Higher Economics Exam
In this learning block we will break down the exam so you know exactly how to tackle it when exam day rolls around!
Structure
Section 1
- 2 case studies (can be based on text or on graphs)
- Each case study has 15 marks worth of questions
- These can cover any area of the course
- Maximum 11 marks for any one area of the course
- Questions can range from 1 mark to 4 marks
Section 2
- 3 questions, each worth 20 marks
- These questions will be broken down ( a,b,c…. i,ii,iii…..)
- Each question covers a single area of the course
- Questions can range from 2 marks to 8 marks
Command Words
The majority of questions will either be Describe, Explain and Discuss, but occasionally the command word is different.
Describe
- Candidates should provide relevant factual points
- Key points are essential; the order of the points are not important
- Answers can include
- Several straightforward points (for example, for a question worth 4 marks you could make 4 separate points)
- Fewer, but more expanded and detailed points (for example for a question worth 4 marks you could make 2 developed points)
- A mix of both (for example for a question worth 4 marks you could make 1 developed point and 2 separate points)
Explain
- Candidates should provide points that show cause and effect relationships
- Answers should clarify connections between processes or situations
- Key reasons may include theoretical concepts
- No need to prioritize reasons
- 1 mark for each accurate relevant reason
- Additional mark possible for further development of the same reason
- Answers can include
- Multiple straightforward reasons (for example, for a question worth 4 marks you could make 4 separate points)
- Fewer, but more developed reasons (for example for a question worth 4 marks you could make 2 developed points)
- A mix of both (for example for a question worth 4 marks you could make 1 developed point and 2 separate points)
Discuss
- Candidates should present points that communicate issues, ideas, or information about the given topic
- The response should make a case for and/or against the topic
- It’s not always necessary to present both sides of the debate
- 1 mark for each accurate relevant point of knowledge
- Additional mark possible for expanding on a knowledge point
Draw
- Candidates should draw and properly label any graphs or diagram
- Marks are awarded based on the correctly drawing and labelling the diagram
- Q and A
- Draw a diagram to show the effect on the market for unhealthy food as a result of the introduction of a ‘fat tax’, combined with increased ‘restrictions on advertising unhealthy food’ (4 marks).
- Axes and curves properly labelled (price, quantity, demand, supply) (1)
- D1 - leftward shift of the demand curve, representing decreased demand due to advertising restrictions (1)
- S1 - leftward shift of the supply curve, due to tax on production of unhealthy food (1)
- New equilibrium point clearly marked, showing new price and quantity (1)
Marking of the diagram:
You could also be asked to describe or explain a concept using a diagram. In these questions you won’t get full marks by just drawing the diagram, you will also have to describe or explain the key concepts.
- Explain, using a diagram, in what way an increase in the price of a product is likely to affect sales revenues, if demand is price elastic (4 marks)
Up to 3 marks for the diagram - clearly labelled (1), price elastic demand curve (1) and clear indicator of revenue gained/lost (1).
Up to 2 marks for an explanation
- 1 mark for each valid explanation
- 1 mark for each valid development
When demand is price elastic, an increase in price leads to a morethan proportional decrease in quantity demanded (1). As a result, the additional revenue from the higher price is outweighed by the revenue lost due to fewer units being sold (1). This causes overall revenue to decrease when price increases in a price elastic market.
- Describe, using a diagram, the relationship between marginal cost and average total cost (5 marks)
Up to 4 marks for the diagram - accurately labelled axes (1), correctly shaped and labelled average total cost curve (1), correctly shaped and labelled marginal cost curve (1) and correctly positioned MC curve cutting the ATC curve at its lowest point (1).
Up to 4 marks for the description
- 1 mark for each valid description
- Maximum 1 mark for a numerical example
The relationship between Marginal Cost (MC) and Average Total Cost (ATC) is dynamic. When MC < ATC, the ATC curve slopes downward (1). Conversely, when MC > ATC, the ATC curve slopes upward (1). This relationship can be understood by thinking of the marginal unit as pulling the average in its direction. For instance, if a student scoring higher than the class average joins the class, the overall class average increases; conversely, if a student scoring lower than the average joins, the class average decreases (1). The point where MC = ATC represents the lowest point on the ATC curve, which is the most technically efficient point of production (1).
Compare
- 1 mark per valid comparison
- Using link words like ‘whereas’ and ‘both’ are encouraged to help clarify answers
- Q and A
- Q - Compare perfect competition and monopolistic competition (2 marks)
- A - In perfect competition, firms produce identical products, whereas in monopolistic competition, firms produce differentiated products (1). Perfect competition has many small firms with no market power, while monopolistic competition has many firms with some market power due to product differentiation, allowing them to have some control over their prices (1).
Distinguish
- 1 mark per valid distinguished point - similar to compare
- 1 mark for a pair of examples
- Using link words like ‘whereas’ is encouraged to help clarify answers
- Q and A
- Q - Distinguish between economic goods and free goods (2 marks)
- A - Economic goods are scarce and have an opportunity cost, whereas free goods are abundant and have no opportunity cost (1). An example of an economic good is a car, whereas an example of a free good is air (1).
Define
- 1 mark for a valid definition
- These questions are usually worth 1 or 2 marks
- Q and A
- Q - Define the term ‘balance of payments’ (2 marks)
- A - The balance of payments is a record of all financial transactions between a country and the rest of the world (1). It includes the current account, capital account and financial account (1).
Suggest
- Suggestion of reasons
- 1 mark for each valid suggestion
- Q and A
- Q - Suggest 3 reasons why a government might choose to impose tariffs on imported goods (3 marks).
- A - One reason is to protect domestic industries from foreign competition (1). Another reason is to raise revenue for the government (1). A further reason is to retaliate against unfair trade practices by other countries (1).
Example of changing levels of demand in questions
- Describe 3 determinants of demand (3)
- need 3 different determinants to gain full marks; no development marks
- Describe determinants of demand (3)
- must have at least 2 different determinants; can have 3 determinants; or 2 determinants plus 1 development
- Describe a determinant of demand (3)
- need 1 determinant plus 2 developments