firms, branded goods, non-pricecompetition and entry barriers, etc.
2 marks All three characteristics taken together describe oligopoly. Some of thecharacteristics apply to other market structures, but not all of them, e.g., no entrybarriers in monopolistic competition.
3 marks Branding, non-price competition and barriers to entry are characteristics ofoligopoly. None of these characteristics apply to perfect competition. There is nocompetition of any sort in monopoly, and there are not any entry barriers inmonopolistic competition. There are no markets for public goods.
Question 10. Characteristics of oligopoly � interpreting a pie chart
1 mark The three biggest firms dominate the market. All the others have only 20% of thechocolate market.
2 marks Nestlé, Rowntree, Mars and Cadbury�s have 80% of the UK chocolate market,which makes the market oligopolistic. A, B, C and D do not apply to the chocolatemarket in the UK.
3 marks The three largest firms have 80% of the market (i.e., 32% + 25% + 23%). Thismarket is an example of oligopoly. The other answers are wrong:products are not homogeneous because of branding; YED is positive because thedifferent brands are substitutes; firms are price makers; Mars� 23% share of £2.5bncomes to less than £1bn.
Further copies of this publication are available fromEdexcel Publications, Adamsway, Mansfield, Notts NG18 4LN
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Order code: UA007567 Issue 1 July 2000
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