9708 Economics - 9708 - Paper 4 AS & A Level
9708 Economics - 9708 - Paper 4 AS & A Level
9708 Economics - 9708 - Paper 4 AS & A Level
Economics
9708
Paper 4 – Data Response and Essays
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Contents
Contents .............................................................................................................................. 3
Introduction .......................................................................................................................... 4
Question 1 ........................................................................................................................ 7
Question 2 ...................................................................................................................... 14
Question 3 ...................................................................................................................... 30
Question 4 ...................................................................................................................... 44
Question 5 ...................................................................................................................... 61
Question 6 ...................................................................................................................... 69
Question 7 ...................................................................................................................... 80
Introduction
The main aim of this booklet is to exemplify standards for those teaching Cambridge International AS and
A Level Economics (9708), and to show how different levels of candidates’ performance (high, middle and
low) relate to the subject’s curriculum and assessment objectives.
In this booklet candidate responses have been chosen to exemplify a range of answers. Each response is
accompanied by a brief commentary explaining the strengths and weaknesses of the answers.
For each question, each response is annotated with a clear explanation of where and why marks were
awarded or omitted. This, in turn, is followed by examiner comments on how the answer could have been
improved. In this way it is possible for you to understand what candidates have done to gain their marks and
what they will have to do to improve their answers. At the end there is a list of common mistakes candidates
made in their answers for each question.
This document provides illustrative examples of candidate work. These help teachers to assess the standard
required to achieve marks, beyond the guidance of the mark scheme. Some question types where the
answer is clear from the mark scheme, such as short answers and multiple choice, have therefore been
omitted.
The questions, mark schemes and pre-release material used here are available to download as a zip file
from Teacher Support as the Example Candidate Responses Files. These files are:
Past papers, Examiner Reports and other teacher support materials are available on Teacher Support at
https://teachers.cie.org.uk
take Papers 1 and 2 only (for the Cambridge International AS Level qualification)
or
follow a staged assessment route by taking Papers 1 and 2 (for the Cambridge International AS Level
qualification) in one series, then Papers 3 and 4 (for the Cambridge International A Level qualification) in
a later series
or
take Papers 1, 2, 3 and 4 in the same examination series, leading to the full Cambridge International
A Level.
Weighting
Component
AS Level A Level
Note: Papers 3 and 4 test the additional syllabus content for A Level, but also require a knowledge and
understanding of the AS Level syllabus content.
Teachers are reminded that the latest syllabus is available on our public website at www.cie.org.uk and
Teacher Support at https://teachers.cie.org.uk
Question 1
3 A series of points
3 which suggest that
rising house prices do
not necessarily bring
only positive effects.
The paragraph
concludes correctly.
(d) The analysis of growth through exports needed to be more clearly linked to the aims.
Marks awarded = (a) 2/2, (b) 5/5, (c) 4/6, (d) 5/7.
(b) The candidate needed to explain how the points identified bring about a benefit to an economy.
(c) Only two of the relevant points were used to support the argument for contradiction.
(d) The first aim was not clearly stated, and the link between it and the two policies needed development.
For the second aim, more discussion of the effects of the two policies was required.
Marks awarded = (a) 1/2, (b) 3/5, (c) 3/6, (d) 3/7.
4
4 The candidate has not
answered the question
here.
5
5 Two aims are
identified, but no links
to the models quoted
are made.
(d) The candidate identified two macroeconomic aims but needed to discuss how these were affected by the
two growth models in the question.
Marks awarded = (a) 2/2, (b) 4/5, (c) 0/6, (d) 2/7.
(b) Not linking the effects identified to an economic theory, e.g. the multiplier process.
(c) Candidates often repeated the answer to part (b) here, ignoring all the evidence in the article which
pointed to a contradiction. Often no conclusion was drawn.
(d) Having identified the two aims, candidates did not apply the two suggested models to those aims.
Question 2
1 A clear definition of a
1 free market system.
2 2 Productive efficiency is
not required by the
question.
3 3 A sound explanatory
paragraph on allocative
efficiency.
4 4 A good illustration of
efficiencies, which suits
the context of the
question.
6 6 A further example of
market failure linked to
inefficiency.
8 8 Some limited
discussion of
government
intervention and its
drawbacks here.
9 9 A neat concluding
paragraph which
reflects the free market
approach.
Level 4
1 1 A good definition of a
market system.
3 This page on
3 productive efficiency is
not required as the
question deals with
allocative efficiency.
4 A good use of
4
monopoly to illustrate
inefficiency.
6 6 The paragraph on
government is very
limited. It mentions
possible approaches,
but fails to explain how
they might be applied
to the inefficiencies
previously identified.
Level 3
2 2 A description of
externalities.
Level 1
Question 3
1 A clear beginning
which identifies the
1 equilibrium between
the budget line (BL)
and the indifference
curve (IC). Both the IC
and BL are clearly
defined. They are
brought together in
Fig. 1, and this figure is
referred to correctly in
the text.
2 2 This paragraph is
concerned with the
marginal utility
approach and does not
add anything to the
response.
Fig. 2 is correctly
drawn and Fig. 3
shows the
consequences of Fig. 2
translated into a
conventional demand
curve.
4 This response
4 identifies the effects of
an indirect tax on both
goods, and correctly
illustrates and analyses
these effects.
1 An opening paragraph
1 based on utility theory.
Some limited
statements towards the
end of the paragraph
refer to indifference
curve analysis.
2 2 A good paragraph on
the budget line (BL)
definition and
illustrations of changes
in the BL
5 5 The candidate
combines changes in
the BL and IC to
analyse the price effect
on the quantity of ‘X’
demanded. The
answer links this
clearly to the demand
curve for the product.
6 6 The candidate's
opening paragraph
focuses on fiscal policy
rather than on a
change in taxes on
goods. The analysis is
good but misplaced.
7 This analysis is
7 relevant but it is
applied to all goods.
This prevents the
candidate from
exploring the income
and substitution effects
that take place when
relative prices change.
(b) More developed discussion of the effect of a price change on one good was needed here. This would
have allowed the candidate to explain the difference between income and substitution effects.
2 This is a good
2 explanation of the
consumer seeking a
higher indifference
curve to provide higher
levels of satisfaction.
3 The candidate
3 introduces and
explains the role of the
budget line, linking it to
the indifference curve.
No conclusion is drawn
regarding the amount
of good A and good B
chosen.
5 A development of the
shape of the demand
curve based on
marginal utility theory
rather than indifference
curve analysis.
5 6 The candidate’s
answer needed to
show the effect of
changing the price on
6 the budget line and
how this affects the
point of intersection
with the ‘family’ of
indifference curves and
hence how the demand
curve emerges.
8 8 This is a correct
description of the effect
of price increases
through taxation on the
budget line, but no
indication is given of
the indirect nature of
the tax change and the
fact that it may apply to
only one of the goods.
(b) More developed discussion of the effect of a price change on one good was needed here. The candidate
also did not develop their response in terms of both budget lines and ICs. This would have allowed them to
analyse the distinction between income and substitution effects and to explore the development of normal
and inferior goods.
(b) Candidates needed to consider the income and substitution effects of a relative price change, rather than
assume the indirect tax increase applied to all goods.
Question 4
4 4 An example of why
wages may differ due
to different supply and
demand conditions for
managers and
cleaners, together with
some explanation of
why supply may differ.
5 5 An example of
imperfect knowledge is
used to explain further
why wages may differ.
6 This opens by
6
explaining why the
assumption stated
previously may no
longer apply and
defines a trade union’s
(TU’s) role.
9 9 Analysis of the
monopsonist labour
buyer and the TU
explains the role of the
TU in negotiating both
a higher wage and
more employment,
based on MRP theory.
(b) The candidate needed to explain that, while wages can improve without resulting necessarily in a fall in
employment, if a trade union persists in demanding higher pay, employment will eventually decline.
4 A limited reference to
4 marginal revenue
product (MRP) theory,
which improves the
quality of the response
overall. A good
illustration of the
demand for labour
within a firm.
6 A definition of an
6 imperfect product
market rather than an
imperfect labour
market.
8 There is no reference
8
to the diagram in the
text.
9 9 A description of the
role of a TU, together
with an example of the
effect of TU activity in
raising the wage level.
The consequence of
such an action is also
correctly identified.
13 A limited conclusion.
13
Mark for (b) = 8/13
Level 3
(b) The candidate needed to explore a wider range of trade union intervention and extend their analysis to
monopsony.
1 A partial definition of
1 perfect competition,
followed by an
unlabelled diagram.
2 2 A limited attempt is
made here to explain
the theory of marginal
revenue product
(MRP).
3 A confused opening
3 paragraph. It is not
clear what the
candidate is trying to
say.
4 4 A clear description of
the role and
effectiveness of a
trade union (TU).
5 A correct attempt to
5
analyse the effect of a
TU on wage rates and
employment in a
diagram. Implicit
reference to MRP
through the labelling
of the demand for
labour; the axes,
however, are not
labelled.
6 6 A good development
of how the loss of
employment may be
avoided. There is the
same problem with a
lack of labelling on the
diagram.
(b) The candidate needed to explore a wider range of trade union intervention and extend their analysis to
monopsony.
(b) Some candidates did not extend their analysis to include monopsony, which would have enabled them to
discover the fallacy of the statement in the question.
Question 5
7 The candidate
develops their analysis
of how sales revenue
7 maximisation may
occur. The wider effect
on other firms and the
development of a price
war is not covered.
Greater analysis of the
sales revenue
maximisation model
was needed here.
10 A good conclusion,
which links the form of
competition to its
10
objective and points
out that they may
differ.
1 1 A correct statement of
the condition for profit
maximisation. The
candidate makes a
good attempt at
explaining why
achieving such a point
is difficult.
2 The difficulties of
2
identifying the demand
curve are explained
here, but the analysis
does not extend to
either the marginal
revenue or the supply
curve and marginal
cost curve.
4 A clear alternative to
profit maximisation is
4 identified here, namely
sales revenue
maximisation, along
with some of the
consequences of such
an objective. The
candidate should have
explained why such a
policy could be
pursued.
5 5 A brief comment on a
further objective, but
no explanation is given
at this point and no link
with market structure is
provided.
6 A confused attempt to
link oligopolistic market
structure to objectives.
The link between price
leadership and output
maximisation needed
to be explained.
8 A correct statement
7 regarding natural
monopoly, but no
reference to the
alternative objectives
of the firm.
(b) The candidate needed to develop the link between the market structure identified and alternative
objectives to profit maximisation.
1 A correct statement of
1 the profit maximisation
rule.
2 A correct illustration of
2
the profit maximisation
rule, but no explanation
of why MC = MR leads
to maximum profits.
3 A correct statement of
the effect of abnormal
profits and their
consequences.
4 The candidate
3 mentions alternatives
to profit maximisation,
but does not develop
these.
7 A limited attempt to
6
define monopolistic
competition, with no
consideration of any
alternative objectives
of the firm.
7 8 Paragraphs 4 and 5
both provide a limited
attempt to define
monopoly and
oligopoly but do not
relate these to other
objectives of the firm.
Question 6
1 A good opening
1 paragraph where the
candidate sets out their
approach to the
answer.
2 The candidate
2 identifies the three
aspects of the HDI and
discusses these with
3 regard to their own
country.
3 Explicit reference is
made to the question
here.
4 The candidate
4 mentions the MPI here,
describing its indicators
and how these apply to
the candidate's
country.
6 This is a weaker
6
paragraph than some
of the others, but it
attempts to link
unemployment to
quality of life, although
without making this
explicit in terms of lack
of personal/household
income.
Level 4
1 A good opening
1 paragraph which could
be improved by
reference to prices to
define real GDP per
capita.
6 This paragraph
develops the
candidate’s theme of
interpreting quality of
6 life in terms of the aims
that governments may
pursue.
8 Equality means a
8 better standard of
living.
Level 3
3 A good illustration of
3 the relative inequality
of incomes, but no
clear link to quality of
life.
5 An explanation of the
meaning of ‘basic
5
infrastructure’ should
have been included
here and how this
improves the quality of
life, e.g. health care.
7 This is not a
7
conclusion.
Level 2
Question 7
1 A clear understanding
1 of the developing
economy, with a brief
link to the question at
the end. This sets the
scene.
4 A good understanding
4 of the employment
structure in both
developing and
developed economies.
5 A sound explanation
and illustration of
5 changes which are
taking place in the
structure of
employment in
developing and
developed economies.
6 A partial concluding
paragraph, explaining
why the population
data differ but not the
employment structure.
8 A clear definition of
8 frictional employment
and an explanation
which links it to both
types of economy,
especially developing
economies.
9 A clear definition of
structural
9 unemployment and an
explanation which links
it to both types of
economy, especially
developing economies.
12 12 This is good, as it
deals with disguised
unemployment, a type
of unemployment
which is often omitted
from the standard
textbooks.
13 13 A good distinction
between developing/
developed economies
and technological
unemployment is made
here.
14 This is a
comprehensive
answer, slightly let
down by a limited
conclusion.
14 Mark for (b) = 11/13
Level 4
2 A clear statement
1 about the main feature
of the population in a
developing country,
with a reasonable
attempt to explain why
this is so. The second
part of the paragraph is
confused and there is
no clear link between
2 the death rate and the
elderly.
7 A good paragraph,
which links the level of
7 development, type of
work and type of
unemployment. A
comparative statement
with respect to
developed economies
would have been a
significant
improvement.
8 The candidate
continues to link types
8
of unemployment to
level of development,
but the explanations
are limited.
(b) The explanations of the links between types of unemployment and levels of development needed to be
more extended.
8 Seasonal
unemployment is
clearly identified and
linked to both types of
economy.
9 A brief description of a
second form of
unemployment here,
though unnamed.
8
10 A good explanation of
structural
unemployment and a
link to developed
9 economies.
11 The candidate
identifies some types
of unemployment and
links them to
developing or
developed economies.
They needed to
identify more types of
unemployment and
discuss their
relevance to both
developing/developed
economies, rather
than just one type of
economy.
(b) The candidate needed to demonstrate the links between the types of unemployment and the level of
development, rather than just define and explain a number of types of unemployment.
(b) Candidates often neglected to explain whether the type of unemployment described was more likely to
occur in developing/developed economies or if there was no difference.