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Summary Economics A Level - A* Essay plans for Micro and Macro
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Essay plans for a broad range of potential micro and macro questions concerning Economics A level A* achieved
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Micro essay plans:Evaluate the economics arguments for the introduction of a sugar tax.
Point 1: Evaluation:
Sugar tax can internalise the negative The producer may not pass on the higher price
externality that sugar has on the economy – to the consumer depending on the PED for the
strain on NHS and the spare funds can be used products – if elastic then the price won’t
for other healthcare projects e.g. sugar tax on change
fizzy drinks: drinks containing 5g of
sugar/100ml will be taxed 18p/litre
Point 2: Evaluation:
The tax revenue raised can be spent by the It’s a regressive tax so it unfairly disadvantages
government on investment into promoting a those on lower incomes so wealthier people
balanced diet or subsidising the gym industry to may not be disincentivised from buying sugary
promote a healthier lifestyle products and poorer people will be
disadvantaged
Evaluate the likely social costs and benefits of building a third runway at Heathrow.
Point 1: Evaluation:
Increased tourism will improve the current Tourism has a negative effect on the
account balance on the BoP – increase in environment – negative externality e.g.
invisibles and it would increase tax revenue rivers/lakes becoming polluted and the added
because TNCs will come to set up hotels and pollution from the third runway will also have a
they will pay corporate tax negative impact on the environment
Point 2: Evaluation:
Increased employment and multiplier effect – The employment may only be seasonal e.g. in
increased demand for labour due to higher AD the summer
from tourists and labour needed in hotels and
other tourist amenities and in the airport –>
higher tax revenue from income tax
‘Regulation is a more effective way of dealing with smoking than taxation.’ To what extent
do you agree with this?
Point 1: Evaluation of taxation:
Regulation is beneficial because it will create a It is a regressive tax, so it’ll disadvantage those
strong deterrent to smoke when there are on a lower income. Inelastic PED for cigarettes
potential legal repercussions e.g. smoking being means that taxation may not be effective in
banned in cars with minors reducing demand
Point 2: Evaluation: Comparing two points
Taxation is effective in internalising the Regulation should not be impacted by the
negative externality because it is designed to be inelastic PED because people don’t want to
the same value as the externality so it will break the law. Taxation may be effective for
, increase tax revenue which the government some people (unlikely), but it does bring in tax
can spend on e.g. nicotine patches revenue. Regulation could theoretically
encourage the purchase of cigarettes on the
black market (unlikely).
‘Legalising marijuana would give young people the impression that it is safe to take drugs.
The economic costs of legalising marijuana outweigh the economic benefits.’ To what
extent do you agree?
Point 1: Evaluation:
Marijuana has a big negative externality on Marijuana could be heavily taxed, like
society due to the impact that it has on health, cigarettes whereby a pack of 20 cigarettes with
which has to be dealt with by the taxpayer who an RRP of £8 will be over 80% tax, which would
funds the NHS disincentivise its consumption and raise tax
revenue that the government could spend on
the NHS
Point 2: Evaluation:
Marijuana is already being commonly Legalising marijuana may give those would
consumed so legalising it would ensure that the previously not have consumed it, the
industry is properly regulated and there is a opportunity to easily buy it and use it without
quality control so that the dangerous viewing it as a bad habit. Additionally, the NHS
substances that are present in the current would have to deal with more health problems
marijuana being sold won’t be allowed and it caused by consumption of marijuana, because
will reduce the number of people breaking the there would be more people using it.
law and caught up in drug gangs.
‘University graduates are likely to earn considerably more than non-graduates over their
lifetime and should therefore pay the full cost of their university degrees.’ Discuss.
Point 1: Evaluation:
Increasing the price of university education It would disincentivise people from going to
would disincentivise people from going to university to study courses which lead them to
university, particularly poorer people. This a career which doesn’t require a degree. This
would reduce the labour productivity of the could reduce people’s debt if they can enter a
nation, because people would be less educated job without going to university.
and less skilled
Point 2: Evaluation:
There is inelastic demand for higher skilled
workers because they are in lower supply than
low skilled workers and they are in higher
demand. Therefore, university graduates will be
able to demand higher wages and in turn be
able to repay their university fees in full
, ‘Subsidising bus travel is a more effective way of reducing congestion than the congestion
charge’. To what extent do you agree with this statement?
Point 1: Evaluation:
Subsidising bus travel will incentivise people to Bus travel and most other forms of public
use buses instead of travelling in individual cars transport are inferior goods – as income
which will reduce congestion. This is because a increase, use of buses will decrease. Therefore,
bus takes up less space on a road than if each reducing the price of bus travel may not hugely
passenger was in their own vehicle. incentivise use of buses because it may only
Over 8000 scheduled buses operate on encourage those who are already using it to
over 700 different routes, so if they were take advantage of lower prices and use the
subsidised then people may increase their use service more.
of them.
Point 2: Evaluation:
Congestion charge is an £11.50 daily charge for The charge may only disincentivise people who
driving a vehicle within the charging zone on drive on slightly lower incomes, which will be
weekdays. This is done to reduce the number of effective in reducing congestion, but the
people travelling to the centre of London in wealthiest drivers won’t be put off by the
their own cars for work, with the aim of charge and may continue to drive into the
reducing congestion and the environmental centre of London despite the expensive charge.
impact of driving. The new ULEZ charges cars
£12.50 for entering the zone.
Evaluate the case for raising the minimum wage (living wage) to £9.00 by 2020.
Point 1: Evaluation:
It will reduce income inequality by lessening Firms may not be able to afford the higher cost
the gap between those on the highest incomes of labour so they may have to lay workers off
and the lowest – use Lorenz curve to illustrate which would increase inequality
what would happen
Point 2: Evaluation:
It reduces government spending on benefits The cost of living may increase due to the
and it would increase tax revenue from those higher costs of production (labour) being
on the minimum wage who will be making passed onto consumers which would mean that
larger tax payments people would require more state welfare
Evaluate the economic impact of government intervention in the market for cigarettes.
Point 1: Evaluation:
Regulation e.g. price floor, that exists for Cigarettes are demand inelastic due to their
alcohol in Scotland, would cause higher prices addictive nature so increased prices may not
which should result in the socially optimum deter consumers from purchasing them.
production of cigarettes thus internalising the
negative externality – less burden on the NHS
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