1. Markets and the price mechanism
   1. Students need to know clear distinction between renewable and non-renewable resources. Plus the key roles of the state in a mixed economy
   2. Functions of the price mechanism (signalling, incentive, rationing functions) often the basis for a question
2. Externalities and market failure
   1. Students only need to know 2 out of 4 externalities diagrams
      1. External costs of production (MSC>MPC)
      2. External benefits of consumption (MSB>MPB)
   2. Also need to know the perceived marginal private benefit curve in cases of information gaps 
   3. Merit and de-merit goods not on the spec
3. Macroeconomic performance and the economic cycle
   1. Output gaps – students could be asked to draw output gaps using AD-AS analysis
   2. The multiplier – could be tested as a calculation e.g. simple formula (k=1/(1-MPC) or 1/marginal propensity to withdraw
   3. Economic well-being – happiness index is on the spec. Students also need to be precise about terms such as real GDP, GNI, PPP etc when discussing living standards
4. Macroeconomic policies 
   1. Students should show awareness of how other countries conduct monetary policy (e.g. different inflation targets, use of QE, managed versus floating exchange rates) + evaluate effectiveness of monetary policy in an international context
5. Business economics / imperfect competition / government intervention
   1. Industry regulation + risk of regulatory capture also important
   2. Nationalisation is on the spec – arguments for and against to be covered
   3. No need for PFI to be covered
   4. 2 firm, 2 price game theory model is required to demonstrate interdependent decision making in an oligopoly / duopoly
   5. Kinked demand curve – not on the specification
   6. Monopsony power – no need for a diagram
   7. Importance of divorce between ownership and control especially with Plcs; roles of activist shareholders
   8. Objectives – focus on multiple objectives including satisficing, price and output analysis for each, impact on consumer welfare
   9. Students need to know why some firms remain small
6. Labour market economics
   1. No need to know/cover MRP theory
   2. But derived demand for labour is important + factors affecting mobility of labour
      1. Students need strong awareness of current labour market issues 
         1. Labour migration – micro and macro effects
         2. Ageing population – micro and macro effects
         3. Automation, robotics, AI – impact on level and pattern of employment
         4. Trade unions
7. International macroeconomics
   1. Global trade imbalances a key aspect of this part of the spec – causes and consequences of persistent trade deficits and surpluses
   2. Comparative advantage – numerical (table) format fine for showing comparative advantage and/or PPF / trade possibility curves
8. Terms of trade – index numbers important – calculating ToT – and understanding the implications of a change in the terms of trade
9. Emerging and developing countries
   1. Significance of capitalism for inequality
   2. Causes of persistently high levels of relative poverty
   3. The developmental state – how the state can contribute to / hinder sustainable and inclusive development
   4. Development strategies – split to market versus interventionist approaches
10. Financial sector economics
    1. Financial regulation needs to be covered – principles of regulation, new roles for central banks, how financial regulation can have micro and macroeconomic effects
    2. Emphasis likely to be on causes of financial market failure
       1. Market rigging e.g. LIBOR scandal
       2. Speculation and market bubbles
       3. Moral hazard in banking

Synoptic paper technique

• Good practice in the 25 mark questions to explicitly state at the start of a paragraph whether the argument being made is micro or macro
• Paper 3 essays – students need to discuss both micro and macro points to avoid a lack of balance

Common confusion – between

• Competition
• Contestability
• Concentration ratio

Source: Geoff Riley – Tutor2U.