edexcel economics a level essay structure

Tips for writing economics essays

Some tips for writing economics essays  Includes how to answer the question, including right diagrams and evaluation – primarily designed for A Level students.

1. Understand the question

Make sure you understand the essential point of the question. If appropriate, you could try and rephrase the question into a simpler version.

For example:

Q. Examine the macroeconomic implications of a significant fall in UK House prices, combined with a simultaneous loosening of Monetary Policy.

In plain English.

• Discuss the effect of falling house prices on the economy
• Discuss the effect of falling interest rates (loose monetary policy) on economy

In effect, there are two distinct parts to this question. It is a valid response, to deal with each separately, before considering both together.

It helps to keep reminding yourself of the question as you answer. Sometimes candidates start off well, but towards the end forget what the question was. Bear in mind, failure to answer the question can lead to a very low mark.

2. Write in simple sentences

For clarity of thought, it is usually best for students to write short sentences. The main thing is to avoid combining too many ideas into one sentence. If you write in short sentences, it may sound a little stilted; but it is worth remembering that there are no extra marks for a Shakespearian grasp of English. (at least in Economics Exams)

Look at this response to a question:

Q. What is the impact of higher interest rates?

Higher interest rates increase the cost of borrowing. As a result, those with mortgages will have lower disposable income. Also, consumers have less incentive to borrow and spend on credit cards. Therefore consumption will be lower. This fall in consumption will cause a fall in Aggregate Demand and therefore lead to lower economic growth. A fall in AD will also reduce inflation.

I could have combined 1 or 2 sentences together, but here I wanted to show that short sentences can aid clarity of thought. Nothing is wasted in the above example.

Simple sentences help you to focus on one thing at once, which is another important tip.

3. Answer the question

Quite frequently, when marking economic essays, you see a candidate who has a reasonable knowledge of economics, but unfortunately does not answer the question. Therefore, as a result, they can get zero for a question. It may seem harsh, but if you don’t answer the question, the examiner can’t give any marks.

At the end of each paragraph you can ask yourself; how does this paragraph answer the question? If necessary, you can write a one-sentence summary, which directly answers the question. Don’t wait until the end of the essay to realise you have answered a different question.

Discuss the impact of Euro membership on UK fiscal and monetary policy?

Most students will have revised a question on: “The benefits and costs of the Euro. Therefore, as soon as they see the Euro in the title, they put down all their notes on the benefits and costs of the Euro. However, this question is quite specific; it only wishes to know the impact on fiscal and monetary policy.

The “joke” goes, put 10 economists in a room and you will get 11 different answers. Why? you may ask. The nature of economics is that quite often there is no “right” answer. It is important that we always consider other points of view, and discuss various different, potential outcomes. This is what we mean by evaluation.

Macro-evaluation

• Depends on the state of the economy – full capacity or recession?
• Time lags – it may take 18 months for interest rates to have an effect
• Depends on other variables in the economy . Higher investment could be offset by fall in consumer spending.
• The significance of factors . A fall in exports to the US is only a small proportion of UK AD. However, a recession in Europe is more significant because 50% of UK exports go to EU.
• Consider the impact on all macroeconomic objectives . For example, higher interest rates may reduce inflation, but what about economic growth, unemployment, current account and balance of payments?
• Consider both the supply and demand side . For example, expansionary fiscal policy can help to reduce demand-deficient unemployment, however, it will be ineffective in solving demand-side unemployment (e.g. structural unemployment)

Example question :

The effect of raising interest rates will reduce consumer spending.

• However , if confidence is high, higher interest rates may not actually discourage consumer spending.

If the economy is close to full capacity a rise in interest rates may reduce inflation but not reduce growth. (AD falls from AD1 to AD2)

• However , if there is already a slowdown in the economy, rising interest rates may cause a recession. (AD3 to AD3)

Micro-evaluation

1. The impact depends on elasticity of demand

In both diagrams, we place the same tax on the good, causing supply to shift to the left.

• When demand is price inelastic, the tax causes only a small fall in demand.
• If demand is price elastic, the tax causes a bigger percentage fall in demand.

2. Time lag

In the short term, demand for petrol is likely to be price inelastic. However, over time, consumers may find alternatives, e.g. they buy electric cars. In the short-term, investment will not increase capacity, but over time, it may help to increase a firms profitability. Time lags.

3. Depends on market structure

If markets are competitive, then we can expect prices to remain low. However, if a firm has monopoly power, then we can expect higher prices.

4. Depends on business objectives

If a firm is seeking to maximise profits, we can expect prices to rise. However, if a firm is seeking to maximise market share, it may seek to cut prices – even if it means less profit.

5. Behavioural economics

In economics, we usually assume individuals are rational and seeking to maximise their utility. However, in the real world, people are subject to bias and may not meet expectations of classical economic theory. For example, the present-bias suggest consumers will give much higher weighting to present levels of happiness and ignore future costs. This may explain over-consumption of demerit goods and under-consumption of merit goods. See: behavioural economics

Exam tips for economics – Comprehensive e-book guide for just £5

9 thoughts on “Tips for writing economics essays”

I really want to know the difference between discussion questions and analysis questions and how to answer them in a correct way to get good credit in Economics

Analysis just involves one sided answers while Discussion questions involve using two points of view

This is a great lesson learnd by me

how can I actually manage my time

The evaluation points in this article are really useful! The thing I struggle with is analysis and application. I have all the knowledge and I have learnt the evaluation points like J-curve analysis and marshall learner condition, but my chains of reasoning are not good enough. I will try the shorter sentences recommended in this article.

What kind of method for costing analysis is most suitable for a craft brewery, in order to analyze the cost of production of different types of beer_

Really useful!Especially for the CIE exam papers

Does anyone know how to evaluate in those advantages/disadvantages essay questions where you would basically analyse the benefits of something and then evaluate? Struggling because wouldn’t the evaluation just be the disadvantages ?? Like how would you evaluate without just stating the disadvantage?

This is an excellent source of adbvise

Leave a comment Cancel reply

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How to Structure Great Data Response Answers and Essays in Edexcel A-Level Economics Paper 1

Last updated 5 Jan 2020

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This video provides advice on structuring high-scoring answers for data response questions and essays in Edexcel A-Level Economics Paper 1.

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How to write a 25 marker for Edexcel A-level Economics

Below I have provided a sample answer to a 25 mark practice question. This is based on my experience as an economics tutor. Hopefully this may help guide some students.

To practise your exam technique for 25 markers and more using practice papers, click the blue button below:

Consider the following 25 mark practice question:

With reference to examples, evaluate the effects of a tariff (25 marks).

I have kept the question relatively simple, as the focus here is on exam technique.

Possible Answer

A tariff is a tax on imports and is a protectionist measure. In recent years there has been an increase in the degree of protectionism around the world. For example the US imposing tariffs on Chinese steel and tariff retaliation from China.

A tariff will support domestic producers . Consider the example of steel tariffs of 25% that US President Donald Trump put in place on Chinese steel.  In the diagram below, a tariff will shift the world supply upwards from world supply to world supply + tariff. So the world price increases from pw to pw+tariff. This reduces the quantity of imports from (q4-q1) to (q3-q2). The tariff increases domestic production from q1 to q2, increasing producer surplus by area (AB pw pw+tariff). This will mean higher profits for the US steel firms, leading to higher investment and employment.

This could also mean local multiplier effects as workers are now richer, owing to possibly higher employment and pay. So workers spend that money in local shops, increasing consumption and living standards in the area. The multiplier effect is when an increase in a component of aggregate demand leads to a larger than proportionate increase in real GDP.

The tariff also raises government revenue. Higher revenue could go towards reducing the large budget deficit that the US Government has because of pandemic spending, hence reducing future debt interest payments. Alternatively government revenue could further support steel firms through export subsidies, making them even more competitive relative to foreign importers and further increasing domestic production, employment and wages in steel.

Evaluation 1

However a tariff can cause a loss in consumer surplus by area pw pw+tariff C D. This is because of higher prices and reduced quantity sold to domestic consumers. Also the units between q1 and q2 are now being produced by inefficient domestic firms, when foreign producers could produce the steel more cheaply. Overall there will be welfare losses of the two shaded green triangles.

Tariffs can also create a possibility of retaliation . In the case of the US tariffs on Chinese steel, China retaliated with its own tariffs, for example on frozen pork. Retaliatory tariffs would increase the costs for US producers of frozen pork, rendering their product less competitive in US markets. This could lead to decreased quantity exported and producer surplus for US frozen pork producers. The retaliation is likely to undermine any benefits from the original tariff, rendering the tariff a less effective policy. As it increases prices, it is also likely to reduce US consumer surplus. The original tariff and the retaliatory tariff both cause a welfare loss for the US economy in this case.

Tariffs can support infant industries . Consider the example of the micro-computer industry in Brazil in the 1980s. This was a new industry for Brazil. Under free trade, Brazilian manufacturers would be undercut by larger international competitors and so Brazilian firms would not be able to grow. With a tariff in place, Brazilian manufacturers face reduced competition from abroad, allowing these firms to grow and achieve economies of scale, meaning lower long-run average costs as output increases.

For example purchasing economies of scale, meaning firms can bulk-buy inputs at discounted prices. Reducing firm costs would shift the SRAS right from SRAS to SRAS1, leading to higher equilibrium real GDP (Y to Y1) and reduce the price level in the economy from PL to PL1.

This leads to an extension along the aggregate demand curve . A lower price level boosts export competitiveness, increasing export demand, likely raising the value of exports (if export demand is price-elastic). So aggregate demand rises.

This would also mean higher employment in the infant industry and wider economy. The tariffs could be used as a short-run measure – once the infant industry has reduced its costs sufficiently through economies of scale, it can compete with the established international firms on cost and hence price.  This may allow greater exports out of Brazil in the future from the infant industry.

Evaluation 2

However tariffs may increase costs for firms relying on steel as an input. Steel is important as an input for cars and planes. The US has major producers of cars such as Ford as well as planes with companies such as Boeing. Increasing costs of steel will increase business costs, shifting the SRAS to the left from SRAS to SRAS_1, leading to a fall in real GDP from Y to Y_1 and an increase in price level from PL to PL_1.

These firms would then see lower profits, investment and employment and if costs get too high, plants could close in the US or even move abroad to circumvent the tariffs. So while tariffs may benefit some industries in the US, they can harm other industries within the US too.

Overall a tariff is likely harmful due to the net welfare loss. This is also because of the increased costs for key US industries using steel as an input.

However the effectiveness of no tariffs depends on other government policies to support those who lose out from free trade.

Even if free trade may make some better off (consumers) and some worse off (steel workers), the US Government could find a way to tax those who benefit and give welfare payments to those worse off or to retrain them.

The US Trade Adjustment Assistance welfare program does this to some degree. This program helps workers who may have lost jobs because of international competition from imports. But the TAA program may not be sufficient to support all workers affected by free trade, including those affected indirectly. The key situation in which a temporary tariff may be desirable occurs when there are infant industries.

An introduction can be very short – defining key terms. I also used it here to set some context but the most important thing is to get on with writing your key point.

For more guidance on exam technique for Edexcel A, check out the blue button here :

The structure I have used involves one KAA (knowledge, application and analysis) paragraph, one evaluation paragraph, then a second KAA paragraph, followed by a second evaluation paragraph then a conclusion. Some schools recommend 3 KAA paragraphs and 3 evaluation paragraphs before a conclusion – this is fine, provided the points are shorter than the ones used above.

The analysis paragraphs use multiple chains of analysis and examples from the real world. Where relevant they also bring in definitions. The evaluation paragraphs explain points fully and use context as a way of supporting the answer. The conclusion gives a judgement, justifies the decision, and explains one key factor the decision may depend on (while referring to context).

This essay would likely achieve the top bands for analysis and evaluation for Edexcel. For more information on the criteria used, see the link to the Edexcel Economics A page here .

This has used the “however” style evaluation. But you could also change this to the “it depends on” style evaluation very easily if you or your teacher prefers this approach.

This is just one way of answering the question and does not represent my view. Indeed you argue that tariffs are effective. For example because of the effects on domestic producers, inequality, negative externalities and so on.

More Reading

To practise using some practice papers written in the style of Edexcel Economics A-level A, click the blue button below:

For more A-level Economics resources, click this blue button below:

About the author

Helping economics students online since 2015. Previously an economist, I now provide economics resources on tfurber.com and tutor A Level Economics students. Read more about me here .

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Edexcel A-Level Economics | Every 25 Marker

AS 20 Markers

In 2015 a report by Public Health England recommended the imposition of a 20% tax on the sale of soft drinks that contain high levels of sugar. Evaluate the likely microeconomic effects of such a tax . (June 2017)

‘Revenue maximisation is a more realistic business objective than profit maximisation for many businesses.’ To what extent do you agree with this statement? Refer to an industry of your choice in your answer. (June 2017)

In September 2016 the government approved the building of an £18 billion nuclear power station, Hinkley Point C, which will supply 7% of UK electricity for up to 60 years. The power station is funded by Chinese and French investment. Evaluate the likely private costs and external costs involved in such major power station construction projects. Use an appropriate externalities diagram in your answer. Evaluate the likely private costs and external costs involved in such major power station construction projects. Use an appropriate externalities diagram in your answer. (June 2018)

In July 2016 Apple’s share of the UK market for smartphones was 38%. Evaluate whether such a high market share for one company is in the consumer interest. Use appropriate diagrammatic analysis in your answer. (June 2018)

In July 2017 it was announced that only a third of the BBC’s 96 top earning presenters were women and that its seven highest-paid presenters were all men. According to the High Pay Centre, in 2018, UK chief executives can earn 120 times more than the average full-time worker earning £28 758. With reference to an industry of your choice, evaluate why wage differences exist within the UK labour market. (June 2019)

In October 2017 Scania, the Volkswagen-owned truck maker, was fined €880 million (£771 million) by the European Commission for colluding with five other truck manufacturers over a 14-year period. The firms had agreed to coordinate prices after experiencing additional costs of meeting emission regulations. With reference to an industry of your choice, evaluate why some firms engage in collusive behaviour. (June 2019)

The International Energy Agency has predicted that oil use by cars will peak in 2025 because of the increasing number of drivers switching to electric vehicles. Evaluate the likely microeconomic consequences of consumers shifting from vehicles powered by fuel obtained from oil to electric-powered vehicles. (June 2020)

‘Amazon.com, the giant online retailer, has too much power.’ It uses its market power to put a squeeze on publishers, in effect driving down the prices it pays for books. If a publisher refuses, Amazon may take action by ‘delaying their delivery, raising their prices, and steering customers to other publishers’. Evaluate the likely costs of a monopsony operating in a market such as book retailing. (June 2020)

The national living wage, the minimum wage for 25-year-olds and over, is expected to rise to more than £10.50 an hour in 2024 compared with £8.72 in 2020. The wage does not apply to the UK’s self-employed and ‘gig economy’ workers. Some economists said the increase was ambitious. Business groups warned that employers in sectors such as social care could be hit hard. In large parts of the north of England the living wage has already reached two-thirds of local median earnings, said Professor Shackleton. Evaluate the disadvantages of a significant increase in the national living wage on a specific labour market, such as that for social care workers. (June 2021)

In many industries, such as banking, health insurance, internet search engines, pharmaceuticals, social media and telecommunications, there have been increases in market concentration. Evaluate the possible consequences for business decision making of increased market concentration. Refer to industries of your choice in your answer. (June 2021)

Evaluate the likely costs of a monopsony operating in a market such as book retailing. (June 2021)

Evaluate the disadvantages of a significant increase in the national living wage on a specific labour market, such as that for social care workers. (June 2021)

‘Tradable permits are less effective than taxation in reducing carbon emissions.’ To what extent do you agree with this statement? (Specimen)

Evaluate the likely microeconomic impact of an increase in the UK national minimum wage. (Specimen)

Tesla held an 82% market share of the electric vehicle market in the United States during the first half of 2020. Evaluate whether a monopoly is likely to operate efficiently. Refer to at least one monopoly of your choice. (Specimen )

Some occupations in the UK are facing large labour shortages. Hard-to-fill vacancies include qualified chefs, software engineers, construction workers and qualified nurses. Evaluate the factors that might influence the supply of labour in an occupation of your choice. (Specimen)

Since the global financial crisis of 2008 there have been over 5 700 increases in tariffs, quotas and administrative controls on international trade. Evaluate the likely effects of an increase in protectionism on the economy of a developing country of your choice. (June 2017)

Global oil prices fell from a 2008 peak of $147 a barrel to $27 in 2016. Evaluate the likely macroeconomic consequences of a significant fall in global oil prices. (June 2017)

In 2016 the UK Chancellor of the Exchequer announced that the government would spend an extra £23 billion on innovation and infrastructure over the following five years. Evaluate the likely economic effects of this planned increase in government expenditure. (June 2018)

The British pound fell by over 10% to a 30-year low against the US dollar after the UK voted to leave the European Union. To what extent will this depreciation impact on future economic growth in the UK? (June 2018)

Three of Africa’s main trading blocs have agreed to form the Tripartite Free Trade Agreement (TFTA). This will create one of the world’s largest free trade areas, stretching across 26 countries with a combined GDP of around £1trillion. Evaluate the effects of the growth of trading blocs such as the TFTA on global trading patterns. (June 2019)

Japan’s budget deficit for 2017/18 is expected to be 4.6% of GDP. Its national debt is forecast to increase to above 250% of GDP by 2019. Evaluate the impact of a large fiscal deficit and national debt on a country’s economy. (June 2019)

In 2018, the United States Government cut the corporation tax rate (tax on company profits) from 35% to 21%. Income tax rates for US citizens were also reduced: for example, the top rate of income tax was cut from 39.6% to 37%. Evaluate the likely impact of cutting tax rates as a policy to increase economic growth. (June 2020)

In terms of income distribution and wealth distribution Brazil is one of the most unequal countries in the world. Its income Gini coefficient is 0.449 and it is ranked number 2 in the world for its wealth inequality. Evaluate possible economic causes of income and wealth inequalities within a country such as Brazil. (June 2020)

The European Central Bank introduced a new round of quantitative easing (QE) in March 2020, purchasing up to €750 billion of assets. The objective of this QE was to reduce the serious risks to the effectiveness of monetary policy resulting from a significant recession. The European Central Bank’s target for inflation remains at ‘below but close to 2%’. Evaluate the effectiveness of quantitative easing during ‘a significant recession’. (June 2021)

It has been estimated that if climate change led to the world’s temperature rising 2.5°C compared to the temperature in 2010, then global GDP per capita would be 15% lower by 2100. If temperatures rise by 4°C compared to the temperature in 2010, then by 2100 global GDP per capita would decline by more than 30%.. Evaluate the potential trade-offs between environmental protection and other macroeconomic objectives. (June 2021)

Both China and the United States have been gradually increasing the tariffs imposed on each other’s exports as their trade dispute continues. The IMF estimated that the trade dispute between China and the United States would reduce global GDP growth by 0.8 percentage points by the end of 2020. Evaluate the likely impact of an increase in protectionism on the global economy. (June 2022)

With global economic growth slowing and inequality rising, the case against globalisation is strengthening. But there are also many benefits to globalisation. Global trade and international trade agreements allow countries to focus on their strengths and share expertise, as well as reducing risk through diversification. Evaluate the likely impact of globalisation on the global economy. (June 2022)

In 2012, it was estimated that Japan’s national debt was equal to 214.3% of its GDP, and Greece’s national debt was equal to 161.3% of its GDP. Evaluate the likely impact of measures which a government could take to reduce the economy’s national debt. Refer to a developed economy of your choice in your answer. (Specimen)

Over the past 25 years, income inequality has been increasing in many developed countries. For example, from 2007 to 2011 Spain’s Gini coefficient rose by 6.0 percentage points, and Ireland’s by 6.6 percentage points. Evaluate the factors which may have caused this increase in income inequality. Refer to a developed economy of your choice in your answer. (Specimen)

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of policies that could be used to stimulate economic growth and development in Chile. (June 2017)

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic impact on Chile’s economy of changes in the level of investment. (June 2017)

With reference to the information provided and your own knowledge, evaluate the likely microeconomic and macroeconomic influences on the UK’s international competitiveness. (June 2017)

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit. (June 2017)

Evaluate the microeconomic and macroeconomic factors that may influence Starbucks’ decision whether to expand in a particular country. (June 2018)

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of increased UK demand for coffee at branded coffee shops. (June 2018)

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects on Indonesia of the volatility of prices of commodities such as coal. (June 2018)

Evaluate the likely microeconomic and macroeconomic effects of the supply-side policies recently introduced in Indonesia. (June 2018)

Evaluate the microeconomic and macroeconomic effects of increased government spending on education to promote healthy eating in the UK. (June 2019)

Evaluate the likely microeconomic and macroeconomic effects of imposing a tax on HFSS foods. (June 2019)

Evaluate the microeconomic and macroeconomic factors, apart from access to credit and banking, influencing growth and development in Mozambique. (June 2019)

Evaluate the likely microeconomic and macroeconomic effects of relatively high inflation rates in many African countries. (June 2019)

Evaluate the likely microeconomic and macroeconomic effects of a rise in interest rates in Turkey. (June 2020)

Evaluate the microeconomic and macroeconomic impact of large infrastructure projects such as the building of a third airport in Istanbul. (June 2020)

Evaluate possible microeconomic and macroeconomic policies which could be used to improve UK competitiveness. (June 2020)

Evaluate the microeconomic and macroeconomic effects of a decline in the literacy and numeracy skills of a country’s young workers. (June 2020)

Evaluate the microeconomic and macroeconomic factors which determine the number of firms in an industry. Refer to HCWs or another industry of your choice. (June 2021)

Evaluate the microeconomic and macroeconomic effects of increased government intervention in an industry. Refer to HCWs or another industry of your choice. (June 2021)

Evaluate the microeconomic and macroeconomic factors which are likely to determine the rate of economic growth in Germany relative to other developed economies. (June 2021)

Evaluate the microeconomic and macroeconomic impacts of ‘a much more expansionary fiscal policy’ (Extract C line 23) on the German economy. (June 2021)

Evaluate the microeconomic and macroeconomic effects of a depreciation of the pound. Refer to restaurants or other food delivery services in your answer. (June 2022)

Evaluate the microeconomic and macroeconomic effects of significant increases in the minimum wage. Refer to restaurants or other food delivery services in your answer. (June 2022)

Evaluate the microeconomic and macroeconomic effects of decreasing interest rates in Kenya, or another developing country of your choice. (June 2022)

Evaluate the microeconomic and macroeconomic strategies that could be used to promote development in Kenya, or another developing country of your choice. (June 2022)

With reference to the information provided and your own knowledge, evaluate the possible microeconomic and macroeconomic effects on the UK economy of a decision by the government to encourage fracking. (Specimen)

With reference to the information provided and your own knowledge, evaluate the possible microeconomic and macroeconomic effects on the global economy of lower energy prices. (Specimen)

With reference to the information provided and your own knowledge, evaluate the likely microeconomic and macroeconomic effects of the imposition of ‘price controls’ (Extract E, line 8) in Argentina. (Specimen)

With reference to the information provided and your own knowledge, evaluate the likely microeconomic and macroeconomic effects of the 23% devaluation of the Argentine peso. (Specimen)

A-Level Economics Model Answers (for Edexcel Past Papers)

Download A-Level Economics Model Answers for Edexcel past papers below for A2 and AS. These candidate responses were extracted from Edexcel exam board’s examiners’ reports and were graded by Edexcel examiners. All new specification Economics papers and their model answers are now available including Paper 1 (Microeconomics), Paper 2 (Macroeconomics) and Paper 3 (Synoptic).

Relevant resources: Download Edexcel A2 Economics past papers for students studying A2 Economics in their second year. Download Edexcel AS Economics past papers for students studying AS Economics in their first year. Visit our Edexcel Economics notes & questions by topic for practicing and revising certain areas of the course.

Economics Model Answers for A2 (Year 2)

Edexcel 2018 Economics A Paper 1 Model Answers Download

Edexcel 2018 Economics A Paper 2 Model Answers Download

Edexcel 2017 Economics A Paper 1 Model Answers Download

Edexcel 2017 Economics A Paper 2 Model Answers Download

Economics Model Answers for AS (Year 1)

Edexcel 2018 AS Economics A Paper 1 Model Answers Download

Edexcel 2017 AS Economics A Paper 1 Model Answers Download

Edexcel 2016 AS Economics A Paper 1 Model Answers Download

Need help with these Edexcel Economics past papers? Ask our Economics Tutor a free question or get a personalised 1 to 1 online lesson with us today. Alternatively, check out our Edexcel Economics revision notes to refresh your memory.

Other Resources

Looking for the full version of the Examiner Reports and more? You can find more Economics past papers and mark schemes on Edexcel’s resource page . Copyright for these examination papers belongs to their respective examination boards but not Qurious Education Ltd.

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Edexcel Economics A-level: Paper 3 Essay Plans

Subject: Economics

Age range: 16+

Resource type: Assessment and revision

Last updated

3 June 2023

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This document consists of 18 pages of Paper 3 Essay plans (Micro- and Macroeconomics). Each essay plan includes top facts, analysis, knowledge and evaluation to get you an A* in your Economics A-level. Each plan is tailored to the top scoring 25 marker structure of the Edexcel Board. However, they can be used for all other boards too, as the content is very similar if not the same. These essay plans also provide ideal points for 8, 12 and 15 markers, helping you ace the whole paper. Please review if the resource has been helpful. Many thanks.

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Economics A-Level: Paper 1, 2 & 3 Essay Plans

A collection of three essay plan documents that aim to help you achieve an A* in your economics A-level. Each document has essay plans answering multiple questions that may appear in your paper. Each essay plan is detailed with the specific chains of analysis, knowledge and real world economic examples. Please note, the essay plans provide a framework so that you can apply the points to a series of questions and paper themes, rather than covering every single question that could come up. It does, however, provide many questions that do tend to come up in exams. These essay plans also provide ideal points for 8, 12 and 15 markers, helping you ace the whole paper. Please leave a review if you have found these resources helpful! Many thanks.

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Monopoly ( Edexcel A Level Economics A )

Revision note.

Economics & Business Subject Lead

Characteristics of Monopoly

• A monopoly is a market structure in which there is a single seller
• There are no substitute products
• This allows the firm to maximise supernormal profit  in the short-run
• There is no long-run erosion of supernormal profit as competitors are unable to enter the industry
• E.g. by purchasing companies who are a potential threat
• It acts to prevent this from happening in most industries

Profit Maximising Equilibrium

• There is no differentiation between the firm & the industry
• This means that its revenue curves are downward sloping
• In order to maximise profits, it produces at the point where marginal cost (MC) = marginal revenue (MR)

A diagram illustrating a monopoly making supernormal profit in the short-run & long-run as the AR > AC at the profit maximisation level of output (Q 1 )

Diagram Analysis

• At this level the AR (P 1 ) > AC (C 1 )

Some exam questions require application of your knowledge. E.g. You may be asked to draw a cost and revenue diagram to show the likely impact of a reduction in sales on profits. This requires you to modify the diagram presented above by shifting the demand curve inwards. You will draw a second AR & MR curve to the left of the existing ones & then illustrate the new level of profit.

Third Degree Price Discrimination

• There are different types (degrees) of price  discrimination
• Third degree price discrimination occurs when a firm charges different prices to   different consumers for the same good/service e.g. rail fares are priced differently depending on the time of travel
• Some airline ticket portals charge higher prices to customers using an Apple computer as they are likely to have higher income

The Following Conditions Must Be Met for Third Degree Price Discrimination to Occur

Illustrating Third Degree Price Discrimination

• In order to illustrate third degree price discrimination diagrammatically, the different sub-market diagrams are placed side by side
• The total profit is a combination of profits from the sub-markets
• The diagram below illustrates the market for rail travel in the UK where inelastic demand is 'peak' hour demand & elastic demand is any other time of the day i.e. 'off-peak'

A third-degree price discrimination diagram demonstrates a market that has been divided based on price inelastic (peak travel) & price elastic demand (off-peak travel). Following the revenue rule , prices are raised for peak demand & lowered for off-peak demand

• Each train route has an effective monopoly provider
• This point is extrapolated to both sub-markets on the left by using the lower dotted line
• The average cost is extrapolated across both sub-markets using the upper dotted line (C 1 )
• A higher price for peak travel has been set at P a & a  lower price for off-peak travel has been set at P b
• Following the revenue rule, total revenue increases in both markets
• The profit for sub-market A = (P a -C 1 ) * Q 1
• The profit for sub-market B = (P b -C 1 ) * Q 2
• Total profit = (P t -C 1 ) * Q 3
• The firms' total profits are higher than if they had charged a single price to all customers   

Costs & Benefits of Third-Degree Price Discrimination

Costs & Benefits of Third-Degree Price Discrimination to Consumers & Producers

Costs & Benefits of Monopoly

• Theoretically this is possible, however in many cases the desire to maximise profits would prevent this from happening

The Advantages & Disadvantages Of Monopoly Power

Natural Monopoly

• This is often due to associated infrastructure issues e.g. delivery of utility services like water where it does not make sense to have multiple pipelines
• It can also be due to the significant cost that is generated when entering the industry e.g. the sunk costs
• It can also be due to the ability of economies of scale to lower prices for consumers e.g. it makes sense to have one firm building five nuclear power stations as opposed to five firms as average costs will be lower with one firm producing
• This regulation is often in the form of a maximum price

When evaluating monopolies demonstrate critical thinking by acknowledging the positives as well as the negatives. For example, Amazon has partly become a monopoly by being very good at what they do & consumers benefit from lower prices & greater choice. However, this power means that they can also abuse the suppliers on their platform.

When evaluating natural monopolies , consider the government failure that may occur with regard to regulation & the imposition of maximum prices . There is a lot of disagreement about the level of profits that natural monopolies should be allowed to make. It is a normative issue.

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Author: Steve Vorster

Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

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