Unit 4: Evaluating Economic Models and Policies · 1520U40-1
WJEC A-level Unit 4, June 2023
All 12 written questions from WJEC A-level Unit 4 (June 2023), Evaluating Economic Models and Policies. Each question shows its marks and topic, with an examiner insight on 12, and opens the question paper and mark scheme at the right page.
Section A
Q1(a)
Using examples, explain the role of barriers to entry in determining market structure.
Mark splitKnowledge 6Analysis 4
TopicMarket structures
Examiner insight
- What to cover
- Three things are needed: explain barriers to entry, give real world examples, and link each barrier to the market structure it produces. Cover natural barriers such as high fixed costs and economies of scale, and behavioural or strategic ones such as limit pricing, branding and patents.
- Diagram
- Cost and revenue diagram showing the scale of output needed to reach minimum efficient scale, or a natural monopoly AC curve.
- Watch out
- Limited use of real examples was the most common reason for missing the top band on AO1 and AO3, and some answers never related the barriers to specific market structures.
- How it went in the exam
- The mean was 6.3 out of 10, the most accessible of the 10 mark options. 59 per cent of candidates chose Question 1 over Question 2.
Q1(b)
With reference to game theory and your own examples, evaluate the likely costs of oligopolistic market structures.
Mark splitKnowledge 6Analysis 6Evaluation 8
TopicMarket structures
Examiner insight
- What to cover
- Set out the costs of oligopoly, using game theory and named examples: collusion and price fixing, higher prices and lower consumer surplus, restricted output, wasteful non price competition, barriers to entry.
- Diagram
- A payoff matrix used to show the incentive to collude or defect, plus a joint profit maximising diagram if helpful.
- Evaluation
- Evaluate each cost at the end of its own paragraph, rather than saving the benefits for the end. For example, after collusion and price fixing with BA and Virgin, judge it against the strength of regulation and the size of the fine if caught. Close with a weighted judgement.
- Watch out
- Two things stopped answers reaching the top band: no real examples, and describing game theory without saying why it demonstrates a cost of oligopoly. Do not treat costs and benefits as two isolated halves.
- How it went in the exam
- The mean was 10.6 out of 20, among the lowest of the essays. Top band AO4 was rare, almost always because there was no weighted judgement.
Q2(a)
Explain, using a relevant diagram(s), the differences between the objectives of profit maximisation and revenue maximisation.
Mark splitKnowledge 6Analysis 4
TopicBusiness growth and objectivesCosts, revenues and profit
Examiner insight
- What to cover
- Explain both objectives and contrast them. Profit maximisation at MC equals MR, revenue maximisation at MR equals zero, which is a higher output and lower price. Explain with PED that revenue rises while demand is elastic, and that the extra output beyond the profit maximising point costs more at the margin than it earns.
- Diagram
- Cost and revenue diagram with both output levels marked, and profit measured using AC, not MC.
- Watch out
- The commonest diagram errors were axis labels and reading the cost off the MC curve instead of AC. Relate the written analysis to specific points on your diagram.
- How it went in the exam
- The mean was 5.7 out of 10. Examiners said the explanation of the two objectives, not the diagram, was the main differentiator, and that noting which stakeholders favour each objective added depth.
Q2(b)
Evaluate the economic impact of firms choosing to grow.
Mark splitKnowledge 6Analysis 6Evaluation 8
Examiner insight
- What to cover
- Cover both micro and macro impacts. Micro: economies of scale, market power, prices, product range. Macro: employment, tax revenue, investment, international competitiveness, regulation. Name the stakeholders affected.
- Diagram
- LRAC showing economies and diseconomies of scale, or a market structure diagram after growth.
- Evaluation
- Evaluate throughout rather than in blocks, and compare benefits with costs to reach a weighted judgement on the net impact.
- Watch out
- An answer centred only on the firm itself, however well developed, was capped at Band 2 because it misses the wider economic impact.
- How it went in the exam
- The mean was 11.4 out of 20, the highest essay mean on the paper, so this is a strong choice if you cover both levels.
Section B
Q3(a)
Explain how the position of an economy's long-run Phillips curve could shift. Use a diagram in your answer.
Mark splitKnowledge 6Analysis 4
TopicMacroeconomic objectives and policy
Examiner insight
- What to cover
- Identify the long run Phillips curve as vertical at the natural rate, then explain the supply side factors that shift it: training and education, labour market flexibility, lower benefit replacement rates, technology, migration.
- Diagram
- Long run Phillips curve, vertical, shifting left or right, with short run curves. Do not substitute AD and AS.
- Watch out
- The main failure was confusing the long run and short run curves. For top AO3 you must explain that after the shift, the inflation and unemployment trade off now happens at a different level of unemployment, and you must refer to your own diagram.
- How it went in the exam
- The mean was 4.9 out of 10, the most challenging 10 mark option on the paper. Only 22 per cent of candidates chose Question 3.
Q3(b)
Assess the likely impact of UK economic growth on the Welsh economy.
Mark splitKnowledge 6Analysis 6Evaluation 8
TopicEconomic growth and the economic cycle
Examiner insight
- What to cover
- Take the standard effects of UK growth, then make each one Welsh. For example, growth elsewhere in the UK raising tourism in towns such as Porthcawl, demand for Welsh exports and inputs, migration and wages, and public spending through the block grant.
- Evaluation
- Evaluate each impact at the end of its paragraph, for example that more UK income could mean fewer staycations and more foreign travel, then give a weighted overall judgement.
- Watch out
- Linking to Wales is the difference between Band 2 and Band 3. Generic, well written theory was capped at Band 2. The specification requires a Welsh context and it can appear in any unit.
- How it went in the exam
- The mean was 10.9 out of 20. Top band AO4 was rarely awarded for the usual reason, no weighted judgement.
Q4(a)
Explain the problems that might arise when measuring the rate of unemployment in an economy.
Mark splitKnowledge 6Analysis 4
TopicMeasuring economic performance
Examiner insight
- What to cover
- Cover problems with both measures, the Labour Force Survey and the Claimant Count. Survey sampling error and response rates, the definition of actively seeking work, people outside the benefit rules, hidden unemployment and underemployment.
- Watch out
- For the top AO3 band, every problem must be tied back to whether the recorded rate is too high or too low. Many answers stopped at naming the problem. Be careful not to mix up the economically inactive with the unemployed.
- How it went in the exam
- The mean was 5.3 out of 10. Weaker answers covered generic problems or only one measure, which caused wide variation in AO1 marks.
Q4(b)
Discuss the possible causes of unemployment in Wales.
Mark splitKnowledge 6Analysis 6Evaluation 8
TopicMeasuring economic performance
Examiner insight
- What to cover
- Take the types of unemployment and attach each to Wales: structural in the former coal and steel areas, cyclical from the covid recession, seasonal in the tourist towns, frictional and regional immobility.
- Evaluation
- Judge throughout whether each cause is more or less prominent in Wales at this time, then give a weighted final judgement.
- Watch out
- As in Q3b, generic theory without Welsh examples was limited to Band 2 no matter how well written.
- How it went in the exam
- The mean was 10.8 out of 20. 78 per cent of candidates chose Question 4 over Question 3, mainly because part (a) was more accessible.
Section C
Q5(a)
Explain the difference between GDP and GNP, and the significance of purchasing power parity adjustments for measuring living standards.
Mark splitKnowledge 6Analysis 4
TopicMeasuring economic performance
Examiner insight
- What to cover
- Define GDP as output within a country's borders and GNP as GDP plus net factor income from abroad, then explain the difference with examples: MEDCs often have GNP above GDP because their firms own assets overseas, while LEDCs often have GNP below GDP because foreign owned firms repatriate profits. Then explain PPP adjustment and why it matters for living standards.
- Watch out
- Very few candidates earned AO3 marks because they defined the two terms but never explained the difference in the MEDC and LEDC cases. PPP is best explained with contrasting price levels, for example Norway against India.
- How it went in the exam
- The mean was 5 out of 10, the second lowest of the 10 mark options, and only 29 per cent chose Question 5.
Q5(b)
Evaluate the extent to which changes in the Human Development Index (HDI) are a good indicator of changes in the level of development in an economy.
Mark splitKnowledge 6Analysis 6Evaluation 8
Examiner insight
- What to cover
- Get the HDI components exactly right: GNI per capita at PPP, life expectancy at birth, and expected plus mean years of schooling. Explain why each is a better development measure than national income alone.
- Evaluation
- Take one component per paragraph, analyse why it is a suitable measure, and close that paragraph with where it falls short, for example that averages hide inequality, that years of schooling say nothing about quality, and that HDI ignores the environment, freedom and inequality. Then give a weighted judgement.
- Watch out
- Common factual errors: using GDP instead of GNI, mortality rates instead of life expectancy, and education in general rather than the two schooling measures. Do not separate pros and cons into two blocks.
- How it went in the exam
- The mean was 10.4 out of 20, the lowest of all the essays on the paper. The paragraph by paragraph evaluation structure is what let the minority reach top band.
Q6(a)
Explain why a currency devaluation may not improve an economy's trade balance.
Mark splitKnowledge 6Analysis 4
TopicInternational trade and exchange rates
Examiner insight
- What to cover
- Explain the devaluation and its effect on export and import prices, then explain why the trade balance may still not improve: the Marshall Lerner condition when demand is inelastic, the J curve in the short run, non price competitiveness such as quality and reliability, dearer imported inputs, and retaliation or protectionism.
- Diagram
- J curve showing the trade balance worsening before it improves.
- Watch out
- Describing the J curve or Marshall Lerner is not enough. Explain why, in that case, exports do not rise and imports do not fall. Many candidates lost the AO3 marks here.
- How it went in the exam
- The mean was 5.3 out of 10. Using precise terminology is what separated top band from mid band AO1.
Q6(b)
Discuss the view that free international trade is more beneficial for MEDCs than LEDCs.
Mark splitKnowledge 6Analysis 6Evaluation 8
TopicInternational trade and exchange rates
Examiner insight
- What to cover
- Compare MEDCs and LEDCs directly and repeatedly, on comparative advantage, specialisation, primary product dependency, terms of trade, employment and wages, infant industries and access to technology.
- Evaluation
- Judge which group gains more and under what conditions, and evaluate throughout rather than at the end.
- Watch out
- Two common problems: treating only one group's perspective, and building the answer on the movement of labour or FDI. Those earn credit only where they are linked to free trade in goods and services, not as the main argument.
- How it went in the exam
- The mean was 11.1 out of 20 and 71 per cent chose Question 6. Stronger responses compared the two groups consistently throughout.
Question text is quoted from the question papers, © WJEC CBAC Ltd, for students’ private study. Open the official papers and mark schemes from the links on each question. Examiner insights are written with AI assistance and moderated by Finn.