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Edexcel Exam Board

NB: This information is for those sitting the Economics (2008) exam, Edexcel have recently introduced an Economics (2015) exam which is not covered in its entirety here.

For those of you studying Economics A-Level with the Edexcel exam board, this is the page for you! I myself studied Economics A-Level with this board and achieved an A*, so hopefully I can help advise you on all the tips to get a good grade in this subject.

This page was created to impart all my best tips right from the start. Although its wordy I hope you find it useful. Firstly choose the stage of learning you are at:

Get Started
For those of you who have just started the course, or who are doing some preparation in the summer holidays before you start I'd recommend that you buy the necessary books. The main book I would recommend is Peter Smith Edexcel AS Economics (the latest version) for your main reading, this is the book I used the most in Year 12. For Yr 13 (A2) I would also recommend Peter Smith - Edexcel A2 Economics (latest version). My teacher also recommended getting the tome of A-Level Economics for Edexcel by Alain Anderton which is quite expensive, and in my opinion not organised very well but on the upside it does contain material for both AS and A2 and is more prescriptive than Smith. As long as your school or local library has a copy of this book which you can use for reference then I don't think there is any need to get this book. Although you haven't started your course yet you may wish to purchase the revision guides now, I found them really useful as they provided additional information to the book and made the material much more concise. The revision guides I would recommend are Mark Gavin (Edexcel AS Economics Student Unit Guide: Unit 1 Competitive Markets - How They Work and Why They Fail), Rachel Cole (Edexcel AS Economics Student Unit Guide: Unit 2 Managing the Economy), Marwan Mikdadi and Rachel Cole (Edexcel A2 Economics Student Unit Guide: Unit 3 Business Economics and Economic Efficiency) and finally, Quentin Brewer (Edexcel A2 Economics Student Unit Guide: Unit 4 The Global Economy).

Now that you have purchased the books get reading! The more preparatory reading you can do before class the better. This means that you will have more time in class to understand the concepts in more detail and take part in class discussions rather than worrying about understanding the basic concepts. When undertaking reading and whilst in class it's important to make detailed notes. Buy a file folder so that you can keep all your work in one place (I had a folder for each of the 4 units) and this way you can order your work so that the relevant topics are all side by side.

Get a copy of the Edexcel exam specification (copy below) so that you can tick off each time you learn a concept on the specification sheet. This means that when you are nearing exam time you will have a list of everything you have learnt and also know what you still need to learn. This is also really useful for revision and is a great time saver if you know what still needs to be done, not to mention the morale boosting effect - next time you think you don't know anything about economics just look at the spec sheet to see everything you do know!

If you have just started your course you should have a bit of time on your hands (well a little more than you will during the hectic exam season) and something I would definitely recommend you do from the start is to take an interest in economic news. Buy the Economist, read online blogs (check mine out here), definitely read/watch the news (the BBC have a good business/economic page) because this will allow you to add context to your answers in your exams. Examiners don't just want to see students who know concepts and who can read a book. They want to see people who are enthusiastic about the subject and who have taken an interest outside of school by keeping up to date with the latest trends in the subject. If you are able to relate concepts to real life events then you will be able to gain full marks. This is particularly pertinent for Unit 4 (Global Economy) where marks are specifically dedicated to students who can relate concepts to real-life events. For example, when talking about the trade deficit try and name some countries who have a trade deficit, and maybe research why they have a trade deficit and if this is a bad thing or not.

Furthermore, try and read some books outside of the curriculum to try and broaden your knowledge. You are still allowed to talk about these books and what you have learnt in your exam (as long as its relevant) and it gives the examiner something different to read. Remember that the examiner reads hundreds of scripts and so they like a change to the same monotonous text that they constantly read. If they are impressed then they may award you more marks, or at least read your script in more detail!

My last tip for those of you just getting started is to ask lots of questions! If you don't know something or you think your understanding might be a little hazy ask someone! There's lots of people to ask - your classmates, your teacher, friends/family that have studied economics, there are many forums and blogs on the internet, including my own! If you're still stuck, why not send me a message and I will do my best to help!

For those of you sitting summer exams (which should be pretty much all of you!) I would begin to start revising in Easter if you haven't already. First things first, you need a plan - get a copy of the exam specification and create a revision timetable (do this in conjunction with your other exam subjects, ideally you should be dedicating equal time to each subject unless you're uber confident) listing when you need to be revising for economics and what concept you are going to look at. 

There are many different ways to learn depending on how you learn best. For some people this might mean watching videos - log on to youtube and get searching; there are loads of videos out there to help you. If you prefer listening to help you learn why not search for economic podcasts? I don't know of any particular podcasts but I am sure there are many out there. If you find any useful ones then send me the details and I can feature it in a blog post or on this page to help out other students!

For those that prefer the more conventional reading of books, try re-reading through your textbooks (recommended) to make sure you haven't missed anything and to refresh your memory. Whilst doing this make notes so you don't forget. One useful method of revising is to put all the key points and concepts for each chapter on a large post-it note at the beginning of each chapter. Not only does this allow you to look through your book and easily know what each chapter is about, but it also helps your understanding if you can talk about a concept concisely. Get the revision guides (recommended) and have a read through these.

Whilst revising make sure you make plenty of notes, try and connect different concepts - economics is a very interconnected subject so try and make links between different concepts. Make posters (which you can stick on doors or around your room) and draw spider diagrams for each topic. Invite classmates over so you can discuss different concepts and test each other. Try explaining to either a class-mate or a non-economically-knowledged friend some of the stuff you have been revising, studies have shown that those who are able to teach a topic get to learn it much better than people who revise on their own. Make revision cards with theory names on the front and then an explanation on the back, try to remember the explanation without looking! Compose a list of key terms and economic 'jargon' which you can get your parents to test you on to make sure you know all the definitions.

Don't forget to check in with your teacher and see what they think you need to do to improve. To get goods marks in the exam you need to be able to write good essays as well as simply learning the material. Use the past papers (see below) going through each of them and attempting them. Once you have attempted them, ask your teacher to mark them, meanwhile you should check out the mark scheme of the paper yourself, perhaps see how many marks you would have awarded yourself and where you think you fell down and then compare this information with what your teacher said. NEVER look at a question paper and then go straight to the mark scheme without attempting the paper. This won't help you at all and there aren't enough past papers for you to do this with! Even if you struggle with a paper, persevere, at the very least make bullet point notes about what you might write about and then look at the mark scheme.

The Edexcel website has examiner reports for each exam, these are very useful as the examiner discusses what they wanted from students, and talk about where students fell down. Have a look at these, the examiner is telling you what to write and what to learn - use it! Make a note of something which examiners repeatedly point out, if the student population fails to grasp a concept repeatedly then it is likely that the question will appear again in future exams until students fully grasp it, therefore the examiners report gives you an idea of the sort of topics which may come up in your exam.

Finally, take a look at the specification below (this is the same one as the Edexcel website), each key concept is linked to a page on this site with information I prepared for my exam, take a look at this, it might help!
What to expect - definitely read the front of each paper (a long time before the exam) to get used to the format of the paper. You should hopefully have done enough past papers to know which sections you need to answer etc. Make sure you take a pen (normally this has to be black) and ensure you carry out all instructions on the front of the page. Whilst it is unlikely you will lose marks for failing to comply (although there may be other punishments, such as fines), it may annoy the examiner and they may be less generous. Furthermore, if you end up answering the wrong question/the wrong number of question then you may well get a lower grade than you ought to.

Unit 1 and Unit 3: is composed of Section A and B. In Section A you have to answer 8 compulsory questions which are tick box, followed by an explanation. Selecting the correct multiple choice answer earns 1 mark, and then a further 3 can be earned from an explanation. Note, you can gain marks from the explanation even if you didn't get the multiple choice correct, hence if you are unsure of the question still give it an attempt - you have a 1/4 chance of getting at least 1 mark! The explanation, as a general rule of thumb, should consist of the relevant definition (often given one mark), an explanation of this theory and why the other options are incorrect, a diagram if relevant may also gain a mark. 
Section B gives you two questions to chose from, only select ONE. The question is usually a long one and is broken down into 5/6 sub-sections. Remember to answer each sub-section. If you can't answer one part (try and give it a go, even if you have to guess, there's a higher probability of getting some marks if you write something than if you write nothing) then move on to the next part. 
Most candidates are given 90 minutes to complete this paper and I recommend dividing Section A and Section B evenly, giving each part 45 minutes. There are 8 Section A questions, so spend roughly 5/6 mins on each question. In section B, spend 5 minutes reading and re-reading the blurb that normally accompanies the question, as well as carefully reading the question to ensure you have understood it and complete all parts of it. When drawing diagrams don't forget to use a ruler and pencil, ensuring that you have correctly labelled any curves and the axis, as well as title the diagram. Don't use a diagram needlessly - make sure you relate and refer to it in the question, explaining where it comes from and how it helps in your analysis. Finally, if you have time at the end of the exam, double check your answers ensuring you have crossed the appropriate number of boxes in Section A and provided an explanation and that you have answered all parts of the question in Section B, maybe re-read your answers and see if you can add further to them where necessary.

Unit 2: in these papers you get a choice of two questions, and you must answer ONE. You have 90 minutes to answer this one question so you have to make sure its detailed and well thought out. Before you start writing make sure you have clearly read the question and understand it. Then plan out what you are going to write: the best answers are those which are well laid-out, thought-out and coherent. Often the question is only broken down into 3 parts, so to get full marks you need to make sure your answer is very detailed, and sometimes quite broad. The question may probe specifically but want you to take a broader answer, encompassing knowledge of other areas. Don't forget the evaluation. This often means rebutting a theory with other theories, or explaining why something may not be the case. For example, you may say that increasing government spending (Unit 2/4) leads to an increase in GDP through the fiscal multiplier, but this can be countered with the theory of Ricardian Equivalence. An even better evaluation would bring in real-life evidence to support or counter one of these arguments.
Unit 4: in Section A you have to answer one question from a selection of 3 and in Section B you get a choice of two questions from which you have to chose one.
Make sure you bring in knowledge of real-world situations, whilst useful for all units, it is particularly pertinent for Unit 4. This is how you obtain the highest marks, by making it relevant to the real world. For example, if discussing government borrowing and taxation, maybe memorise some figures for the UK (or other economy which takes your interest), which shows the examiner you read outside the subject.

Beforehand - the best advice is probably not to try and cram revision in the night/morning before. A little bit of revision can help, especially if you find a nugget of information which is interesting and relevant which you missed in the main bulk of your revision. But you shouldn't still be learning major new concepts a few days before your exam! Do yourself a favour and ensure your revision is sufficient that this doesn't happen: it isn't worth the stress. Personally, I read through my brief notes (created during revision from my main notes created when I actually learnt the material) and revision guides as well as test myself on definitions for which I created a definition sheet so that I could learn the definitions verbatim.

After - some people like to discuss what they wrote in their exams with their peers, or check online forums like TheStudentRoom to see what other people did. If this works for you - like it did for me - then fine. My personal belief was that exams are to be learnt from and therefore I wanted to know where I went wrong in my exams. For some people discussions after the exam only serve to stress them out. In this case don't do it! Tell you friends this beforehand, so they know not to bother you. At the end of the day the exam has been completed and no amount of worrying will change what you wrote; you're best of focusing your energy on the next exam, or simply resting.

If you have come to this section just before exams STOP! Don't panic. That won't help the situation. Check with your friends and teacher for what you should be doing, and get on with some reading and revision. There is loads (read above) you can do to prepare yourself, but ultimately you will do best in the exam if you are well-rested, so don't go pulling all-nighters before the exams (but ensure you do do some revision!).

If you have plenty of time left, then read the whole of this document for advice on studying and revision. If it doesn't help you can speak to peers in your subject, your teacher, a careers adviser (if available) as well as your parents/family. There are also many other websites, forums and chat-rooms where you can get advice.
Unit 1 
Understand the problem of unlimited wants and finite resources.Students should understand that the economic problem is faced by consumers, producers and the government.Distinguish between renewable and non-renewable resources.Students should understand the meaning of sustainable resources. 
Use production possibility frontiers to depict opportunity cost, economic growth and the efficient allocation of resources.Distinguish between movements along and shifts in production possibility frontiers. Marginal analysis is required to depict opportunity cost. A basic definition of economic growth is required along with knowledge of the factors which might cause the production possibility frontier to shift outwards or inwards. 
Understand the advantages and disadvantages of specialisation and the division of labour.
Understand the advantages and disadvantages of specialisation and the division of labour.
Understand the advantages and disadvantages of a free market economy and why there are mixed economies.
Distinguish between objective statements and value judgements on economic issues.
Understand how a change in price causes a movement along a demand curve. Understand factors which may cause a shift in the demand curve, for example, changes in the price of substitutes or complementary goods; changes in real income and tastes.
Explain price, income and cross elasticities of demand. Understand factors that influence elasticities of demand and their significance to firms and government. Students may have to calculate and interpret numerical values of price, income and cross elasticity of demand.Understand the relationship between price elasticity of demand and total revenue.Students should understand the significance of elasticity to firms and government in terms of the imposition of indirect taxes and subsidies; changes in real income and changes in the price of substitute and complementary goods.
Understand how a change in price causes a movement along the supply curve.Understand the factors which may cause a shift in the supply curve, for example, changes in the costs of production, the introduction of new technology, indirect taxes and government subsidies.Producer cartels may be a significant determinant of supply in some markets, for example, oil. Students should be able to apply both specific and ad valorem taxes to a market. 
Explain price elasticity of supply; understand factors that influence price elasticity of supply.Distinguish between the short run and long run in economics and understand its significance to price elasticity of supply.Students may have to calculate and interpret numerical values of price elasticity of supply. 
Explain equilibrium price and quantity and how they are determined. Understand how the operation of market forces eliminates excess demand and excess supply. Students should understand that shifts in demand and supply curves will change the equilibrium price and quantity. 
Distinguish between consumer and producer surplus. Illustrate consumer and producer surplus on a demand and supply diagram. Students should understand how changes in demand or supply might affect consumer and producer surplus.
Functions of the Price Mechanism 
Understand the rationing, incentive and signalling functions of the price mechanism for allocating scarce resources.The price mechanism may be considered in the context of product, commodity and labour markets. 
Apply the price mechanism in markets, such as goods, services, commodities or labour.Students should be able to apply the determinants of demand and supply to various markets, for example, price of stock market shares, oil, precious metals and agricultural commodities.
Use supply and demand analysis to demonstrate the impact and incidence of taxes and subsidies on consumers, producers and the government. Students should be aware of the importance of elasticities of demand and supply, for example, in relation to government indirect taxes and subsidies.
Understand the factors which influence the demand and supply of labour. Recognise that demand for labour is derived from the demand for the final product it makes (derived demand).Understand that factors influencing the supply of labour include population migration, income tax and benefits, government regulations (for example, national minimum wage) and trade unions.
Define and understand different types of market failure. Students should understand that market failure is when the price mechanism causes an inefficient allocation of resources.The types of market failure considered at AS level are externalities, public goods, imperfect market information, labour immobility and unstable commodity markets.
Illustrate external costs and external benefits using marginal analysis, distinguishing between the market and social optimum positions. The welfare loss or gain areas are required. Students are required only to illustrate the external costs from production and external benefits from consumption. Students should assess the costs and benefits from major investment projects such as sporting events and transport infrastructure improvements.
Explain why public goods may not be provided by the market. Distinguish between public and private goods. Students should understand the free rider and valuation problems.
Distinguish between symmetric and asymmetric information.Understand how imperfect market information may lead to a misallocation of resources, for example, health care, education, pensions, tobacco and alcohol.
Understand geographical and occupational immobility of labour may result in structural unemployment.Students should understand the significance of house prices for restricting the geographical mobility of labour and the skills shortage for restricting the occupational mobility of labour.Assess government measures to reduce factor immobility such as training programmes and relocation subsidies.
Understand the causes and effects of fluctuating commodity prices on consumers and producers.Assess the impact of government intervention in the form of minimum prices and buffer stocks. Use diagrammatic analysis for minimum prices and buffer stocks. Students should understand how uncertainty in production (for example, climatic) and time lags may affect supply and the significance of price and income elasticity of demand.
Understand the different measures of government intervention to correct market failure, for example, indirect taxation, subsidies, buffer stocks, tradable pollution permits, extension of property rights, state provision and regulation. Apply, analyse and assess the effectiveness of each method of government intervention for correcting market failure. Students should be able to apply government economic measures in various contexts, for example, road pricing, landfill tax, carbon offsetting and carbon emissions trading, renewable energy certificates.
Define and explain different types of government failure, for example, undesirable outcomes from agricultural stabilisation policies; environmental policies; transport, housing and the national minimum wage. Students should understand that government intervention may result in a net welfare loss.Students should understand the economic arguments for and against an increase in the national minimum wage.
Unit 2 
Understand how economic growth is measured and its limitations, for example: the inadequacy of economic growth measurement as a measure of standards of living problems of comparison between developed and developing countries. An understanding of the following distinctions is required:
  •  nominal and real
  •  total and per capita
  •  volume and value.
Understand the process of calculating the rate of inflation in the UK. Increases in the cost of living are measured using an index based on a weighted basket of goods and services. A price survey and a family expenditure survey are used. Understand the significance of the measure. Students are expected to be able to assess the main measure of inflation currently used as a target in the UK.
Understand how unemployment is measured in the UK. An understanding of measures to measure unemployment such as the claimant count and International Labour Organisation (ILO) measures is required. Understand the types and costs 
of unemployment. Understand the significance of changes in the rates of employment and unemployment. The significance of migration for employment and unemployment should be considered.
Understand the meaning of Balance of Payments deficits and surpluses on the current account.For this unit, emphasis will be on the current account of the Balance of Payments and, in particular, on the balance in trade in goods and services.Understand the causes and costs of an imbalance in the current account, at a basic level.
Understand the advantages and limitations of HDI in making comparisons of living standards between countries. Students should know the three components of HDI and should to be able to interpret HDI data. A definition of Purchasing Power Parities (PPPs) is helpful.
Interpret and use other 
measures of development. For 
 the percentage of adult male labour in agriculture
 combined primary and secondary school enrolment figures
 access to clean water; energy consumption per capita
 access to mobile phones per thousand of the population.
Understand that national income can be shown as a circular flow. Students might find it helpful to draw a simple diagram of the circular flow of income.
Income and Wealth
Understand the likely correlation between income and wealth.Wealth may be considered as a stock concept, while income is a flow.
Analyse the impact of injections and withdrawals on the circular flow. For example, an increase in investment may increase the spending in an economy as well as productive capacity.
Understand the factors influencing the components of AD.Students should understand the relative importance of these components, for example consumption comprises approximately 65 per cent of AD.
Understand the main influences on consumer spending, for example: interest rates; consumer confidence; wealth effects. Understand how changes in house prices may affect consumer spending.Recognition of the importance of consumption as a component of AD should be used as an evaluative tool.
Understand the main influences on investment, for example: interest rates; confidence levels; risk; the influence of government and regulations.
Understand the main influences on government spending, for example the deliberate manipulation of the economy through fiscal policy.Students should understand that the budget does not have to balance in the short run, and be able to assess the impact of an imbalance on the flow of income.
Exports - Imports
Understand the impact on the current account of factors including:
 a change in the exchange rate
 changes in the state of the world economy
 non-price factors.
Evaluation of these influences is required, for example:
 the change in the exchange rate might have opposite effects in the short and long run
 a stronger currency makes exports relatively uncompetitive and imports relatively cheap. This decreases AD as value of X falls and value of M rises.
 the price elasticity of demand for exports and imports may be very low meaning the stronger currency worsens the current account in the short run.
Movements and Shifts of the AD curve
Understand why AD slopes downwards. Show the relevant shifts in the AD curve when one of the components change. Students should distinguish between levels of the components and the changes in components. For example, falls in the rate of investment may mean that AD rises more slowly.
Understand the factors influencing the amount that firms are willing to supply at various prices, for example the costs of production, the level of investment, availability of factors of production. Students should be able to illustrate spare capacity in an economy.
Explain factors that might cause a shift in AS. Factors might include: changing costs of raw materials; a change in the level of international trade or exchange rates; technological advances; relative productivity changes; education and skills changes; regulation changes.Students should be able to show the relevant shifts in the AS curve.
Understand the concept of equilibrium real national output.The ability to apply the AD/AS model to real-world situations will be expected.
Explain the size of the multiplier, using the concept of the marginal propensity to consume; apply the multiplier to shifts in AD.Students should be able to explain the impact on the economy of the multiplier. Evaluation points include the difficulty of measuring it; the time it takes to come into full effect and size of leakages.
Identify trends in growth rate; sustainable growth; understand output gaps in developed economies.Changes in the level of GDP should be distinguished from changes in the rate of growth of GDP, for example, the level of GDP still rises when an economy grows at a slower rate, as long as growth is positive.
Explain the significance of factors such as investment or innovation; constraints may be in terms of absence of capital markets or instability of government.Students should consider some of the following, for example:
 impact of migration
 impact of changes in birth rates
 export-led growth. 
Students should understand changes in injections and leakages affect changes in the flow of income.
Benefits of Growth
Understand the benefits of growth to citizens of increased standards of living, to firms (increased profits) and to government (for example, increasing tax revenues).Students may consider whether an increase in income necessarily
Costs of Growth
Understand the adverse consequences of growth for the environment; Balance of Payment problems; income distribution and the opportunity cost of growth.Evaluation might consider whether the benefits or costs are greater, the difficulties of measurement and the changes over time.
Identify, outline and evaluate the major current macroeconomic objectives.Objectives may include increased economic growth; control of inflation; a reduction in unemployment; restoration of equilibrium in the Balance of Payments; making the distribution of income more equal; and protection of the environment.
Consider basic conflicts between objectives, such as inflation and unemployment; or economic growth and sustainability.Possible trade offs include those between inflation and unemployment; growth and sustainability; inflation and equilibrium on the current account of the Balance of Payments.
Understand the practical application of monetary and fiscal policy, for example inflation targeting; the role of the Bank of England’s Monetary Policy Committee; the impact of budget deficits on aggregate demand. A diagrammatic treatment is required, using AD/AS analysis. Students require knowledge of how the Bank of England’s Monetary Policy Committee in the UK operates; the factors it takes into consideration when making its decisions; the problems in determining the magnitude of the effects of these policies.
Identify measures that are used to increase the productivity of factors, such as education and training; measures to increase incentives, such as changing the levels of benefits; cutting the costs of bureaucracy in firms. A diagrammatic treatment is required, using AD/AS analysis. The difficulty in operating supply-side policies without an impact on aggregate demand is a useful tool for evaluation. Students need to know the problems in determining the magnitude of the effects of these policies.
Understand that the use of one macroeconomic policy can outweigh the impact of another, for example:
 conflicts between fiscal and supply-side policies
 the impact of fiscal policy which might have inflationary effects in the short run but may be deflationary in the long run
 use of fiscal policy to incorporate environmental goals, for example using ‘green taxes’
 impact of a change in interest rates on the distribution of income.
Evaluation in this section might include the difficulty in measuring the conflicts in the short and long term, or the importance of the prioritisation of policies.
Students may consider whether policy instruments may affect other variables in the economy, and consider the consequences for aggregate demand and supply, for example:
 the interest rate may influence the exchange rate and impact upon competitiveness
 the level of government spending might affect the amount of money in the economy which may influence the interest rate.
Unit 3
Objectives may include:
 profit maximisation
 revenue maximisation
 sales maximisation
 behavioural theories, for example, satisficing.
Students should be able to distinguish between forward, vertical and conglomerate integration, and know the reasons for such mergers/takeovers. Students will need to know why some firms tend to remain small and others grow. Students should also understand the reasons for demergers. 
Illustrate and perform simple calculations using total revenue, average revenue and marginal revenue. Students will need to be able to draw and interpret revenue curves and to understand the relationships between total revenue, price elasticity of demand and marginal revenue.
Illustrate and perform simple calculations using total cost; total fixed cost; total variable cost; average total cost; average fixed cost; average variable cost and marginal cost. Students will need to be able to draw and interpret cost curves; distinguish between short run and long run costs; and explain the shape of the average cost curve in terms of diminishing marginal returns and economies of scale.
Identify economies and diseconomies of scale. Students must be able to distinguish and give examples of internal and external economies and diseconomies of scale.
Understand and distinguish between productive and allocative efficiency. Students will be required to know that the minimum point on the average total cost is the most productively efficient point and that allocative efficiency occurs where price is equal to marginal cost. Students should also understand the meaning of inefficiency eg, x-inefficiency.
Understand the distinction between normal and supernormal profit. This can be related to the understanding of the objectives of the firm and the ability of different firms to make normal and supernormal profit.
Explain and illustrate the concept of profit maximisation using marginal cost and marginal revenue.
Barriers to Market Entry and Exit
Understand the meaning and types of barriers to entry and exit and how they affect the behaviour of firms. Examples of barriers to include economies of scale; limit pricing; legal barriers, for example patents; sunk costs, for example advertising. Students will be expected to discuss the significance of barriers to entry and exit to firms operating in different market structures.
Understand market concentration ratios and be able to interpret the meaning and significance for business behaviour.
Understand the assumptions of perfect competition and be able to explain the behaviour of firms in this market structure. Diagrammatic analysis of the market structure is required in both the short and long run. Students will be expected to understand the significance of firms as price-takers in perfectly competitive markets. An understanding of the meaning of shut-down point is required. The impact of entry into and exit from the industry should be considered.
Understand the characteristics of this model and be able to use them to explain the behaviour of firms in this market structure. Diagrammatic analysis of the market structure is required. Students must be able to explain the sources of monopoly power such as the degree of product differentiation and entry barriers. Explain and evaluate the differences in efficiency between perfect competition and monopoly. A diagrammatic explanation to compare the two market structures is expected. Explain and evaluate the potential costs and benefits of monopoly to both firms and consumers, including the conditions necessary for price discrimination to take place. Diagrams should also be used to support the understanding of price discrimination.
Explain and evaluate the characteristics and necessary conditions for a monopsony to operate. Evaluate the potential costs and benefits of a monopsony to both firms and consumers. Students should be aware of the significance of monopsony power for businesses operating in a particular market for example, the impact of supermarket monopsony power on suppliers.
Understand the characteristics of this market structure with particular reference to the interdependence of firms. Be able to explain the behaviour of firms in this market structure. Students should be able to explain that oligopolistic markets have high concentration ratios, in which a firm’s decisions on price, output and other competitive activities may have immediate effects upon other competitors. Explain the reasons for collusive and non-collusive behaviour. Evaluate the reasons why firms may wish to pursue both overt and tacit collusion. Use simple game theory to illustrate the interdependence that exists in oligopolistic markets.
Understand the characteristics of a monopolistically competitive market and be able to use these to explain the behaviour of firms in this market structure. Students should be able to carry out diagrammatic analysis of the market structure in both the short and long run. Students should understand the importance of advertising and differentiation for the model of monopolistic competition and be able to contrast this with other market structures. Students should be able to explain and evaluate the efficiency of monopolistic competition.
Define contestability and understand how the threat of new entry may influence behaviour and market performance of existing firms.Students should be able to understand the relationship between sunk costs and the degree of contestability — examples may include banking, airline industry and petrol retailing.
Explain and evaluate measures aimed at enhancing competition between firms and their impact on prices, output and market structure. Students should be able to explain why governments may intervene to encourage competition, or prevent monopolies and mergers. Compare and evaluate the strengths and weaknesses of methods of regulation for example price capping, monitoring of prices and performance targets. Students will need to be aware of various types of private sector involvement in public sector organisations, including contracting out, competitive tendering and public private partnerships (PPP/PFI).
Unit 4
Identify factors contributing to globalisation. For example: trade liberalisation; reduced cost of communications; increased significance of transnational companies.
Identify the benefits and costs of globalisation. Students should consider the issue of sustainability and environmental degradation as part of the costs of trading.
Patterns of Trade 
Identify patterns of trade between developed and developing countries. Students should be aware of changes in trade flows between countries and the reasons for them, for example the potential impact of China and India on world trade patterns and the possible reaction of developed economies.
Specialisation and Comparative Advantage
Understand the benefits and costs of specialisation and trade; the law of comparative advantage. Students should understand the distinction between absolute and comparative advantage. The significance of opportunity cost should be emphasised. Comparative advantage may be illustrated numerically and diagrammatically.
Understand the role of the World Trade Organization (WTO) in trade liberalisation; trading blocs. The distinction between different types of trading blocs should be understood. Possible conflicts between trading blocs and the WTO should be considered.
Identify potential restrictions on free trade: reasons and types for example, tariffs, quotas, non-tariff barriers, subsidies to domestic producers. Diagrammatic representation of tariffs is required (to include welfare changes and government revenue).
Identify potential effects of protectionist policies on resource allocation. Students should examine cases of protectionism currently in the news.
Understand the different components of the Balance of Payments. For example: the trade in goods and services current account as well as the accounts showing short- and long-term capital flows.
Understand the factors influencing the size of deficits and surpluses on different components of the Balance of Payments; significance of deficits and surpluses on the current account. Students should consider whether such current account surpluses and deficits matter and examine measures to reduce such imbalances. The significance of global imbalances should be examined. 
Understand factors influencing exchange rates. Students should consider the significance of relative interest rates; relative inflation rates; speculation.
Consider the impact of changes in exchange rates. For example the implications for competitiveness.
Understand benefits and costs of monetary unions. For example: the effects on the rate of inflation; unemployment; the Balance of Payments and economic growth. Students could focus on the eurozone. 
Consider measures of competitiveness. For example: relative unit labour costs and relative export prices. 
Consider factors influencing a country’s competitiveness. For example: exchange rate; productivity; wage and non-wage costs; regulation.
Examine government policy to increase international competitiveness. For example: measures to improve education and training; incentives for investment; deregulation. Students might examine case studies of particular industries to see how they compete for example: cars; textiles.
Consider absolute and relative poverty. An ability to understand/sketch a Lorenz curve diagram and Gini coefficients is required.
Identify measurements of inequality: the Lorenz curve; Gini coefficient. Students should consider the causes and consequences of inequality and poverty in developed and developing countries and related issues, for example the extent to which inequality is an essential ingredient of capitalism.
Consider factors such as: „ poor infrastructure „ human capital inadequacies „ primary product dependency „ savings gap; inadequate capital accumulation „ foreign currency gap „ capital flight „ corruption „ population issues „ debt „ poor governance; civil wars. Students will not be expected to know specific numerical information for countries. Students should be aware of the problems associated with declining terms of trade. Students would benefit from using case studies as a means of illustrating the constraints facing different economies and reasons for their different growth rates. For example, they could study one country from each of the following continents: Africa, Asia, South America, North America and Europe. Specific knowledge of individual countries will not be required.
Macroeconomic Policies
Evaluate the use of policies to achieve economic objectives including macroeconomic stability. For example, how fiscal policy is used to achieve budgetary objectives; the role of independent central banks to achieve inflation targets; the use of supply-side policies to achieve economic growth. Students should have an understanding of global factors influencing a country’s inflation rate; for example the impact of low wages in developing countries or the impact of a rise in commodity prices. The AD/AS model introduced in Unit 2 should be applied in analysing and evaluating these policies. The distinction between short and long run aggregate supply curves should be considered, as well as the factors influencing each. Students should be aware of the problems facing policy makers when applying policies, for example inaccurate information; risks and uncertainties.
Public Expenditure
Give reasons for the changing size and pattern of public expenditure in different countries. Examine how the state might tax revenues to improve human capital. Students should understand the significance of differences in tax structures; public expenditure and public finances between countries. For example, students might examine the significance of the differences of the size of the state sector between a developed economy such as the UK and a developing economy such as Malaysia.
Understand taxation: direct and indirect; progressive, proportional and regressive taxes. Understand how governments might use public expenditure and taxation to reduce poverty. Students should understand the possible link between changes in tax rates and tax revenues.
Public Sector Borrowing and Public Sector Debt
Understand the significance of the size of public sector borrowing and debt. Students should understand the significance of differences in the state of public finances between countries, for example with respect to attractiveness to foreign direct investment and incentives.
Consider factors such as: „ aid „ debt relief „ development of human capital „ inward looking/outward looking strategies „ free market/government intervention approaches „ industrialisation; development of tourism; agriculture „ micro-finance „ fair trade schemes „ role of international financial institutions and non-government organisations in promoting growth and development. Students should investigate the benefits and disadvantages associated with each of the listed strategies. In addition, the strategy should be considered in relation to some theoretical framework, for example market orientated approaches; structural change theories; international dependence theories. With reference to a particular economy, students might consider which theory might be most appropriate. Students could examine the use of micro-finance and fair trade schemes as they affect particular countries. The functions of some of the key institutions should be considered and evaluated.

Edexcel Economics Past Papers
Date  Unit 1  Unit 2  Unit 3  Unit 4 
June 2014
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June 2013  Paper Mark Scheme
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June 2012  Paper Mark Scheme  Paper Mark Scheme
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January 2012  Paper Mark Scheme
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June 2011  Paper | Mark Scheme
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January 2011  Paper Mark Scheme Paper Mark Scheme  Paper Mark Scheme N/A
June 2010  Paper Mark Scheme Paper Mark Scheme  Paper Mark Scheme  Paper Mark Scheme 
January 2010  Paper Mark Scheme N/A
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June 2009  Paper Mark Scheme
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Main Textbooks
Edexcel AS Economics - Peter Smith (Yr 12 Book)
Edexcel A2 Economics - Peter Smith (Yr 13 Book)
A-Level Economics for Edexcel - Alain Anderton

Revision Guides
Edexcel AS Economics Student Unit Guide: Unit 1 Competitive Markets - How They Work and Why They Fail (Mark Gavin)
Edexcel AS Economics Student Unit Guide: Unit 2 Managing the Economy (Rachel Cole)
Edexcel A2 Economics Student Unit Guide: Unit 3 Business Economics and Economic Efficiency (Marwan Mikdadi and Rachel Cole)
Edexcel A2 Economics Student Unit Guide: Unit 4 The Global Economy (Quentin Brewer)

Page last updated on 02/07/15