Cambridge International A-Level Economics 9708: Frequent mistakes

Cambridge Principal Examiner Reports for Economics 9708 identify recurring weaknesses in public goods, elasticity, diagrams, balance of payments and comparative advantage. Many questions have low correct rates (e.g. 7–42%).

Microeconomic concepts

Public goods

Only ~7% correctly identified that government-funded, free-at-point-of-use healthcare is not a public good. 81% chose the public good option. Public goods must be non-rival and non-excludable.

Fix: Public good: non-rival (one person’s use doesn’t reduce for others) AND non-excludable (can’t exclude). Healthcare can be excludable; often isn’t fully non-rival.

Price elasticity

Candidates misunderstand PED and PES, especially in textual (non-numerical) contexts. Confusing elasticity with slope; misidentifying factors affecting elasticity.

Fix: PED = %ΔQd ÷ %ΔP. Elastic ≠ steep. Steep demand can be inelastic. Elasticity = responsiveness.

Consumer surplus

Only ~35% correctly calculated consumer surplus loss after price change. Failing to distinguish initial vs. new consumer surplus.

Fix: CS = area under demand, above price. Price rise → CS falls. Calculate both areas; find difference.

Supply curve slopes

27% incorrectly linked upward-sloping supply to increased productivity. Productivity shifts supply (down/right); doesn’t change slope.

Fix: Slope = relationship between P and Qs. Shift = change in non-price factor (costs, tech, etc.).

Macroeconomic concepts

Injections and withdrawals

Only ~30% correctly applied the injections/withdrawals model to identify national equilibrium. J = W at equilibrium.

Fix: J = I + G + X. W = S + T + M. Equilibrium: J = W.

Balance of payments

Struggle with remittances and exchange rate impacts. Only ~25% understood how overseas worker remittances affect BOP. 39% misidentified resident status.

Fix: Remittances: income from abroad. Credit in current account. Resident = lives in country 12+ months.

Terms of trade

Many don’t recognise that Terms of Trade is not an item in balance of payments accounts. It’s an index (export prices/import prices).

Fix: BOP: current account, capital account, financial account. Terms of Trade = ratio, not BOP item.

Comparative advantage

Questions on comparative vs. absolute advantage are “frequently asked and often misunderstood.” Only 28–42% answer correctly.

Fix: Comparative advantage = lower opportunity cost. Absolute = more productive. Trade based on comparative.

Inflation reduction

Struggle to identify which policies reduce inflation through aggregate supply/demand analysis.

Fix: Demand-pull: reduce AD (fiscal, monetary). Cost-push: increase AS (productivity, supply-side).

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Based on Cambridge International A-level Economics 9708 Principal Examiner Reports (2017–2023).