Exam (elaborations)

Edexcel A Level Economics Paper 3 Model Questions and Answers

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Module
Paper 3 Essay Plans

Institution
PEARSON (PEARSON)

This document outlines crucial essay plans for Edexcel A-Level Economics Paper 3, covering both microeconomic and macroeconomic themes. It includes evaluations of market failures, government interventions, and the impacts of policies such as fracking, interest rates, and quantitative easing. It als...

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Uploaded on September 12, 2024
Number of pages 30
Written in 2021/2022
Type Exam (elaborations)
Contains Questions & answers

A Level Paper 3 Essay Plans

Theme 1
1.3 Market Failure
1. With reference to the information provided and your own knowledge, evaluate the possible microeconomic
and macroeconomic effects on the UK economy of a decision by the government to encourage fracking
2. Evaluate the possible microeconomic and macroeconomic policies to limit externalities

Theme 2
2.6 Macroeconomic objectives and policies
1. Evaluate the possible microeconomic and macroeconomic effects on the global economy of reduced interest
rates
2. Evaluate the possible microeconomic and macroeconomic effects on the global economy of quantitative
easing
3. Evaluate the possible microeconomic and macroeconomic effects on the global economy of reduced taxation
4. Evaluate the microeconomic and macroeconomic impact of large infrastructure projects such as the building
of a third airport/government expenditure on infrastructure development
5. Evaluate the microeconomic and macroeconomic effects of an improvement in the literacy and numeracy
skills of a country’s young workers
6. Evaluate the microeconomic and macroeconomic effects of increased government spending on education to
promote healthy eating in the UK
7. Evaluate the microeconomic and macroeconomic effects of reduced investment
8. Evaluate the likely microeconomic and macroeconomic effects of supply-side policies
9. Evaluate the likely microeconomic and macroeconomic policies that could be used to stimulate economic
growth and development

Theme 3
3.1 Business growth
1. Microeconomic and macroeconomic impacts of mergers/growth of business
2. Evaluate the microeconomic and macroeconomic factors that may influence Starbucks’ decision on whether
to expand in a particular country
3. With reference to the information provided and your own knowledge, evaluate the microeconomic and
macroeconomic effects of increased UK demand for coffee at branded coffee shops
3.5 Labour market
1. Evaluate the microeconomic and macroeconomic effects of a minimum wage on the economy
2. Evaluate the microeconomic and macroeconomic effects of immobility of labour
3. Evaluate the microeconomic and macroeconomic factors to reduce immobility of labour
4. Evaluate the factors for wage differentials

,Theme 4
4.1 International economics
1. Evaluate the likely microeconomic and macroeconomic effects of specialisation and trade
2. Evaluate possible microeconomic and macroeconomic policies which could be used to devalue the exchange
rate
3. With reference to the information provided and your own knowledge, evaluate the likely microeconomic and
macroeconomic effects of the 23% devaluation of the Argentine peso
4.3 Emerging and developing economies
1. Evaluate the microeconomic and macroeconomic factors, apart from access to credit and banking, influencing
growth and development in Mozambique
2. Evaluate the microeconomic and macroeconomic strategies influencing growth and development in
Mozambique
4.5 Role of the state in the macroeconomy
1. With reference to the information provided and your own knowledge, evaluate the microeconomic and
macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a
means of reducing a fiscal deficit
2. Evaluate possible microeconomic and macroeconomic policies which could be used to reduce poverty and
inequality
3. Evaluate possible microeconomic and macroeconomic policies which could be used to improve UK
competitiveness
4. Evaluate the likely microeconomic and macroeconomic effects of imposing a tax on HFSS foods
5. With reference to the information provided and your own knowledge, evaluate the microeconomic and
macroeconomic effects on Indonesia of the volatility of prices of commodities such as coal
6. With reference to the information provided and your own knowledge, evaluate the possible microeconomic
and macroeconomic effects on the global economy of lower energy prices
7. With reference to the information provided and your own knowledge, evaluate the microeconomic and
macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a
means of reducing a fiscal deficit

, With reference to the information provided and your own knowledge, evaluate the possible
microeconomic and macroeconomic effects on the UK economy of a decision by the government to
encourage fracking

1. Micro - negative production externalities
- Eg Pollution - marginal society cost is greater than the marginal private
cost
- Loss of economic / social welfare - usually because the costs or benefits
that the market gives to individuals or businesses diverge from the costs
or the benefits of society as a whole

Evaluation - may be offset by increasing taxation on pollution - Pigouvian taxes in line with
the cost of emissions and pollution - there is no longer the deadweight welfare loss as MPC
shifts inwards - reduces the quantity and price of fracking

OR
1. May lead to reduced costs for fracking - reduced energy prices - may
lead to reduced costs of goods and services produced with this energy
type - increased demand for goods - increased revenue - increased
profits - dynamic efficiency - reinvested into the business - improved
quality and quantity of goods and services

Evaluation - however these profits may not be reinvested - principal agent problem - may look after managers own
self benefits and pleasing of shareholders in the short term rather than the long term sustainability of the business -
may be used to pay off shareholder dividends - loss of dynamic efficiency

2. Fracking - increased quantity of natural gas and reduced price -
reduced costs of production for firms who use this as a source of
energy for production - shifts out SRAS - economic growth

Evaluation - however many firms are now under renewable energy quotas
and sustainability measures - therefore the PED of fracking may be very
inelastic - so if the fracking prices fall then the quantity demanded will
increase proportionally less - will not represent a significant decrease in costs of production for firms

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