Three topics, weighted by the share of marks they carry. Macroeconomics and the role of government is the largest, at 55%.
Topic 1
Economic schools, the economic way of thinking and recent history, 5%
Topic 2
Microeconomics, 40%
Topic 3
Macroeconomics and the role of government, 55%
What the topics cover
Questions can draw on any part of the syllabus in any session, so prepare across all of it.
Area
Syllabus objectives
Economic thinking, schools and recent history
1.1 to 1.3
Demand, supply and elasticity
2.1
Consumer choice, behaviour and advertising
2.2 and 2.3
Production, costs, revenue and profit
2.4
Perfect competition and monopoly
2.5
Monopolistic competition, oligopoly and game theory
2.6
Pricing strategies in financial services
2.7
Market failure and government intervention
3.1 and 3.2
Globalisation, trade and exchange rates
3.3, 3.4 and 3.6
GDP, growth, unemployment and inflation
3.5
Money, interest rates and the financial system
3.7 and 3.8
Output, unemployment and inflation
3.9
Fiscal, monetary and supply-side policy
3.10 and 3.11
Try a question
Elasticity of demand for travel insurance
Markets · Straightforward · 8 marks
Wayfarer Cover sells single-trip travel insurance online. When it cut its price from £40 to £32 a policy, monthly sales rose from 5,000 to 6,000 policies. Assume nothing else affecting demand changed.
(i)
Calculate the price elasticity of demand using the original price and quantity as the base, to 2 decimal places.
2 marks
(ii)
Calculate the price elasticity of demand using average (midpoint) values, to 2 decimal places.
2 marks
(iii)
Calculate the change in Wayfarer's monthly premium income, in £.
2 marks
(iv)
Explain why the two methods give different answers, and comment on which result is consistent with the change in premium income.