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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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

A00

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

.

A00

7567

− E

dexc

el A

S/A

dvan

ced

GC

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

A00

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

7567

− E

dexc

el A

S/A

dvan

ced

GC

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

A00

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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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.

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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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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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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

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− 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

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− E

dexc

el A

S/A

dvan

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E Ec

onom

ics T

each

ers�

Gui

de

Inw

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ign

inve

stm

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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

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uide

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UA

0075

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xcel

AS/

Stan

dard

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onom

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each

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36U

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7567

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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 −

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AS/

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dard

GC

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onom

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each

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: uni

t 6 (2

x 1

hou

r)TH

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OF

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FIR

MW

hy fi

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xist

and

thei

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a m

arke

t eco

nom

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ND

HO

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amin

atio

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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

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firm

s rem

ain

smal

l. T

he ro

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f the

MN

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the

glob

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RN

ATI

ON

AL

EXC

HA

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ason

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nd th

e fa

ctor

sth

at h

ave

led

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loba

lisat

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and

the

rise

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eM

NC

. Ex

amin

atio

n of

the

sign

ifica

nce

of th

ese

chan

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TER

M 4

DET

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INA

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NO

F M

AR

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STR

UC

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Fact

ors t

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eter

min

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arke

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ctur

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. bar

riers

toen

try a

nd e

xit,

prod

uct d

iffer

entia

tion

and

cont

esta

ble

mar

kets

. In

trodu

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n to

diff

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ket s

truct

ures

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easu

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f mar

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once

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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

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AN

DO

UTP

UT

DEC

ISIO

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IN A

PER

FEC

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AR

KET

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it m

axim

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obje

ctiv

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d th

e pe

rfec

tlyco

mpe

titiv

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arke

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rice

outp

ut a

nd e

ffic

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afr

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arke

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he c

once

pts o

f allo

cativ

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dpr

oduc

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effic

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inat

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of U

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d re

cent

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form

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UK

�sco

mpe

titiv

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sitio

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ctor

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ch c

ould

exp

lain

this

pos

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. eg.

how

rela

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unit

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ICIN

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OU

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pric

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stra

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ativ

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to p

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mai

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UK

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EU

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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

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amin

e ca

uses

and

con

sequ

ence

s.PO

LIC

Y IS

SUES

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inat

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of G

over

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t act

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to d

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ithso

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actic

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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)

UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 71

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.

74 UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide

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.

UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 75

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.

UA007567 − Edexcel AS/Standard GCE Economics Teachers' Guide 77

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

russell@westminster.org.uk

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

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oduc

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lloca

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e ro

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e su

pply

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cept

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last

icity

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ect t

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licat

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e pr

oduc

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arke

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nd e

xit o

f firm

sG

over

nmen

t int

erve

ntio

n in

mar

kets

Indi

rect

and

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ct ta

xes.

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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

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ive

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econ

omic

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bjec

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tent

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aths

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ient

ific

Vs S

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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

.

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Mar

kets

� w

hy

th

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ilM

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Type

s of m

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Publ

ic, m

erit

and

dem

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good

sR

emed

ies f

or m

arke

t fai

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ernm

ent f

ailu

re

Com

mun

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-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

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man

dan

d th

e pr

ice

leve

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bet

wee

nag

greg

ate

supp

ly a

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rice

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e eq

uilib

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leve

l of r

eal o

utpu

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acro

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omic

pol

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obje

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an

EU c

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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

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− E

dexc

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S/St

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CE

Econ

omic

s Tea

cher

s' G

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UN

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CO

NTE

NT

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OR

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R D

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ENT

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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

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xcha

nge

info

rmat

ion

e.g.

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w u

p a

tabl

e of

per

fect

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rfec

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kets

with

info

rmat

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on a

bilit

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pric

e, n

umbe

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irms,

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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

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argi

nal c

osts

and

reve

nue.

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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

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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

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the

beha

viou

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uppl

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thro

ugh

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ectio

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icat

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ache

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alte

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way

s of u

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and

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resp

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sm

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cont

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cha

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bour

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e im

porta

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g a

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ase

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ith a

vie

w to

pro

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nthe

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form

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wag

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ls in

term

s of

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o do

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oin

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licat

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Info

rmat

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tech

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1 U

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raph

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show

ann

ual n

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hour

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per e

mpl

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bar

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of n

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ning

and

inte

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ting

info

rmat

ion

- Und

erst

andi

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e ar

gum

ent f

or se

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pro

porti

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perc

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f lab

our f

orce

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ould

bene

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per

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upils

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day

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o pu

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lain

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e cl

ass/

grou

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ding

and

synt

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ing

info

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ion

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e di

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ence

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wee

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lativ

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ty th

roug

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case

stud

y of

a L

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and

a D

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biqu

e V

s UK

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wo

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onom

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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 -

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1 U

sing

diff

eren

t sou

rces

e.g

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of i

nter

net t

o ob

tain

dat

a on

Mex

ico

or P

akis

tan

conv

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g ta

bles

into

gra

phs t

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ore,

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elop

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exc

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atio

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g. U

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imag

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fits a

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osts

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ouris

m.

Appl

icat

ion

of n

umbe

r -N

3.1

Plan

ning

and

inte

rpre

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info

rmat

ion

- Und

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dvan

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disa

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irect

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tista

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alcu

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alcu

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per

cent

age

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bour

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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

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icie

sen

forc

ed b

y th

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orld

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in th

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Trad

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an

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real

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fun

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mun

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ussio

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ith te

ache

r / p

eers

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ee tr

ade

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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

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ea V

s Sr

i Lan

ka i.

e. e

xpor

t orie

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mpo

rtsu

bstit

utio

n.- p

upils

cou

ld u

se O

HPs

, and

cre

ate

a vi

sual

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play

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elp

expl

ain

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outc

ome

of u

sing

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eren

t pol

icie

s to

the

clas

s/gr

oup.

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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

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e im

pact

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heC

AP

on w

orld

trad

e co

mm

oditi

es.

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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.

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Order code: UA007567 Issue 1 July 2000

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