1. You owe me…. Consumer/producer surplus 3 MC Q’s
Textbook p55 Q2 diagrams…

2. how to improve exam skills
LOWER 6TH Economics
ASSESSMENT RETURN
I’m expecting you
to make notes on
how to improve exam skills
through this session

3. How much do you want your A-Level?
On a scale of 1 to 5
Where would you place your commitment to learning, since Sept?
1 = very determined, read over topics & extra reading
3 = will do ‘enough’ work to get by
5 = c’est la vie! I attend the lessons (most of the time!), what more do I need to do?!
My views on you!

4. My views on you… No one has been consistent at handing HWK in on time!
This has to be improved on this ½ term!

5. My views on you… Your AS exam is on Wednesday 13th January!
I feel that too many of you haven’t got engaged with A Levels yet….

6. Make notes on how to improve your explanation marks
LOWER 6TH ASSESSMENT
James
&
Kieran
23/24
MULTI CHOICE RETURN
Make notes on how to improve your explanation marks

7. Skills techniques Multi choice worth 4 marks each.
1 mark for correct answer
1 mark for definition or formula
1 to 2 marks for diagram (clearly drawn and / or annotated) or calculations shown
2 marks for clear explanation….

8. 1. The demand curve for a normal good will shift to the left if
A There is a successful advertising campaign for the good.
B The price of the good increases.
C The price of a complementary good increases.
D The tax on the good increases. C
Draw a diagram to get it moving in the ‘correct direction’

9. EXPLANATION (3 marks)
If a complementary good becomes more expensive there will be less demand for that good because of the inverse relationship AND for this good hence an inward shift in Demand (1)
Due to an income and substitution effect – explained (2)
Diagram (s) drawn & annotated (2)

10. 2. The diagram below shows a shift in the supply curve for computers.
The shift in the supply curve for computers from S1 to S2 can result from
A A decrease in the demand for computers.
B Increased use of technology in the computer manufacturing industry.
C A decline in the price of computers.
D An increase in wages in the computer manufacturing industry.

11. EXPLANATION (3 marks)
Higher wages increases the cost of production (1) so there is less incentive for the co cannot afford to supply as much. (1)
Using the same cost structure a company can now only afford to produce less. (2)
Diagram annotated (1)

12. B The increase in price from P1 to P2 is most likely to be a result of
3. The diagram below shows the demand and supply curves for milk, where P1 is the initial equilibrium price. B
A an increase in milk production costs and a decrease in the price of complementary goods to milk.
B a successful advertising campaign for a milk substitute and a tax on milk.
C a decrease in the population and an increase in the subsidy on milk.
D a decrease in wages paid to all workers, including farm workers.
The increase in price from P1 to P2 is most likely to be a result of

13. EXPLANATION (3 marks)
Successful campaign for milk substitute will cause an increase in demand for the substitute (1)
and so a fall in demand for MILK (1)
AND an increase in tax on milk will reduce supply due to higher costs of production. (1)

14. D A shift the demand curve for strawberries to the right.
4. All other things being equal, if strawberries and cream are complementary goods, a fall in the price of strawberries will ….
A shift the demand curve for strawberries to the right.
B cause a movement along the demand curve for cream.
C cause a fall in the price of cream.
D shift the demand curve for cream to the right. D

15. Kieran has a good example
EXPLANATION (3 marks)
If strawberries are cheaper there will be in an increase in demand for strawberries, shown as a movement along the demand curve for strawberries (1)
and if cream is a complementary good it is likely that more people will buy cream hence an outward shift in demand (1)
This is because of the income effect (1) as people will have ‘spare’ money from paying less for strawberries and so can now possibly afford to buy the cream too! (1)
Diagram drawn & annotated (2)
Kieran has a good example

16. Which of the markets, labelled A, B, C and D, illustrates the effects of a subsidy paid to the producers of a good? C

17. EXPLANATION (3 marks)
A subsidy will reduce the cost of production (1) and prove to be an incentive to the company to produce more as they will generate greater profits. (1)
Hence the outward shift in supply curve
They might pass on the lower costs as lower prices for consumers (1)
Clear annotation of diagram to show fall in price & increase in quantity (1)

18. 6. The diagram shows the supply and demand for bus travel in Harchester.
In this town, bus travel is an inferior good. Real incomes increase and, at the same time, there is a significant increase in fuel costs for operating buses. If the initial equilibrium position is indicated by point X, what will be the new equilibrium position, A, B, C or D? D

19. Really good example from James B
EXPLANATION (3 marks)
Define inferior term / real income term (1)
Since bus travel is ‘inferior’ then an increase in income will mean that people will demand less D to D1(1) …. And substitute to a better quality form of transport (1)
Higher fuel costs will also mean that the supply will inward shift S to S1 as the company cannot afford to supply as much (1)
Relate answer to annotated diagram of same P but lower quantity (1)
Really good example from James B

20. Feedback post multi choice

21. HINTS ~ 1 Do not describe – you have to explain WHY the event occurs!
Eg Q2 the supply curve has shifted …because of increases in wages….. Is a repeat of the answer rather than an explanation!
Do not describe – you have to explain WHY the event occurs!
This requires you to use income effect & substitution effect – for DEMAND issues
For SUPPLY issues you have to use profit motive as part of your explanations

22. HINTS ~ 2 Annotate and clearly label diagrams
Draw diagrams where relevant for your answers

23. HINT ~ 3 If you can’t explain WHY the answer is the correct one
Then you can explain why the OTHERS are the wrong option – do this only as a last resort – but you must explain not just list!

24. HINTS ~4 Tax on goods – directly affect S curve 1st.
Draw an equilibrium
Draw an increase in tax on goods (shown by an inward shift in S)
What has happened to D?
(movement along D- contraction)

25. You should all be achieving at least 10 marks (out of 24)
If not – lots of basic revision required.
Skills – define, draw & explain (DON’T describe what’s happened!)
Better use of terminology
Read info/diagrams carefully.

26. Grades for Multi choice
A = 80% or 20 / 24
B = 70% or 17 / 24
C = 60% or 15 / 24
D = 50% or 12 / 24
E = 40% or 10 / 24
In other words you all need to achieve at LEAST
10 / 24!

27. Jamie
&
Kieran
78%
Data Response skills

28. Data provided…
Gold is the most beautiful of all precious metals. However, its price has risen from $ a troy ounce in November 2003 to $ in November 2004 and experts are predicting that demand for gold jewellery is about to fall.
Two factors have played a significant role in causing the increased price of gold. During 2004 there was the biggest fall in gold production since the Second World War and this was combined with a 5 per cent increase in the demand for gold in manufacturing, most of it in jewellery production.
The soaring price of gold has had a knock-on effect on the prices of silver and diamonds. Early warning signs of a gloomy future for Britain’s jewellers came from Tiffany’s, the jewellery company, which announced that its third quarter earnings were only £11.1 million compared with £16.2 million from the same period last year.
Source: adapted from The Independent, 15 November 2004, and The Times, 17 January 2005

29. Questions…
18 marks
available
With reference to the first paragraph of the extract, distinguish between positive and normative economic statements. Explain your answer. (3)
Discuss the likely impact of an increase in the price of gold on the price of silver.(5)
How might an increased demand for diamonds affect the producer surplus of diamond mining companies?(4)
With the aid of a diagram, assess the reasons why the price of gold increased in (6)
Questions 2006 paper:

30. 1. With reference to the first paragraph of the extract, distinguish between positive and normative economic statements. Explain your answer. (3)
Reference:
First sentence: normative… “Gold is the most beautiful of all precious metals”
Second sentence positive … “However, its price has risen from $ a troy ounce in November 2003 to $ in November 2004” (1)
Explanation:
normative sentence is based on a value judgement – allow subjective judgement but not “opinion” (1)
Whereas Positive statement is a fact and can be tested as true or false (1)

31. Your answers
Jamie “a positive statement is one that is factual ..quote…which is statistical and can be proved. On the other hand, a normative statement is one of someone’s opinion… quote… this is one person’s opinion on gold, not everyone.”
Mikey on normative statements… “not everyone will think that gold is the most beautiful”.

32. 2. Discuss the likely impact of an increase in the price of gold on the price of silver.(5)
Explanation (max 3 marks)
Gold and silver are substitutes (1) so an increase in the price of gold will cause a rise in the demand of silver (1) because of an income & substitution effect (explained) (2)
There will probably be an increase in the price of silver (due to shift in D for silver)
Diagram analysis (2)
Evaluation (max 2 marks)
Comment on degree of substitutability between gold and silver
To what extent would consumers substitute gold when it is an ostentatious product – on commodity markets – if prices are expected to increase… there is a further increase in demand.

33. Your answers – good evaluation comments
Gareth “there is a slight impact of an increase in the price of gold on the price of silver because if the price of gold increases then less people would be able to afford gold. (need to explain income effect)
However, gold is seen as an ostentatious good for wealthy people so a rise in the price of gold would not affect the price of silver. Silver is also seen as ostentatious but not as good as gold so people won’t buy it because it is cheaper.”

34. Your answers
Will “Naturally gold is more expensive than silver, so if the price of gold increases than some demand for gold will decrease and this would possibly shift over to silver.
Those consumers who have made a substitute of silver from gold may be prepared to pay a higher price than normal for the substitution of silver. The producers of silver will be aware that the demand is increasing, therefore may raise their price, where consumers will still purchase it as it will be cheaper than gold despite the price rise.”

35. Definition of producer surplus
3. How might an increased demand for diamonds affect the producer surplus of diamond mining companies?(4)
Definition of producer surplus
E.g. difference between market price and cost of production ; or difference between market and supply price (1)
Increase in price of diamonds would, therefore, increase producer surplus (2)
Draw diagram & annotate (2)

36. Your answers
Kieren “an increase in demand would increase the producer surplus. The shaded area represents the extra producer surplus should the demand for diamonds increase. The other shaded area shows the original producer surplus.”
A clear and well annotated & shaded diagram shown with his answer.

37. Your answers
Jin “ At the equilibrium price, producer surplus is set below S1 & D1 equilibrium. An increase in demand will result in an increase in the equilibrium price, which sets the producer surplus higher than the original equilibrium.
This is due to the fact that some producers are willing to lower their prices below the new equilibrium price.”

38. 4. With the aid of a diagram, assess the reasons why the price of gold increased in 2004. (6)
A correctly labelled diagram showing decrease in supply and increase in demand with original and new equilibrium prices. (2)
Explanation for shift of either curve: (2)
decreased production… but why has this happened? It’s a finite resource…less gold mines / not so profitable…
increased demand for gold jewellery – only so much gold available so there is upward pressure on price of gold.
Could get 2 marks for shifting either S or D curve with explanation
Up to 4 marks for evaluation.

39. Evaluation marks…. up to 4 marks for any one point, or 2+2, 1+3
Extent of price increase depends on elasticity / consumer /producer reactions…
How much S & D curves shift
Relative significance of reasons identified
Difference between short run and long run effects.
Max 4/6 if only 1 curve shifted

40. Your answers
Lee “ prior to 2004 there wa\s an abundance of gold and so it was readily available. During 2004 there was the biggest fall in gold production. This could eventiually lead to a scarcity of gold and people panic and decide to buy. Suppliers take advantage of this and sell at a higher price to compensate for the decrease in numbers of sales i.e. price discrimination.”

41. You need your planner
Turn to page 108

42. In your planners 1 = A/B 2 = B/C 3 = C/D 4 = D/E 5 = E/U
The (T) is my feedback on how you could improve!
Fill in an ECONOMICS section
Write in Mrs Gordon in one section & Mr Vivian in the other
On your scripts – you will find an Attainment and a Target level…
You will also find at least ONE (T) with a comment!

43. How can you improve by Wednesday 13th January – your exam!
So what know?
How can you improve by Wednesday 13th January – your exam!

44. Review theory covered so far…
Demand theory – factors that shift D PASIFIC, different types of demand
Supply theory – factors that shift PINTS WC
Equilibrium theory
And everything else that we’ve covered!
Use the textbook – now we have it – there are a lot of ‘specific’ content that you need to read over…
Read over chapters – make revision notes!

45. Exam technique
Homeworks – will help improve your skills so spend quality time on them rather than rushing to get them out of the way!
More exam practice – which will happen this ½ term!
Take on board the (T) comments on your scripts.