Sep 253 min read

A2 Economics Essay: Oct 2024 Exam Tips

Microeconomics Section

Indifference Curve & Budget Line

Indifference Curve Assumptions: Don't forget to write the assumptions underlying the indifference curve, as this is often be used for evaluation.
Knowledge and Understanding: It's not enough to just write definitions. Make sure to explain the entire theory comprehensively.

Efficiency & Market failure

Market efficiency, why market in the real world will fail and whether government interventions would correct market failure/ improve resource allocation. This will usually appear as a 20-marks question. Market is only efficient theoretically.

Must define merit or demerit goods.
In any essay about market failure, include definitions of both productive and allocative efficiency.
Take note of the types of goods or services mentioned in the question, such as education, vaccines, or airlines, and include these in your analysis.
Highlight 2 or 3 market failures (any of them, unless the question specifies e.g. monopoly and externalities are common)
Then must recommend suitable policies to improve resource allocation and whether this will always work. Obviously they don't and that is why we have government failures e.g. information failure as in the government may have intervened too much or too little with indirect taxes/ subsidies and also difficulty to predict how consumers and firms will react to the policy changes. Don't forget about the conclusion too.

Market structure

Explain the characteristics of the market structure mentioned in the question, such as barriers to entry, the number of buyers and sellers, whether firms are price takers or price makers, the homogeneity or differentiation of products, and the concentration ratio.
Common types of questions include comparing efficiency, short-run and long-run analysis, price discrimination, collusion, and evaluating the pros and cons of the market structure for consumers.

Labour market

Common types of questions include how wages are determined in competitive labor markets (based on the demand and supply of labor) and in monopsony markets.
Whether market wage rates are always dependent on market forces alone. You will have to repeat (competitive market) and then mention that this is true but only to some extent. In practice, labour market is largely dominated by imperfections. Forces like powerful unions and government intervention can cause wage rates not to settle at its equilibrium, and in this case ends up being above. Also, powerful employers (monopsony) can cause wage rates to go lower than equilibrium knowing that these workers are occupationally immobile. Do include other factors like racial and gender discrimination, experience and skills, level of education and others.
Additionally, questions often explore how trade unions and minimum wage laws affect unemployment. Whether trade union interventions will always cause unemployment. You have to mention 'yes' if one refers to competitive forces of demand and supply. Unions may be able to negotiate for higher wage rates but this comes at the expense off rising unemployment. As evaluation, you have to mention 'no' if one refers to the case where trade unions intervene into an otherwise monopsonist labour market. Wage rates and employment are increased at the same time

Macroeconomics Section

Macro aims and conflicts

Remember all the macroeconomic aims.
Common types of questions include
- how these aims conflict with each other,
- whether they can be achieved simultaneously,
- how policies used to achieve one objective may make it harder to achieve another.
- consider which aim should be prioritized.

Macroeconomics Policies to correct BOP deficit, unemployment, inflation, improve economic growth

When writing essays on macroeconomic policies, you should include knowledge of the multiplier effect.
For economic growth-related questions, differentiate between actual and potential growth.
In unemployment essays, specifically mention the types of unemployment, such as cyclical, structural, frictional, equilibrium, and disequilibrium, and discuss the Phillips curve.

GDP and standard of living

Please don't forget to include other indicators like HDI, MEW and MPI. Although the question does not explicitly mention about these indicators, they actually want them to be included.
Write the meaning or characteristics of MEW, GDP, GNI per capita, and HDI as measurements for living standards
Compare their usefulness and limitations.

Globalisation /MNCs /FDI/productivity /international aid/free trade to improve

living standard in low income country

First, explain the meaning of low-income countries and low standard of living.
Then, discuss how globalization/MNCs/FDI/productivity/international aid/ free trade can improve living standards in low-income countries, while evaluating their negative impacts.

These are other lower-frequency exam topics, which were generally examined before 2023 in the old syllabus and are less likely to appear in exams.