Markets in Action

Worked examples (6)

• 1Identify scarcity, choice and opportunity cost in a scenario
• 2Match factors of production to their rewards
• 3Explain why money is not a factor of production
• 4Explain the opportunity cost of a government decision
• 5Classify short run vs long run
• 6Apply the three fundamental economic questions

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Classify statements as positive or normative
• 2Find the normative statement in a list
• 3Separate positive and normative claims in an extract
• 4Explain why a false statement is still positive
• 5Show how value judgements split economists' advice
• 6Evaluate whether economics can be value-free

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — Adapted from WEC11/01, January 2022, Q12(b) (4 marks)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels

Worked examples (6)

• 1Identify the opportunity cost of a choice
• 2Classify goods as economic or free
• 3Distinguish scarcity from a shortage
• 4Apply the three basic economic questions
• 5Analyse a government's opportunity cost
• 6Analyse scarcity of a non-renewable resource

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge u0026 Application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Match each agent to what it is assumed to maximise
• 2Classify the reason a consumer is behaving irrationally
• 3Explain why economists assume rationality
• 4Explain how herding leads to irrational choices
• 5Analyse why consumers stay with an expensive provider
• 6Evaluate the use of nudges to improve decisions

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge + Application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Interpret points on, inside and outside a PPF
• 2Movement along vs shift of the PPF
• 3Calculate opportunity cost from PPF data
• 4Explain why a PPF is concave to the origin
• 5Analyse the capital vs consumer goods trade-off
• 6Evaluate the usefulness of the PPF model

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section B style — Application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Identify advantages of the division of labour
• 2Match examples to the functions of money
• 3Explain two functions of money
• 4Explain why specialisation needs money
• 5Analyse a role of financial markets
• 6Evaluate the benefits of specialisation

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge/Application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Classify how each system answers the three questions
• 2Identify the functions of the price mechanism
• 3Explain how a free market answers 'what to produce'
• 4Analyse a drawback of the command economy
• 5Contrast Smith/Hayek with Marx
• 6Evaluate whether the free market is the best system

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — explain (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1State and apply the law of demand
• 2Draw a labelled demand curve
• 3Movement along vs shift of demand
• 4Show a shift caused by a fall in income
• 5Identify derived, joint and composite demand
• 6Analyse a shift using a demand and supply diagram

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), diagram expected
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Find equilibrium price and quantity from a schedule
• 2Draw a labelled equilibrium diagram
• 3Explain how a surplus self-corrects
• 4Show a demand shift to a new equilibrium
• 5Analyse a supply shift using a D/S diagram
• 6Both curves shift — which result is certain?

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Diagram and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), diagram expected
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Calculate and interpret PED
• 2Calculate and classify YED
• 3Calculate and classify XED
• 4Use PED to advise on price and total revenue
• 5Explain why PED varies along a straight-line demand curve
• 6Evaluate how useful PED is for setting an indirect tax

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — Adapted from WEC11/01, January 2022, Q10 (4 marks)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Name the three functions of the price mechanism
• 2Apply the rationing function
• 3Distinguish signalling from incentive
• 4The incentive function on consumers
• 5Analyse reallocation after a rise in demand
• 6Reallocation after a fall in supply

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), diagram expected
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1State and apply the law of supply
• 2Draw a labelled supply curve
• 3Movement along vs shift of supply
• 4Show a shift caused by a rise in costs
• 5Direction of shift: indirect tax vs subsidy
• 6Analyse a shift using a demand and supply diagram

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), diagram expected
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Calculate and interpret PES
• 2Classify supply from PES values
• 3Explain why supply is more elastic in the long run
• 4Identify factors that make supply elastic or inelastic
• 5Analyse why agricultural supply is inelastic
• 6Evaluate the effect of inelastic supply on commodity prices

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Identify consumer surplus on a diagram
• 2Identify producer surplus on a diagram
• 3Calculate consumer surplus from values
• 4Calculate producer surplus from values
• 5Analyse a demand shift on surplus using a diagram
• 6Evaluate the surplus effects of an indirect tax

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), diagram expected
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Distinguish specific from ad valorem taxes
• 2Draw a specific tax on a market
• 3Show and explain tax incidence
• 4Calculate tax revenue and the burden split
• 5Link incidence to PED and PES
• 6Analyse a subsidy on a market

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), diagram expected
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Nail the definition of market failure
• 2Classify complete vs partial market failure
• 3Build up social cost and social benefit
• 4Map an example to its source of market failure
• 5Explain why the free market misallocates
• 6Examine two sources of market failure in a market

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Classify private, external and social costs
• 2Find the social optimum from MSB and MSC
• 3Draw a negative externality of production
• 4Draw a negative externality of consumption
• 5Draw a positive externality of consumption
• 6Positive externality of production (Ru0026D spillovers)

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), diagram expected
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Government failure vs market failure
• 2Name the cause of government failure
• 3Explain how a price cap causes government failure
• 4Why information gaps undermine a corrective tax
• 5Discuss whether a subsidy leads to government failure
• 6Evaluate whether government failure means 'don't intervene'

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Identify the two characteristics of a public good
• 2Classify goods as private, public or common
• 3Explain the free-rider problem
• 4Explain the missing market and government solution
• 5Distinguish pure from quasi-public goods
• 6Examine whether the state should provide a good

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks)
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Distinguish symmetric from asymmetric information
• 2Identify an information gap and its effect
• 3Classify merit vs demerit goods
• 4Analyse why a merit good is under-consumed
• 5Explain adverse selection in insurance
• 6Explain the value judgement in classifying a demerit good

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks)
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Spot moral hazard in everyday situations
• 2Define speculation and fundamental value
• 3Explain how speculation inflates a bubble
• 4Link asymmetric information to moral hazard
• 5Distinguish moral hazard from adverse selection
• 6Analyse the effects of a bubble bursting

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks)
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels

Worked examples (6)

• 1Match the method to the market failure
• 2Draw a maximum price on a market
• 3Analyse a minimum price and the surplus
• 4Compare tradable permits with regulation
• 5Explain a case of government failure
• 6Evaluate an intervention (elasticity and opportunity cost)

Model answers (6)

• ✓Model answer — WEC11/01 Section C(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC11/01 Section B style — Knowledge and application (4 marks, point-marked)
• ✓Model answer — WEC11/01 Section C(c) style — KAA (6 marks), Levels 1–3, diagram expected
• ✓Model answer — WEC11/01 Section C(d) style — KAA (8 marks), Levels 1–3
• ✓Model answer — WEC11/01 Section C(e) style — KAA (8 marks) + Evaluation (6 marks), diagram expected
• ✓Model answer — WEC11/01 Section D style — KAA (12 marks) + Evaluation (8 marks), best-fit levels