I'm sure you remember the test well. Mark scheme is below. Make sure you read the introduction part which tells you how it is being marked (essentially graded by levels of your knowledge and evaluation).
Short-answer questions
The assessment criteria apply to all questions. Each question is worth [10 marks].
Level
0 Inappropriate answer. 0
1 Limited knowledge but some basic points made. There may be significant errors and/or omission of important points. 1–3
2 Evidence of familiarity with basic economic principles. Some ability to apply relevant theory and/or to analyse using relevant theory. 4–6
3 Evidence of familiarity with basic economic principles. Clear ability to apply relevant theory or to analyse using relevant theory. 7–8
4 Evidence of familiarity with basic economic principles. Clear ability to apply relevant theory and to analyse using relevant theory. 9–10
1. Explain why Veblen goods are an exception to the law of demand.
• definition of the law of demand with reference to a time period and including the ceteris paribus clause
• definition of Veblen goods with example(s)
• diagram or explanation indicating an upward-sloping demand curve and/or a direct relationship between price and quantity demanded.
Some responses may also refer to the concept of elasticity of demand.
Examiners should be aware that candidates may take a different approach, which if appropriate should be fully rewarded. [10 marks]
2. To what extent can a firm in monopolistic competition earn supernormal (abnormal) profits?
• definition of monopolistic competition.
• definition of supernormal (abnormal) profits
• diagram showing a firm in monopolistic competition earning supernormal (abnormal) profits in the short run
• supernormal (abnormal) profits are eroded away in the long run because of a lack of barriers to entry
• diagram with an explanation showing the long run equilibrium of a firm in monopolistic competition
Examiners should be aware that candidates may take a different approach, which if appropriate should be fully rewarded. [10 marks]
3. Compare the impact of an indirect tax on the market for cigarettes with the impact of an indirect tax on the market for holidays.
• definition of indirect tax
• diagram and/or explanation to indicate that demand for cigarettes is generally acknowledged to be inelastic, so that the incidence of an indirect tax falls largely on consumers; prices will rise and demand will fall less than proportionately
• diagram and/or explanation to explain that demand for holidays is generally acknowledged to be elastic, so that the incidence of an indirect tax falls largely on producers; prices will rise and demand will fall more than proportionately
• explanations can imply either ad valorem or percentage taxes
Examiners should be aware that candidates may take a different approach, which if appropriate should be fully rewarded. [10 marks]
