Marking Scheme for Economics Essays

7/28/2019 Marking Scheme for Economics Essays

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Marking Scheme for Economics Essays

Level 1

Knowledge/Recognise(Description)

Candidates merelyo Identify the key theory without explanation

o Outline give a list of relevant factors with no

explanation.

1-5

(20%)

Answer is mostly irrelevant and contains only a few valid points made incidentally in an irrelevant context.

6-9

(36%)

Some relevant knowledge demonstrated but poor grasp of question with basic theoretical mistakes, or inadequatedevelopment of analysis.

Level 2

Consolidate(Add some detail + some application)

Candidate cano Explain what happens, descriptive

o Clarify give examples without explanation

10-11

(44%)

Some evidence of an ability to identify facts, some ability at diagrams.An accurate but underdeveloped explanation of the facts relating to the question together with an explanation of

the theory.Evidence of some ability to discriminate, form elementary judgements and apply known laws / principles to newsituations. But no clear logical presentation.

12-14

(56%)

Has a more thorough relevance to the question but where the theory is incompletely explained.

Level 3

Elaborate(Extend to include analysis)

Candidate cano Analyse use relevant theory to aid

explanationo Apply place explanation in context of

question

15-17

(68%)

Good grasp of facts and theory and ability to apply them accurately to question (i.e. relates to the context of the

question) even when presented in a novel way.Able to provide a 2-sided analysis eg. for and against.Able to examine the implications of the question.Attempts to distinguish between facts and value judgements.Gives clear statements, supported by reasonedarguments. Some attempt at a conclusion to the question.Presents a reasoned structure to the whole answer.

19-21

(84%)

Thorough knowledge of the facts and theory with an excellent ability to describe and explain this in aprecise,logical and reasoned manner.Shows ability to query assumptions.Provides new illustrations and examplesrelevant to the material discussed as additional evidence ofunderstanding the question.

Evaluation (16%)

+ E1 1-2 Mainly unexplained judgement

+ E2 3-4 Judgement based on analysis

Note: This marking scheme is only a guide.Can a candidate score full marks in an essay question?Yes. Examiners do award 100%. Full marks are awarded when the candidate provides clear analysis, rich illustration and a good attempt atconsidered evaluation. Giventhe time constraint and the experience and age of the candidate, the answer that could not be improved much more.


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SKILLS FOR ESSAY WRITING (H2 and H1)The mastery of essay writing skills is crucial because the essay section takes up 30% and 60% of the total marks in the H1 and H2examination respectively.

(1)Thinking Skills

Before you can do any writing, you must do some thorough thinking and your essays should represent a presentation of that thinking.Lower Order Skills

Level1

Knowledge Knowledge of concepts, principles and theoriesKnowledge of the Singapore economyAcquaintance with major institutions MAS, WTO, IMF, Federal Reserve, Bank of England etc.

Level2

Comprehension Ability to explain economic concepts and principles of a familiar/routine nature.

Higher Order Skills

Level

3

Application Ability toselect and apply economic concepts and principles to questions presented in a novel or unfamiliar mannerexplain contemporary events (including those in the Singapore and the regional contexts) by applying a relevanttheoretical economic analytical framework.explain by giving concrete examples, comparisons or analogies.

Analysis /Synthesis

Ability todistinguish between positive and normative issues, statements of facts, value judgement and hypotheticalstatements.break down information into its integral parts, identify the relationship of each part within a structure andreorganise them into a new entity, using economic analysis.draw out the implications / effects of some assertion.develop reasoning logically.

Evaluation Ability torecognize underlying /implicit assumptions.make independent judgement of the validity and quality of information. (e.g. identify logical fallacies in arguments,question underlying assumptions.)discriminate between alternative explanations.assess merits & demerits in the light of some criteria.weigh up the available evidence to reach a conclusion consistent with the information given.weigh the arguments for and against to reach a reasoned conclusion.


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(2) Writing SkillsIn particular, presentation and expression.

How do you know which particular thinking skills are being tested in the essay question?

THINKING SKILLS AND PROCESS (COMMAND) WORDS

Thinking skill Process words Examples of Questions

Knowledge OutlineWhatIdentifyDefine

Outline the features of a market economy.

Identify the factors that influence the market demand for a product.

What may cause changes in the demand schedule for a good?

Comprehension HowExplainWhy

Account forIllustrate

How are resources allocated in a market economy?

Explain the concepts of price, income and cross elasticity of demand.

Why do oligopolists engage in non-price competition?

Account forthe shape of a firms cost curve.

Illustrate the working of the price mechanism.

Note: some questions may use the above process words but also test higher order skills such as application and analysisEg.Why do some countries face difficulties in attracting investment?Account for the increase in the price of oil.

Higher order skillsApplication Explain how an understanding of the concept of own-price and cross-price elasticity can aid a car

manufacturerin makingprice and output decisions.

Using demand and supply analysis, how would you explain the fact that, in the last 10 years, air travel hasbecome apopularmode of transport for people travelling between countries?


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Analysis /Synthesis

DistinguishDifferentiateCompareExamineAnalyse

Distinguish between the concepts of price, income and cross elasticities of demand.

Differentiate between the key features of the economic models of perfect competition and monopoly.

Compare the likely effects of an increase in personal income tax with an increase in general consumption tax onthe economy.

Examine the reasons for the fall in price of residential property in recent years.

Analyse the consequences of implementing rent control.

Evaluation To what extentDiscussDo you agreeCommentConsiderAnalyse the extentto which AssessCriticise

Critically discussDo or Does....EvaluateHow usefulHow farShouldWhat in yourview..Is it justifiable

To what extent does the price mechanism ensure efficient allocation of resources?

Discuss whether raising government expenditure is the best way to achieve a sustained increase in nationalincome in Singapore.

Do you agreethat in the market place the consumer is king?

For the past four years, the prices of automobiles have been rising, and each year, people have purchasedmore automobiles. Prices and quantity are directly related, and the economists law of demand is

incorrect.Comment.

Considerwhether economic growth should be the top priority goal of a government.

Assess the relevance of the concepts of price, income and cross elasticities of demand to the sales manager ofan international airline.

Evaluate the extent to which a cut in interest rates will spur economic growth.

Imagine you are a researcher who has to produce an annual report on the economic performance of yourcountry. How useful would national income statistics be of use to you in writing your report?

How fardo you support the argument that having large firms will benefit consumers?

Should the government introduce minimum wages to reduce the income gap in Singapore?

What, in your view, is the likely future trend for oil prices?

Is it justifiable for a developing country to practise protectionism?


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AN APPROACH TO WRITING ECONOMICS ESSAYS

Steps

1)Dissect the question

(to establish therequirements of thequestion)

Read the question carefullyUnderline key (content) words.This will help you to identify the relevant contentto focus on. Note the concepts introduced or suggested bythe question (they will have to be explained).Circle or impute process (command) words.They tell you the thinking skills that you must show. Refer to appendix for the explanation of what you arerequired to do when you come across them.Rephrase the question but do not change it to suit what you have memorized.Build smaller part questions and identify sub-topics that will determine the approach you would take. [Theapproach you take will serve as a guide to your plan in step 2.]

Be alert to the stimulus if one is given (eg. country context, time frame, key issues described)Be alert to linkages between the part questions. For questions with parts (a) and (b), consider part (b)before attempting (a).Ask yourselfAre there any unstated assumptions?

2)Plan your answer* i) Brainstorm the pointsJot down points that come to mind (concepts, examples, diagrams) initially disregarding their degree ofimportance and relevance. With practice, you will become more adept at listing relevant ideas.

ii) Draw up your plan/outlineMake reference to the approach you decided on in step 1

Ideas should be organised/sequenced in such a way thata)there is a structure to the essay that meets the requirements spelled out in the process words of thequestionb)there is a theoretical economic framework to your answer.c)they serve to develop the central idea of your essay.d)your essay should flow and not read like stand-alone paragraphs


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*Planning is a 2-part process. After you have brained-stormed the points, you need to think about the order of the points and their

interrelationships.

Steps

3)Write the essay

(The essay shouldcontainAn introductionDevelopmentalparagraphs

A conclusion)

INTRODUCTION *Be brief. This usually containsa summary of 1) your approach or 2) the method of analysis you wish to write in your essay.Clarification of the key words which will affect the scope of the essay.Highlighting the key issues and underlying conditions of the context if given a stimulus.Before you start writing, make sure you know where your essay is going i.e. have an idea how you intend to conclude.

Do not

Give a list of definitions of the key economic terms.Give your judgement (evaluation) in the introduction. That is, dont use conclusions as introductions.

BODYThis is the main part of the essay and each paragraph should contain only ONE idea. This idea should be succinctly conveyed inthetopic sentence and the rest of the paragraph serves to build around the topic sentence.

Examples are important because they illustrate your ability to apply concepts and theories. They also serve to substantiate yourexplanation.

Use relevant and properly-labelled diagrams to help explain concepts and principles. Makereference to the diagrams in yourdiscussion. Otherwise, however nicely drawn the diagrams are, they remain as white elephants. Examiners love to seediagrams where applicable because they are either correctly or incorrectly drawn and students cannot be vague about it or try to

bluff their way through. Draw only diagrams which illustrate analysis. Diagrams on which nothing is moving or being comparedare usually useless.

Use signal words to link sentences and paragraphs. Examples of signal words are: hence, however, otherwise, in contrast,nevertheless, for instance, in conclusion, etc. If these words are used appropriately, they will help in the flow of the essa y. On theother hand, if these words are used indiscriminately, the opposite is also true. For example, students are often seen using the word"hence" at the start of a new paragraph. Why is this inappropriate?


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Avoid enumerating points as firstly, secondly, thirdly that is poor style of writing unless you are looking at a set of relatedpoints pertaining to a certain idea.

Avoid repetition. It doesnt look good because it gives the examiner the impression that you have nothing much to write and youare desperate!

CONCLUSIONDepending on the nature of the question, this will contain 1) a summary of main ideas and 2) a judgement based on a synthesis ofthe individual ideas represented in the body of your essay and/or 3) recommendations based on the analysis in the body.

Emphasize to students that 2) and 3) are more important than 1). Unless 1) leads on to 2) and/or 3), 1) alone will not gain marks.

* For structured questions, you probably do not need to write an introduction and conclusion for part (a). However, an introduction will berequired for part (b) and this should show the links between parts (a) and (b).


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GENERAL POINTS TO NOTE

Stick to the point.

Be precise.Definitions of concepts must be accurately given. Theories must be correctly explained and diagrams accurately drawn and labelled.

Be concise and SELECTIVE.Dont regurgitate everything from the lecture notes. An essays average length is only about 4 pages, diagrams inclusive.

Pay attention to the mark allocation to help you determine the time taken for each question or part question. You must exercise self-discipline and make sure you do not spend more than 45 minutes for one question.

As a general rule, you should attempt to bring higher order thinking into every question attempted.

E.g. describe the factors that influence the market demand for a product such as personal computers.

A good answer will do more than merely list and describe the factors. It would prioritise the relevant factors and justify that prioritisation.

Essays should not be 1-sided, if it is a discussion based questions, you should attempt to adopt the TAS framework (thesis, anti-thesis, synthesis). Refer to example on pg.12-14

Refrain from non-substantiated assertions.

Expression and handwriting counts. Avoid unacceptable shorthand (e.g. govt., u). If a common shorthand is used (e.g. MC, MR), it has to be spelled out at the start e.g.marginal cost (MC), marginal revenue (MR).

Simple language, good grammar, spelling and punctuation will enhance the quality of your essays. Legible handwriting ensures all ideas are communicated clearly.

Dont be too concerned about whether your answer matches the model answer of the examiner. There is no model answer! It is more important for your answer to displayevidence that

the question has been understood.

relevant economic concepts, principles and theories have been selected and applied to the situations / problems posed by the questions.

your presentation is coherent and organised.you have reached meaningful, plausible conclusions by a process of logical reasoning from acceptable assumptions.

you have demonstrated your ability to think like an economist.


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Marking Scheme for Economics Essays

Level 1

Knowledge/Recognise

(Description)

Candidates merelyoIdentify the key theory without

explanationoOutline give a list of relevant factors with

no explanation.

1-5

(20%)

Answer is mostly irrelevant and contains only a few valid points made incidentally in an irrelevantcontext.

6-9

(36%)

Some relevant knowledge demonstrated but poor grasp of question with basic theoretical mistakes,or inadequate development of analysis.

Level 2

Consolidate(Add some detail + some application)

Candidate canoExplain what happens, descriptive

oClarify give examples without

explanation

10-11

(44%)

Some evidence of an ability to identify facts, some ability at diagrams.An accurate but underdeveloped explanation of the facts relating to the question together with anexplanation of the theory.Evidence of some ability to discriminate, form elementary judgements and apply known laws /principles to new situations. But no clear logical presentation.

12-14

(56%)

Has a more thorough relevance to the question but where the theory is incompletely explained.

Level 3

Elaborate(Extend to include analysis)

Candidate can

oAnalyse use relevant theory to aid

explanationoApply place explanation in context of

question

15-17

(68%)

Good grasp of facts and theory and ability to apply them accurately to question (i.e. relates to thecontext of the question) even when presented in a novel way.Able to provide a 2-sided analysis eg. for and against.Able to examine the implications of the question.Attempts to distinguish between facts and value judgements.Gives clear statements, supported by reasonedarguments. Some attempt at a conclusion to the question.

Presents a reasoned structure to the whole answer.

19-21

(84%)

Thorough knowledge of the facts and theory with an excellent ability to describe and explain this inaprecise, logical and reasoned manner.Shows ability to query assumptions.Provides new illustrations and examplesrelevant to the material discussed as additional evidence


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of understanding the question.

Evaluation (16%)

+ E1 1-2 Mainly unexplained judgement

+ E2 3-4 Judgement based on analysis

Note: This marking scheme is only a guide.Can a candidate score full marks in an essay question?Yes. Examiners do award 100%. Full marks are awarded when the candidate provides clear analysis, rich illustration and a good attempt atconsidered evaluation. Giventhe time constraint and the experience and age of the candidate, the answer that could not be improved much more.

EXAMPLE 1

a)Explain how prices of goods and services are determined in a free market. [8m]b)Over the last few years, the sale of mobile phones to teenagers in Singapore has risen dramatically. Discuss the possible causesbehind this trend. [17m]

Step 1: Dissect the questionThe contentwords are

a)demand and supply analysis, free market, price of goods and services determinationb)last few years, sales, mobile phones, teens, risen, causes

The topic is on price and output determination in a free and competitive market.

Theprocess words are

a)explain

b)discuss You are required to analyse the different possible causes and evaluate their relative importance.

Smaller part-questions and sub-topics -

For part b)Does a rise or fall in demand cause a rise in the equilibrium quantity?What are the relevant demand factors? Which of these factor(s) is/are more important?Does a rise of fall in supply cause a rise in the equilibrium quantity?What are the relevant supply factors? Which of these factor(s) is/are more important?

Are demand or supply factors more important?

Rephrase the question


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a)How is the price of a product determined by demand and supply in a market where there is no government intervention?b)Consider which demand and supply factors can account for the recent rise in mobile phone ownership by Singaporean teenagers and consider which is/are the moreimportant factors.

Step 2: Plan your answeri) BrainstormingList down points that come to mind

-Fall in price

-Fashion-Promotions by Singtel, M1, Starhub-New features / better technology (MMS, 3G, 3.5G, MP3, cameras, wi-fi etc)-More brands-Teens are getting bigger allowances-Rising supply-Rising demand

ii) Draw up your plan / outline(1)Schematic Plana)

Assumption: Free, competitive market

Demand

Supply

Price determination


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b)

Theoretical analysis

Demand Factors

Supply Factors

Evaluation

Which factor(s) is/are more important?

Application to contextwith illustrations

(2) Linear Plana)

Context = free market. Explain what this means.

Explain how demand and supply determine price.


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Highlight how surpluses and shortages exert pressure on the market price to move price towards the equilibrium level.

Illustrate how either a change in demand or supply affects the market price.b)

Context = mobile phone market, Singapore, teenagers.

Question is about a rise in quantity sold.

Applying economic analysis, this can be explained by a rise in either demand and or supply

Explain demand factors with illustrations relevant to context.

1)improvement in the product2)rise in allowances or income3)fall in price of complements like mobile phone service4)improvement in quality of the complements5)change in taste fashion

Explain supply factors with illustration relevant to the context.

- Fall in Marginal Cost. Give reasons.Evaluate the importance of the factors given the context (teenagers).A detailed essay outline

a)

Question assumes a free market.

Price is determined by demand and supplyPrice will settle at the equilibrium level.- Define equilibrium price.- If price is at a disequilibrium level, it will move towards the equilibrium level.- Explain how equilibrium is attained by explaining the adjustment process from adisequilibrium state.

Once equilibrium is attained, price will not change unless demand and or supply changes. Give an illustration. E.g. Consider the case where a

rise in DD shortage rise in price.This is in contrast to a command economy where the price is fixed by the government and the price remains at the same level despiteshortages.

b)

Intro:Observation the quantitysold to teenagers has increased.Basis of observation - rise in DD or/and SS.

Body:

Using DD and SS analysis, a rise in the quantity sold can be due to a rise in demand.Reasons for rightward shift in the demand curve


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1) Improvement in the product (e.g. Camera, Music Player, Video Player, 3.5G)(This affects 6).2) Rise in household income (mobile phones as normal goods)

An important factor as demand is effective demand i.e. must be backed by purchasing power. Teenagers may desire mobile phones but whether they actually buy them woulddepend on their purchasing power. Singapore has been enjoying economic growth in most years recently.

3) Change in price of related goods

-Fall in price of complements

E.g. mobile phone services (due to increased competition from new service providers in the Singapore market due to the governmentliberalization of the market)

An important factor as this is a big % of the overall cost of owning and using a mobile phone.4)Change in population structure more teenagers? But Spore has an ageing population due to falling birth rate.5)Change in quality of complements improvement in 3.5G, Wi-Fi services6)change in taste and trends (e.g. mobile phones as fashion, WiFi & Music Player & Dual Camera fad, keeping up with trend with frequentupgrades etc)

The rise in quantity sold could also be due to a rise in supply.Reasons for rightward shift in the supply curve

- Fall in production costsDue to- advancement in technology- production shift to LDCs to take advantage of lower costs

Quite likely, both demand and supply have increased in recent years. The rise in quantity sold is explained by both a rise in demand andsupply. When supply rise by more than demand, there will be a fall in price together with a rise in quantity sold. Illustrate with diagram.

Conclusion:Given that teenagers generally have limited allowances, the fall in pricewould have been a major factor explainingwhy sales of mobile phonesto teenagers have been rising dramatically. The fall in price is due to the rise in supply. Thus, supply factors are particularly important inexplaining the rise in sale of mobile phones to teenagers. But non-price DD factors, especially the fall in price of complements and increases inhousehold income, also played a part.


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EXAMPLE 2

The demand for goods and services is often influenced by advertising or involves choices based on impulse. This means that the

economic theory of demand is irrelevant.Discuss whether you agree with this argument. [15]

Step 1: Dissect the question

The contentwords are

demand for goods and services, advertising, economic theory of demand, influenced by, involves choices based on impulse

The topic is on theory of demand

Theprocess word is

Discuss you are required to examine the situation and provide a 2-sided analysis


What is the theory of demand?How does advertising affect demand or affect choices?What other factors affect demand? Which of these factor(s) is/are more important?Is the theory of demand irrelevant?Or is the theory of demand still relevant?Do I agree or do I disagree? What is my stand?


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Consider if economic theory of demand is not relevant in determining the demand for goods and services or if economic theory of demand isrelevant in determining the demand for goods and services. Discuss.

Step 2: Plan your answer

i) Brainstorming

List down points that come to mind-Definition of demand, effective demand-Law of demand-Price factor vs non-price factors-Movement along dd curve vs shift in demand curve-Factors affecting demand-Eg. income level, prices and availability of related goods, expectations of price and income changes, taste, preference, fashion,-Taste, preference, fashion-Advertising

ii) Draw up your plan / outline(1)Schematic Plan

Effective Demand

Willingness

Ability

Law of demand

Factors affecting quantity demanded

Factors affecting demand

Thesis

Anti-Thesis

Synthesis / Evaluation

Conclusion

(2) Linear Plan


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Define effective demand

State the law of demand

Distinguish between price and non-price factors

Explain how the various factors may affect demandThesis:

Discuss how advertising and choices by impulse affects demand

Explain that for certain goods and services, taste and preferences pay an important role in influencing demand eg. fashion, clothes, shoes, slimming, beauty products

Explain that advertising affects the elasticity of demandAnti-thesis

Explain how effective demand depends also on ability to pay

Explain that other factors also play an equally important role in affecting demand

Explain that demand for certain goods and services must be backed by ability to pay

Synthesis

advertising and choices by impulse affects demand for goods and services to a certain extent (probably more for certain types of goods and services), law of demand still holdtrue and relevant especially when effective demand must be backed by the ability to pay.

Conclusion

A detailed essay outline

Define effective demand

Demand is the willingness and ability to purchase a good. Demand is not just a desire for the good, for demand to be effective, it must be backed by purchasing power.State the law of demandthere is an inverse (or negative) relationship between price and quantity demanded

Distinguish between price and non-price factorschange in the price of the good and service itself results in a change in quantity demanded and is reflected by a movement along the demand curvechange in other factors, other than the price of good and service itself results in a change in demand and is reflected by a s hift of the demand curve

List the various factors which may affect demandPriceLevel and distribution of incomePrices and availability of related goodsChanges in population and population structureExpectations of future prices and income levelLevel of technologyQuality of products

Change in taste and preferencesThesis:

Discuss how advertising and choices by impulse affects willingness to buyExplain how advertising and impulse affects taste and preferences and increase demandExplain that for certain goods and services, taste and preferences pay an important role in influencing demand eg. fashion, clothes, shoes, slimming, beauty products

Explain that advertising affects the elasticity of demand, making the good or service less substitutable by othersAnti-thesis

Explain how effective demand depends also on ability to pay


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Explain that other factors also play an equally important role in affecting demand eg. price of good, income level, prices and availability of related goods

Explain that the law of demand and theory of demand still hold in affecting demand for goods and services

Explain that demand for certain goods and services must be backed by ability to pay eg. sports cars, private residential, jewellerySynthesis

advertising and choices by impulse affects demand for goods and services to a certain extent (probably more for certain types of goods and services). However, the theory ofdemand still hold true and stays relevant especially when effective demand must be backed by the ability to pay.

Conclusion

Class discussion

Identify the level 2, level 3 and evaluative skills displayed in the essay outline above.

Written essay assignmentFor the question below:(i)work out the schematic plan& linear plan;(ii)identify where level 2 & 3and evaluative skills will beused;

(iii)

write the essay.

a) Distinguish between price elasticityof demand and cross elasticity ofdemand.

[10]

b) Carrefour recently launched a sale on various items instore. Using the above concepts, analyse how this strategymay affect Carrefours revenue. [15]

||Appendix

Check list in evaluating an economics essay

No Question Yes No NA

1. Has the candidate understood the question?

2. Has he brought in irrelevant ideas?

3. Has the candidate met the thinking requirement(s) of the question?


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4. Are the candidates points clearlyexplained?

5. Has the candidate applied relevant economic concepts and theories in answering the question?

6. Has the candidate made any conceptual mistakes?

7. Are the points raised generic or contextual?

8. For a question which is based on the Singapore economy, has the candidate shown good knowledge of the Singaporecontext?

Are his policy recommendations relevant to the Singapore context?

9. Has the candidate made use of relevant diagrams which show analysis of the issue at hand in his explanation?

10. Has the candidate provided examples to illustrate his point?

11. Has the candidate analysed the issue at hand from a variety of perspectives? E.g. Short-term vs long-term, consumer vsfirm, internal vs external, demand-side vs supply-side, Classical vs Keynesian.

12. Has the candidate considered both the pros and cons of the issue at hand?

13. Has he written an introduction? Does it serve its purpose?

14.Are the points well structured and / or sequenced?

15. Does the essay flow? E.g. shows good development

16. Is the candidate able to arrive at a well-reasonedconclusion?


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Teachers guide

Class discussion of the example givena)

Level1

1-3

Some relevant knowledge but hasnt answeredthe question.

Merely able to define demand, supply, free market. Able topoint outthat price is determined by market forcesof demand and supply. No explanation.

Level2

4-5

Underdeveloped explanation of the theory. Includes market diagram and identifies equilibrium price as that where demand cuts supply. Showsawareness (e.g. by labelling the market diagram) that shortages put upward pressure while surpluses putsdownward pressure on price but no explanation.

Level3

6-7

Thorough explanation of the theory. Explains why price will move towards equilibrium if initially it were at a disequilibrium level.

8 Thorough and precise explanation and providesillustration as additional evidence ofunderstanding.

Gives example and explains how a change in demand or supply will affect price.

b)

Level1

1-3 Some valid points made incidentally. Able to identify demand and/or supply factors, not all of which are relevant to the context.

4-5 Exhibits relevant knowledge butinadequate development of analysis.

Considers rightward shift of demand and/ or supply but does not provide market analysis.Factors considered are largely generic.

Level2

6-10

Some ability at applying DD & SStheoretical framework. Butunderdeveloped explanation of the theory.

Able to link increase sales to increase in quantity sold in DD&SS analytical framework.I. e. provides market analysis.However, explanation supports either a rise in demand or supply but not both.Factors considered are largely relevant to the handphone market but inadequate explanation of the factors.

Level3

11-12

Thorough application and explanation ofthe theory.

Provides market analysis and considers both rise in demand and supply.Answer is well structured -breaks down factors according to demand and supply side.Adequate explanation of demand and supply factors. Applies relevant economic concepts in the explanation e.g.handphones as normal goods with positive income elasticity when considering income as a factor.

13-14

Above + thorough knowledge of theSingapore handphone market.

Above + considers factors which are relevant to the handphone market in Singapore.

Evaluation

+E1

1-2

Mainly unexplainedjudgement

Asserts that fall in price and rise in income are important factors.

+E2

3-4

Judgement basedon analysis

Justifies which particular demand factor(s) is (are) more important and/or more relevant based on the context and considerswhether demand or supply factors are more important. Justification is based on the context of the question focus


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on teenage customers.

Written essay assignment

Step 1: Dissect the questionThe contentwords are

a)Price and cross elasticity of demand.b)Carrefour, sale on various items, above concepts (Ep & Exy), Carrefours revenue.

The topic is on using elasticity concepts to evaluate the sale strategy that Carrefour adopts and how this s trategy affects their revenue.

Theprocess words are

a)DistinguishYou need to explain the differences between (same as differentiate)

b)AnalyseYou are required to find the main ideas and show how they are related and why they are important


For part b)What does it mean when there is a sale?What are the concepts that this question is referring to?How are these concepts related to revenue?


a)Differentiate between price and cross price elasticity of demand.b)Carrefour recently reduced prices of most of its items in store. How can the concept of price or cross price elasticity of demand be used to explain this motive to reduceprices? Relate this motive to the Carrefours revenue target.

Step 2: Plan your answeri) BrainstormingList down points that come to mind-sale

-Is Carrefour a big store?

-Nature of the goods on sale?-Complement or substitutes of Carrefour or Carrefours products


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ii) Draw up your plan / outline(1)Schematic Plan

a)

Price Elasticity

(i) Extent to which

Qd when price of

the good itselfs

(ii) Movement along

(iii) Range of value

(iv) Factors affectingelasticity

Difference 1

Difference 2

Difference 4Cross Elasticity

(i) Extent to which DD when price of

another good s


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(ii) Shift

(iii) Range of value

(iv) Factors affectingelasticity

Difference 3

b)

Ep > 1

Revenue

Ep < 1

Revenue

Exy > 0

Revenue

Exy < 0

Revenue

(1) Revenue effect on the item:

(2) Revenue effect on other items:Exy > 0

Revenue

Exy < 0


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Revenue

Carrefours Revenue:

IF reduce prices

Revenue ?

Revenue

Revenue

Revenue ?

(1) + (2):

Depends on the mix of items it carries & the extent of the sale

(2) Linear Plan

a)

Provide the definition and formula of the elasticity concepts.- Differentiates between the two concepts by pointing out that Ep concerns movement along DDx whereas Exy concerns at a shift in DDx dueto a change in the price of Y.

Make references to the possible range of the elasticity values.- Differentiate between the two concepts by pointing out the different meaning of the signsof the elasticity values.- Examples

Provide the factors influencing the values of the two elasticity concepts.- Highlight their differences.

b)Intro:

Observation 1 Carrefour is a large multi-product store.Interpretation of sale price reduction of items in Carrefour.

Observation 2 various items are on sale.

Body:


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Using price elasticity, explain how a cut in price may increase TR for products whose demand is price elastic and vice versa. (Note that mostof its products come with many close substitutes, perhaps except for those with very established brands (from heavy advertising))- Support with diagrams- Examples- Highlight that the above analysis applies under assumption of ceteris paribus. However, this assumption might not hold. E.g. rivalsupermarkets might counter with price cuts.

Using cross elasticity, explain how such a strategy may affect the TR for a multi-product firm.- The sales strategy will cause the revenue for some goods (substitutes) to fall and some (complements) to rise. (e.g. lowering the price ofGillettes shavers will cause the sales of Gillettes shaving blades to rise while lowering the sales of Nationals elec trical shavers.)

- Explain how the effects on TR arising from price elasticity analysis may ultimately depend on the TR analysis using cross elasticity.

Consider the special nature of the firm in question Carrefour is a mega-market, selling many different types of goods. If Carrefour cuts theprice of Gillette shavers, this might attract consumers to buy the shavers from Carrefour instead of another supermarket. Once at Carrefour, outof convenience, they will also buy the other items, which are not on sale in Carrefour but are in their shopping list. Hence demand for items likecheese, shampoo, etc, although technically unrelated to Gillette shavers, would see a rise in demand. Given the inverse relationship betweenprice of shavers and demand for cheese or shampoo, these complementary goods would have -ve cross price elasticity.

Conclusion:The overall outcome on TR would also depend on the combination of goods Carrefour has in store.

Mark schemea)Distinguish between price elasticity of demand and cross elasticity of demand. [10]

Level1

1-4 Some correct knowledge Give the definition and formula of the elasticity concepts.

Knowledge about whether the value is + or -.

Listing of factors.

Level

2

5-6 Underdeveloped explanation Explain the interpretation of the elasticity coefficients.

Underdeveloped explanation of the factors or gives examples with no explanation

Level3

7 -10

Differentiates between the two concepts.

Provides illustrations as additionalevidence of understanding.

Able to distinguish by examining the different ways in which the concepts are different instead ofmerely describing each concept without noting the differences.

Present a structured response.

Explains the factors with examples.


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b) Carrefour recently launched a sale on various items in store. Using the above concepts, analyse how this strategy may affect Carrefoursrevenue. [15]

Level

1

1-

3

Some correct knowledge Able to define TR.

Unexplained statements about how cuts in price will impact on the TR of goods with varying Ep andExy.E.g. States that a cut in price will increase TR for a good whose demand is price elastic but noexplanation.

Level2

4-7

Underdeveloped explanation andanalysis.

Able to

explain how price cuts impact on TR with reference to diagrams by applying Ep. Gives relevantexamples but limited explanation to justify why a certain good is perceived to be price elastic orinelastic.

explain how a price cut for one good affects the demand and hence TR for a related good(considers either complements or substitutes) by applying Exy.

iIllustrate using separate examples for Ep and Exy.

Level

3

8-

11

Good grasp of the concepts with greater

analytical ability and application tocontext.

Able to

explain why examples of goods chosen are price elastic or inelastic.explain how the impact of a cut in the price of 1 good impacts on the TR of that good by applyingEp and how the TR ofboth its complements and substitutes are in turn affected by applying Exy.Illustrates using examples which are linked.

Examples are based on the context of Carrefour being a megamart. Better scripts will extend togive examples which haveve cross price elasticity but are technically not complements.

acknowledge the assumption of ceteris paribus and that the analysis based on Ep would not holdif rival supermarkets had also offered discounts on similar items during the same period.

Evaluation

+

E1

1-

2

Mainly

unexplainedjudgement

Asserts that the impact of Carrefours pricing strategy on itsoverallrevenue is indeterminate given that a multi-product firm like

Carrefour sells goods with different Ep.

Judgement that Carrefour should expect a rise in TR given that it sells a wide range of complements.

+E2

3-4

Judgement basedon analysis

Judgement that the final outcome depends on the combination of goods sold by Carrefour because a multi-product retailingfirm like Carrefour not only sells goods with different Ep, it also sells the complements and the substitutes. The effects on TRarising from price elasticity analysis may ultimately depend on the TR analysis using cross elasticity.


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Note to tutors:

When marking assignments, we are more stringent than UCLES in awarding level 1 marks because we want to train our students

to explain their ideas with more detail. On the other hand, when students are able to show ability to analyze and evaluative, we should also

reward accordingly so that the students get the marks that they deserve based on UCLES standard.

Documents

Marking Scheme for Economics Essays