# A-Level Economics Tutor > Specialist A-Level Economics tutor with 9 years' experience and 94+ five-star reviews. AQA, Edexcel and International A-Level. One-to-one from £70/hr. Groups from £35/hr. Free trial session. Public Ghost content for AI and LLM tooling. This file includes a bounded export of public pages first, then recent public posts. Append `.md` to any post or page URL to get the content in Markdown (for example, `/example-post.md`). ## Pages ### A-Level Economics Tutor | Reviews & Feedback URL: https://www.a-level-economics-tutor.com/reviews/ Last updated: 2026-01-02T12:07:33.000Z ## What Students and Parents Say I've been tutoring A-Level Economics since 2017, working with students across the UK and internationally. Here's what they have to say: ### **Clear Explanations & Understanding** > "His clear explanations, patience and encouragement made a huge difference to my daughter's confidence and understanding of the subject." > — Shahab, September 2025 > "He has a structured way of explaining Economics, making it easy to understand and helping me build up my knowledge and confidence." > — Elsie, August 2024 > "His rare ability to explain technical economic concepts and difficult diagrams in a simple and memorable way helped me consistently improve." > — Sarah, September 2024 ### **Grade Improvements** > "During the limited time he tutored me, he helped me improve my grades in Economics by three grades." > — Rafi, August 2025 > "I went from a D in class assessments to an A in my actual A-Levels." > — Fatima, August 2024 > "He took me from a D at AS to an A at A-Level, and I couldn't have done it without his support." > — Elsie, August 2024 > "With his support, she achieved the grade she needed for university." > — Shahab, September 2025 ### **Exam Technique** > "His lessons integrated exam questions and crucial exam tips, helping me understand exactly what examiners are looking for." > — Sarah, September 2024 > "After reviewing my work, he explained where I was losing marks and how to fix it, which made a huge difference in exams." > — Sarah, September 2024 ### **Communication & Support** > "He kept me updated with regular progress reports and even checked in after the exams." > — Martha, August 2025 > "We are extremely grateful for the support he gave our children in A-Level Economics. His guidance and dedication made a real difference." > — Francesca, August 2025 > "He helped our twins with their A-Level Economics, bringing structure and process to their revision and making it much easier." > — Tim, August 2024 ### **87+ Five-Star Google Reviews** View all my reviews here. [87+ 5 star Google Reviews](https://share.google/d93OfNBMtOIQIBVv5?ref=a-level-economics-tutor.com) ## **Get in Touch** If you'd like to discuss tutoring, feel free to contact me or message me on WhatsApp. --- [Contact Form](https://www.a-level-economics-tutor.com/contact/) [Whatsapp](https://wa.me/447378262000?ref=tootingtutors.co.uk) ### Contact URL: https://www.a-level-economics-tutor.com/contact/ Last updated: 2025-12-31T17:49:58.000Z I’m happy to answer any questions about **A-Level Economics tutoring** and always reply on the same day. Please feel free to get in touch directly via **Phone or WhatsApp** (preferred). ## [**(+44) 0737 8262 000**](https://wa.me/447378262000?ref=tootingtutors.co.uk) Alternatively, you can complete the contact form below and I’ll get back to you by message or phone at your preferred time. Loading… ### About Me | A-Level Economics Tutor URL: https://www.a-level-economics-tutor.com/about/ Last updated: 2026-02-12T16:02:20.000Z ## A-Level Economics Tutor | 87+ Five-Star Reviews **My name is Jaisul. I’m a UCL Economics graduate and I’ve tutored A-Level and International A-Level Economics since 2017\. Having studied the same specification as today’s students, I understand the content, exam technique and common areas of difficulty. With 8 years of experience and thousands of teaching hours, I’ve developed a clear, structured and relatable teaching style that helps students build confidence and understanding from the very first session.** ### **My passion for Economics** I was first introduced to Economics at A-Level, where I had an excellent teacher. It quickly became one of my favourite subjects and complemented A-Level Maths very well. With this combination, I set my sights on studying Economics at UCL, where I thoroughly enjoyed my time and graduated with a 2:1 in 2020. Having studied the same specification as today’s students, combined with the deeper understanding I gained from university, I’m in a strong position to support and mentor students effectively — and it’s something I genuinely enjoy doing. ### **My passion for Teaching** My interest in teaching began with the challenges I faced during Year 13\. Our Economics teacher left at the end of Year 12, and we were required to complete much of the course through independent study. Despite this, I was determined to achieve the grades needed to study Economics at UCL, which had always been my goal. While working through the specification, I found that although many online resources existed, they often gave conflicting definitions and explanations, and there was a complete absence of model answers that I could use for exam practice. Since completing my A-Levels, I have helped hundreds of students achieve A\*–B grades in Economics, and I have created my own revision notes and model answers to provide students with clear, reliable material. You can read my **87+ five-star reviews here**. [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) The notes I originally made for myself have been improved and expanded so that every student I work with has access to concise topic summaries. I am also developing a growing bank of model answers to help students understand how to approach essay questions under exam conditions. I relate strongly to students who find Economics difficult at school, and I always teach in a way that keeps concepts simple, structured and engaging. ### **How I can help** I’m happy to work with any student who would benefit from clear teaching and structured support in Economics. All lessons are taught by me and are available as one-to-one sessions or small groups. You can find out more here. [A-Level Economics Tutoring and FAQ](https://www.a-level-economics-tutor.com/economics-tutoring/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) ### A-Level Economics Tutor URL: https://www.a-level-economics-tutor.com/economics-tutoring/ Last updated: 2026-05-30T13:56:15.000Z ## A-Level & International A-Level Economics Tutoring | 2025/26 I am always welcoming new enquiries for **A-Level Economics tutoring** and **International A-Level Economics tutoring**. I offer both **one-to-one** and **small group** tutoring for students in the UK and internationally. You can get in touch with me via WhatsApp, or use the contact form listed below and I will get back to you.[ ](https://wa.me/447378262000?ref=tootingtutors.co.uk) [Whatsapp](https://wa.me/447378262000?ref=tootingtutors.co.uk) [Contact Form](https://www.a-level-economics-tutor.com/contact/) You can also call me directly at **(+44) 0737 8262 000** --- ## A-Level Economics Tutoring Services For the **2025/26 academic year**, I offer one-to-one tutoring (with limited availability) and small group tutoring in **A-Level and International A-Level Economics**. --- ### One-to-one A-Level Economics Tutoring — £60 per hour I offer one-to-one tutoring to a small number of students. Where possible, a daytime slot is preferred for these sessions. One-to-one tutoring is suited to students who want fully personalised support, flexible pacing, and targeted help with specific areas of the specification or exam technique. --- ### Small Group A-Level Economics Tutoring — £35 per hour I also tutor A-Level Economics in small groups of **2–4 students**. All students within a group: - Study the same exam board - Are working at similar grades - Share similar goals and motivations This allows sessions to remain just as effective as one-to-one tutoring. Small group sessions also allow students to benefit from hearing others’ questions and learning from different approaches. This can be particularly helpful for students who are less confident asking questions themselves. Group tutoring also allows me to offer high-quality **A-Level Economics tutoring** at a more **affordable** price. I understand that small groups do not suit everyone, and students are always welcome to move to one-to-one tutoring if they prefer. --- ## Free A-Level Economics Trial Session All new students are offered a **free trial session**. This gives us the chance to make sure the tutoring is the right fit and to build a personalised success plan together. During the trial, we will: - Review your current grades and recent mock results - Identify the topics and paper styles you are finding most difficult - Set a clear target grade and map out what it will take to get there - Create a step-by-step success plan tailored to your timeline and university aspirations - Run a short example lesson so you can see immediate progress - Agree availability and preferred session times --- ## Student Outcomes & Reviews I am a UCL Economics graduate and have been tutoring A-Level Economics since 2017, initially working with students locally before expanding to support students across the UK and internationally. I have received positive feedback from [**Dr Mark Potts**](https://aleveleconomicssuccess.com/?ref=a-level-economics-tutor.com) of ALevelEconomicsSuccess, a senior examiner with over 38 years' experience, who regularly refers students to me. I work with students aiming for the top grades and have a proven track record of supporting significant improvements — including students who have improved by two or three grades over a single academic year. You can read my **94+ five-star reviews** here. [Reviews](https://www.a-level-economics-tutor.com/reviews/) --- ## A-Level Economics Tutoring FAQs ### Do you follow the syllabus? Yes. I have detailed knowledge of the AQA, Edexcel and International Edexcel Economics specifications. While much of the content overlaps, the exam technique and assessment style differ between boards. This allows me to teach content in the right way for each exam board and then work through relevant past-paper questions so students become confident applying their knowledge under exam conditions. --- ### Which exam boards do you cover? I have 9 years' experience tutoring A-Level Economics across all major exam boards. For detailed information on how I teach each specification, select your exam board below: [AQA A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/aqa-a-level-economics-tutor/) [Edexcel A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/edexcel-a-level-economics-tutor/) [International A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/international-a-level-economics-tutor/) --- ### How much does tutoring cost? For the 2025/26 academic year: - **One-to-one tutoring:** £60 per hour - **Small group tutoring:** £35 per hour --- ### How long are your sessions? Sessions are **one hour per week**. This provides enough time to make a meaningful improvement each week while allowing students to ask questions and fully understand a key topic or exam skill. I also provide **optional homework**, including **exam questions**, as well as **lesson notes and session recordings**. --- ### Do you give homework? I’m mindful that students already receive a significant workload from school, so sessions are designed to make strong progress without relying on extra work. For students who want to go further, I set **optional practice and exam-style questions** to help consolidate learning. --- ### Do you mark essays? Yes. I regularly review and mark essays and provide clear feedback to help students improve structure, analysis and evaluation. --- ### What is your availability? I tutor every day of the week, except Friday evenings and weekend evenings. I reply quickly and do my best to be flexible with timings. --- ### How many students are in each small group? Small groups contain **2–4 students**. All students in a group study the same exam board and are working towards the same grades. Some groups focus more on exam practice, while others focus on building strong understanding before moving on to exam technique. --- ### What payment methods do you accept? Payments can be made via bank transfer, card or PayPal. --- ## Get in Touch If you’d like to arrange **A-Level Economics tutoring** or ask any questions, you can get in touch with me directly via WhatsApp, or use the contact form listed below and I will get back to you.[ ](https://wa.me/447378262000?ref=tootingtutors.co.uk) [Whatsapp](https://wa.me/447378262000?ref=tootingtutors.co.uk) [Contact Form](https://www.a-level-economics-tutor.com/contact/) You can also call me directly at **(+44) 0737 8262 000** ### AQA A-Level Economics Tutor URL: https://www.a-level-economics-tutor.com/aqa-a-level-economics-tutor/ Last updated: 2026-05-30T10:50:10.000Z ## Specialist AQA A-Level Economics Tutoring | One-to-One & Small Groups I am currently welcoming new enquiries for **AQA A-Level Economics tutoring**. I offer both one-to-one and small group tutoring for students across the UK, online via Zoom. You can get in touch via WhatsApp or use the contact form below — I reply quickly. [Whatsapp](https://wa.me/447378262000?ref=tootingtutors.co.uk) [Contact Form](https://www.a-level-economics-tutor.com/contact/) You can also call me directly at **(+44) 0737 8262 000** --- ## Why Choose an AQA Specialist Tutor? AQA A-Level Economics has a specific style of questioning, mark scheme, and assessment criteria that differs from other exam boards. Generic tutoring is not enough. I have 9 years of experience tutoring **AQA A-Level Economics** specifically. I know exactly what examiners are looking for across: - **Paper 1** — Markets and Market Failure - **Paper 2** — National and International Economy - **Paper 3** — Economic Principles and Issues (data response and essays) This means every session is targeted at what actually earns marks in the AQA exam — not just covering content, but building the analytical chains, evaluation skills, and essay technique that separates an A from a B. --- ## AQA A-Level Economics Tutoring Services ### One-to-One AQA Economics Tutoring — £60 per hour I offer one-to-one tutoring to a small number of AQA students. Availability is limited, so I recommend getting in touch early. One-to-one tutoring is ideal for students who want: - Fully personalised sessions tailored to their specific weaknesses - Targeted help with AQA essay technique and data response questions - Flexible pacing through the specification - Direct feedback on marked essays and past paper answers --- ### Small Group AQA Economics Tutoring — £35 per hour per student I tutor AQA A-Level Economics in small groups of 2–4 students. All students in a group study AQA and are working at similar grades and towards similar targets. Small group tutoring allows students to: - Master the content deeply through structured teaching and model answers - Understand exactly what examiners want and how to write responses that score full marks - Access high-quality AQA Economics tutoring at a more affordable price Sessions are structured and focused — group sizes are kept small enough that every student gets the attention they need. --- ## Free AQA Economics Trial Session All new students are offered a **free trial session**. This gives us the chance to make sure the tutoring is the right fit and to build a personalised success plan together. During the trial, we will: - Review your current grades and recent AQA mock results - Identify the AQA topics and paper styles you are finding most difficult - Set a clear target grade and map out what it will take to get there - Create a step-by-step success plan tailored to your timeline and university aspirations - Run a short example lesson so you can see immediate progress - Agree availability and preferred session times --- ## About Me My name is **Jaisul**. I am a UCL Economics graduate and have been tutoring **AQA A-Level Economics** since 2017. I studied the same A-Level Economics content as today's students — including the AQA specification — and achieved an A. Since then I have helped hundreds of students build the confidence, understanding, and exam technique needed to achieve their target grades. I have also received positive feedback from **Dr Mark Potts** of [**ALevelEconomicsSuccess**](https://aleveleconomicssuccess.com/?ref=a-level-economics-tutor.com), a senior examiner with over 38 years of experience. You can read my **94+ five-star reviews** here [94+ Five-Star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) --- ## What My AQA Students Say *"He took me *from a D at AS to an A at A-Level*, and I couldn't have done it without his support."* — Fatima, August 2024 *"His rare *ability to explain technical economic concepts and difficult diagrams* in a simple and memorable way helped me consistently improve."* — Sarah, September 2024 *"During the limited time he tutored me, he helped me *improve in Economics by three grades*."* — Rafi, August 2025 *"His clear explanations, patience and encouragement made a *huge difference to my daughter's confidence and understanding* of the subject."* — Shahab, September 2025 --- ## AQA A-Level Economics Tutoring FAQs ### Do you follow the AQA specification? Yes. I have comprehensive knowledge of the AQA A-Level Economics specification and structure every session around it. I focus particularly on the essay and data response skills that AQA rewards at the top mark bands. ### Which papers do you cover? I cover all three AQA papers: - Paper 1: Markets and Market Failure - Paper 2: National and International Economy - Paper 3: Economic Principles and Issues ### How much does AQA Economics tutoring cost? - **One-to-one:** £60 per hour - **Small group (2–4 students):** £35 per hour per student ### How long are sessions? Sessions are one hour per week. I also provide lesson notes, session recordings, and optional homework including AQA past paper questions. ### Do you mark AQA essays? Yes. I regularly mark AQA-style essays and data response answers, providing clear feedback on structure, analysis, and evaluation in line with the mark scheme. ### Is tutoring online or in person? Tutoring is primarily online via Zoom. In-person sessions may be available for students in South London. ### How do I get started? Get in touch via WhatsApp or the contact form. I will reply quickly, and we can arrange a free trial session at a time that suits you. --- ## Get in Touch If you are looking for an **AQA A-Level Economics tutor**, I would be happy to hear from you. [Whatsapp](https://wa.me/447378262000?ref=tootingtutors.co.uk) [Contact Form](https://www.a-level-economics-tutor.com/contact/) You can also call me directly at **(+44) 0737 8262 000** ### Edexcel A-Level Economics Tutor URL: https://www.a-level-economics-tutor.com/edexcel-a-level-economics-tutor/ Last updated: 2026-05-30T11:28:30.000Z ## Specialist Edexcel A-Level Economics Tutoring | One-to-One & Small Groups I am currently welcoming new enquiries for **Edexcel A-Level Economics tutoring**. I offer both one-to-one and small group tutoring for students across the UK, online via Zoom. You can get in touch via WhatsApp or use the contact form below — I reply quickly. [Whatsapp](https://wa.me/447378262000?ref=tootingtutors.co.uk) [Contact Form](https://www.a-level-economics-tutor.com/contact/) You can also call me directly at **(+44) 0737 8262 000** --- ## Why Choose an Edexcel Specialist Tutor? Edexcel A-Level Economics has a distinct structure, mark scheme, and question style that rewards specific analytical and evaluative skills. The 25-mark essay questions in particular require a precise approach that generic tutoring rarely develops. I have 9 years of experience tutoring **Edexcel A-Level Economics** specifically. I know exactly what examiners are looking for across: - **Paper 1** — Markets and Business Behaviour - **Paper 2** — The National and Global Economy - **Paper 3** — Microeconomics and Macroeconomics (synoptic) Every session is built around the skills that actually earn marks in Edexcel exams — structured chains of reasoning, well-supported evaluation, and confident use of diagrams under exam conditions. --- ## Edexcel A-Level Economics Tutoring Services ### One-to-One Edexcel Economics Tutoring — £60 per hour I offer one-to-one tutoring to a small number of Edexcel students. Availability is limited, so I recommend getting in touch early. One-to-one tutoring is ideal for students who want: - Fully personalised sessions tailored to their specific weaknesses - Targeted help with Edexcel 25-mark essays and data response questions - Flexible pacing through the specification - Direct feedback on marked essays and past paper answers --- ### Small Group Edexcel Economics Tutoring — £35 per hour per student I tutor Edexcel A-Level Economics in small groups of 2–4 students. All students in a group study Edexcel and are working at similar grades and towards similar targets. Small group tutoring allows students to: - Master the content deeply through structured teaching and model answers - Understand exactly what examiners want and how to write responses that score full marks - Access high-quality Edexcel Economics tutoring at a more affordable price Sessions are structured and focused — group sizes are kept small enough that every student gets the attention they need. --- ## Free Edexcel Economics Trial Session All new students are offered a **free trial session**. This gives us the chance to make sure the tutoring is the right fit and to build a personalised success plan together. During the trial, we will: - Review your current grades and recent Edexcel mock results - Identify the Edexcel topics and paper styles you are finding most difficult - Set a clear target grade and map out what it will take to get there - Create a step-by-step success plan tailored to your timeline and university aspirations - Run a short example lesson so you can see immediate progress - Agree availability and preferred session times --- ## About Me My name is **Jaisul**. I am a UCL Economics graduate and have been tutoring **Edexcel A-Level Economics** since 2017. I have comprehensive knowledge of the Edexcel A-Level Economics specification and have helped hundreds of students build the confidence, understanding, and exam technique needed to achieve their target grades. I have also received positive feedback from **Dr Mark Potts** of [ALevelEconomicsSuccess](https://aleveleconomicssuccess.com/?ref=a-level-economics-tutor.com), a senior examiner with over 38 years of experience. You can read my **94+ five-star reviews** here [94+ Five-Star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) --- ## What My Edexcel Students Say *"He took me from a D at AS to an A at A-Level, and I couldn't have done it without his support."* — Fatima, August 2024 *"His rare ability to explain technical economic concepts and difficult diagrams in a simple and memorable way helped me consistently improve."* — Sarah, September 2024 *"During the limited time he tutored me, he helped me improve in Economics by three grades."* — Rafi, August 2025 *"His clear explanations, patience and encouragement made a huge difference to my daughter's confidence and understanding of the subject."* — Shahab, September 2025 --- ## Edexcel A-Level Economics Tutoring FAQs ### Do you follow the Edexcel specification? Yes. I have comprehensive knowledge of the Edexcel A-Level Economics specification and structure every session around it. I focus particularly on the 25-mark essay technique and the synoptic skills required for Paper 3. ### Which papers do you cover? I cover all three Edexcel papers: - Paper 1: Markets and Business Behaviour - Paper 2: The National and Global Economy - Paper 3: Microeconomics and Macroeconomics ### How much does Edexcel Economics tutoring cost? - **One-to-one:** £60 per hour - **Small group (2–4 students):** £35 per hour per student ### How long are sessions? Sessions are one hour per week. I also provide lesson notes, session recordings, and optional homework including Edexcel past paper questions. ### Do you mark Edexcel essays? Yes. I regularly mark Edexcel 25-mark essays and data response answers, providing clear feedback on structure, analysis, and evaluation in line with the Edexcel mark scheme. ### Is tutoring online or in person? Tutoring is primarily online via Zoom. In-person sessions may be available for students in South London. ### How do I get started? Get in touch via WhatsApp or the contact form. I will reply quickly, and we can arrange a free trial session at a time that suits you. --- ## Get in Touch If you are looking for an **Edexcel A-Level Economics tutor**, I would be happy to hear from you. [Whatsapp](https://wa.me/447378262000?ref=tootingtutors.co.uk) [Contact Form](https://www.a-level-economics-tutor.com/contact/) You can also call me directly at **(+44) 0737 8262 000** ### International A-Level Economics Tutor URL: https://www.a-level-economics-tutor.com/international-a-level-economics-tutor/ Last updated: 2026-05-30T11:31:34.000Z ## Specialist Edexcel International A-Level Economics Tutoring | One-to-One & Small Groups I am currently welcoming new enquiries for **Edexcel International A-Level Economics tutoring**. I offer both one-to-one and small group tutoring for students across the UK and internationally, online via Zoom. You can get in touch via WhatsApp or use the contact form below — I reply quickly. [WhatsApp](https://wa.me/447378262000?ref=a-level-economics-tutor.com) [Contact Form](https://www.a-level-economics-tutor.com/contact/) You can also call me directly at **(+44) 0737 8262 000** --- ## Why Choose an International A-Level Economics Specialist Tutor? The Edexcel International A-Level Economics specification is distinct from the standard UK A-Level. While the core economic content overlaps, the unit structure, question style, and mark scheme differ in important ways — and students who are taught using the wrong specification often underperform as a result. I have 9 years of experience tutoring **Edexcel International A-Level Economics** specifically. I have comprehensive knowledge of all four units: - **Unit 1** — Markets in Action - **Unit 2** — Macroeconomic Performance and Policy - **Unit 3** — Business Economics and Economic Efficiency - **Unit 4** — Global Economy Every session is tailored to the International A-Level specification — the right content, the right diagrams, and the right exam technique for each unit. --- ## International A-Level Economics Tutoring Services ### One-to-One International A-Level Economics Tutoring — £60 per hour I offer one-to-one tutoring to a small number of International A-Level students. Availability is limited, so I recommend getting in touch early. One-to-one tutoring is ideal for students who want: - Fully personalised sessions built around the International A-Level specification - Targeted help with unit-specific essay and data response questions - Flexible pacing through the content - Direct feedback on marked essays and past paper answers --- ### Small Group International A-Level Economics Tutoring — £35 per hour per student I tutor Edexcel International A-Level Economics in small groups of 2–4 students. All students in a group study the International A-Level specification and are working at similar grades and towards similar targets. Small group tutoring allows students to: - Master the content deeply through structured teaching and model answers - Understand exactly what examiners want and how to write responses that score full marks - Access high-quality International A-Level Economics tutoring at a more affordable price Sessions are structured and focused — group sizes are kept small enough that every student gets the attention they need. --- ## Free International A-Level Economics Trial Session All new students are offered a **free trial session**. This gives us the chance to make sure the tutoring is the right fit and to build a personalised success plan together. During the trial, we will: - Review your current grades and recent mock results - Identify the units and question styles you are finding most difficult - Set a clear target grade and map out what it will take to get there - Create a step-by-step success plan tailored to your timeline and university aspirations - Run a short example lesson so you can see immediate progress - Agree availability and preferred session times --- ## About Me My name is **Jaisul**. I am a UCL Economics graduate and have been tutoring **Edexcel International A-Level Economics** since 2017. I am currently ranked in the top 3 on Google for "International A-Level Economics tutor" — a reflection of the trust students and parents place in my teaching and the results I consistently help students achieve. I have also received positive feedback from **Dr Mark Potts** of [ALevelEconomicsSuccess](https://aleveleconomicssuccess.com/?ref=a-level-economics-tutor.com), a senior examiner with over 38 years of experience. You can read my **94+ five-star reviews** here [94+ Five-Star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) --- ## What My Students Say *"He took me from a D at AS to an A at A-Level, and I couldn't have done it without his support."* — Fatima, August 2024 *"His rare ability to explain technical economic concepts and difficult diagrams in a simple and memorable way helped me consistently improve."* — Sarah, September 2024 *"During the limited time he tutored me, he helped me improve in Economics by three grades."* — Rafi, August 2025 *"His clear explanations, patience and encouragement made a huge difference to my daughter's confidence and understanding of the subject."* — Shahab, September 2025 --- ## International A-Level Economics Tutoring FAQs ### Do you follow the Edexcel International A-Level specification? Yes. I have comprehensive knowledge of the Edexcel International A-Level Economics specification and teach exclusively to it. This means the content, diagrams, and exam technique I teach are exactly what is required for your exams — not the standard UK A-Level. ### Which units do you cover? I cover all four International A-Level units: - Unit 1: Markets in Action - Unit 2: Macroeconomic Performance and Policy - Unit 3: Business Economics and Economic Efficiency - Unit 4: Global Economy ### How much does International A-Level Economics tutoring cost? - **One-to-one:** £60 per hour - **Small group (2–4 students):** £35 per hour per student ### How long are sessions? Sessions are one hour per week. I also provide lesson notes, session recordings, and optional homework including International A-Level past paper questions. ### Do you mark International A-Level essays? Yes. I regularly mark International A-Level essays and data response answers, providing clear feedback in line with the Edexcel International mark scheme. ### Is tutoring online or in person? Tutoring is primarily online via Zoom, which makes it accessible for students anywhere in the world. In-person sessions may be available for students in South London. ### Do you tutor students outside the UK? Yes. I tutor International A-Level Economics students across the UK and internationally. Online tutoring via Zoom works seamlessly regardless of time zone, and I do my best to accommodate different time zones where possible. ### How do I get started? Get in touch via WhatsApp or the contact form. I will reply quickly, and we can arrange a free trial session at a time that suits you. --- ## Get in Touch If you are looking for an **International A-Level Economics tutor**, I would be happy to hear from you. [Whatsapp](https://wa.me/447378262000?ref=tootingtutors.co.uk) [Contact Form](https://www.a-level-economics-tutor.com/contact/) You can also call me directly at **(+44) 0737 8262 000** ## Posts ### Explain how the increasing demand for dental care is likely to affect the market for dentists URL: https://www.a-level-economics-tutor.com/explain-how-the-increasing-demand-for-dental-care-is-likely-to-affect-the-market-for-dentists/ Last updated: 2026-09-04T16:24:56.000Z ### [AQA AS-Level Paper 1 June 2019 Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-June-2019.pdf) **Extract E (line 9) states: ‘a growing population is increasing the demand for dental care.’** **Explain how the increasing demand for dental care is likely to affect the market for dentists. (10 marks)** Demand is the number of goods and services that people are willing and able to buy at each given price. The market for dental care and the market for dentists are related. In this case, the demand for dentists is derived from the demand for dental care. As the population increases, there are more people who are willing and able to pay for dental care at each given price. Therefore, there is an increase in the demand for dental care. This leads to an increase in the equilibrium quantity and the equilibrium price for dental care. ![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/09/image-2.png) Increase in Demand diagram for A-Level Economics In the market for dental care, there is an expansion along the supply curve, due to the profit motive. This means that firms need more factors of production to raise output. This causes an increase in demand for dentists. This causes the equilibrium quantity and the equilibrium wage to go up in the market for dentists. ![Increase in Demand for Labour diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/09/image-3.png) Increase in Demand for Labour diagram for A-Level Economics --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Evaluate whether the UK government should take more action to improve dental health in the UK URL: https://www.a-level-economics-tutor.com/evaluate-whether-the-uk-government-should-take-more-action-to-improve-dental-health-in-the-uk/ Last updated: 2026-09-04T16:23:38.000Z ### [AQA AS-Level Economics Paper 1 June 2019 Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-June-2019.pdf?ref=a-level-economics-tutor.com) Use the extracts and your knowledge of economics to evaluate whether the UK government should take more action to improve dental health in the UK. (25 marks) **Plan** - **Paragraph 1** - **Argument: on the one hand, the government should take more action to solve any possible market failure in dental care** - **Diagram: positive externalities in consumption** - **Evaluation: however, there is a risk of government failure e.g. market distortions (and other issues like opportunity cost)** - **Paragraph 2** - **Argument: on the other hand, the government should leave dental care to the free market as the price mechanism is more effective at solving problems like excess demand** - **Diagram: excess demand** - **Evaluation: however, the free market only allocates goods and services to those who are willing and able to pay** --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### AQA AS-Level Economics Past Papers 2026 URL: https://www.a-level-economics-tutor.com/aqa-as-level-economics-past-papers/ Last updated: 2026-09-03T12:12:35.000Z ### AQA AS-Level Economics Past Paper June 2026 AQA AS-Level Economics Paper 1 June 2026 | Insert | QP | MS | ER AQA AS-Level Economics Paper 2 June 2026 | Insert | QP | MS | ER ### AQA AS-Level Economics Past Paper June 2025 AQA AS-Level Economics Paper 1 June 2025 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2025-Insert.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/02/AQA-AS-Level-Economics-Paper-1-June-2025-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/02/AQA-AS-Level-Economics-Paper-1-June-2025-MS) | [ER](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2025-ER.PDF) AQA AS-Level Economics Paper 2 June 2025 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2025-Insert.PDF) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/02/AQA-AS-Level-Economics-Paper-2-June-2025-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/02/AQA-AS-Level-Economics-Paper-2-June-2025-MS) | [ER](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2025-ER.PDF) ### AQA AS-Level Economics Past Papers June 2024 AQA AS-Level Economics Paper 1 June 2024 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-June-2024.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2024-QP.PDF) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2024-MS.PDF) | [ER](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2024-ER.PDF) AQA AS-Level Economics Paper 2 June 2024 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2024-1.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2024-QP-1.PDF) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2024-MS.PDF) | [ER](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2024-ER.PDF) ### AQA AS-Level Economics Past Papers June 2023 AQA AS-Level Economics Paper 1 June 2023 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-June-2023.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2023-QP.PDF) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2023-MS.PDF) | [ER](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2023-ER.PDF) AQA AS-Level Economics Paper 2 June 2023 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2023-1.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2023-QP-1.PDF) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2023-MS.PDF) | [ER](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2023-ER.PDF) ### AQA AS-Level Economics Past Papers June 2022 AQA AS-Level Economics Paper 1 June 2022 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-June-2022.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2022-QP.PDF) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2022-MS.PDF) | [ER](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2022-ER.PDF) AQA AS-Level Economics Paper 2 June 2022 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2022-1.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2022-QP.PDF) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2022-MS.PDF) | [ER](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2022-ER.PDF) ### AQA AS-Level Economics Past Papers June 2020 AQA AS-Level Economics Paper 1 June 2020 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-June-2020.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2020-QP.PDF) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2020-MS.PDF) AQA AS-Level Economics Paper 2 June 2020 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2020-1.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2020-QP.PDF) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2020-MS.PDF) ### AQA AS-Level Economics Past Papers June 2019 AQA AS-Level Economics Paper 1 June 2019 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-June-2019.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2019-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2019-MS.pdf) AQA AS-Level Economics Paper 2 June 2019 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2019-1.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2019-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2019-MS.pdf) ### AQA AS-Level Economics Past Papers June 2018 AQA AS-Level Economics Paper 1 June 2018 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-June-2018.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2018-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2018-MS.pdf) AQA AS-Level Economics Paper 2 June 2018 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2018-1.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2018-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2018-MS.pdf) ### AQA AS-Level Economics Past Papers June 2017 AQA AS-Level Economics Paper 1 June 2017 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-June-2017.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2017-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2017-MS.pdf) AQA AS-Level Economics Paper 2 June 2017 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2017-1.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2017-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2017-MS.pdf) ### AQA AS-Level Economics Past Papers June 2016 AQA AS-Level Economics Paper 1 June 2016 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-June-2016.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2016-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-June-2016-MS.pdf) AQA AS-Level Economics Paper 2 June 2016 | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2016-1.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2016-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-June-2016-MS.pdf) ### AQA AS-Level Economics Past Papers Specimen AQA AS-Level Economics Paper 1 Specimen | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-1-Insert-Specimen.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-Specimen-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-Specimen-MS.pdf) | [ER](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-1-Specimen-ER.PDF) AQA AS-Level Economics Paper 2 Specimen | [Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-Specimen-1.pdf) | [QP](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-Specimen-QP.pdf) | [MS](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-Specimen-MS.pdf) | [ER](https://www.a-level-economics-tutor.com/content/files/2026/09/AQA-AS-Level-Economics-Paper-2-Specimen-ER.PDF) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Evaluate the view that increased government spending on education and training is essential to achieve a long-term improvement in UK macroeconomic performance URL: https://www.a-level-economics-tutor.com/evaluate-the-view-that-increased-government-spending-on-education-and-training-is-essential-to-achieve-a-long-term-improvement-in-uk-macroeconomic-performance/ Last updated: 2026-09-02T18:25:38.000Z ### AQA AS-Level Economics Paper 2 June 2025 Insert Extract C (lines 8–9) states: ‘Increased spending on education and training is likely to be essential to achieve a long-term improvement in macroeconomic performance.’ Use the extracts and your knowledge of economics to evaluate the view that increased government spending on education and training is essential to achieve a long-term improvement in UK macroeconomic performance. (25 marks) **Plan** - **Paragraph 1** - **Argument: on the one hand, increased spending on education and training is essential because it can lead to long-run economic growth and a low and stable stable price level** - **Diagram: increase in LRAS** - **Evaluation: opportunity cost** - **Paragraph 2** - **Argument: on the other hand, other policies like greater spending on infrastructure are likely to be more important for achieving macroeconomic objectives** - **Diagram: increase in LRAS** - **Evaluation: time lag** --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Evaluate what more, if anything, the Government should do to achieve a sustained increase in investment in the UK economy URL: https://www.a-level-economics-tutor.com/evaluate-what-more-if-anything-the-government-should-do-to-achieve-a-sustained-increase-in-investment-in-the-uk-economy/ Last updated: 2026-09-02T18:05:02.000Z ### [AQA AS-Level Economics Paper 2 June 2025 Insert](https://www.physicsandmathstutor.com/pdf-pages/?pdf=https%3A%2F%2Fpmt.physicsandmathstutor.com%2Fdownload%2FEconomics%2FA-level%2FPast-Papers%2FAQA%2FAS-Paper-2%2FIN%2FJune%202025%20IN.pdf&ref=a-level-economics-tutor.com) Extract F (lines 11–13) states: ‘There are signs that business investment is starting to increase again, but government intervention may be needed to encourage firms to continue investing, to try to ensure the increase in investment is sustained.’ Use the extracts and your knowledge of economics to evaluate what more, if anything, the Government should do to achieve a sustained increase in investment in the UK economy. (25 marks) **Plan** - **Paragraph 1** - **Argument: one way to achieve greater investment is through lower interest rates** - **Diagram: increase in AD** - **Evaluation: however, lower interest rates can contribute to higher inflation rates** - **Paragraph 2** - **Argument: another way to achieve greater investment is through supply-side fiscal policies like lower corporation taxes** - **Diagram: increase in AD and LRAS** - **Evaluation: however, lower corporation taxes can cause a worsening of the budget deficit** --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Evaluate the view that imposing a maximum price for rice is the best way for a rice-importing nation, such as Nigeria, to ensure the affordability of a basic food for its citizens URL: https://www.a-level-economics-tutor.com/evaluate-the-view-that-imposing-a-maximum-price-for-rice-is-the-best-way-for-a-rice-importing-nation-such-as-nigeria-to-ensure-the-affordability-of-a-basic-food-for-its-citizens/ Last updated: 2026-09-01T20:07:31.000Z ### [AQA A-Level Economics Paper 1 June 2025 Insert](https://www.a-level-economics-tutor.com/content/files/2026/02/AQA-A-Level-Economics-Paper-1-June-2025-QP.pdf?ref=a-level-economics-tutor.com) **Using the data and your knowledge of economics, evaluate the view that imposing a maximum price for rice is the best way for a rice-importing nation, such as Nigeria, to ensure the affordability of a basic food for its citizens. (25 marks)** **Plan** - **Paragraph 1** - **Argument: on the one hand, a maximum price is the best way to ensure food like rice is more affordable because it guarantees a lower price** - **Diagram: maximum price diagram** - **Evaluation: on the other hand, maximum prices can lead to government failure (excess demand means the government have distorted the market)** - **Paragraph 2** - **Argument: on the other hand, a subsidy is a better way to ensure affordability because it can lead to lower prices as well as an increase in quantity.** - **Diagram: subsidy diagram** - **Evaluation: on the other hand, subsidies have a large opportunity cost** --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the best policies to prevent deflation URL: https://www.a-level-economics-tutor.com/discuss-the-best-policies-to-prevent-deflation/ Last updated: 2026-08-30T15:15:53.000Z Expansionary fiscal policy Expansionary monetary policy One way to prevent deflation is the use of expansionary fiscal policy. This is when the government increases spending or decreases taxes to influence the level of aggregate demand in the economy. One example is the government reducing income taxes. This allows consumers to have more disposable income. This means that consumer spending (C) is likely to increase, which causes aggregate demand (AD) to increase since C is a component of AD. Initially, this causes real GDP to increase from y1 to y2, and then to y3 through a multiplier effect, as shown on the diagram below. As aggregate demand increases, there is greater demand for goods and services, which leads to an increase in the derived demand for labour. This leads to a decrease in unemployment. As incomes increase further, this causes consumer confidence and consumer spending will increase even further. Additionally, as businesses get closer to full capacity, they are likely to increase their spending on capital (accelerator theory). As consumer spending and business investment increase, aggregate demand increases further. Overall, there is an increase in economic growth from y1 to y3 and an increase in the price level from pl1 to pl3, as there is more demand chasing the same goods and services. ![Multiplier Effect diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.44@2x.png) Size of the multiplier Crowding out National debt One way to prevent deflation is through the use of expansionary monetary policy. This involves the central bank reducing interest rates in order to influence the components of aggregate demand. Consumer spending is likely to increase due to cheaper borrowing costs. Homeowners are likely to see a boost in disposable incomes as their monthly mortgage payments are likely to fall. Additionally, there might be a wealth effect. Lower interest rates make it more attractive to buy a home. This leads to an increase in the demand and therefore the value of homes. Therefore, homeowners can enjoy greater wealth and greater consumer confidence. As consumer spending (C) increases, business confidence is likely to increase. Additionally, businesses expect to reach closer to full capacity so they are likely to increase investment (I) by spending more on capital goods. Finally, as interest rates fall, there is likely to be a net outflow of hot money. This causes a currency depreciation, making exports cheaper and imports more expensive. Overall, a decrease in interest rates can lead to an increase in C, I and (X-M), causing aggregate demand to increase. The diagram shows AD shifting to the right, leading to an increase in economic growth from y1 to y2, preventing the deflationary spiral. The average price level also increases from pl1 to pl2 as a result of greater demand chasing the same number of goods and services. ![Increase in Aggregate Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.06.39@2x.png) Liquidity trap and real interest rates --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Policies to reduce structural unemployment URL: https://www.a-level-economics-tutor.com/policies-to-reduce-structural-unemployment/ Last updated: 2026-08-30T14:01:58.000Z Training schemes Infrastructure One way to reduce structural unemployment is through increased spending on education and training schemes. Structural unemployment is a form of long-term unemployment where there is a mismatch between the location or skills of workers and the available jobs. Increased spending on education and training can allow workers to improve their existing skills, or re-train entirely. This increases occupational mobility of labour in labour markets, and reduces any mismatches in skills. For example, the government has recently introduced T-Levels, which allows 16 to 18 year olds to gain technical qualifications. This increases the number of young people available to work and helps to reduce the number of young people who go to university and gain skills that are less relevant to the current job market. Overall, this reduces structural unemployment. Additionally, due to more skilled workers, the productive potential of the economy will increase, shown by a rightward shift in the long-run aggregate supply (LRAS) curve. This leads to a decrease in the price level from pl1 to pl2 as there is the same demand chasing more goods and services. Also, this causes an increase in economic growth from y1 to y2. ![Increase in Long-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.54@2x.png) Opportunity cost Time lag One way to reduce structural unemployment is through increased spending on infrastructure. Structural unemployment is a form of long-term unemployment where there is a mismatch between the location or skills of workers and the available jobs. In particular, the government could increase spending to improve transport links. For example, the government have spent close to £40 billion on HS2\. When complete, this would make it much easier for workers and businesses to commute to job opportunities that are further away, without needing to relocate. Overall, this reduces structural unemployment. Also, the economy can benefit from an increase in the productive potential due to the increase in geographical mobility of labour, shown by a rightward shift in the long-run aggregate supply (LRAS) curve. This leads to a decrease in the price level from pl1 to pl2 as there is the same demand chasing more goods and services. Also, this causes an increase in economic growth from y1 to y2. ![Increase in Long-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.54@2x.png) Opportunity cost Time lag --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the best policies to reduce inflation URL: https://www.a-level-economics-tutor.com/discuss-the-best-policies-to-reduce-inflation/ Last updated: 2026-08-28T10:29:09.000Z Contractionary monetary policy Contractionary fiscal policy One way to reduce the inflation rate is the use of contractionary monetary policy. This involves the central bank raising interest rates, in order to influence the level of aggregate demand (AD) in the economy. AD = C + I + G + (X-M) and higher interest rates can lead to lower levels of consumption (C), investment (I) and net trade (X-M). Higher interest rates mean that there is a higher cost of borrowing and higher reward for saving. For consumers, there is a greater incentive to save rather than borrow and spend. Additionally, there could be a negative wealth effect as higher interest rates reduce the demand from houses due to potentially higher monthly repayments. This reduces house prices which can reduce the wealth of homeowners and reduce consumer confidence. Overall, consumer spending falls. Higher interest rates also mean that it is more expensive for businesses to take out loans, so they are less likely to invest in capital. Additionally they anticipate that there will be spare capacity due to lower consumer spending, so investment will fall. Finally, higher interest rates can cause a net movement of hot money flows into the UK, which causes the pound to appreciate. This makes imports cheaper and exports more expensive, which can cause the trade deficit to worsen. Overall, aggregate demand falls, as shown in the diagram below. This causes the price level to fall from pl1 to pl2 as there is less demand chasing the same number of goods and services. Additionally, the real GDP decreases from y1 to y2. ![Decrease in Aggregate Demand at Full Capacity diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.21@2x.png) Trade-offs Real interest rates One way to reduce the inflation rate is through the use of contractionary fiscal policy. This is when the government decrease spending or increase taxes to influence the level of aggregate demand (AD). For example, the government could raise income tax rates. In the UK, real incomes are being taxed more every year as the income tax bands are frozen (until at least 2028) despite workers earning pay rises due to inflation. Higher income taxes mean that consumers have less disposable income. This is likely to lead to lower consumer spending, which is a component of AD, causing it to fall from AD1 to AD2 as shown in the diagram below. This causes real GDP to fall and it also causes the price level to fall from pl1 to pl2 as there is less demand chasing the same number of goods and services. ![Decrease in Aggregate Demand at Full Capacity diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.21@2x.png) Trade-offs Negative multiplier effect --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Supply-Side Policies | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/supply-side-policies-a-level-economics-model-paragraph/ Last updated: 2026-08-27T12:13:12.000Z Training schemes Infrastructure Lower corporation tax Lower income tax Cut in welfare payments One way to increase potential growth is through interventionist supply-side policies like increased spending on training schemes. Potential growth, also known as long-run economic growth, is when there's an increase in the productive capacity of the economy. One example of a new training scheme is the implementation of T-Levels which allow 16-19 year olds a chance to gain technical qualifications. Policies like this can improve human capital, as workers develop more skills. This leads to an increase in labour productivity, as there is an increase in the amount of output produced per worker per hour. As a result, businesses are able to produce more goods and services when all factors of production are fully employed. This increases the productive potential of the economy, shown by a rightward shift in the long-run aggregate supply (LRAS) curve. This leads to a decrease in the price level from pl1 to pl2 as there is the same demand chasing more goods and services. Also, this causes an increase in economic growth from y1 to y2\. The increase in LRAS represents the potential growth. ![Increase in Long-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.54@2x.png) Opportunity cost Time lag One way to increase potential growth is through interventionist supply-side policies like increased spending on infrastructure. For example, the government have spent around £40bn on HS2\. Policies like this lead to improved transport links, which can reduce journey times. This makes it easier for staff and business owners to commute around the UK. This should lead to an increase in the output produced by any factors of production per hour, therefore increasing productivity. As a result, businesses are able to produce more goods and services when all factors of production are fully employed. This increases the productive potential of the economy, shown by a rightward shift in the long-run aggregate supply (LRAS) curve. This leads to a decrease in the price level from pl1 to pl2 as there is the same demand chasing more goods and services. Also, this causes an increase in economic growth from y1 to y2\. The increase in LRAS represents the potential growth. ![Increase in Long-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.54@2x.png) Opportunity cost Time lag One way to increase potential growth is through market-based supply-side policies like lower corporation tax. This means that businesses are taxed less on their profits. For example, Ireland had one of the lowest corporation taxes in Europe of around 12.5% until 2021\. Firstly, the potential for higher retained profits incentivises more firms to set up. Secondly, higher retained profits allow businesses to increase investment in capital. Improvements in capital can allow work to be done faster. As a result, businesses are able to produce more goods and services when all factors of production are fully employed. This increases the productive potential of the economy, shown by a rightward shift in the long-run aggregate supply (LRAS) curve. This leads to a decrease in the price level from pl1 to pl2 as there is the same demand chasing more goods and services. Also, this causes an increase in economic growth from y1 to y2\. The increase in LRAS represents the potential growth. ![Increase in Long-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.54@2x.png) Opportunity cost Time lag One way to increase potential growth is through market-based supply-side policies like lower income tax. Income taxes in the UK are progressive, meaning that as income increases, the proportion that is taxed also increases. Lower income tax rates increase the incentive for people to work, as they get to keep more of their pay. This incentivises people to enter the workforce, work overtime, or seek promotions. Lower income tax rates also attract skilled workers from abroad who may have otherwise chosen to work in places with lower income tax rates like Dubai. This increases the quantity and quality of labour in the economy which leads to an increase in labour productivity; the amount of output produced per worker per hour. As a result, businesses are able to produce more goods and services when all factors of production are fully employed. This increases the productive potential of the economy, shown by a rightward shift in the long-run aggregate supply (LRAS) curve. This leads to a decrease in the price level from pl1 to pl2 as there is the same demand chasing more goods and services. Also, this causes an increase in economic growth from y1 to y2\. The increase in LRAS represents the potential growth. ![Increase in Long-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.54@2x.png) Opportunity cost Time lag One way to increase potential growth is through market-based supply-side policies like cutting welfare payments. For example, the government could reduce unemployment benefits like Jobseeker's Allowance, or they could increase the pension age. This reduces the incentive for people to remain out of work, and encourages more people to enter the labour market. The supply of labour increases, putting downward pressure on wages, reducing firms' average costs of production. As a result, businesses are able to produce more goods and services when all factors of production are fully employed. This increases the productive potential of the economy, shown by a rightward shift in the long-run aggregate supply (LRAS) curve. This leads to a decrease in the price level from pl1 to pl2 as there is the same demand chasing more goods and services. Also, this causes an increase in economic growth from y1 to y2\. The increase in LRAS represents the potential growth. ![Increase in Long-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.54@2x.png) Opportunity cost Time lag --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Policies to reduce cyclical unemployment URL: https://www.a-level-economics-tutor.com/policies-to-reduce-cyclical-unemployment/ Last updated: 2026-08-26T13:20:19.000Z Expansionary fiscal policy Expansionary monetary policy One way to reduce cyclical unemployment is the use of expansionary fiscal policy. This is when the government increases spending or decreases taxes to influence the level of aggregate demand in the economy. One example is the government reducing income taxes. This allows consumers to have more disposable income. This means that consumer spending (C) is likely to increase, which causes aggregate demand (AD) to increase since C is a component of AD. Initially, this causes real GDP to increase from y1 to y2, and then to y3 through a multiplier effect, as shown on the diagram below. As aggregate demand increases, there is greater demand for goods and services, which leads to an increase in the derived demand for labour. This leads to a decrease in cyclical unemployment. As incomes increase further, this causes consumer confidence and consumer spending will increase even further. Additionally, as businesses get closer to full capacity, they are likely to increase their spending on capital (accelerator theory). As consumer spending and business investment increase, aggregate demand increases further. Overall, there is an increase in economic growth from y1 to y3 and an increase in the price level from pl1 to pl3, which shows that expansionary fiscal policy can be useful in reducing cyclical unemployment. ![Multiplier Effect diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.44@2x.png) Size of the multiplier Crowding out National debt One way to reduce cyclical unemployment is through the use of expansionary monetary policy. This involves the central bank reducing interest rates in order to influence the components of aggregate demand. Consumer spending is likely to increase due to cheaper borrowing costs. Homeowners are likely to see a boost in disposable incomes as their monthly mortgage payments are likely to fall. Additionally, there might be a wealth effect. Lower interest rates make it more attractive to buy a home. This leads to an increase in the demand and therefore the value of homes. Therefore, homeowners can enjoy greater wealth and greater consumer confidence. As consumer spending (C) increases, business confidence is likely to increase. Additionally, businesses expect to reach closer to full capacity so they are likely to increase investment (I) by spending more on capital goods. Finally, as interest rates fall, there is likely to be a net outflow of hot money. This causes a currency depreciation, making exports cheaper and imports more expensive. Overall, a decrease in interest rates can lead to an increase in C, I and (X-M), causing aggregate demand to increase, as shown in the diagram below. This leads to an increase in real GDP from y1 to y2, and an increase in the average price level from pl1 to pl2\. As there is a greater value of goods and services being produced, this leads to an increase in the derived demand for labour, reducing cyclical unemployment. ![Increase in Aggregate Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.06.39@2x.png) Liquidity trap --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain the effects of deflation URL: https://www.a-level-economics-tutor.com/explain-the-effects-of-deflation/ Last updated: 2026-08-25T13:22:25.000Z Deflationary spiral Increase in real value of debt Sign of strong supply-side Increase in competitiveness Deflation can be damaging as it can trigger a deflationary spiral. Deflation occurs when there is a fall in the average price level. When prices are falling in the economy, rational consumers form an expectation that prices will continue to fall. This means that consumers are likely to delay their spending as they expect expensive purchases like homes to be cheaper if they waited. This leads to a fall in consumer spending, which causes aggregate demand to decrease. This causes the price-level to fall further, reinforcing the spiral. Additionally, as aggregate demand falls, real GDP decreases as there will be a fall in the value of goods and services being produced. This leads to a fall in the derived demand for labour, causing unemployment to rise. This causes disposable incomes and consumer confidence to fall, causing consumption and aggregate demand to fall further. This means that deflation can cause a negative multiplier effect, which can lead to a recession if not managed properly.![Negative Multiplier Effect diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.50@2x.png) One problem with deflation is that it causes the real value of debt to increase. This affects consumers, businesses and the government. Deflation occurs when there is a fall in the average price level. This means that asset prices will fall whilst the debt owed remains the same. For example, house prices might fall but the mortgage repayments owed would remain the same. This means that a larger proportion of people's income now goes towards their fixed mortgage repayments in real terms, so their disposable incomes would fall, and therefore they would be able to afford fewer goods and services. Therefore, they would be able to satisfy fewer needs and wants, so their living standards would fall. Additionally, businesses would face a similar issue in terms of the debt they owe for any land or machinery. This means their profits would fall as they are paying more towards their debt in real terms, whilst having to reduce their prices along with the deflation rate. Finally, the government would also have to pay the same nominal amounts towards any national debt, whilst tax revenues are likely to fall along with the deflation rate. This happens because workers' incomes might fall, and receipts from indirect taxes are also likely to fall due to lower consumer spending. One possible positive of deflation is that it can be a sign of a strong supply-side. Deflation occurs when there is a fall in the average price level. For example, the government could implement supply-side policies like infrastructure spending. One example of this is HS2 which would provide much faster transport links around the UK when complete. This would allow businesses to produce more output with the same factors of production. This would lead to an increase in the productive potential of the economy. If this is not matched by increases in aggregate demand, then this would create a negative output gap, which is when the actual rate of economic growth is slower than the trend rate of economic growth. Naturally, this causes a low or falling price level until aggregate demand increases and the economy adjusts closer to full capacity. This means that there is now more room for demand-side growth, through fiscal or monetary policy.![Increase in Long-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.54@2x.png) One possible advantage of deflation is that it can lead to an improvement in the balance of payments on the current account. Deflation occurs when there is a fall in the average price level. Firstly, this makes UK goods and services more internationally competitive. This means that exports are likely to increase. Secondly, as prices, and possibly incomes, are falling in the UK, domestic alternatives become relatively cheaper, meaning imports seem more expensive. This makes it likely that imports will fall. This means that there should be a fall in the UK's current account deficit. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain the effects of inflation URL: https://www.a-level-economics-tutor.com/effects-of-inflation/ Last updated: 2026-08-25T17:19:09.000Z Worse living standards Wage-price spiral High economic growth Reducing national debt High inflation can be damaging to individuals as it can worsen their living standards. Inflation is when there is an increase in the average price level. A high rate of inflation means it is likely that prices are rising faster than wages. This means that real wages are falling, meaning that people can consume less goods and services. This means they can satisfy less of their needs and wants, meaning their living standards are worsening. High inflation can be damaging to the economy as it can lead to a wage-price spiral. Inflation is when there is an increase in the average price level. A high rate of inflation means that it is likely that prices are rising faster than wages. This means that real incomes are falling, which means that consumers will be unable to satisfy as many of their needs and wants. This means that workers are likely to bargain for higher wages. This means that firms will have higher costs of production. This will lead to a decrease in short-run aggregate supply in the economy as firms will be willing to produce fewer goods and services at each price level due to lower profit margins. This leads to cost-push inflation, which reinforces the wage-price spiral. One advantage of high inflation is that it is a sign of economic growth and reinforces further economic growth. Demand-pull inflation in particular happens when there is an increase in aggregate demand as this means that firms must raise prices as there is too much demand chasing too few goods and services. This leads to an increase in the average price level but it also suggests that the economy is growing closer to its productive potential. Additionally, higher levels of inflation means that rational consumers form an expectation that prices will continue to rise. This encourages them to continue to spend on goods and services rather than delay spending. This causes further economic growth as it leads to an increase in the value of goods and services being produced. The government can minimise the trade-off between economic growth and high inflation by implementing supply-side policies, which allows the productive potential to increase.![Increase in Aggregate Demand at Full Capacity diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.13@2x.png) One possible advantage of inflation is that it makes it easier for the government to reduce debt. This is because it reduces the real value of debt whilst it also allows the government to increase tax revenue. Inflation occurs when there is an increase in the average price level. Firstly, the real value of debt falls as the government bonds that lenders have bought are now worth less in real terms. Secondly, the tax revenue from both direct and indirect taxes should increase. In the case of demand-pull inflation, there is an increase in aggregate demand. This causes average prices to increase as there is more demand chasing the same goods and services. The government can collect more income tax due to fiscal drag. This is when workers negotiate pay rises due to inflation. This means that many workers will enter a higher income tax band. Income taxes are progressive in the UK meaning that as income increases the proportion of income that is taxed increases. Therefore, income tax revenue should increase. Additionally, as firms increase prices, the government can collect more revenue through indirect taxes like VAT which is 20% on most goods and services. Finally if the economy grows, businesses should be able to make more profits, which would allow the government to collect more through corporation tax. This is assuming that the government do not adjust any tax bands immediately. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain the functions of the price mechanism URL: https://www.a-level-economics-tutor.com/explain-the-functions-of-the-price-mechanism/ Last updated: 2026-08-21T17:35:05.000Z Increase in demand Decrease in demand Decrease in supply Increase in supply The diagram below shows how the free market responds to an increase in demand. This is due to the invisible hand of the market (the functions of the price mechanism). Initally, the market is at equilibrium with a quantity q1 and price p1\. Then, demand increases. This means that there is an excess demand in the market. This is because there is a greater quantity of goods and services that consumers are willing and able to buy compared to what firms are willing and able to produce. This information will be signalled through the market as firms. For example, firms will notice busier stores or longer queues than usual. This incentivises firms to raise prices. A higher price has a rationing function as it leads to a contraction along the demand curve (D2). At the same time, the higher price causes an expansion along the supply curve (S1). This means the market reaches a new equilibrium price and quantity, and the excess demand no longer exists.![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) The diagram below shows how the free market responds to a decrease in demand. This is due to the invisible hand of the market (the functions of the price mechanism). Initally, the market is at equilibrium with a quantity q1 and price p1\. Then, demand decreases. This means that there is an excess supply in the market. This is because there is a greater quantity of goods and services that firms are willing and able to produce compared to what consumers are willing and able to buy. This information will be signalled through the market as firms. For example, firms will notice quieter stores or shorter queues than usual. This incentivises firms to reduce prices. A lower price has a rationing function as it leads to an expansion along the demand curve (D2). At the same time, the lower price causes a contraction along the supply curve (S1). This means the market reaches a new equilibrium price and quantity, and the excess supply no longer exists.![Decrease in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.57@2x.png) The diagram below shows how the free market responds to a decrease in supply. This is due to the invisible hand of the market (the functions of the price mechanism). Initally, the market is at equilibrium with a quantity q1 and price p1\. Then, supply decreases. This means that there is an excess demand in the market. This is because there is a greater quantity of goods and services that consumers are willing and able to buy compared to what firms are willing and able to produce. This information will be signalled through the market as firms. For example, firms will notice busier stores or longer queues than usual. This incentivises firms to raise prices. A higher price has a rationing function as it leads to a contraction along the demand curve (D1). At the same time, the higher price causes an expansion along the supply curve (S2). This means the market reaches a new equilibrium price and quantity, and the excess demand no longer exists.![Decrease in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.06@2x.png) The diagram below shows how the free market responds to an increase in supply. This is due to the invisible hand of the market (the functions of the price mechanism). Initally, the market is at equilibrium with a quantity q1 and price p1\. Then, supply increases. This means that there is an excess supply in the market. This is because there is a greater quantity of goods and services that firms are willing and able to produce compared to what consumers are willing and able to buy. This information will be signalled through the market as firms. For example, firms will notice quieter stores or shorter queues than usual. This incentivises firms to reduce prices. A lower price has a rationing function as it leads to an expansion along the demand curve (D1). At the same time, the lower price causes a contraction along the supply curve (S2). This means the market reaches a new equilibrium price and quantity, and the excess supply no longer exists.![Increase in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.02@2x.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain the causes of a price change URL: https://www.a-level-economics-tutor.com/explain-the-causes-of-a-price-change/ Last updated: 2026-08-20T16:13:54.000Z ### Factors affecting demand (PIRATES) Population Income Related goods Advertising Trends Expectations Seasons One cause of a price change is a change in population. When the population increases, this would lead to an increase in the demand for milk, as consumers would be willing and able to buy more milk at each price level, simply because there is now a larger population of people who drink milk. As demand increases, this causes an expansion along the supply curve. This causes the market equilibrium quantity and price to increase to q2 and p2.![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) One cause of a price change is a change in incomes. As income increases, demand for smartphones would increase as there would be an increase in the number of smartphones that people would be willing and able to buy at each price point. This is because an increase in incomes allows people to satisfy more of their needs and wants, and demand for luxury goods like newer smartphones will usually increase. As demand increases, this causes an expansion along the supply curve. This causes the market equilibrium quantity and price to increase to q2 and p2.![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) One cause of a price change is a change in the price of related goods. For example, an increase in the price of matcha could lead to an increase in the price of coffee. As the price of matcha increases, consumers will be more likely to consider switching to alternative goods and services, like coffee. Matcha and coffee are substitute goods, which means they have a positive cross elasticity of demand. An increase in the price of matcha is likely to cause an increase in the demand for coffee as there would be an increase in the amount of coffee that people are willing and able to buy at each price. As demand increases, this causes an expansion along the supply curve. This causes the market equilibrium quantity and price to increase to q2 and p2.![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) One cause of a price change is a change in advertising. If there was an increase in the advertising for bicycles, or an improvement in the quality of advertising, demand for bicycles would increase as there would be an increase in the number of bicycles that people are willing and able to buy at each price point. This is because the advertising would allow more people to see the value of owning a bicycle. As demand increases, this causes an expansion along the supply curve. This causes the market equilibrium quantity and price to increase to q2 and p2.![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) One cause of a price change is a change in trends. For example, vapes have become more trendy or fashionable than traditional cigarettes. This means that the demand for vapes would increase as there are a greater amount of vapes that people would be willing and able to buy at each price point. This is because people often make decisions based on social norms and therefore there might be an increase in their perceived value of owning a vape in social settings. As demand increases, this causes an expansion along the supply curve. This causes the market equilibrium quantity and price to increase to q2 and p2.![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) One cause of a price change is a change in expectations. For example, during lockdown, people formed expectations that supplies like toilet roll would run out due to the news stories they were reading. They may have heard that lockdown would be extended and noticed people rushing to supermarkets. This caused the demand for toilet roll to increase as there was a greater quantity of toilet roll that people were willing and able to buy at each price point. As demand increases, this causes an expansion along the supply curve. This causes the market equilibrium quantity and price to increase to q2 and p2.![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) One cause of a price change is a change in seasons. For example, the need for certain goods and services like ice cream is likely to change naturally at different times of year. For example, the demand for ice cream would increase during the summer due to the warmer weather, as there would be an increase in the amount of ice cream that people are willing and able to buy at each price point. As demand increases, this causes an expansion along the supply curve. This causes the market equilibrium quantity and price to increase to q2 and p2.![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) ### Factors affecting supply (PC TWINS) Productivity Costs of production Technology Weather Indirect taxes Number of firms Subsidies One cause of a price change is a decrease in productivity. This means that there is a decrease in output that can be produced despite the same input of factors of production. As a result, firms need to employ more factors of production to produce the same amount of output, which leads to an increase in the cost to produce each unit. This causes a decrease in supply, as there would be a decrease in the number of goods and services that firms are willing and able to produce, at each given price. This would lead to a contraction along the demand curve. This causes the market equilibrium price to increase from p1 to p2, as shown on the diagram below.![Decrease in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.06@2x.png) One cause of a price change is an increase in costs of production. For example, higher energy bills would make it more expensive for firms to produce goods and services. This causes a decrease in the profit margin available at each price point. Thus there is a decrease in the incentive for new and existing firms to produce that good or service. This causes a decrease in supply, as there would be a decrease in the number of goods and services that firms are willing and able to produce, at each given price. This would lead to a contraction along the demand curve. This causes the market equilibrium price to increase from p1 to p2, as shown on the diagram below.![Decrease in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.06@2x.png) One cause of a price change is a change in technology. For example, there could be a decrease in the quality, or an increase in the cost to operate technology such as AI agents, which would lead to an increase in the cost per unit to produce a good or service. This causes a decrease in the profit margin available at each price point. Thus there is a decrease in the incentive for new and existing firms to produce that good or service. This causes a decrease in supply, as there would be a decrease in the number of goods and services that firms are willing and able to produce, at each given price. This would lead to a contraction along the demand curve. This causes the market equilibrium price to increase from p1 to p2, as shown on the diagram below.![Decrease in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.06@2x.png) One cause of a price change is a change in the weather. For example, poor weather makes it more difficult to produce agricultural goods. This means that farmers are having to work longer hours to produce the same number of goods and services, so cost per unit increases due to firms having to pay more in rent and wages, to produce the same output. This causes a decrease in the profit margin available at each price point. Thus there is a decrease in the incentive for new and existing firms to produce that good or service. This causes a decrease in supply, as there would be a decrease in the number of goods and services that firms are willing and able to produce, at each given price. This would lead to a contraction along the demand curve. This causes the market equilibrium price to increase from p1 to p2, as shown on the diagram below.![Decrease in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.06@2x.png) One cause of a price change is an increase in indirect taxes. Indirect taxes are costs imposed on firms by the government, meaning firms must pay the government according to each unit they produce. This could be a specific tax, a fixed amount per unit, such as fuel duty, or an ad-valorem tax, a percentage of the price, such as VAT. This causes a decrease in the profit margin available at each price point. Thus there is a decrease in the incentive for new and existing firms to produce that good or service. This causes a decrease in supply, as there would be a decrease in the number of goods and services that firms are willing and able to produce, at each given price. This would lead to a contraction along the demand curve. This causes the market equilibrium price to increase from p1 to p2, as shown on the diagram below.![Decrease in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.06@2x.png) One cause of a price change is an increase in the number of firms in the market. In the long-run, firms are incentivised to enter a market where existing firms are making supernormal profits, given that the barriers to entry are low enough. This causes an increase in supply, as there would be an increase in the number of goods and services that firms are willing and able to produce, at each given price. This would lead to an expansion along the demand curve. This causes the market equilibrium price to decrease from p1 to p2, as shown on the diagram below.![Increase in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.02@2x.png) One cause of a price change is an increase in subsidies. Subsidies are payments made to firms by the government. This reduces the cost per unit for firms who are producing the given good or service. This causes an increase in the profit margin available at each price point. Thus there is an increase in the incentive for new and existing firms to produce that good or service. This causes an increase in supply, as there would be an increase in the number of goods and services that firms are willing and able to produce, at each given price. This would lead to an expansion along the demand curve. This causes the market equilibrium price to decrease from p1 to p2, as shown on the diagram below.![Increase in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.02@2x.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Evaluate whether the government should intervene in a market URL: https://www.a-level-economics-tutor.com/evaluate-whether-the-government-should-intervene-in-a-market/ Last updated: 2026-08-26T10:49:57.000Z Free market: efficient allocation Free market: inequitable outcomes Intervention: correcting market failure Intervention: risk of government failure One advantage of providing services like bus travel through the free market is that scarce resources are allocated efficiently due to the functions of the price mechanism. This was the argument of Adam Smith who suggested that the free market has an Invisible Hand. A common issue that occurs in markets such as transport and housing is an increase in demand. In a situation where demand increases, this information first gets signalled to producers who might see longer queues for their services. Producers are likely to respond by raising prices. Higher prices lead to a contraction in demand since fewer people are willing and able to pay the higher price for the service. This higher price also causes an expansion in supply due to a greater profit motive incentivising firms to produce more of the service. Eventually, the market reaches a new equilibrium meaning that the excess demand has been rationed. This is at a higher quantity which shows that the market is able to respond well to increases in demand. In comparison, when services like bus travel are provided by the government, an increase in demand can often cause excess demand that does not get resolved. ![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) One disadvantage of leaving services like bus travel to the free market is that it can lead to inequitable outcomes. When prices increase, the rationing function means that demand contracts in the market. In reality, higher prices mean that some people get priced out of accessing the service. This can apply to those with lower incomes, such as the elderly. This can lead to further issues that the government might have to solve. For example, if elderly people find it more of an inconvenience to travel, they might end up staying home more. This can cause loneliness and put a greater strain on society and the NHS, and it might also lead to them spending less money in the economy. Positive externalities in consumption are when there is a positive impact on a third party from a transaction. The third party refers to anybody apart from the buyer or the seller. For example, when the elderly can safely rely on bus travel, they are likely to go out more often, meaning that they are able to contribute more towards the economy. They are also more likely to be social and active, and therefore less likely to burden the NHS, saving taxpayer money. In a free market, goods like bus travel are under-consumed. This is because the buyer and seller are assumed to be rational and want to maximise their individual utility. As they act out of self-interest, they ignore the positive effect on third parties, such as the reduced burden on the NHS. The diagram shows that at each level of output, marginal social benefit is higher than marginal private benefit. The free market equilibrium is at the point where MPB equals MPC, because this is the level of output that maximises the utility of buyers and sellers. Q\* is the socially optimal output, where social welfare is maximised, because MSC equals MSB. The government can correct this through intervention. They could use subsidies to increase the supply of bus travel and reduce the price, or they could implement state provision which can be set free of charge. ![Positive Externalities in Consumption diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.34@2x.png) One disadvantage of government intervention will always be a risk of government failure. This is when government intervention ends up reducing social welfare even more. Please note: I would recommend tailoring this paragraph to the question with a relevant example of government failure. You can find worked examples in our posts on [measures to correct negative externalities](https://www.a-level-economics-tutor.com/measures-to-correct-negative-externalities/) and [measures to correct positive externalities](https://www.a-level-economics-tutor.com/measures-to-correct-positive-externalities/). --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the best government interventions to correct positive externalities URL: https://www.a-level-economics-tutor.com/measures/ Last updated: 2026-08-18T18:45:50.000Z Maximum prices Subsidies Provision of information State provision ## A-Level Economics Model Paragraph — Analysis One way to correct the market failure in the market for rented housing is through maximum prices. A maximum price is a price above which it is illegal to sell, and a maximum price should be set below the free-market equilibrium to have any effect on the market. For example, New York City has used rent controls for many years, and the city's mayor has recently introduced a rent freeze for certain apartments. The diagram shows that a maximum price causes an expansion in demand and a contraction in supply, and the price decreases from P1 to P2\. Overall, housing becomes more affordable, meaning that it becomes easier for low-income families to buy or rent a place to stay. Maximum prices can be particularly effective in markets where supply is price inelastic. This means that a fall in price is associated with only a small contraction in supply. Rent becomes more affordable without a large fall in the equilibrium quantity. The supply of rented apartments could be considered price inelastic, since landlords have no real reason to take stock off the market. ![Maximum Price diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.27@2x.png) ## A-Level Economics Model Paragraph — Evaluation Market distortion ## A-Level Economics Model Paragraph — Analysis One way to correct the market failure in the market for gym memberships is through subsidies. A subsidy is a payment given by the government to firms, which helps them cover more of their costs of production. This causes supply to shift to the right, as firms become willing and able to produce more goods and services at each price. The diagram below shows the increase in supply, causing an expansion in demand and a fall in price from P1 to P2, and an increase in the equilibrium quantity from Q1 to Q2\. This reduces the market failure in the market for gym memberships, where they were previously being under-consumed in the free market, as the positive externalities of exercise were being ignored by consumers. ![Subsidy diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.22@2x.png) ## A-Level Economics Model Paragraph — Evaluation Opportunity cost Dependency on subsidies Inelastic demand ## A-Level Economics Model Paragraph — Analysis One way the government could intervene in the market for transport is through provision of information. Cycling has positive externalities in consumption, as it provides a benefit to the third party (people other than the buyer or the seller). This is because cycling reduces dependence on cars and also public transport, and this reduces damage to the environment, which would have been at a cost to future generations. The diagram below shows the under-consumption in the free market. Provision of information can be used by the government to provide people with better information about the choices they make when travelling. People can understand that cycling has a positive impact on themselves in terms of health, but also a positive impact on the environment. As the perceived benefit from cycling increases, this causes demand for cycling to increase, resulting in an increase in the market equilibrium. This is shown in the diagram below. Therefore, the market moves closer to the socially optimal level of output, and the market failure can be reduced. ![Positive Externalities in Consumption diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.34@2x.png) ![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) ## A-Level Economics Model Paragraph — Evaluation Opportunity cost Information may be ignored **Note:** State provision as a measure to correct positive externalities is on the AQA specification only. This section is not required for Edexcel or International A-Level Economics. ## A-Level Economics Model Paragraph — Analysis State provision occurs when the government chooses to provide goods and services free of charge, to correct a market failure. For example, dental care is a service that has positive externalities in consumption. If left to the free market, it would be under-consumed, because people would ignore the fact that people who get regular checkups and have healthier teeth provide a benefit to third parties, such as being less likely to be absent from school or work due to teeth pain or health issues. If the government were to fully fund dental care and provide it free of charge via the NHS, this could help correct the under-consumption caused by this positive externality. The diagram shows that the government may research the socially optimal quantity and provide that quantity of dental care free of charge, as shown by the quantity Q1\. The benefit of this is the increase from the equilibrium quantity which would have been provided by the free market, meaning more people would have access to reliable dental care free of charge (P0), which should mean that the market failure has been resolved by the government. ![State Provision diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.59@2x.png) ## A-Level Economics Model Paragraph — Evaluation Opportunity cost Excess demand / market distortion --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the best government interventions to correct negative externalities URL: https://www.a-level-economics-tutor.com/measures-to-correct-negative-externalities/ Last updated: 2026-08-18T18:46:03.000Z Minimum prices Indirect taxes Pollution permits Provision of information (Consumption) Provision of information (Production) ## A-Level Economics Model Paragraph — Analysis One way to correct the market failure in the market for alcohol is through minimum prices. A minimum price is a price below which it is illegal to sell, and a minimum price should be set above the free-market equilibrium to have any effect on the market. There is a minimum price of 65p per unit in Scotland. The diagram shows that a minimum price causes a contraction in demand and an expansion in supply, and the price increases from P1 to P2\. As a result, there is a decrease in the amount of alcohol consumed, therefore a movement closer to the socially optimal level of output in the market. ![Minimum Price diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.52@2x.png) ## A-Level Economics Model Paragraph — Evaluation Black markets Inelastic demand / inadequate information ## A-Level Economics Model Paragraph — Analysis One way to correct the market failure associated with sugary drinks is through indirect taxes. An indirect tax is an extra cost of production imposed by the government on firms. Higher costs of production mean that firms will be willing and able to produce less sugary drinks at each given price. There is currently a sugar tax of around 20 to 30p per litre in the UK, depending on the sugar content per 100ml. The diagram shows the effects of the indirect tax. Supply decreases, and this causes a contraction in demand. Overall, there is an increase in the equilibrium price from P1 to P2 and a decrease in the equilibrium quantity of sugary drinks from Q1 to Q2\. This means that the market equilibrium quantity moves closer to the socially optimal level of output. ![Indirect Tax diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.03@2x.png) ## A-Level Economics Model Paragraph — Evaluation Information gaps (inelastic demand) Regressive burden on consumers Tax revenue generated ## A-Level Economics Model Paragraph — Analysis One way the government can reduce negative externalities of production is through tradable pollution permits. When the production of goods and services causes pollution in the form of carbon emissions, the government can begin by researching the size of the market failure and issue a certain number of pollution permits depending on where the socially optimal level of output is in the market. The government can also choose to reduce the allocation of permits gradually over time, tightening the cap further. The diagram below shows the market for pollution permits. D1 represents the demand for pollution permits, and S1 represents the perfectly inelastic supply of pollution permits. It is perfectly inelastic because the quantity supplied does not vary at all with price, because the quantity of available permits is pre-determined by the government. As this doesn't change, the government can almost guarantee that carbon emissions don't exceed Q1\. If firms want to pollute more, they will have to buy additional permits. If other firms choose to pollute less, they are able to sell their extra permits. The price mechanism incentivises firms to reduce emissions so that they can earn revenue. It also punishes firms who are emitting too much carbon, as they must pay a price to buy more permits. ![Tradable Permits diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.58.04@2x.png) ## A-Level Economics Model Paragraph — Evaluation Imperfect information Administrative costs ## A-Level Economics Model Paragraph — Analysis One way the government could intervene in the market for fast food is through provision of information. The market for fast food has negative externalities in consumption, as consumers are motivated to maximise their own utility. They are also likely to ignore the long-term health costs to themselves and the burden this places on the NHS. The government could provide information through advertising campaigns or warning labels, highlighting the links between fast food and conditions like obesity and heart disease. This can be done in a similar way to the warning signs on cigarette packages. As people become more aware of these risks, their perceived benefit from consuming fast food falls, causing demand to shift to the left. This results in a lower equilibrium quantity, moving the market closer to the socially optimal level of output. ![Negative Externalities in Consumption diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.39@2x.png) ## A-Level Economics Model Paragraph — Evaluation Opportunity cost Information may be ignored ## A-Level Economics Model Paragraph — Analysis One way the government could intervene to reduce the over-production of single-use paper cups is through information provision. The coffee market has negative externalities in production, as producers have the objective to maximise profits. Therefore they are likely to ignore or under-value the long-term environmental damage caused by using single-use packaging that cannot be recycled once contaminated. The government could provide information through advertising campaigns highlighting the environmental cost of single-use cups. Firms who make better decisions regarding paper waste can benefit from improvements in their reputation. Coffee shops might start to run schemes that reward customers for bringing their own cups, or offer long-term customers high-quality reusable cups at discounted prices. The goal would be to reduce the number of single-use cups sold, discouraging over-production. This should cause a fall in supply, moving the market closer to the socially optimal level of output. ![Negative Externalities in Production diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.43@2x.png) ## A-Level Economics Model Paragraph — Evaluation Opportunity cost Information may be ignored --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### A-Level Economics Diagrams URL: https://www.a-level-economics-tutor.com/a-level-economics-diagrams/ Last updated: 2026-08-29T10:37:51.000Z ## All Diagrams for Year 12 Microeconomics ### Production Possibility diagram ![Production Possibility diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.43.29@2x.png) Production Possibility diagram for A-Level Economics ### Outward Shift in Production Possibility diagram ![Outward Shift in Production Possibility diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.31@2x.png) Outward Shift in Production Possibility diagram for A-Level Economics ### Free Market Equilibrium diagram for A-Level Economics ![Free Market Equilibrium diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.48@2x.png) Free Market Equilibrium diagram for A-Level Economics ### Increase in Demand diagram for A-Level Economics ![Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.53@2x.png) Increase in Demand diagram for A-Level Economics ### Decrease in Demand diagram for A-Level Economics ![Decrease in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.53.57@2x.png) Decrease in Demand diagram for A-Level Economics ### Increase in Supply diagram for A-Level Economics ![Increase in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.02@2x.png) Increase in Supply diagram for A-Level Economics ### Decrease in Supply diagram for A-Level Economics ![Decrease in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.54.06@2x.png) Decrease in Supply diagram for A-Level Economics ### Rationing an Increase in Supply diagram for A-Level Economics ![Rationing an Increase in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.55.47@2x.png) Rationing an Increase in Supply diagram for A-Level Economics ### Rationing an Increase in Demand diagram for A-Level Economics ![Rationing an Increase in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.55.52@2x.png) Rationing an Increase in Demand diagram for A-Level Economics ### Rationing a Decrease in Demand diagram for A-Level Economics ![Rationing a Decrease in Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.02@2x.png) Rationing a Decrease in Demand diagram for A-Level Economics ### Rationing a Decrease in Supply diagram for A-Level Economics ![Rationing a Decrease in Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.08@2x.png) Rationing a Decrease in Supply diagram for A-Level Economics ### Consumer Surplus diagram for A-Level Economics ![Consumer Surplus diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.12@2x.png) Consumer Surplus diagram for A-Level Economics ### Producer Surplus diagram for A-Level Economics ![Producer Surplus diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.25@2x.png) Producer Surplus diagram for A-Level Economics ### Positive Externalities in Consumption diagram for A-Level Economics ![Positive Externalities in Consumption diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.34@2x.png) Positive Externalities in Consumption diagram for A-Level Economics ### Negative Externalities in Consumption diagram for A-Level Economics ![Negative Externalities in Consumption diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.39@2x.png) Negative Externalities in Consumption diagram for A-Level Economics ### Negative Externalities in Production diagram for A-Level Economics ![Negative Externalities in Production diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.43@2x.png) Negative Externalities in Production diagram for A-Level Economics ### Positive Externalities in Production diagram for A-Level Economics ![Positive Externalities in Production diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.47@2x.png) Positive Externalities in Production diagram for A-Level Economics ### Indirect Tax diagram for A-Level Economics ![Indirect Tax diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.03@2x.png) Indirect Tax diagram for A-Level Economics ### Indirect Tax with Inelastic Demand diagram for A-Level Economics ![Indirect Tax with Inelastic Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.08@2x.png) Indirect Tax with Inelastic Demand diagram for A-Level Economics Subsidy diagram for A-Level Economics ![Subsidy diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.22@2x.png) Subsidy diagram for A-Level Economics ### Maximum Price diagram for A-Level Economics ![Maximum Price diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.27@2x.png) Maximum Price diagram for A-Level Economics ### Maximum Price with Inelastic Demand & Supply diagram for A-Level Economics ![Maximum Price with Inelastic Demand & Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.04.31@2x.png) Maximum Price with Inelastic Demand & Supply diagram for A-Level Economics ### Minimum Price diagram for A-Level Economics ![Minimum Price diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.52@2x.png) Minimum Price diagram for A-Level Economics ### Minimum Price with Inelastic Demand & Supply diagram for A-Level Economics ![Minimum Price with Inelastic Demand & Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.46@2x.png) Minimum Price with Inelastic Demand & Supply diagram for A-Level Economics ### State Provision diagram for A-Level Economics (AQA only) ![State Provision diagram for A-Level Economics (AQA only)](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.57.59@2x.png) State Provision diagram for A-Level Economics (AQA only) ### Tradable Permits diagram for A-Level Economics ![Tradable Permits diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.58.04@2x.png) Tradable Permits diagram for A-Level Economics ## All Diagrams for Year 12 Macroeconomics ### L-Shaped Long-Run Average Cost diagram for A-Level Economics ![L-Shaped Long-Run Average Cost diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.06.27@2x.png) L-Shaped Long-Run Average Cost diagram for A-Level Economics ### Classical AD/AS Model diagram for A-Level Economics ![Classical AD/AS Model diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.06.31@2x.png) Classical AD/AS Model diagram for A-Level Economics ### Keynesian AD/AS Model diagram for A-Level Economics ![Keynesian AD/AS Model diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.06.35@2x.png) Keynesian AD/AS Model diagram for A-Level Economics ### Increase in Aggregate Demand diagram for A-Level Economics ![Increase in Aggregate Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.06.39@2x.png) Increase in Aggregate Demand diagram for A-Level Economics ### Decrease in Aggregate Demand diagram for A-Level Economics ![Decrease in Aggregate Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.32.27@2x.png) Decrease in Aggregate Demand diagram for A-Level Economics ### Increase in Short-Run Aggregate Supply diagram for A-Level Economics ![Increase in Short-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.04@2x.png) Increase in Short-Run Aggregate Supply diagram for A-Level Economics ### Decrease in Short-Run Aggregate Supply diagram for A-Level Economics ![Decrease in Short-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.08@2x.png) Decrease in Short-Run Aggregate Supply diagram for A-Level Economics ### Increase in Aggregate Demand at Full Capacity diagram for A-Level Economics ![Increase in Aggregate Demand at Full Capacity diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.13@2x.png) Increase in Aggregate Demand at Full Capacity diagram for A-Level Economics ### Decrease in Aggregate Demand at Full Capacity diagram for A-Level Economics ![Decrease in Aggregate Demand at Full Capacity diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.21@2x.png) Decrease in Aggregate Demand at Full Capacity diagram for A-Level Economics ### Increase in Aggregate Demand at Spare Capacity diagram for A-Level Economics ![Increase in Aggregate Demand at Spare Capacity diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-29-at-11.37.33@2x.png) Increase in Aggregate Demand at Spare Capacity diagram for A-Level Economics ### Decrease in Aggregate Demand at Spare Capacity diagram for A-Level Economics ![Decrease in Aggregate Demand at Spare Capacity diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.39@2x.png) Decrease in Aggregate Demand at Spare Capacity diagram for A-Level Economics ### Multiplier Effect diagram for A-Level Economics ![Multiplier Effect diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.44@2x.png) Multiplier Effect diagram for A-Level Economics ### Negative Multiplier Effect diagram for A-Level Economics ![Negative Multiplier Effect diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.50@2x.png) Negative Multiplier Effect diagram for A-Level Economics ### Increase in Long-Run Aggregate Supply diagram for A-Level Economics ![Increase in Long-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.54@2x.png) Increase in Long-Run Aggregate Supply diagram for A-Level Economics ### Decrease in Long-Run Aggregate Supply diagram for A-Level Economics ![Decrease in Long-Run Aggregate Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.58@2x.png) Decrease in Long-Run Aggregate Supply diagram for A-Level Economics ## All Diagrams for Year 13 Microeconomics ### Costs & Revenue diagram for A-Level Economics ![Costs & Revenue diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.08.34@2x.png) Costs & Revenue diagram for A-Level Economics ### Increase in Costs diagram for A-Level Economics ![Increase in Costs diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.08.42@2x.png) Increase in Costs diagram for A-Level Economics ### Decrease in Costs diagram for A-Level Economics ![Decrease in Costs diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.08.49@2x.png) Decrease in Costs diagram for A-Level Economics ### Increase in Revenue diagram for A-Level Economics ![Increase in Revenue diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.08.49@2x-1.png) Increase in Revenue diagram for A-Level Economics ### Decrease in Revenue diagram for A-Level Economics ![Decrease in Revenue diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.09.00@2x.png) Decrease in Revenue diagram for A-Level Economics ### Business Objectives diagram for A-Level Economics ![Business Objectives diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.09.15@2x.png) Business Objectives diagram for A-Level Economics ### Efficiency diagram for A-Level Economics ![Efficiency diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.09.19@2x.png) Efficiency diagram for A-Level Economics ### Perfect Competition in the Short-Run diagram for A-Level Economics ![Perfect Competition in the Short-Run diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.09.23@2x.png) Perfect Competition in the Short-Run diagram for A-Level Economics ### Perfect Competition in the Long-Run diagram for A-Level Economics ![Perfect Competition in the Long-Run diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.09.23@2x-1.png) Perfect Competition in the Long-Run diagram for A-Level Economics ### Monopoly diagram for A-Level Economics ![Monopoly diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.09.34@2x.png) Monopoly diagram for A-Level Economics ### Monopolistic Competition in the Short-Run diagram for A-Level Economics ![Monopolistic Competition in the Short-Run diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.09.48@2x.png) Monopolistic Competition in the Short-Run diagram for A-Level Economics ### Monopolistic Competition in the Long-Run diagram for A-Level Economics ![Monopolistic Competition in the Long-Run diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.09.53@2x.png) Monopolistic Competition in the Long-Run diagram for A-Level Economics ### Contestability diagram for A-Level Economics ![Contestability diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.11.33@2x.png) Contestability diagram for A-Level Economics ### Game Theory diagram for A-Level Economics ![Game Theory diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.10.04@2x.png) Game Theory diagram for A-Level Economics ### Kinked Demand Curve diagram for A-Level Economics ![Kinked Demand Curve diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.10.09@2x.png) Kinked Demand Curve diagram for A-Level Economics ### Limit Pricing diagram for A-Level Economics ![Limit Pricing diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.10.24@2x.png) Limit Pricing diagram for A-Level Economics ### First Degree Price Discrimination diagram for A-Level Economics ![First Degree Price Discrimination diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.10.31@2x.png) First Degree Price Discrimination diagram for A-Level Economics ### Third Degree Price Discrimination diagram for A-Level Economics ![Third Degree Price Discrimination diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.10.39@2x.png) Third Degree Price Discrimination diagram for A-Level Economics ### Economies of Scale diagram for A-Level Economics ![Economies of Scale diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.10.46@2x.png) Economies of Scale diagram for A-Level Economics ### Natural Monopoly (LRAC only) diagram for A-Level Economics ![Natural Monopoly (LRAC only) diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.10.54@2x.png) Natural Monopoly (LRAC only) diagram for A-Level Economics ### Natural Monopoly (Full Cost & Revenue Curves) diagram for A-Level Economics ![Natural Monopoly (Full Cost & Revenue Curves) diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.11.10@2x.png) Natural Monopoly (Full Cost & Revenue Curves) diagram for A-Level Economics ### Price Control diagram for A-Level Economics ![Price Control diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.11.25@2x.png) Price Control diagram for A-Level Economics ### Deregulation diagram for A-Level Economics ![Deregulation diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.11.33@2x.png) Deregulation diagram for A-Level Economics ### Perfect Labour Market diagram for A-Level Economics ![Perfect Labour Market diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.11.48@2x.png) Perfect Labour Market diagram for A-Level Economics ### Increase in Demand for Labour diagram for A-Level Economics ![Increase in Demand for Labour diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.11.54@2x.png) Increase in Demand for Labour diagram for A-Level Economics ### Decrease in Demand for Labour diagram for A-Level Economics ![Decrease in Demand for Labour diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.11.59@2x.png) Decrease in Demand for Labour diagram for A-Level Economics ### Increase in Supply for Labour diagram for A-Level Economics ![Increase in Supply for Labour diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.12.04@2x.png) Increase in Supply for Labour diagram for A-Level Economics ### Decrease in Supply for Labour diagram for A-Level Economics ![Decrease in Supply for Labour diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.12.04@2x-1.png) Decrease in Supply for Labour diagram for A-Level Economics ### Wage Differences Due to Demand diagram for A-Level Economics ![Wage Differences Due to Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.12.28@2x.png) Wage Differences Due to Demand diagram for A-Level Economics ### Wage Differences Due to Supply diagram for A-Level Economics ![Wage Differences Due to Supply diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.12.36@2x.png) Wage Differences Due to Supply diagram for A-Level Economics ### Minimum Wage diagram for A-Level Economics ![Minimum Wage diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.12.41@2x.png) Minimum Wage diagram for A-Level Economics ### Maximum Wage diagram for A-Level Economics ![Maximum Wage diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.12.46@2x.png) Maximum Wage diagram for A-Level Economics ### Monopsony Labour Market diagram for A-Level Economics ![Monopsony Labour Market diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.13.02@2x.png) Monopsony Labour Market diagram for A-Level Economics ### Minimum Wage in a Monopsony Labour Market diagram for A-Level Economics ![Minimum Wage in a Monopsony Labour Market diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.13.09@2x.png) Minimum Wage in a Monopsony Labour Market diagram for A-Level Economics ## All Diagrams for Year 13 Macroeconomics Floating Exchange Rate diagram for A-Level Economics ![Floating Exchange Rate diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.13.37@2x.png) Floating Exchange Rate diagram for A-Level Economics ### Currency Appreciation diagram for A-Level Economics ![Currency Appreciation diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.13.44@2x.png) Currency Appreciation diagram for A-Level Economics ### Currency Depreciation diagram for A-Level Economics ![Currency Depreciation diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.13.53@2x.png) Currency Depreciation diagram for A-Level Economics ### Currency Revaluation diagram for A-Level Economics ![Currency Revaluation diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.14.37@2x.png) Currency Revaluation diagram for A-Level Economics ### Currency Devaluation diagram for A-Level Economics ![Currency Devaluation diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.14.46@2x.png) Currency Devaluation diagram for A-Level Economics ### J-Curve diagram for A-Level Economics ![J-Curve diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.14.52@2x.png) J-Curve diagram for A-Level Economics ### Reverse J-Curve diagram for A-Level Economics ![Reverse J-Curve diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.14.56@2x.png) Reverse J-Curve diagram for A-Level Economics ### Specialisation and Trade diagram for A-Level Economics ![Specialisation and Trade diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.15.00@2x.png) Specialisation and Trade diagram for A-Level Economics ### Trade diagram for A-Level Economics ![Trade diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.15.17@2x.png) Trade diagram for A-Level Economics ### Tariff diagram for A-Level Economics ![Tariff diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.15.21@2x.png) Tariff diagram for A-Level Economics ### Tariff Removal diagram for A-Level Economics ![Tariff Removal diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.15.26@2x.png) Tariff Removal diagram for A-Level Economics ### Laffer Curve diagram for A-Level Economics ![Laffer Curve diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.15.31@2x.png) Laffer Curve diagram for A-Level Economics --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Maximum Price | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/maximum-price-a-level-economics-model-paragraph/ Last updated: 2026-08-09T15:03:46.000Z ### Maximum prices One way to correct the market failure in the market for rented housing is through maximum prices. A maximum price is a price above which it is illegal to sell, and a maximum price should be set below the free-market equilibrium to have any effect on the market. In New York City, around 30,000 apartments are subject to rent control, with an average controlled rent of roughly $1,300 per month compared to an average market rent of around $2,500 per month. The diagram shows that a maximum price causes an expansion in demand and a contraction in supply, and the price decreases from P1 to P2\. As a result, there is an increase in the amount of housing consumed by those able to access it, therefore a movement closer to the socially optimal level of output in the market. However, a maximum price can cause government failure in the form of a distorted market. As mentioned, a maximum price causes a contraction along the supply curve whilst causing an expansion along the demand curve. This means that there is a shortage of homes on the market. As a result, there is likely to be an under-consumption of housing relative to the socially optimal level, worsening the market failure it was intended to correct. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Minimum Price | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/minimum-price-a-level-economics-model-paragraph/ Last updated: 2026-08-09T15:03:04.000Z ### Minimum prices One way to correct the market failure in the market for alcohol is through minimum prices. A minimum price is a price below which it is illegal to sell, and a minimum price should be set above the free-market equilibrium to have any effect on the market. There is a minimum price of 65p per unit in Scotland. The diagram shows that a minimum price causes a contraction in demand and an expansion in supply, and the price increases from P1 to P2\. As a result, there is a decrease in the amount of alcohol consumed, therefore a movement closer to the socially optimal level of output in the market. However, minimum prices can cause government failure, especially in the form of unintended consequences. As mentioned, there is an expansion in supply, but a contraction in demand, creating a surplus of alcohol that remains unsold at the legal price. Producers are likely to be aware of this and may look to offload the surplus by selling below the minimum price through a black market, in order to maximise their revenues. A similar example is that some off-licences sell alcohol illegally after the 11pm cutoff — a similar logic could start to apply in terms of selling below the legal minimum price. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Provision of information | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/provision-of-information-positive-a-level-economics-model-paragraph/ Last updated: 2026-08-09T15:00:54.000Z ### Provision of information One way the government could intervene in the market for cycling is through provision of information. The market for cycling has positive externalities in consumption, as cyclists under-value the full benefit of their choice, both to their own health and to wider society through reduced traffic congestion and lower pollution. The government could provide information through public health campaigns, highlighting the fitness and long-term health benefits of regular cycling. As people become more aware of these benefits, their perceived benefit from cycling rises, causing demand to shift to the right. This results in a higher equilibrium quantity, moving the market closer to the socially optimal level of output. Opportunity cost Information may be ignored However, there is a large opportunity cost associated with setting up a national information campaign. The government would have to consider the value of the next best alternative, as spending on these advertising campaigns might mean that the government have to cut spending in other areas such as education or healthcare. The government should be confident on the effect of the information campaigns on demand, and that it won't be a waste of their budget. However, there is a chance that the information provided will be ignored by consumers if it is not presented carefully enough, meaning there may not be enough of a change in consumer behaviour, as they might not be able to see the value in the extra benefit of taking up the activity. Behavioural economics also teaches us that consumers do not always make rational decisions, as they suffer from bounded rationality. Consumers have a limited ability to process and act on information, due to habitual behaviour and a poor capacity to absorb new information. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Complete Market Failure | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/complete-market-failure-a-level-economics-model-paragraph/ Last updated: 2026-08-07T13:44:59.000Z ### Complete market failure Complete market failure occurs when the free market fails to provide a good entirely, resulting in a missing market. This happens in the case of public goods, which are goods that are both non-rival and non-excludable. These characteristics cause the free-rider problem to occur. A good is non-excludable if it is impossible to prevent someone from accessing it regardless of whether they have paid, and non-rival if one person's consumption does not reduce the amount available for others. The non-excludable nature of public goods means that there is no incentive for consumers to pay, as they can free-ride on the contribution of others. For example, once a pavement has been built or a street lamp has been installed, there is no incentive for users to continue to contribute. Producers would be aware that there is no incentive to provide the good or service in the first place, as they would not be able to profit. This means that there would be a missing market for street lamps if they were left to the free market. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Externalities | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/externalities-a-level-economics-model-paragraph/ Last updated: 2026-08-28T09:43:12.000Z ### Types of externality Positive externality in consumption Negative externality in consumption Positive externality in production Negative externality in production Positive externalities in consumption are when there is a positive impact on a third party from a transaction. The third party refers to anybody apart from the buyer or the seller. For example, when somebody wears a bicycle helmet, they are safer on the road. This means that they are less likely to have a serious injury, and therefore less likely to burden the NHS, saving taxpayer money. In a free market, goods like bicycle helmets are under-consumed. This is because the buyer and seller are assumed to be rational and want to maximise their individual utility. As they act out of self-interest, they ignore the positive effect on third parties, such as the reduced burden on the NHS. As a result, bicycle helmets get under-consumed in a free market. The diagram shows that at each level of output, marginal social benefit is higher than marginal private benefit. The free market equilibrium is at the point where MPB equals MPC, because this is the level of output that maximises the utility of buyers and sellers. Q\* is the socially optimal output, where social welfare is maximised, because MSC equals MSB. ![Positive Externalities in Consumption diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.34@2x.png) Negative externalities in consumption are when there is a negative impact on a third party from a transaction. The third party refers to anybody apart from the buyer or seller. For example, consumers of fast food are likely to have worse health, and therefore be a bigger burden on the NHS, and therefore cost the taxpayer more money. In a free market, goods like fast food are over-consumed because buyers and sellers want to maximise their own utility. As they act out of self-interest, they ignore the negative effect on third parties, such as the added burden on the NHS. As a result, fast food gets over-consumed in a free market. The diagram shows that at each level of output, marginal private benefit is higher than marginal social benefit. The free market equilibrium is at the point where MPB equals MPC, because this is the level of output that maximises the utility of buyers and sellers. Q\* is the socially optimal output, where social welfare is maximised, because MSC equals MSB. ![Negative Externalities in Consumption diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.39@2x.png) Positive externalities in production are when there is a positive impact on a third party from a transaction. The third party refers to anybody apart from the buyer or the seller. For example, producers of honey need to keep bees, and these bees pollinate surrounding crops and plants, which increases benefit to nearby farmers. In a free market, goods like honey are under-produced. This is because the buyer and seller are assumed to be rational and want to maximise their individual utility. As they act out of self-interest, they ignore the positive effect on third parties, such as the increased benefit to nearby farmers. As a result, honey gets under-produced in a free market. The diagram shows that at each level of output, marginal social cost is lower than marginal private cost. The free market equilibrium is at the point where MPC equals MPB, because this is the level of output that maximises the utility of buyers and sellers. Q\* is the socially optimal output, where social welfare is maximised, because MSC equals MSB. Negative externalities in production are when there is a negative impact on a third party from a transaction. The third party refers to anybody apart from the buyer or the seller. For example, businesses who need to produce magazines will cut down trees to get paper. This causes environmental damage that costs future generations and future taxpayers. In a free market, goods like magazines are over-produced. This is because the buyer and seller are assumed to be rational and want to maximise their individual utility. As they act out of self-interest, they ignore the negative effect on third parties, such as the cost of environmental damage passed on to future generations. As a result, magazines get over-produced in a free market. The diagram shows that at each level of output, marginal social cost is higher than marginal private cost. The free market equilibrium is at the point where MPC equals MPB, because this is the level of output that maximises the utility of buyers and sellers. Q\* is the socially optimal output, where social welfare is maximised, because MSC equals MSB. ![Negative Externalities in Production diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-19.56.43@2x.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain how an appreciation of the krone could help Norway reduce inflation URL: https://www.a-level-economics-tutor.com/explain-how-an-appreciation-of-the-krone-could-help-norway-reduce-inflation/ Last updated: 2026-08-06T15:24:00.000Z ### AQA A-Level Economics Paper 2 June 2025 **Extract B (lines 6–7) states: ‘Some analysts hope that, before long, the currency will start to appreciate which could help Norway reduce inflation.’** **With the help of a suitable diagram, explain how an appreciation of the krone could help Norway reduce inflation. (9 marks)** 1. Exchange rates are the price of a currency in terms of another. 2. Inflation is the rate at which the average price level is increasing. 1. A currency appreciation means that the currency has increased in value as a result of market forces (supply and demand). 2. As the Krone becomes more expensive, imports become cheaper and exports become more expensive for Norway. 3. This means that exports are likely to decrease and imports are likely to increase. 4. This leads to a decrease in aggregate demand. 5. Also a stronger Krone means that it is cheaper for firms in Norway to import raw materials. 6. As costs of production might fall, this might lead to an increase in short-run aggregate supply. 7. As aggregate demand falls and short-run aggregate supply increases, the price level falls from P1 to P2 as shown in the diagram below. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain why a higher rate of economic growth is likely to reduce the budget deficit URL: https://www.a-level-economics-tutor.com/explain-why-a-higher-rate-of-economic-growth-is-likely-to-reduce-the-budget-deficit/ Last updated: 2026-08-05T20:23:59.000Z ### AQA A-Level Economics Paper 2 June 2019 **Extract E (lines 11–12) states ‘If growth could be increased, the budget deficit would fall much faster.’** **With the help of a diagram, explain why a higher rate of economic growth is likely to reduce the budget deficit. (9 marks)** 1. Economic growth refers to an increase in real GDP. 2. Real GDP is the total value of goods and services produced in a year. 3. A budget deficit is when government spending exceeds tax revenue in a given financial year. 1. As the economy grows, tax revenues are likely to increase. 2. As the economy grows, real gdp per capita (income per person) is likely to increase. 3. As incomes increase, the government are able to collect higher amounts of income tax revenue. 4. Additionally, higher income enables greater levels of consumer spending, which allows the government to collect more revenue from VAT. 5. Finally, as business profits increase with economic growth, the government are able to collect greater amounts of revenue from corporation taxes. 1. Also, government spending is likely to decrease as the economy grows. 2. As economic growth means that there is a higher value of goods and services being produced, this means that there is a greater derived demand for labour. 3. So as unemployment falls, the government are able to spend less on welfare payments such as unemployment benefits. 4. Real GDP is the total value of goods and services produced in the economy, adjusted for inflation. 5. A budget surplus occurs when tax revenue exceeds government spending in a given year. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain how an increase in injections may generate multiple increases in an economy’s GDP URL: https://www.a-level-economics-tutor.com/explain-how-an-increase-in-injections-may-generate-multiple-increases-in-an-economys-gdp/ Last updated: 2026-08-05T20:12:05.000Z ### AQA A-Level Economics Paper 2 June 2019 **Extract B (lines 8–9) states ‘If injections into an economy’s circular flow of income increase, then this may generate multiple increases in GDP.’** **With the help of a diagram, explain how an increase in injections may generate multiple increases in an economy’s GDP. (9 marks)** 1. GDP is the value of goods and serviced produced in an economy, usually in a year. 2. The multiplier effect happens when an increase in aggregate demand (AD) leads to further increases in AD. 1. For example, the UK government might choose to reduce income taxes. 2. Initially, this leads to an increase in disposable incomes. 3. This causes an increase in consumption (C) causing an initial increase in AD. 4. Then, businesses anticipate that they will reach closer to capacity. They may also have higher business confidence. 5. This causes them to increase spending on capital goods; investment (I). 6. This is another component of AD so AD increases further. 7. Overall, an initial injection causes GDP to increase by even more than the original amount, as shown by the diagram below, from y1 to y3. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-05-at-21.03.37@2x.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain how a floating exchange rate may help to correct a trade surplus URL: https://www.a-level-economics-tutor.com/explain-how-a-floating-exchange-rate-may-help-to-correct-a-trade-surplus/ Last updated: 2026-08-05T19:59:56.000Z ### AQA A-Level Economics Paper 2 June 2018 **Extract C (lines 8–9) states ‘Trade deficits and surpluses may be selfcorrecting in a floating exchange rate system.’** **With the help of a diagram showing the supply of and demand for a currency, explain how a floating exchange rate may help to correct a trade surplus. (9 marks)** 1. Exchange rates are the price of a currency in terms of another. 2. In a floating exchange rate system, the value of the currency is determined by market forces (demand and supply). 3. A trade surplus means that the value of exports exceed the value of imports. 1. If UK exports increase, there is a greater demand for UK goods, and therefore a greater demand for the pound. 2. If imports into the UK decrease, there is a lower demand for foreign goods, and therefore a lower demand for the foreign currency, and therefore a lower supply of the pound. 3. As demand for the pound increases and supply of the pound falls, the value of the pound increases from p1 to p2\. 4. As the pound appreciates, imports become cheaper and exports become more expensive. 5. This means that imports are likely to increase and exports are likely to fall, causing the trade surplus to fall. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-05-at-20.59.32@2x.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain how a reduction in tariffs could help to reduce inflation URL: https://www.a-level-economics-tutor.com/explain-how-a-reduction-in-tariffs-could-help-to-reduce-inflation/ Last updated: 2026-08-04T20:45:08.000Z ### AQA A-Level Economics Paper 2 June 2022 **Extract E (lines 7–9) states: ‘It was hoped that policy measures, including a reduction in tariffs... would help to reduce inflation’.** **With the help of a diagram, explain how a reduction in tariffs could help to reduce inflation. (9 marks)** 1. A tariff is a tax on imports. 2. Inflation is the rate at which average prices are increasing in the economy. 1. As tariffs are reduced, taxes on imports are reduced, so imports become cheaper. 2. This means that world supply shifts to the right (downwards on the diagram below) from Sworld+tariff to Sworld. 3. This leads to a fall in the price from p1 to p2. 4. This leads to an expansion along the domestic demand curve and a contraction along the domestic supply curve. 5. This means that there is an increase in imports from q1q2 to q3q4\. 6. As net exports (X-M) is a component of aggregate demand (AD), there will be a decrease in AD. 7. Additionally, imports are cheaper so it is cheaper for firms to import raw materials from abroad. They might also benefit from cheaper energy bills since it might be cheaper to import oil. 8. This leads to a fall in costs of production, and therefore an increase in short-run aggregate supply. 9. As AD decreases and SRAS increases, the price level and inflation rate in the economy fall. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-04-at-21.44.51@2x.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain how a reduction in government spending could increase unemployment in the private sector URL: https://www.a-level-economics-tutor.com/explain-how-a-reduction-in-government-spending-could-increase-unemployment-in-the-private-sector/ Last updated: 2026-08-04T20:37:17.000Z ### [AQA A-Level Economics Paper 2 June 2021](https://www.a-level-economics-tutor.com/content/files/2026/04/AQA-A-Level-Economics-Paper-2-June-2021-QP.pdf) **Extract B (line 9) states: ‘The government spending cuts also severely damaged private-sector jobs.’** **With the help of a diagram, explain how a reduction in government spending could increase unemployment in the private sector. (9 marks)** 1. Unemployment is the number of people who are willing and able to work but can't find a job. 1. The government might reduce spending to reduce the budget deficit, which is the difference between government spending and tax revenue in a given financial year, or to reduce national debt. 2. For example, the extract mentions reduced spending on pensions. 3. This means that older people in society have reduced disposable incomes, leading to a fall in consumption. 4. Consumption is a component of aggregate demand. 5. As aggregate demand decreases, the economy contracts, as shown from y1 to y2, as less goods and services are being produced. 6. This leads to a fall in the derived demand for labour, leading to an increase in cyclical unemployment. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain how investment in research and development (R&D) can help to increase the long-run growth rate of an economy URL: https://www.a-level-economics-tutor.com/explain-how-investment-in-research-and-development-r-d-can-help-to-increase-the-long-run-growth-rate-of-an-economy/ Last updated: 2026-08-04T20:18:05.000Z ### AQA A-Level Economics Paper 2 June 2021 **Extract E (line 14) states: ‘Investment in R&D has been an important driver of economic growth and industrial progress.’** **With the help of a diagram, explain how investment in research and development (R&D) can help to increase the long-run growth rate of an economy. (9 marks)** 1. Economic growth refers to an increase in real GDP. 2. Long-run economic growth refers to the rate of increase in the productive potential of an economy. 1. The government might subsidise firms' investment in research and development (R&D). 2. As firms invest in R&D, they will be able to find ways to innovate. 3. Innovation means that firms will find new ways of producing goods and services. 4. As the newer methods will be more productive, more output can be produced per hour with a given input (factors of production). 5. As productivity increases, the productive potential of the economy increases, as shown by an increase in the long-run aggregate supply curve. 6. This means that the long-run growth rate of the economy increases. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain how a depreciation of the pound may cause inflation URL: https://www.a-level-economics-tutor.com/explain-how-a-depreciation-of-the-pound-may-cause-inflation/ Last updated: 2026-08-04T16:19:10.000Z ### AQA A-Level Economics Paper 2 June 2024 **Extract C (lines 4–5) states ‘Energy and food bills had risen dramatically due to shocks to the economy, such as labour shortages, a depreciation of the pound…’** **With the help of a diagram, explain how a depreciation of the pound may cause inflation. (June 2024)** 1. Exchange rates are the price of one currency in terms of another 1. A currency depreciation means that there is a fall in the value of a currency due to market forces. 2. As the pound becomes weaker, UK exports become cheaper and therefore more competitive, so the value of exports increase. 3. Also, imports become more expensive so the value of imports is likely to decrease. 4. As a result, net exports (X-M) is likely to decrease. 5. As this is a component of aggregate demand (AD), AD decreases 6. This means that there is less pressure on firms to produce goods and services. 7. This causes a fall in demand-pull inflationary pressure. 1. Additionally, a weaker pound means that imports are more expensive. 2. This causes firms to pay more for the raw materials that they import. 3. Also, as it becomes more expensive to import oil, energy prices are likely to increase. 4. As costs of production increase, short-run aggregate supply is likely to decrease. 5. This would cause an increase in cost-push inflationary pressure. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain how high economic growth could help to create a budget surplus URL: https://www.a-level-economics-tutor.com/explain-how-high-economic-growth-could-help-to-create-a-budget-surplus/ Last updated: 2026-08-04T16:00:12.000Z ### AQA A-Level Economics Paper 2 June 2023 **Extract C (line 13) states: ‘High economic growth rates allowed Ireland to run a budget surplus in 2018 and 2019.’** **With the help of a diagram, explain how high economic growth could help to create a budget surplus. (9 marks)** 1. Economic growth occurs when real GDP increases. 2. Real GDP is the total value of goods and services produced in the economy, adjusted for inflation. 3. A budget surplus occurs when tax revenue exceeds government spending in a given year. 1. As the economy grows, tax revenues are likely to increase. 2. As the economy grows, real gdp per capita (income per person) is likely to increase. 3. As incomes increase, the government are able to collect higher amounts of income tax revenue. 4. Additionally, higher income enables greater levels of consumer spending, which allows the government to collect more revenue from VAT. 5. Finally, as business profits increase with economic growth, the government are able to collect greater amounts of revenue from corporation taxes. 1. Also, government spending is likely to decrease as the economy grows. 2. As economic growth means that there is a higher value of goods and services being produced, this means that there is a greater derived demand for labour. 3. So as unemployment falls, the government are able to spend less on welfare payments such as unemployment benefits. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain how a low rate of corporation tax may cause short-run and long-run economic growth URL: https://www.a-level-economics-tutor.com/explain-how-a-low-rate-of-corporation-tax-may-cause-short-run-and-long-run-economic-growth/ Last updated: 2026-08-04T15:40:13.000Z ### AQA A-Level Economics Paper 2 June 2024 **Extract E (lines 17–18) states: ‘A low rate of corporation tax has also contributed to both short-run and long-run economic growth.’** **With the help of a diagram, explain how a low rate of corporation tax may cause short-run and long-run economic growth. (9 marks)** 1. Corporation taxes are taxes on business' profits. 2. Short-run economic growth is when there's an increase in real GDP. 3. Long-run economic growth is when there is an increase in the productive potential. 1. Lower corporation taxes enable businesses to increase investment, which is spending by businesses on capital goods. 2. Investment (I) is one of the components of aggregate demand (AD). 3. As aggregate demand increases, the economy grows, meaning it produces a higher value of goods and services. 4. Overall, lower corporation taxes can promote short-run economic growth. 1. Lower corporation taxes can also affect long-run economic growth. 2. As businesses spend more on capital goods, this allows them to produce more output per hour with their given inputs. 3. Therefore, productivity increases. 4. For example, companies who use self-checkout machines like Lidl can produce and sell more output per hour. 5. These productivity improvements mean that the economy can produce more goods and services with all its factors of production fully employed. 6. Therefore, the long-run aggregate supply curve shifts outward and the productive potential of the economy increases. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain why a trade-off between price stability and low unemployment might occur URL: https://www.a-level-economics-tutor.com/explain-why-a-trade-off-between-price-stability-and-low-unemployment-might-occur/ Last updated: 2026-08-04T15:30:19.000Z ### AQA A-Level Economics Paper 2 June 2018 **Extract E (lines 16–17) states ‘However, some argue that trying to maintain stable prices and low unemployment could create trade-offs.’** **With the help of a diagram, explain why a trade-off between price stability and low unemployment might occur.** 1. Inflation is when there is a rise in average price level. 2. Unemployment refers to the people who are willing and able to work but cannot find a job. 1. A fall in unemployment means that more people are working, and earning an income. 2. As disposable incomes increase, consumers are able to increase their spending. 3. Consumer spending (C) is a component of aggregate demand (AD). 4. As aggregate demand increases, the price level increases from p1 to p2 as shown on the diagram below. 5. This happens because there is more demand chasing the same number of goods and services, and as many firms in the economy experience excess demand, they face pressure to increase prices. 6. It is also likely that increases in aggregate demand might cause a multiplier effect as business confidence increases and investment increases. 7. As aggregate demand increases more, inflation increases more. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/01/Screenshot-2026-01-04-at-16.03.36.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Policies to Increase Economic Growth | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/policies-to-increase-economic-growth-a-level-economics-model-paragraph/ Last updated: 2026-08-26T12:28:19.000Z Expansionary fiscal policy Expansionary monetary policy One way to promote economic growth is the use of expansionary fiscal policy. This is when the government increases spending or decreases taxes to influence the level of aggregate demand in the economy. One example is the government reducing income taxes. This allows consumers to have more disposable income. This means that consumer spending (C) is likely to increase, which causes aggregate demand (AD) to increase since C is a component of AD. Initially, this causes real GDP to increase from y1 to y2, and then to y3 through a multiplier effect, as shown on the diagram below. As aggregate demand increases, there is greater demand for goods and services, which leads to an increase in the derived demand for labour. This leads to a decrease in unemployment. As incomes increase further, this causes consumer confidence and consumer spending will increase even further. Additionally, as businesses get closer to full capacity, they are likely to increase their spending on capital (accelerator theory). As consumer spending and business investment increase, aggregate demand increases further. Overall, there is an increase in economic growth from y1 to y3 and an increase in the price level from pl1 to pl3, which shows that expansionary fiscal policy can be useful in promoting economic growth. ![Multiplier Effect diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.07.44@2x.png) Size of the multiplier Crowding out National debt One way to promote economic growth is through the use of expansionary monetary policy. This involves the central bank reducing interest rates in order to influence the components of aggregate demand. Consumer spending is likely to increase due to cheaper borrowing costs. Homeowners are likely to see a boost in disposable incomes as their monthly mortgage payments are likely to fall. Additionally, there might be a wealth effect. Lower interest rates make it more attractive to buy a home. This leads to an increase in the demand and therefore the value of homes. Therefore, homeowners can enjoy greater wealth and greater consumer confidence. As consumer spending (C) increases, business confidence is likely to increase. Additionally, businesses expect to reach closer to full capacity so they are likely to increase investment (I) by spending more on capital goods. Finally, as interest rates fall, there is likely to be a net outflow of hot money. This causes a currency depreciation, making exports cheaper and imports more expensive. Overall, a decrease in interest rates can lead to an increase in C, I and (X-M), causing aggregate demand to increase. The diagram shows AD shifting to the right, leading to an increase in economic growth from y1 to y2, indicating a successful economic recovery. The average price level also increases from pl1 to pl2 as a result of greater demand chasing the same number of goods and services. ![Increase in Aggregate Demand diagram for A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/08/CleanShot-2026-08-09-at-20.06.39@2x.png) Liquidity trap --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess whether Netflix subscribers behave rationally URL: https://www.a-level-economics-tutor.com/assess-whether-netflix-subscribers-behave-rationally/ Last updated: 2026-08-02T15:06:33.000Z ### [Edexcel A-Level Economics Paper 1 June 2023 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2023-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to the information provided, assess whether Netflix subscribers behave rationally. (10 marks)** 1. It is possible that Netflix customers act irrationally, which means that they don't always maximise their utility as traditional economic theory suggests. 2. In general, irrational behaviour can occur due to the tendency to follow habits or social norms, or the inability to compute things logically. 3. In the case of Netflix subscribers, many are likely to keep a subscription running permanently purely out of habit, rather than look at whether they will actually want to watch the new shows in the upcoming month. 4. The extract also mentions Netflix exploiting habitual behaviour through an auto-play feature. 5. Many customers also take up a free trial and then become likely to continue their subscription rather than weigh up whether the service is worth the price. 6. Additionally, many customers might find it difficult to understand the different options in terms of TV subscriptions and how easy it is to switch back and forth or cancel depending on their preferences. 7. For example, Disney has a higher satisfaction rate but many customers might not be interested in or aware of the switching process. 1. However, you could argue that Netflix customers are somewhat rational as the extract mentions that they are aware and worried about their 'rising cost of living'. 2. 200,000 Netflix customers have unsubscribed in the first quarter. 3. This suggests that they are refusing to stick to habits and they are considering all their options and trying to maximise their utility. 4. Customers in theory should cancel their subscription if the monthly price is higher than what they are willing and able to pay for the service. 5. If they paid more than that amount, they wouldn't have any consumer surplus from the transaction. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess the extent to which ‘information gaps’ and ‘irrational behaviour’ are the main causes of food waste in the UK. URL: https://www.a-level-economics-tutor.com/assess-the-extent-to-which-information-gaps-and-irrational-behaviour-are-the-main-causes-of-food-waste-in-the-uk/ Last updated: 2026-08-02T14:15:06.000Z ### [Edexcel A-Level Economics Paper 1 June 2017 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2017-Paper-1.pdf?ref=tootingtutors.co.uk) **Assess the extent to which ‘information gaps’ (Extract B, lines 5 and 6) and ‘irrational behaviour’ (Extract B, line 11) are the main causes of food waste in the UK. (10 marks)** 1. Information gaps exist as a result of both parties, or one party (asymmetric information) not having perfect information about an economic transaction or action. 2. In this case, there is some degree of asymmetric information in the food industry as producers would know less than consumers about how much food will be demanded each day. 3. This is likely to result in an over-production of food as producers would not want to miss out on any potential revenue. 4. This has contributed to 4.1 million tonnes of annual food waste. 1. However supermarkets and suppliers are working together to decrease food waste. 2. The extract mentions aims of 'improving forecasts for supply and demand' and 'increasing the reliability of transportation and storage'. 1. Additionally, irrational behaviour often means that economic agents don't end up maximising their utility. 2. This can happen because of the tendency for people to follow social norms or habits, or also if they lack the ability to compute outcomes logically. 3. In this case, the norm might be for families to store or cook slightly more food and have some leftovers at the end of the day. 4. Families are likely to end up guessing how much food to store rather than calculating it precisely. 5. The extract mentions that this contributes to 7 million tonnes of annual food waste. 1. However, this can be reduced through better provision of information by the government. 2. This can help customers to understand the negative consequences of wasting food, which will encourage them to buy the appropriate amount of food day-to-day. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess the limitations of using GDP to compare living standards over time URL: https://www.a-level-economics-tutor.com/assess-the-limitations-of-using-gdp-to-compare-living-standards-over-time/ Last updated: 2026-08-02T10:44:23.000Z ### [Edexcel AS-Level Economics Paper 2 June 2022 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2022-Paper-2.pdf?ref=tootingtutors.co.uk) **With reference to the fourth paragraph of Extract A, assess the limitations of using GDP to compare living standards over time. (10 marks)** 1. GDP might not be the best way to compare living standards over time as it fails to account for changes in income inequality. 2. As the economy grows, income per capita increases. 3. As a result, consumer spending increases and aggregate demand increases, which causes inflation. 4. Low skilled workers will have less bargaining power compared to high skilled workers. 5. This means that real incomes are likely to fall for some workers, leading to greater differences in people's quality of life. 1. Secondly, increases in GDP are unlikely to capture changes in subjective happiness. 2. For example, as income increases, people might take on more stressful jobs and work longer hours. 3. There might be other ways to capture changes in living standards, such as surveys or a happiness index. 4. The extract mentions poor productivity, which could be as a result of high stress levels and possible burnout. 1. However, the extract mentions that 'government expenditure has been rising'. 2. Higher GDP suggests that the government would be able to generate more tax revenue through income tax, corporation tax and also VAT. 3. This means that the UK can invest more into services like healthcare and education, which should suggest that living standards are improving. 4. Additionally, GDP is arguably the most simple but effective way of comparing living standards over time as it can take inflation into account when being measured in real terms. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Profit maximisation is assumed to be the business objective of most firms. Assess whether this is the case for coffee shop owners. URL: https://www.a-level-economics-tutor.com/profit-maximisation-is-assumed-to-be-the-business-objective-of-most-firms-assess-whether-this-is-the-case-for-coffee-shop-owners/ Last updated: 2026-08-01T19:00:14.000Z ### [Edexcel A-Level Economics Paper 1 June 2022 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2022-Paper-1.pdf?ref=a-level-economics-tutor.com) **Profit maximisation is assumed to be the business objective of most firms.** **With reference to Extract A, assess whether this is the case for coffee shop owners. (10 marks)** 1. Profit maximisation occurs when firms produce at the output where marginal costs = marginal revenue. 2. Coca Cola have stated that they have the aim of 'maximising long term returns to shareholders'. 3. Additionally, coffee shops are part of an oligopoly market which means they can focus on profit maximising rather than survival, as there are only a few firms dominating the market. 4. Costa is the market leader, with 2681 shops in the UK in 2021. 5. Most coffee shop owners are likely to be operating at this point where MC=MR. 6. At any point below this, firms can increase output and make more total profit because marginal revenue exceeds marginal cost. 7. At any point after this, increasing output leads to a fall in total profit since marginal costs exceed marginal revenue. 8. Therefore, it is likely that coffee shops like Costa operate in a way that allows them to maximise their profits. 9. This allows them to reinvest more and also allows shareholders to earn the most dividends. 1. However, firms might not prioritise maximum profits over other factors such as the customer experience. 2. Line 8 mentions that customers value 'coffee quality'. 3. In an oligopoly firms know that they are unable to set prices as high prices leads to a loss of market share and low prices leads to a price war. 4. Therefore, firms in an oligopoly often focus on non-price competition. 5. Managers are likely to be aware of this, which leads to profit satisficing. 6. Firms might sacrifice profits in order to meet other targets like maximising sales and increasing their customer base and customer loyalty. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess how the regulation of energy suppliers’ profits is likely to affect consumers and suppliers in the energy market URL: https://www.a-level-economics-tutor.com/assess-how-the-regulation-of-energy-suppliers-profits-is-likely-to-affect-consumers-and-suppliers-in-the-energy-market/ Last updated: 2026-08-01T12:48:03.000Z ### [Edexcel A-Level Economics Paper 1 June 2018 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2018-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to Extract B, assess how the regulation of energy suppliers’ profits is likely to affect consumers and suppliers in the energy market. (10 marks)** 1. A profit cap is likely to increase consumer surplus. 2. A profit cap limits how much profit firms can make as a proportion of their total revenue. 3. Extract B mentions a recommended profit cap of 1.25% of total revenue. 4. This means that firms who were previously making high levels of supernormal profit might be forced to reduce their prices to avoid a fine from OFGEM. 5. As a result, consumers can benefit from more consumer surplus, as there is a greater difference between the prices consumers were willing and able to pay, and the price they actually end up paying. 1. However, instead of reducing prices, firms might become less incentivised to control costs. 2. Firms can start to show signs of X-inefficiency when they don't produce on the lowest possible average cost for any given level of output. 3. This means that there is more wastage, and consumers still have to pay higher prices. 1. Energy producers are likely to re-invest less. 2. If firms can retain less profits consistently, they have less money left to re-invest. 3. Scottish Power said that the profit cap would 'reduce investment' across the energy industry. 4. This means that they will find it more difficult to consistently innovate their services. 5. This means that the market will experience a fall in dynamic efficiency, and customers also suffer from poorer quality services. 1. However, if firms know that they can only keep so much of their revenue as profit, it might actually incentivise them to increase the amount they spend on factors of production like capital. 2. This actually means that they might re-invest more during each financial year. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess possible reasons why many ‘landline-only’ customers do not switch to a cheaper telephone provider URL: https://www.a-level-economics-tutor.com/assess-possible-reasons-why-many-landline-only-customers-do-not-switch-to-a-cheaper-telephone-provider/ Last updated: 2026-07-31T21:07:30.000Z ### [Edexcel A-Level Economics Paper 1 June 2019 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2019-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to Extract C, assess possible reasons why many ‘landline-only’ customers do not switch to a cheaper telephone provider. (10 marks)** 1. One reason customers might not switch to a cheaper provider is due to irrational behaviour. 2. Switching providers regularly is the most rational thing to do as it means that customers pay lower prices and can enjoy more consumer surplus. 3. One reason why this ends up being unlikely is because customers have computational weakness. 4. This is the idea that people find it difficult to figure out the best decision for themselves, as they might struggle with logical thinking or with gathering information. 5. Customers might not have attempted to find a new telephone provider, especially given the fact many have been with BT for decades, which has allowed prices of consumers to steadily increase without them being aware of 1. However, customers can benefit from stronger regulation. 2. Ofcom have pressured companies like BT to provide better value for money. 3. Prices are expected to "fall from £18.99 to £11.99 per month" meaning that they will not be exploited from not switching. 1. Another reason landline-only customers do not switch is a lack of information about alternative providers. 2. Typically, consumers are likely to select the cheapest alternative available in a market. 3. This is unlikely to be the case for landline-only customers as customers are usually sent automatic renewals to make it as easy as possible for them to remain with the same provider. 4. Customers will not be given information by their current providers about how to shop around. 5. It is also more likely to be elderly customers who are still using landline, and they are less likely to use the internet and use comparison sites to understand the options available through switching. 6. Customers have faced price increases between "23% and 47% in recent years". 1. However, Ofcom have said it will be helping people "shop around for better deals with more confidence". 2. This will make it easier for customers to be aware of options when it comes to renewing their landline services, making it more likely that they do end up switching. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess whether complete nationalisation of the rail industry might protect employees URL: https://www.a-level-economics-tutor.com/assess-whether-complete-nationalisation-of-the-rail-industry-might-protect-employees/ Last updated: 2026-07-31T20:09:47.000Z ### [Edexcel A-Level Economics Paper 1 June 2020 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2020-Paper-1.pdf?ref=tootingtutors.co.uk) **Assess whether complete nationalisation of the rail industry might protect employees. (10 marks)** 1. Nationalisation of the rail industry is likely to protect employees. 2. Nationalisation refers to the government taking ownership of firms in the rail industry. 3. Private firms generally aim to maximise profit so they might exploit their market share and under-provide goods and services, knowing that they can overcharge for them. 4. The extract mentions that 'the privately-owned train operators are now the subject of fierce criticism'. 5. This means that firms are likely to under-employ staff or make them redundant when suitable. 6. When these industries are nationalised, the government are more likely to aim for allocatively efficient outcomes to maximise social welfare. 7. This means they are likely to increase output closer to the point where marginal costs = average revenue. 8. At a higher output, there will be greater and consistent demand for workers, meaning that workers are more likely to be protected. 1. However, a state owned monopoly of rail might exploit their monopsony power when employing labour. 2. Monopsonies are able to exploit their buying power and underpay for factors of production. 3. Workers specialising in the railway industry would have no choice but to work for the government. 4. This means that the government have more bargaining power and are able to negotiate lower pay with workers, compared to if workers had the option to work for different firms in the private sector. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess whether Thomas Cook’s failure was caused by the principal-agent problem URL: https://www.a-level-economics-tutor.com/assess-whether-thomas-cooks-failure-was-caused-by-the-principal-agent-problem/ Last updated: 2026-07-31T11:21:53.000Z ### [Edexcel A-Level Economics Paper 1 June 2021 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2021-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to Extract C, assess whether Thomas Cook’s failure was caused by the principal-agent problem. (10 marks)** 1. On the one hand, you could argue that Thomas Cook's failure was caused by the principal-agent problem. 2. This occurs when the principal leaves the agent to manage day-to-day tasks on their behalf but the principal and the agent both have a different set of objectives. 3. Extract C mentions that the role of the management is being investigated by the UK government. 4. The shareholders and owners of firms like Thomas Cook generally aim to maximise profits so they can pay themselves the most in dividends. 5. Managers and workers are most likely to value other objectives, such as job satisfaction but also possibly sales maximisation if that's what earns them bonuses or greater recognition when striving for career progression. 6. In this particular case, the CEO might have been incentivised by the £500,000 bonus as it might have been tied to market share or sales rather than consistent long-term profitability. 1. On the other hand, you could argue that Thomas Cook's failure was caused by other factors such as high costs. 2. The extract mentions that the CEO worked “exhaustively” to rescue Thomas Cook and create a long-term turnaround strategy. 3. Ultimately, the merger with MyTravel increased debts significantly which would have led to an increase in costs due to the interest owed each year. 4. This would have contributed to Thomas Cook reaching its long-run shutdown condition, as it could not sustain average costs being higher than average revenue. 5. MyTravel only made profit once in six years and in 2019 Thomas Cook made a £1.5bn loss. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess the likely impact on the Rwandan economy of the change in aid received between 2017 and 2018 URL: https://www.a-level-economics-tutor.com/assess-the-likely-impact-on-the-rwandan-economy-of-the-change-in-aid-received-between-2017-and-2018/ Last updated: 2026-07-30T13:38:22.000Z ### [Edexcel A-Level Economics Paper 2 June 2021 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2021-Paper-2.pdf?ref=tootingtutors.co.uk) **With reference to the information provided, assess the likely impact on the Rwandan economy of the change in aid received between 2017 and 2018\. (10 marks)** 1. One main impact of the decrease in aid could be that economic growth might slow down. 2. Aid usually refers to assistance given from developed countries to less economically developed countries (LEDCs), and this can be in many forms. 3. Figure 1 shows a decrease in aid received from roughly $103 per capita in 2017 to $91 per capita in 2018. 4. As the government receive less aid, there is more pressure on them to fund spending on services such as healthcare and education. 5. This means the government have to cut spending in other areas or potentially raise taxes. 6. This can lead to a decrease in aggregate demand, and therefore a fall in real gdp. 7. As income per capita falls, people can afford less goods and services and satisfy fewer needs and wants, so living standards could fall. 1. However, the data shows that the Rwandan economy grew in every year from 2008 and 2018, including a growth rate of roughly 7.6% in 2018. 2. This suggests that the Rwandan economy was sustaining itself well and becoming less dependent on foreign aid. 3. As the economy has been growing consistently, it means that people's incomes per capita has been increasing and therefore people are less dependent on the government for the provision of services. 4. Additionally, people are able to pay more taxes as their income rises, which reduces the government's dependence on aid. 5. Absolute poverty fell from 59% to 39% between 2001 to 2014. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess whether the market for video game development is contestable URL: https://www.a-level-economics-tutor.com/assess-whether-the-market-for-video-game-development-is-contestable/ Last updated: 2026-07-30T13:21:54.000Z ### [Edexcel A-Level Economics Paper 1 June 2025 Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-1-June-2025-Extract.pdf?ref=a-level-economics-tutor.com) **With reference to the information provided, assess whether the market for video game development is contestable. (10 marks)** 1. The market for video game development is arguably contestable as there are signs that there are low barriers to entry and exit and low sunk costs. 2. Extract A mentions that digital markets have 'brought about increased competition across a wide range of products and services'. 3. In terms of video game development, it has allowed groups of people to work together online and also market and sell their product online. 4. This reduces costs such as the rent for a physical store. 5. Additionally, startups can make use of tools like AI, such as ChatGPT (Extract C). 6. This means that firms do not need to hire as many specialist staff, such as software engineers, who would be much more expensive. 7. Overall, these factors (digital markets and automation) make it easier for new firms to enter the video game market than before. 1. On the other hand, you could argue that the market for video games is becoming less contestable. 2. This is because large firms are clearly able to exploit and increase their market share. 3. For example, Microsoft are by buying companies like Activision. 4. As firms like Microsoft start to own more of the smaller video game developers, they increase their market share and can exploit more economies of scale. 5. This makes it even harder for new firms to enter the video game market and compete on costs with giants like Microsoft. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess two likely benefits of debt relief to Angola URL: https://www.a-level-economics-tutor.com/assess-two-likely-benefits-of-debt-relief-to-angola/ Last updated: 2026-07-30T10:05:29.000Z ### [Edexcel A-Level Economics Paper 2 June 2023 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2023-Paper-2.pdf?ref=tootingtutors.co.uk) **Assess two likely benefits of debt relief to Angola. Refer to Extract B in your answer. (10 marks)** 1. Debt relief would allow the government of Angola to reduce income inequality and alleviate poverty. 2. Extract B mentions that 17 million people in Angola still live in absolute poverty. 3. Debt relief would reduce the amount the government have to pay on repayments and interest, and gives them a fresh opportunity to manage their budget better. 4. The government would be able to increase spending on services like the provision of free healthcare and education. 5. This would allow better opportunities for families and especially young people to gain skills and find work, which should reduce the chance of absolute poverty rates getting worse. 1. However, it depends on how the government chooses to spend and allocate the extra budget voided by debt repayments. 2. The "provision of vital services" such as education may not have an effect on those living in absolute poverty who may not be able to go to school due to transport costs or because they need to earn an income to support their families. 1. However, debt relief can be wasted if governments are either corrupt or lack knowledge and information. 2. It is imperative that future spending and taxes are adjusted in a way that promotes economic growth. 3. For example, misspending might lead to temporary improvements in services like healthcare but if the economy doesn't grow, it will be difficult for the government to raise tax revenue and maintain a balanced budget consistently. 1. Debt relief can also help Angola to reduce their foreign currency gap. 2. The IMF has loaned Angola $4.5 billion since 2018\. 3. The repayment would also likely be in dollars. 4. If the interest payments or some of the debt itself is relieved, Angola would have to sell less of their currency to purchase dollars. 5. Therefore, their currency should stabilise instead of continuing to depreciate. 6. This makes it easier for consumers and firms in Angola to afford essential imports such as medicine and food. 1. However, another disadvantage of debt relief is that it creates a moral hazard. 2. The possibility of debt relief might incentivise countries to take bad loans, as they know that they can be rescued if they fail to make repayments. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain why an increase in the tax payable on firms’ profits may lead to lower productivity growth URL: https://www.a-level-economics-tutor.com/explain-why-an-increase-in-the-tax-payable-on-firms-profits-may-lead-to-lower-productivity-growth/ Last updated: 2026-07-29T15:26:25.000Z ### AQA AS-Level Paper 2 June 2025 Insert **Extract E (lines 12–13) states: ‘To increase revenue, the main rate of corporation tax, the tax payable on firms’ profits, was increased to 25%.’** **Explain why an increase in the tax payable on firms’ profits may lead to lower productivity growth. (10 marks)** 1. Productivity is a measure of how much a factor of production can produce in a given period of time. 2. Extract E mentions an increase in the rate of corporation taxes. 3. This means that firms get taxed on more of their profits. 4. As firms keep less of their profits, they have less money left to reinvest in capital like machinery. 5. This means that firms might not be able to produce as much output per hour. 6. The diagram shows the effect of a fall in the economy's productive potential, with the shift from LRAS1 to LRAS2. 7. This results in a fall in real gdp from y1 to y2 as there is a decrease in the value of goods and services being produced in the economy. 8. This slowdown in output also implies a fall in the UK's productivity growth rate. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-28-at-18.25.49@2x.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain two factors considered by the Bank of England’s MPC when setting Bank Rate URL: https://www.a-level-economics-tutor.com/explain-two-factors-considered-by-the-bank-of-englands-mpc-when-setting-bank-rate/ Last updated: 2026-07-29T15:13:42.000Z ### [AQA AS-Level Paper 2 June 2023 Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2023-1.pdf?ref=a-level-economics-tutor.com) Extract B (lines 7–9) states: ‘With this in mind, the government sets the target rate of inflation that the Bank of England’s Monetary Policy Committee (MPC) has to achieve.’ **Explain two factors considered by the Bank of England’s MPC when setting Bank Rate. (10 marks)** 1. One factor the MPC would consider when setting the bank rate is the rate of inflation. 2. Extract B mentions that 'high inflation can be disruptive'. 3. Inflation is the rate that average prices are rising by. 4. A higher bank rate, and therefore higher high street interest rates mean that the cost of borrowing and the reward for saving increase. 5. This incentivises consumers and firms to save more and borrow less. 6. This leads to a fall in consumer spending and investment. 7. These are both components of aggregate demand (C+I+G+X-M), so therefore aggregate demand decreases in the UK economy, and the price level falls back towards the 2% target. 1. Another factor the MPC might consider when setting the bank rate is the current account. 2. If they were to raise interest rates, this would increase the reward for saving in the UK. 3. This would make it more attractive for people to buy the pound, meaning that there would be an increase in hot money flows into the UK. 4. This increases the demand for the pound, causing the pound to appreciate. 5. This makes imports cheaper and exports more expensive, which would lead to a worsening of the current account deficit. 6. Therefore, this is something that the MPC should consider when they are thinking about raising interest rates. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess policies the Nigerian government could use in response to the concerns of the country’s ‘manufacturers and trade unions’ if they join this trading bloc URL: https://www.a-level-economics-tutor.com/assess-policies-the-nigerian-government-could-use-in-response-to-the-concerns-of-the-countrys-manufacturers-and-trade-unions-if-they-join-this-trading-bloc/ Last updated: 2026-07-28T12:46:05.000Z ### [Edexcel A-Level Economics Paper 2 June 2020 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2020-Paper-2.pdf?ref=tootingtutors.co.uk) **Nigeria is considering joining the African Continental Free Trade Agreement.** **Assess policies the Nigerian government could use in response to the concerns of the country’s ‘manufacturers and trade unions’ (Extract B paragraph 3) if they join this trading bloc. (10 marks)** Firstly, the Nigerian government could use a market-based supply-side policy such as lower corporation taxes. Lower corporation taxes enable firms in Nigeria to retain more of their profits. This allows them to reinvest more into machinery. This allows them to increase their productivity, which makes them more internationally competitive, allowing them to continue to export. And keep dependence on imports low despite the concerns about being 'more open to imports from other African countries'. Secondly, the Nigerian government could use an interventionist supply-side policy such as greater investment in infrastructure. As they spend more on infrastructure projects, firms in Nigeria are able to access better transport networks. This can allow firms to increase their labour productivity as output per worker per hour increases for businesses where travel is a big part of the job. This might involve small businesses who often have meetings or have to transport goods. This can combat the concerns mentioned in Extract C about Nigeria having to compete with 'other African countries with lower labour costs'. However, these supply-side policies have both an opportunity cost and a time lag. Spending more on infrastructure, or reducing taxes, would both lead to a worsening of the budget deficit if the government do not make a decision to cut other forms of spending or raise other taxes. This can lead to other issues like implications on inequality or living standards. Additionally, the idea to spend on infrastructure is likely to have a particularly large time lag due to the time taken to actually complete such projects. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess whether firms in the electronics industry benefit from economies of scale URL: https://www.a-level-economics-tutor.com/assess-whether-firms-in-the-electronics-industry-benefit-from-economies-of-scale/ Last updated: 2026-07-27T15:52:27.000Z ### [Edexcel A-Level Economics Paper 1 June 2024 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2024-Paper-1.pdf?ref=tootingtutors.co.uk) **Assess whether firms in the electronics industry benefit from economies of scale. (10 marks)** 1. Firms in the electronics industry are likely to benefit from economies of scale as they are large. 2. Extract C mentions that 'large electronics firms benefit from economies of scale'. 3. As firms increase their output, they are able to reduce their long-run average costs. 4. The diagram shows this as the long-run average cost falls from c1 to c2 at the higher output q2. 5. When a firm is larger, they are able to bulk-buy materials, and this enables them to reduce their cost per unit. 6. Another example is that larger firms can hire specialist managers to oversee more staff at once, and this also enables them to reduce their cost per unit. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-27-at-16.42.29@2x.png) 1. However, as firms become too large, diseconomies of scale might outweight their economies of scale. 2. For example, there might be communication problems. 3. As a firm becomes larger workers might feel alienated. 4. This reduces their motivation to work hard, and this reduces their productivity. 5. As a result, firms average costs might increase. 6. Extract B also mentions that firms are finding it difficult to find suitable staff suited to the industry. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess the likely macroeconomic effects of the German government’s budget deficit URL: https://www.a-level-economics-tutor.com/assess-the-likely-macroeconomic-effects-of-the-german-governments-budget-deficit/ Last updated: 2026-07-26T15:56:39.000Z ### [Edexcel A-Level Economics Paper 2 June 2025 Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-2-June-2025-Extract.pdf?ref=a-level-economics-tutor.com) **With reference to the information provided and your own knowledge, assess the likely macroeconomic effects of the German government’s budget deficit. (10 marks)** 1. The German government's budget deficit is likely to promote economic growth. 2. Figure 2 shows that the German government were running a budget deficit of 2.6% of GDP in 2022. 3. A budget deficit exists when government spending exceeds tax revenue in a given year. 4. For example, if the government were to reduce income taxes, this would allow people to keep more disposable income. 5. This allows people to increase their consumption, leading to an increase in aggregate demand. 6. As aggregate demand increases, the economy grows as real GDP increases. 1. However, frequently running a budget deficit can also harm the economy. 2. Budget deficits can accumulate as national debt. Figure 2 also shows that the German government ran a budget deficit for three consecutive years from 2020 to 2022. 3. As national debt increases, the government must pay more towards interest. 4. This carries an opportunity cost, as the goverment must cut spending on other services or raise taxes. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess whether a fiscal deficit and national debt should be a cause for concern for the UK government URL: https://www.a-level-economics-tutor.com/assess-whether-a-fiscal-deficit-and-national-debt-should-be-a-cause-for-concern-for-the-uk-government/ Last updated: 2026-07-25T19:11:22.000Z ### [Edexcel A-Level Economics Paper 2 June 2024 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2024-Paper-2.pdf?ref=tootingtutors.co.uk) **Assess whether a fiscal deficit and national debt should be a cause for concern for the UK government. (10 marks)** 1. A fiscal deficit exists when government spending exceeds tax revenue in a given year. 2. If a country runs a fiscal deficit frequently, this accumulates as national debt. 3. This is likely to be a cause for concern as it leads to the opportunity cost it presents. 4. As the UK's national debt increases, the government must also pay back more interest each year. 5. The UK's national debt reached around 94% of GDP in 2020/21. 6. There is an opportunity cost as, eventually, the government must decide to cut spending on some services or increase taxes in order to reduce national debt. ### 1. However, a budget deficit can contribute positively to the UK as it can promote economic growth. 2. Figure 4 shows that people earning above £125,140 are being taxed more on their income, and other people are also being taxed more in real terms. 3. If the government were to actually reduce taxes, this would allow people to have more disposable income and consume more, despite the budget deficit rising. 4. As consumption increases, aggregate demand increases and the economy grows, which can actually make it easier for the government to collect more tax revenue, through VAT and corporation tax. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess the likely impact of an appreciation of the euro on the current account of the balance of payments for Eurozone countries URL: https://www.a-level-economics-tutor.com/assess-the-likely-impact-of-an-appreciation-of-the-euro-on-the-current-account-of-the-balance-of-payments-for-eurozone-countries/ Last updated: 2026-07-25T14:35:16.000Z ### [Edexcel A-Level Economics Paper 2 June 2017 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2017-Paper-2.pdf?ref=tootingtutors.co.uk) **Since mid-2015 the euro has appreciated. Assess the likely impact of an appreciation of the euro on the current account of the balance of payments for Eurozone countries. (10 marks)** 1. An appreciation of the Euro is most likely to worsen the balance of payments for Eurozone countries. 2. Exchange rates are the price of a currency in terms of another and Figure 1 shows that the Euro appreciated from roughly £1.70 in mid 2015 to roughly £1.77 at the start of 2016. 3. As the value of the Euro increases, imports become cheaper and exports become more expensive. 4. This means that imports are likely to increase and exports are likely to fall as they become less internationally competitive. 5. As a result, the current account deficit of Eurozone countries will likely worsen as this is a measure of trade in goods and services (as well as primary and secondary income). 1. However, the impact of currency fluctuations can vary as explained by the Marshall-Lerner condition. 2. It explains that a currency appreciation is only going to lead to a worsening of the current account deficit if the price elasticity of demand for exports and imports add up to at least one. 3. It is more likely that imports and exports are actually price inelastic in demand in the short-run. 4. So, a stronger currency would actually improve the current account position as the value of exports would rise as consumers and firms abroad do not have enough chance to adjust their demand to the new prices. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess the impact of a fall in real incomes on subjective happiness URL: https://www.a-level-economics-tutor.com/assess-the-impact-of-a-fall-in-real-incomes-on-subjective-happiness/ Last updated: 2026-07-25T13:12:59.000Z ### [Edexcel A-Level Economics Paper 2 June 2019 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2019-Paper-2.pdf?ref=tootingtutors.co.uk) **With reference to the last paragraph in Extract C, assess the impact of a fall in real incomes on subjective happiness. (10 marks)** 1. A fall in real incomes is most likely to lead to a fall in the measure of subjective happiness 2. Falling real incomes refers to the fact that incomes are falling after you take inflation into account. 3. So, cost of living is increasing at a faster rate than incomes. 4. As a result, people cannot afford as many goods and services, and therefore find it harder to satisfy as many of their needs and wants. 5. Extract C mentions that consumers would 'become more vulnerable to falling behind' with payments, meaning that they have to think about giving up some of their luxuries. 6. This means that living standards fall, and therefore subjective happiness might also fall as a result. 7. Higher bills and more difficult decisions can also increase stress levels, which will affect measures of subjective happiness. 1. However, the overall impact on happiness could be small if this fall in real income is small or temporary. 2. The extract also mentions that 'the UK economy recently recorded the lowest rate of unemployment since 1975'. 3. This suggests that job security and consumer confidence are likely to be high, which suggests that stress levels are unlikely to suddenly rise. 1. Secondly, a rise in real incomes does not always correlate to higher levels of happiness. 2. Higher incomes might be correlated with longer working hours or more stressful jobs. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess whether an increase in real income improves subjective happiness within the UK URL: https://www.a-level-economics-tutor.com/assess-whether-an-increase-in-real-income-improves-subjective-happiness-within-the-uk/ Last updated: 2026-07-25T12:55:26.000Z ### [Edexcel A-Level Economics Paper 2 June 2022 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2022-Paper-2.pdf?ref=tootingtutors.co.uk) **With reference to Figure 2, assess whether an increase in real income improves subjective happiness within the UK. (June 2022)** 1. Overall, higher real incomes is most likely to improve subjective happiness. 2. Figure 2 shows that, as people earn more income, ranging from £10,000 up to £40,000+, subjective happiness increases. 3. The survey indicates an increase in happiness from 7.02 to 7.13, which is due to higher incomes being correlated with a better quality of life. 4. Quality of life and living standards refer to consumers' ability to meet their needs and wants. 5. Higher real income means that incomes are rising faster than the rate of inflation. 6. This means that people can use their money to satisfy an increasing portion of their needs and wants, for example by travelling more, buying more luxury goods, going out for nicer meals. 1. However, an increase in real income does not always improve subjective happiness in places like the UK. 2. The Easterlin paradox suggests that people might care more about their relative income than their exact individual income. 3. Therefore, if people's incomes are rising with economic growth, this may have less impact on subjective happiness. 4. After a point, higher incomes seem to have a diminishing marginal utility since higher incomes are linked to more stressful jobs, longer working hours, environmental damage, and possibly higher levels of income inequality. 5. Figure 2 even shows that those earning under £10,000 are actually the happiest day-to-day. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Assess the likely impact on the UK economy of an ‘increase in consumption’ URL: https://www.a-level-economics-tutor.com/assess-the-likely-impact-on-the-uk-economy-of-an-increase-in-consumption/ Last updated: 2026-07-25T12:54:35.000Z ### [Edexcel AS-Level Economics Paper 2 June 2020 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2020-Paper-2.pdf?ref=tootingtutors.co.uk) **Assess the likely impact on the UK economy of an ‘increase in consumption’ (Extract A, lines 5–6). Use an aggregate demand and aggregate supply diagram in your answer. (10 marks)** 1. An increase in consumption will lead to more economic growth in the UK. 2. Figure 1 shows that household consumption increased by nearly 117% between 1998 and 2018. 3. Consumption refers to spending on goods and services produced in the UK. 4. Consumption is a component of aggregate demand. 5. The diagram below shows an increase in aggregate demand and how it leads to an increase in the price level to p2 and an increase in real gdp to y2. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-23-at-18.18.41@2x.png) However, the overall impact of greater consumption depends on the original state of the economy. For example, if the economy is clsoer to full employment, then greater consumption will cause very little growth and a lot more inflation as the economy experiences a positive output gap. This would not be the case if there was spare capacity in the economy as the economy would be able to grow without experiencing inflationary pressure. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain the impact of the increase in the number of students attending university on the market for student accommodation URL: https://www.a-level-economics-tutor.com/explain-the-impact-of-the-increase-in-the-number-of-students-attending-university-on-the-market-for-student-accommodation/ Last updated: 2026-07-23T17:05:28.000Z ### AQA A-Level Economics Paper 1 June 2024 **Extract B (lines 3–4) states that ‘Universities have expanded the number of places on offer to students, but the supply of student accommodation is highly inelastic’.** **With the help of a diagram, explain the impact of the increase in the number of students attending university on the market for student accommodation. (June 2024)** 1. Firstly, as there are more students attending university, this leads to an increase in the demand for student accommodation. 2. This is shown with a right shift in demand from D1 to D2 in the diagram below. 3. As demand increases, there is an expansion along the supply curve. 4. This means there is an increase in both the equilibrium quantity and the equilibrium price at q2 and p2. 5. The supply of student accommodation is price inelastic. 6. This means that the increase in price leads to a proportionally small increase in the quantity. 7. Providers of student accommodation are unlikely to have spare factors of production such as land, meaning it is difficult to produce more even when the price rises. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/image-1.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine two causes of the high cost of transporting goods between African countries URL: https://www.a-level-economics-tutor.com/examine-two-causes-of-the-high-cost-of-transporting-goods-between-african-countries/ Last updated: 2026-07-23T11:09:37.000Z ### [Edexcel A-Level Economics Paper 1 June 2023 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2023-Paper-2.pdf?ref=tootingtutors.co.uk) **With reference to Extract A, examine two causes of the high cost of transporting goods between African countries. (8 marks)** One cause of the high transportation costs might be poor infrastructure. Poor infrastructure such as transport links means that it takes longer to transport things, which means that it is likely to take up more time from staff, and therefore costs more. The extract mentions that 'ports are small and slow'. Secondly, the extract mentions that a lack of information is also contributing to transport problems. Extract A, line 30 mentions that 'the key problem is a lack of information'. It means that firms are unable to buy space on trains as and when they need it, and have to pay for long-term contracts. However, the cost of transporting goods can be reduced with investment. For example, Chinese built railways are currently being under-used but as firms or the government invest in storage yards and other facilities, this can make transport easier and cheaper around African countries. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine two likely causes of income inequality within the UK URL: https://www.a-level-economics-tutor.com/examine-two-likely-causes-of-income-inequality-within-the-uk/ Last updated: 2026-07-23T10:07:03.000Z ### [Edexcel A-Level Economics Paper 2 June 2022 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2022-Paper-2.pdf?ref=tootingtutors.co.uk) **With reference to Figure 1 and Extract A, examine two likely causes of income inequality within the UK. (8 marks)** One explanation for the UK’s income inequality is poor transport and infrastructure. Poor transport makes it harder for people outside of London to access higher paying jobs inside London. The extract mentions that gross disposable household income was between £19,000 and £21,000 in London whereas gross disposable household income was between £13,000 and £13,999 in the North East. Secondly, poor education contributes to income inequality. Poor or inconsistent state education leads to hugely differing levels of skills around the economy, meaning that not everyone can access high paying jobs. However, progressive income taxes are in place to control the level of income inequality. As income increases, the proportion of income that is taxed also increases, which reduces the gap in net incomes between higher and lower earners. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine two ways, apart from Fairtrade schemes, in which cocoa farmers could boost their incomes despite the falling price of cocoa URL: https://www.a-level-economics-tutor.com/examine-two-ways-apart-from-fairtrade-schemes-in-which-cocoa-farmers-could-boost-their-incomes-despite-the-falling-price-of-cocoa/ Last updated: 2026-07-22T09:15:20.000Z ### [Edexcel A-Level Economics Paper 2 June 2020 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2020-Paper-2.pdf?ref=tootingtutors.co.uk) **Examine two ways, apart from Fairtrade schemes, in which cocoa farmers could boost their incomes despite the falling price of cocoa. (8 marks)** Farmers can invest in machinery. Extract A mentioned that cocoa prices fell by a third and that farmers had 'fragile' incomes. To make up for falling prices, better machinery can increase farmers' productivity meaning that farmers can produce more output per hour, since machinery and capital like tractors can allow them to complete tasks faster. This allows them to sell more output and earn more income. However, this will cause an increase in the supply of cocoa, which might decrease prices even further. Secondly, farmers can diversify their products. If they are able to grow different agriculture, they can have more stable revenue even if the price of one product like cocoa falls. 54% of Ivory Coast's exports are cocoa related but if they were able to produce more oil, which shows that farmers are heavily dependent on it. However, farmers may find it expensive to produce more stock, as this might require training, or more land or more materials. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine the likely impact of Thomas Cook’s plan ‘to reduce their airline emissions’ on the social optimum position URL: https://www.a-level-economics-tutor.com/examine-the-likely-impact-of-thomas-cooks-plan-to-reduce-their-airline-emissions-on-the-social-optimum-position/ Last updated: 2026-07-22T08:09:56.000Z ### [Edexcel A-Level Economics Paper 1 June 2021 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2021-Paper-1.pdf?ref=tootingtutors.co.uk) **Examine the likely impact of Thomas Cook’s plan ‘to reduce their airline emissions’ (Extract B, line 6) on the social optimum position. Use an appropriate externalities diagram in your answer. (8 marks)** As Thomas Cook reduces their airline emissions, the socially optimal position increases from q\*1 to q\*2 as shown in the diagram below. The free market equilibrium exists when marginal private benefit equals marginal private costs (MPB=MPC). This is because consumers and producers act in their self-interest. They ignore any externalities (positive or negative impacts on third parties). The extract mentions the 'risks presented by climate change' and how Thomas Cook didn't previously 'recognise' these. The socially optimal quantity accounts for this and it’s where marginal social benefit equal marginal social costs (MSB=MSC). As emissions are lower at each unit of output, marginal social cost falls closer to marginal private cost, so the socially optimal quantity increase as shown below. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-18-at-17.00.07@2x-1.png) However, it is difficult to measure the size of these externalities. It might be possible to measure the amount of carbon emissions before and after the changes but it is always hard to quantify the impact these will have on future generations. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine two effects of increased ‘automation’ on the demand for labour URL: https://www.a-level-economics-tutor.com/examine-two-effects-of-increased-automation-on-the-demand-for-labour/ Last updated: 2026-07-22T08:04:54.000Z ### [Edexcel A-Level Economics Paper 1 June 2025 Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-1-June-2025-Extract.pdf?ref=a-level-economics-tutor.com) **With reference to Extract C, examine two effects of increased ‘automation’ on the demand for labour. (8 marks)** Firstly, increased automation is initially likely to lead to a decrease in the demand for workers in many job markets. For example, the successful implementation of self-checkout machines has led to a decrease in the demand for retail staff, as their tasks can be completed by machinery. Similarly, the extract mentions the growth of automation in banking, leading to high street banks closing. As demand for these workers decreases, this causes a contraction along the supply curve leading to a decrease in the equilibrium quantity of workers and a decrease in their wage. Secondly, increased automation might also lead to an increase in the demand for specialists like software engineers and machine learning engineers who are able to help implement AI within companies. They would also see an increase in their pay assuming there isn’t a massive increase in the supply of them. Overall, the impact will depend hugely on which job market we are referring to, and the level of occupational mobility of labour, which is the ability of workers to re-train themselves and quickly get another job. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine the likely impact of the change in the sterling exchange rate on the UK economy URL: https://www.a-level-economics-tutor.com/examine-the-likely-impact-of-the-change-in-the-sterling-exchange-rate-on-the-uk-economy/ Last updated: 2026-07-22T07:54:07.000Z ### [Edexcel A-Level Economics Paper 2 June 2019 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2019-Paper-2.pdf?ref=tootingtutors.co.uk) **With reference to Extract A and Figure 1, examine the likely impact of the change in the sterling exchange rate on the UK economy. (8 marks)** One likely impact of the currency depreciation is an increase in economic growth. The extract shows that the Pound depreciated from around $1.50 to $1.30 after the Brexit vote. A weaker pound means that exports are cheaper and imports are more expensive. This means that exports are likely to increase and imports are likely to fall, which improves the trade balance (X-M). As the trade deficit in the UK falls, this causes aggregate demand to increase, which leads to an increase in the real gdp, as there is a higher value of goods and services being produced, to meet greater demand for exports. However, a currency depreciation can also cause cost push inflation in the short-run as raw materials become more expensive to import. This can cause a decrease in short run aggregate supply and cause slower economic growth in the UK. These imports are likely to become more price elastic over time. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine two factors which might influence the supply of labour in the electronics industry URL: https://www.a-level-economics-tutor.com/examine-two-factors-which-might-influence-the-supply-of-labour-in-the-electronics-industry/ Last updated: 2026-07-20T14:42:00.000Z ### [Edexcel A-Level Economics Paper 1 June 2024 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2024-Paper-1.pdf?ref=tootingtutors.co.uk) **Examine two factors which might influence the supply of labour in the electronics industry. (8 marks)** One factor which could affect the supply of labour in electronics is the nature of skills required. Extract B states that jobs are now requiring increasing levels of 'problem solving' skills. If jobs become more difficult, there would be less people who are willing and able to work at each given wage, hence there would be a left shift in supply of workers in the industry. Another factor that could be affecting supply of labour is typically wages in substite jobs, but in this case this also includes retirement pensions. Extract B states that many people 'retire' from the industry every year. If people are choosing to value leisure time over the wage, then the opportunity cost of working increases, so supply of labour will decrease as less people are willing and able to work at each wage. However, there are many other factors that affect the supply of labour so it is hard to pinpoint the main ones without much data. The level of skills required is one of them. AI is already helping to make it easier to attain these skills (line 7). The government can invest in training programs that make it easier for young people to pick up these necessary skills. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine the likely numerical value of the cross elasticity of demand between UK online streaming services URL: https://www.a-level-economics-tutor.com/examine-the-likely-numerical-value-of-the-cross-elasticity-of-demand-between-uk-online-streaming-services/ Last updated: 2026-07-20T14:13:31.000Z ### [Edexcel A-Level Economics Paper 1 June 2023 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2023-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to the information provided, examine the likely numerical value of the cross elasticity of demand between UK online streaming services. (8 marks)** Cross elasticity of demand (XED) is the percentage change in the demand of a good, by the percentage change in the price of another good. The XED for UK online streaming services is very likely to be positive. For example, it could be a number close to 1\. The various online streaming services act as substitutes for each other. This means that an increase in the price of one service leads to a contraction in demand for that given service. Therefore, consumers look for alternatives and the demand for a substitute is likely to increase. The extract mentions that 'Netflix subscribers have also quoted a decline in value for money', which means that their customers are looking for better alternatives. However, whether XED is between 0 and 1, or actually greater than 1 depends on whether the two services are weak substitutes or close substitutes. Some consumers may have started tv shows that they really enjoy on one streaming service and would be unlikely to move to another streaming service despite a price increase. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine two factors that may cause significant changes in the international price of coffee beans URL: https://www.a-level-economics-tutor.com/examine-two-factors-that-may-cause-significant-changes-in-the-international-price-of-coffee-beans/ Last updated: 2026-07-20T12:02:40.000Z ### [Edexcel A-Level Economics Paper 1 June 2022 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2022-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to Figure 2 and your understanding of price elasticity, examine two factors that may cause significant changes in the international price of coffee beans. (8 marks)** One factor that might have caused an increase in the price of coffee beans might have been changes in the weather. Coffee prices rose the most in August 2020, by 11.11%, Poor weather could make it harder to harvest coffee beans, leading to a decrease in the supply of coffee beans. As supply shifts to the left, there is a contraction along the demand curve, leading to a fall in the equilibrium quantity and an increase in the price. If demand is price inelastic, this means that a given shift in the supply curve will lead to a larger change in price. Another factor that might have caused an increase in the price of coffee beans might have been a decrease in productivity. The price of coffee beans went up by the second largest amoumt, 9.36% in March 2020\. It is possible that the covid pandemic caused more sickness, meaning that workers took time off sick or couldn't work as fast. This would have also caused the supply curve to decrease and the price to increase. However, the extent of the price rise depends on price elasticity of demand and price elasticity of supply. For example, when the supply curve shifts to the left by a given amount, the price will increase even more if the demand curve is price inelastic. This might be the case as there are a lack of strong substitutes to coffee beans so coffee shops will still buy coffee beans despite a higher price. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine two possible factors which may have influenced demand for rail travel since 2008 URL: https://www.a-level-economics-tutor.com/examine-two-possible-factors-which-may-have-influenced-demand-for-rail-travel-since-2008/ Last updated: 2026-07-18T15:53:29.000Z ### [Edexcel A-Level Economics Paper 1 June 2020 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2020-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to Figure 2, examine two possible factors which may have influenced demand for rail travel since 2008\. (8 marks)** One factor that might have caused an increase in the demand for rail travel since 2008 might have been an increase in the price of substitutes such as cars. As the price of cars increase, consumers look for alternatives. leading to an increase in the demand for rail travel. The extract shows that rail travel has become more popular, as passenger kilometers has increased from roughly 50bn in 2008 to 65bn in 2018\. Another reason that might have caused an increase in the demand for rail travel might have been an increase in the population as the population increases there are more people who would be willing and able to buy rail travel as part of their day-to-day activities, such as their commute to and from work. However, there might also be other factors limiting demand from increasing. For example, changes in trends have meant that working from home has become more popular, and this limits the need for rail travel during and after covid. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine two possible reasons for the change in price elasticity of demand for electricity over time URL: https://www.a-level-economics-tutor.com/examine-two-possible-reasons-for-the-change-in-price-elasticity-of-demand-for-electricity-over-time/ Last updated: 2026-07-18T15:35:28.000Z ### [Edexcel A-Level Economics Paper 1 June 2018 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2018-Paper-1.pdf?ref=tootingtutors.co.uk) **The price elasticity of demand for electricity in the UK is estimated to be -0.35 in the short run and -0.85 in the long run.** **With reference to Extract A and your own knowledge, examine two possible reasons for the change in price elasticity of demand for electricity over time. (8 marks)** One reason the demand for electricity might have become more price elastic because of an increase in substitutes. The extract mentions that rival suppliers can directly contact customers. This makes it easier for consumers to see which substitutes are available. This means that consumers will be less likely to accept price increases, and demand will fall more proportionally compared to before. Another reason the demand for electricity might have become more price elastic because the benefit of greater time. It takes time for consumers to switch energy suppliers as this might involve them learning how to use the database, or waiting for their next renewal to come up. However, consumers may not act as rationally as the theory suggests. In reality, consumers might behave out of habits. They might be used to accepting automatic renewals rather than shopping around. Therefore, more expensive energy companies can continue to exploit customers due to their inertia. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine two likely benefits for the Rwandan economy of the growth in the country’s population URL: https://www.a-level-economics-tutor.com/examine-two-likely-benefits-for-the-rwandan-economy-of-the-growth-in-the-countrys-population/ Last updated: 2026-07-22T08:50:51.000Z ### [Edexcel A-Level Economics Paper 2 June 2021 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2021-Paper-2.pdf?ref=tootingtutors.co.uk) **With reference to the information provided, examine two likely benefits for the Rwandan economy of the growth in the country’s population. (8 marks)** One likely benefit from population growth is an increase in the rate of economic growth. Rwanda's population grew from 9.5 million in 2008 to 12.3 million in 2018\. As the population grows, more people need to satisfy their needs and wants and maximise their living standards, so they are likely to increase consumption, leading to more aggregate demand and therefore more economic growth. Another likely benefit of more population is an increase in the productive potential of the economy. As the population grows, the size of the labour force increases. This gives firms more bargaining power and allows them to choose the most skilled workers, and also pay less. This allows them to produce more output when they are their capacity. However, an increase in population can also cause problems such as declining living standards. As the population increases, labour supply increases, and wages decrease. This means more families will struggle to pay for food and healthcare services. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine the likely impact of the ‘freeze in income tax thresholds’ on aggregate demand URL: https://www.a-level-economics-tutor.com/examine-the-likely-impact-of-the-freeze-in-income-tax-thresholds-on-aggregate-demand/ Last updated: 2026-07-17T16:29:31.000Z ### [Edexcel A-Level Economics Paper 2 June 2024 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2024-Paper-2.pdf?ref=tootingtutors.co.uk) **With reference to Figure 4 and Extract A, examine the likely impact of the ‘freeze in income tax thresholds’ (Extract A line 1) on aggregate demand. (8 marks)** A freeze in income taxes is likely to cause a decrease in aggregate demand since this makes it harder for people to earn more real disposable incomes. This is because cost of living has been increasing with inflation, which means that people must bargain for payrises. As people get their payrise, more of their pay is being taxed, as many of the tax thresholds have remained the same despite ongoing inflation, and they are likely to be frozen until 2031 at least. This means that many peoples' pay is growing slower than average prices. A slow growth in real incomes can cause consumer confidence, and therefore consumer spending to fall. This causes aggregate demand (C+I+G+(X-M)) to fall, as shown below. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-17-at-16.51.38@2x.png) However, aggregate demand might not fall as much as we expect. Firstly, higher income tax payments and lower real incomes might increase people's marginal propensity to consume, which just meanst that people are more likely to spend a greater proportion of their payrise. Additionally, the government are likely to spend much of the tax revenue on services that also contribute to aggregate demand. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Examine two factors influencing the short‑run aggregate supply of the German economy URL: https://www.a-level-economics-tutor.com/examine-two-factors-influencing-the-short-run-aggregate-supply-of-the-german-economy/ Last updated: 2026-07-17T12:38:41.000Z ### [Edexcel A-Level Economics Paper 2 June 2025 Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-2-June-2025-Extract.pdf?ref=a-level-economics-tutor.com) **With reference to Extract A, examine two factors influencing the short‑run aggregate supply of the German economy. (8 marks)** One factor that might have caused a decrease in short-run aggregate supply (SRAS) in the German economy could be the 'restrictions on free-trade'. One example of this might be tariffs. A tariff is a tax on imports. As imports are being taxed, it's more expensive to import them. This means that firms in Germany would have to pay more when importing raw materials such as oil. As a result their cost of production increase and this causes SRAS to shift to the left as shown in the diagram below. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-17-at-13.30.09@2x.png) Another factor that could have caused a decrease in SRAS in the German economy might have been 'labour shortages' as mentioned in line 14\. If firms do not have enough workers to choose from, this gives workers more bargaining power when it comes to wages. This means that firms must pay more wages for the same factors of production. This means it costs firms more at each unit of output leading to an increase in cost of production leading to a decrease in SRAS. However, there are other factors that could influence SRAS in the opposite direction. For example, the German government 'aim to have renewables account for 80% of its energy supply' which would reduce their dependence on foreign energy supply. This would reduce firms' costs of production and lead to an increase in SRAS in the economy. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the likely effectiveness of ‘measures to open up and increase competition’ in the UK energy market URL: https://www.a-level-economics-tutor.com/discuss-the-likely-effectiveness-of-measures-to-open-up-and-increase-competition-in-the-uk-energy-market/ Last updated: 2026-07-17T12:11:51.000Z ### [Edexcel A-Level Economics Paper 1 June 2018 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2018-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to Extract A, discuss the likely effectiveness of ‘measures to open up and increase competition’ in the UK energy market. (12 marks)** A 'temporary price cap' is likely to be effective as it should make the UK energy market more allocatively efficient. Allocative efficiency occurs when firms are producing at the point where average revenue equals marginal cost (AR=MC). This leads to a fall in price from p1 to p2 as shown in the diagram below and a policy like this would also lead to more consumer surplus, as more consumers can afford and enjoy energy without having to worry about affordability as much. They would not be paying more than they would be willing and able to. This is especially important as energy is a necessity and if firms have monopoly power, it is very easy for them to exploit customers, as demand is likely to be price inelastic. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-17-at-13.03.42@2x.png) However, these price caps are temporary and the assumption that it will increase competition may not necessarily work and these new rules implemented might affect the firms as the CMA investigation found no evidence of anti-competitiveness by firms — it might therefore make it worse for the producers and by reducing profits might lead to inefficiencies. Secondly, the database and the smart energy meters are designed to improve transparency and make it easier for customers to switch energy suppliers. This makes it easier for new firms to attract customers which can allow for price wars to happen. This means that larger firms that previously had monopoly power and were charging high prices will be forced to lower their prices as they might otherwise lose customers. This leads to lower prices for customers, as shown below. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-17-at-13.08.56@2x.png) However, the assumption that consumers act rationally might not hold true due to issues like lack of time, and computational weakness. Some customers may be too busy and not see the value in researching various energy firms, and some may not understand how to use the database or other comparison sites, which might mean that they do not switch to cheaper firms. Also, customers might have habitual behaviour or demonstrate inertia, which means that larger energy companies can maintain high prices and continue to exploit customers. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the possible impact of supermarket monopsony power on both food suppliers and consumers URL: https://www.a-level-economics-tutor.com/discuss-the-possible-impact-of-supermarket-monopsony-power-on-both-food-suppliers-and-consumers-2/ Last updated: 2026-07-15T16:32:12.000Z ### [Edexcel A-Level Economics Paper 1 June 2017 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2017-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to Figure 2 and Extract A, discuss the possible impact of supermarket monopsony power on both food suppliers and consumers. (12 marks)** Monopsony power is where a buyer in a market has significant bargaining power when buying factors of production. Food suppliers are likely to experience lower revenues because they will be under-paid for their food as they have no option but to sell to monopsony employers of these factors of production, such as Tesco. The GCA is investigating the abuse of this power, with a YouGov poll showing 31% of Tesco's food suppliers claiming they are failing to meet the GCC. The diagram below shows they will experience a lower average revenue of p2 rather than p1 if monopsony power is exploited. They will also make less supernormal profit as shown by the red rectangle compared to the black rectangle. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-15-at-17.21.03@2x.png) However, monopoly food suppliers, e.g. Unilever, can act as a counterweight to monopsony power as their control of key brands in supermarket sales can allow them to negotiate more strongly with the supermarkets, so their revenues won't fall as significantly and neither will profits. Consumers are likely to enjoy lower prices, as monopsonies like Tesco can benefit from lower costs when buying food. This has contributed towards supermarkets engaging in a price war, which has led to prices falling by 1.7% over two years, which leads to lower prices p2 rather than p1 as shown in the diagram below, and greater consumer surplus, which is the difference between how much consumers are willing to pay at most compared to what they actually end up paying. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-15-at-17.20.55@2x.png) However as food suppliers are facing falling profits and are investing less the quality of food may fall or there may be less innovation in terms of flavour. The quantity supplied by the food suppliers has also fallen from Q to Q₁, which may lead to shortages. Moreover, in order to reduce costs in the long-run, food suppliers could reduce the size of their products, e.g. smaller quantities in jars, in order to reduce costs and improve profit margins, but this will lead to a fall in the quality of good for consumers and falling consumer welfare. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss one likely reason for the rise in BT’s profit URL: https://www.a-level-economics-tutor.com/discuss-one-likely-reason-for-the-rise-in-bts-profit/ Last updated: 2026-07-15T15:12:38.000Z ### [Edexcel A-Level Economics Paper 1 June 2019 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2019-Paper-1.pdf?ref=tootingtutors.co.uk) **Discuss one likely reason for the rise in BT’s profit (Figure 2, Extracts B and C). Use a cost and revenue diagram to support your answer. (12 marks)** One main reason that Extract B mentions that BT 'reported a rise in profit' would be an increase in BT's market share. As BT tookover EE, they were able to increase their market share. As BT enjoyed higher market share, they gain more customers and this leads to a 'increased revenue'. This leads to BT being able to change their output from MC=MR1 to MC=MR2 which is the new profit maximising level of output. The diagram shows supernormal profits increasing from the black rectangle to the red rectangle 0q2p2c2. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-14-at-11.24.45@2x.png) Additionally, as BT gain more market share, they are able to increase their output. This makes it easier for them to exploit more economies of scale, which means they can reduce their long-run average costs by taking advantage of specialist managers or bulk-buying materials. These lower long-run average costs would allow BT to earn even greater profits. However, BT may be forced into making lower profits due to interference from Ofcom, who called BT out for providing 'poor value for money'. This led to BT decreasing their rental charges for landline-only customers from £18.99 to £11.99 per month. As this reduces BT's supernormal profits, this also reduces their ability to reinvest and innovate and achieve dynamic efficiency. This might make it slightly easier for other firms to compete with them, although the fact that they have cut their prices might also make it harder. Overall, stricter regulation from Ofcom is most likely to lead to a reduction in BT's profits but it depends on how Ofcom treat BT's competitors. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss whether the rail network can be considered to be a natural monopoly URL: https://www.a-level-economics-tutor.com/discuss-whether-the-rail-network-can-be-considered-to-be-a-natural-monopoly/ Last updated: 2026-07-15T14:40:38.000Z ### [Edexcel A-Level Economics Paper 1 June 2020 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2020-Paper-1.pdf?ref=a-level-economics-tutor.com) **With reference to Extract A, paragraph 3, discuss whether the rail network can be considered to be a natural monopoly. (12 marks)** On the one hand, the rail network can be considered a natural monopoly. This is a market structure where the most efficient number of firms is likely to be one. This would be the case if firms in the rail network have an L-shaped long-run average cost curve, as shown below. This happens because the firms experience extremely high sunk costs. The extract mentions that the rail network is made up of 2500 stations and 32000km of tracks, all of which would have required considerable investment. Therefore, these firms’ economies of scale would outweigh their diseconomies of scale even when output is very high. This means that a firm would have to produce a really high output for it to operate at its minimum efficient scale in the long run and achieve productive efficiency. This would be easier if it wasn’t competing with other firms. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-15-at-15.34.02@2x.png) However, some members of the government believe that rail networks can be open to competition. Line 13 mentions that 'companies can bid to build new rail lines'. If this is the case, each firm would lose market share. Then the market structure could be better described as an oligopoly where a few firms dominate the market, rather than a natural monopoly. This means that firms lose some of their price making power as they would lose market share if they get undercut. We saw this happen when Royal Mail got privatised. It faced competition from DPD and DHL and Evri. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the likely private and external benefits of viewing educational websites and TV programmes URL: https://www.a-level-economics-tutor.com/discuss-the-likely-private-and-external-benefits-of-viewing-educational-websites-and-tv-programmes/ Last updated: 2026-07-15T14:28:41.000Z ### [Edexcel A-Level Economics Paper 1 June 2023 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2023-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to Extract C, discuss the likely private and external benefits of viewing educational websites and TV programmes. (12 marks)** Private benefit is the benefit directly to the consumer, whereas external benefit is the benefit to a third party from an economic transaction. The third party specifically refers to anyone apart from the consumer or the producer. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/CleanShot-2026-07-14-at-10.47.23@2x.png) One likely private benefit is that children will become better educated. Extract C states that 'the guides are written by teachers and subject experts'. This will increase the quality of education children will receive as well as increasing the amount they can learn, as it is online, meaning that once they come home from school they can keep on learning. This will increase their skills and qualifications. This is a private benefit as the consumers are directly benefitting from its consumption. However, the private benefit of such goods and services is very difficult to measure. Firstly, the benefit students gain from using websites like BBC Bitesize might be dependent on how well they are initially taught at schools, or how much they are encouraged by their family members. Also, the private benefit can vary with time. During COVID, or during school holidays, online learning becomes more of a necessity, so the private benefit might increase. One likely external benefit is the increase in productivity for firms. For example, BBC Bitesize achieved around 1.2 million weekly unique browsers. This will lead to a large amount of students increasing their skills and therefore education, meaning that their productivity will increase. This will benefit firms as their supply of labour will be productive allowing decreased costs and so increased profits. This is an external benefit as it benefits the third party (firms). The issue with externalities like these are that they get ignored by the buyer and seller, so these educational platforms are going to be left under-consumed at q1 in a free-market, rather than being consumed at the socially optimal level of output q\*. However, this external benefit will only be experienced after a long period of time. It will be years before young children enter the labour market, meaning that there is a huge delay before firms can experience the spillover effects such as an increase in productivity. Nonetheless, this will still provide a significant external benefit to firms as seen by the distance between MSB and MPB on the graph. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the proposed government subsidy to prevent Thomas Cook from reaching its shut-down point URL: https://www.a-level-economics-tutor.com/discuss-the-proposed-government-subsidy-to-prevent-thomas-cook-from-reaching-its-shut-down-point/ Last updated: 2026-07-15T14:14:29.000Z ### [Edexcel A-Level Economics Paper 1 June 2021 Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2021-Paper-1.pdf?ref=tootingtutors.co.uk) **With reference to Extract C, discuss the proposed government subsidy to prevent Thomas Cook from reaching its shut-down point. (12 marks)** One reason in favour of the proposed subsidy is that it could have prevented Thomas Cook from shutting down in the long-run. Thomas Cook's management said they ‘had no choice’ and ‘ceased trading’ in 2019\. The long-run shutdown condition is when average revenue is less than average costs (AR value of exports ### What is a current account surplus? Value of exports > value of imports ### What could cause a current account deficit? - high inflation rate relative to other countries - low quality goods and services here (supply side policies) - exchange rate ### What policies can be used in macroeconomics? 1. fiscal policy 2. monetary policy 3. supply side policies ### What is fiscal policy? Use of government spending & taxation to influence aggregate demand. ### What is expansionary fiscal policy? The government increases spending or reduces taxation. This leads to an increase in aggregate demand. For example, if the government reduces income tax, people have more disposable income. So, consumer spending increases. This leads to more economic growth and lower unemployment. However, it can cause higher inflation and also cause a budget deficit. ### What is contractionary fiscal policy? The government decreases spending or increases taxation. This leads to a decrease in aggregate demand. For example, if the government increases taxes, people have less disposable income. So, consumer spending decreases. This leads to lower inflation. However, it could reduce economic growth and increase unemployment. ### Examples of government spending - infrastructure - NHS - police - defence - pensions - welfare benefits ### Examples of taxes - income taxes - corporation taxes - VAT ### What is monetary policy? Use of interest rates to influence aggregate demand ### What are interest rates? The cost of borrowing or the reward for saving. ### What is expansionary monetary policy? The Bank of England reduce interest rates. This makes it cheaper to borrow money and less rewarding to save money. Consumer spending increases. This leads to more economic growth and less unemployment. It also causes inflation to increase. ### What is contractionary monetary policy? Contractionary monetary policy is when the central bank decrease interest rates. This makes it cheaper to borrow money and less rewarding to save money. Consumer spending increases. It also causes inflation to decrease. But it could also cause economic growth to decrease and unemployment to increase. ### What are supply-side policies? Supply-side policies are policies used to increase aggregate supply in the economy (the productive potential) of the economy. **Privatisation and deregulation** 1. Deregulation reduces barriers to entry 2. This encourages more competition 3. This leads to more productivity 4. This leads to an increase in aggregate supply **Education and training** 1. Better access to quality training schemes allows workers to improve their skills 2. This allows them to be more productive at work/ in their business 3. This leads to an increase in aggregate supply **Infrastructure spending** 1. The government can spend money to improve infrastructure such as transport links e.g. a new tube line 2. This allows people to commute faster 3. This leads to an increase in productivity 4. This leads to an increase in aggregate supply **Lower corporation taxes** 1. Lower corporation taxes allow firms to keep more of their profits 2. This allows them to increase investment (especially in capital) 3. Capital/machinery allow firms to increase productivity 4. This leads to an increase in aggregate supply **Lower income tax rates** 1. Lower income taxes incentivise people to work more 2. Skilled workers may work longer hours or come out of retirement or migrate into the country 3. This leads to an increase in productivity 4. This leads to an increase in aggregate supply ### What are two downsides of most supply-side policies? 1. opportunity cost 2. time lags ### What is globalisation? Globalisation is the increased integration of different economies around the world. ### What are four causes of globalisation? 1. Better transport 2. Better technology and communication 3. More MNCs (multinational corporations) 4. More free trade agreements ### What are the two main advantages of globalisation? **Increase in economic growth** 1. globalisation allows each country to specialise in fewer goods and services 2. this allows countries to increase productivity 3. this leads to more output and more economic growth **Lower prices** 1. globalistion means that there are more free trade agreements 2. for example, fewer tariffs and quotas 3. a tariff is a tax on imports 4. reducing tariffs mean that imports are cheaper 5. this leads to lower prices ### What are the three main disadvantages of globalisation? **Structural unemployment** 1. globalisation encourages countries to specialise in fewer goods and services 2. this means that some industries will decline as we could import those goods and services instead 3. for example, the UK now imports steel from China 4. this causes structural unemployment **Environmental damage** 1. another consequence of globalisation is environmental damage 2. globalisation can lead to more economic growth and more trade 3. this leads to higher levels of transportation, energy usage, and packaging costs 4. this leads to more waste and more pollution **Over-dependence** 1. globalisation encourages countries to specialise in fewer goods and services 2. this means that countries are more **vulnerable to economic shocks** 3. for example, if there is a sudden change in the exchange rate or new protectionist measures, this means that imports become more expensive 4. this means that businesses and consumers face higher costs of production 5. this causes cost-push inflation ### What is a multinational corporation (MNC)? An MNC is a large business that operates in more than one country. ### What is foreign direct investment (FDI)? FDI is when an MNC invests in factories in a new country. ### What are exchange rates? Exchange rates are the price of one currency in terms of another. ### What are 3 factors that can affect exchange rates? **Interest rates** 1. lower interest rates means lower return on saving 2. more hot money flows out of the UK as people want to take advantage of higher interest rates elsewhere 3. lower demand for the pound 4. pound depreciates **Increase in exports** 1. more demand for UK goods and services 2. Foreign consumers need to buy the pound in order to buy UK goods and services 3. increase in demand for the pound 4. pound appreciates **Increase in imports** 1. more demand for Chinese goods 2. UK consumers need to sell the pound to buy foreign currency 3. increase in supply of the pound 4. pound depreciates ### What is the impact of a currency depreciation? **Current account** 1. the currency is weaker 2. imports become more expensive and exports become cheaper 3. this means exports increase and imports decrease 4. the current account would improve 5. this leads to more economic growth **Cost-push inflation** 1. imports become more expensive 2. costs to import raw materials like oil increase 3. this leads to cost-push inflation ### What is the impact of a currency appreciation? **Current account** 1. the currency is stronger 2. imports become cheaper and exports become more expensive 3. imports increase and exports decrease 4. the current account worsens 5. this leads to slower economic growth **Costs of production** 1. imports become cheaper 2. costs to import raw materials like oil decrease 3. firms can increase output and reduce prices ### Evaluate the possible conflicts between macroeconomic objectives when seeking to control inflation URL: https://www.a-level-economics-tutor.com/evaluate-the-possible-conflicts-between-macroeconomic-objectives-when-seeking-to-control-inflation-3/ Last updated: 2026-04-11T16:10:12.000Z ## Edexcel A-Level Economics June 2025 In January 2023 the UK prime minister, Rishi Sunak, promised to halve inflation by the end of the year. In July 2023 the Bank of England governor, Andrew Bailey, said: “It is crucial that we… return inflation to its 2% target and provide the environment of price stability in which the UK economy can thrive. This is the best contribution monetary policy can make to the prosperity of the United Kingdom. **Evaluate the possible conflicts between macroeconomic objectives when seeking to control inflation. (25 marks)** - **Paragraph 1** - **Argument**: one possible conflict due to lower inflation is an increase in cyclical unemployment - **Diagram**: left shift in AD, negative multiplier - **Evaluation**: depends on the size of the multiplier and the state of the economy - **Paragraph 2** - **Argument**: another conflict specifically due to higher interest rates is a increase in the current account deficit - **Diagram**: exchange rates diagram - **Evaluation**: lower inflation will eventually lead to an increase in competitiveness One possible conflict from trying to reduce inflation to the 2% target is an increase in cyclical unemployment. Cyclical unemployment is when unemployment is caused by a lack of aggregate demand during a downturn or a recession in the economy. Assuming that the government use contractionary demand-side policies to reduce the rate of inflation rate, this would cause an increase in cyclical unemployment. For example, the government could use contractionary fiscal policy which means they increase taxes or decrease government spending. For example, they could increase income taxes. We have seen this in recent years in the form of fiscal drag, which is when tax brackets do not change to reflect inflation, meaning that workers' incomes are taxed more. Higher income taxes mean that workers have less disposable income, which means consumer spending would fall. This leads to a left shift in aggregate demand, causing the price level to fall from p1 to p2 towards the 2% target. The trade-off is that real gdp also falls from y1 to y2 as a result of lower demand for goods and services. This is shown by the diagram below. This then means that the derived demand for workers falls, causing an increase in cyclical unemployment. Additionally, the trade-off could worsen as increasing income taxes could also lead to a negative multiplier effect. As consumer spending and consumer confidence falls, this could lead to a fall in business confidence, causing a fall in business investment. As this is another component of aggregate demand, AD could fall even further, resulting in an even larger decrease in real gdp and increase in unemployment. ![decrease in aggregate demand diagram A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/04/CleanShot-2026-04-11-at-16.26.09@2x.png) However, the trade-off between lower inflation and higher unemployment would vary depending on the original state of the economy and also the size of a potential multiplier effect. This can be seen on the Keynesian long-run aggregate supply curve below. It shows that if the economy was originally experiencing a positive output gap, the government may be able to decrease the inflation rate without causing too much of an increase in unemployment since p1 falls significantly to p2 and output doesn't fall by too much. A positive output gap is when the actual rate of economic growth is higher than the trend rate of economic growth, meaning that the economy is working beyond full capacity. This is likely to be the case as in 2022, inflation hit a recent record of around 11%. Additionally, the size of the multiplier depends on the equation k=1/(1-MPC) so therefore, if the government raise income taxes for high income households, the multiplier would be much lower, which is more suited to carefully controlling inflation since high income households have a lower MPC. ![decrease in aggregate demand diagram A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/04/CleanShot-2026-04-11-at-16.35.14@2x.png) Another possible conflict caused by controlling inflation could be a weaker current account. This is only going to be the case if contractionary monetary policy is being used. Andrew Bailey mentioned the 'contribution monetary policy can make'. Contractionary monetary policy involves the Bank of England increasing base interest rates. Interest rates are the cost of borrowing or the reward for saving. Whilst this is likely to reduce aggregate demand, it also causes an increase in demand for the pound in the form of hot money flows since people want to take advantage of the higher savings rate in the UK. This causes an increase in demand for the pound which causes an appreciation, as shown by the diagram below. This means that exports become more expensive and imports become cheaper. In theory, this should worsen the current account. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/04/CleanShot-2026-04-11-at-16.50.07@2x.png) Increase in demand for pounds diagram A-Level Economics However, a weaker current account is not likely to be a long-term trade-off with lower inflation; is just a consequence of the Bank of England raising interest rates as a method to reduce inflation. Instead, when inflation eventually falls, the average price level falls and UK goods and services become cheaper. The extract mentions Rishi Sunak's promise to halve inflation. This means that UK exports become more competitive, making them more attractive to consumers in foreign countries. In my opinion, the current account deficit is not the most worrying trade-off as it would be a temporary effect of higher interest rates, so the government should focus on limiting the potential increase in unemployment. A large increase in unemployment would be damaging as it could lead to a crisis of consumer confidence and cause a negative multiplier effect and potentially a recession. It could also cause knock on effects such as an increase in the budget deficit as it leads to more claimants of unemployment benefits as well as a decrease in income tax receipts. The government and the central bank should be careful to not raise income taxes or interest rates by too much to avoid this spiral. The government should also consider alternatives such as supply-side policies. These have a huge time lag so they would not be able to reduce inflation in a short amount of time, but if implemented successfully they can reduce the risk of high inflation in the future, without causing any major trade-offs with the other macroeconomic objectives. We know this because supply-side policies cause an increase in LRAS, which allow the price level to fall whilst the economy continues to grow. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Fixed Exchange Rates | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/fixed-exchange-rates-a-level-economics-model-paragraph/ Last updated: 2026-04-10T10:45:30.000Z ### Discuss how fixed exchange rates can help China to control the value of their currency Exchange rates are the price of a currency in terms of another. A fixed exchange rate is when the value of the currency is managed by the central bank who buy and sell currency reserves in order to control the value of their currency. China could use their dollars to buy more yuan, or they could use their yuan to buy more dollars. For example, China may prefer a weak currency so that it makes their exports cheaper and therefore more attractive, to achieve high aggregate demand and high economic growth. If their currency rises, they could use their reserves in order to devalue their currency. They would sell their reserves of Chinese Yuan and buy more US dollars. The diagram shows the value of the Chinese Yuan will fall as a result of this increase in supply, which will make their exports cheaper. ![](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/images/2025/03/Screenshot-2025-03-18-at-14.44.23.png) A country could also use their fixed exchange rate to cause an increase in the value of their currency. This could be so that the country can import goods and services at a lower cost. They would be able to do this by using their reserves of the foreign currency in order to buy back more of their own currency. This artificially creates greater demand for their own currency, which causes the value of it to increase, as shown by the diagram below. ![](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/images/2025/03/Screenshot-2025-03-18-at-14.50.59.png) However, these manipulations in the value of currency require a fixed exchange rate, which is not ideal. The country's central bank has to keep hold of millions of pounds worth of reserves, of their own currency, and of a foreign currency. Another downside about using a fixed exchange rate system is that there is very limited flexibility in terms of the country's interest rates. This is because any change in interest rates (for example - to control inflation) will also have a knock-on effect on the value of the currency. For example, if the central bank reduces interest rates, that would cause a fall in demand from investors (hot money flows), causing a fall in demand for the currency. This may contradict the plans to keep a high exchange rate, or would mean that the central bank has to constantly be on top of any fluctuations in demand and supply, by buying and selling their reserves. There is an added risk of government failure. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### State Provision | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/state-provision-a-level-economics-model-paragraph/ Last updated: 2026-08-09T14:01:36.000Z ### State provision State provision occurs when the government chooses to provide goods and services free of charge, to correct a market failure. For example, dental care is a service that has positive externalities in consumption. If left to the free market, it would be under-consumed, because people would ignore the fact that people who get regular checkups and have healthier teeth provide a benefit to third parties, such as being less likely to be absent from school or work due to teeth pain or health issues. If the government were to fully fund dental care and provide it free of charge via the NHS, this could help correct the under-consumption caused by this positive externality. The diagram shows that the government may research the socially optimal quantity and provide that quantity of dental care free of charge, as shown by the quantity Q1\. The benefit of this is the increase from the equilibrium quantity which would have been provided by the free market, meaning more people would have access to reliable dental care free of charge (P0), which should mean that the market failure has been resolved by the government. Opportunity cost Market distortions However, there is a substantial opportunity cost associated with a full state provision of services like dental care. Opportunity cost is the value of the next best alternative. The government could spend the same money in other areas, to improve NHS healthcare or state education. If the government must restrict spending in these areas, this can defeat the purpose of spending more to provide dental care, as it could lead to other market failures instead. However, there is a risk of government failure as state provision causes a market distortion. At the price P0, there is excess demand, as shown by the difference between Q1 and Q2\. This is because there are more people who are willing and able to consume the service since it's free, compared to the volume that the government are willing and able to provide for free. This means that there will be large waiting times or backlogs of people wanting to visit the dentist. Overall, this could lead to rushed services or poor quality. We see this with other state-provided services, in the form of large class sizes at schools, or long wait times at A&E. If the government are unable to fund enough of the service, there will continue to be an under-provision and under-consumption and the market failure will still exist. ![](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/images/2025/03/Screenshot-2025-03-23-at-21.11.22.png) State provision diagram for a level economics --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Education and Training | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/education-training-a-level-economics-model-paragraph/ Last updated: 2026-04-10T10:21:59.000Z ### Explain the effect of education and training on a labour market Another policy to reduce the gender pay gap could be to improve the education and training available to women. In a free labour market, wages are determined by supply and demand of labour alone. So, if the demand for female workers is lower than the demand of male workers, then the best policies would focus on reducing this gap. Demand for labour at any given wage is determined by demand for the final good or service, substitutability of capital, and productivity of the workers. If the government can improve training schemes for women, then this would improve their productivity, which would improve their marginal revenue product (MRP). MRP is how much extra revenue each unit of labour contributes to a firm. This would lead to an increase in the demand for female workers. The diagram below shows this. Wages would increase from W1 to W2 and quantity of female workers employed go up from Q to Q2. ![Increase in demand for labour, labour markets diagram A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/04/CleanShot-2026-04-10-at-11.20.22@2x.png) However, improving education and training has a high opportunity cost as well, and also a large time lag. If the government introduced better training schemes, it would take a few years for people to enrol and benefit from higher wages. It is also not guaranteed if firms would respect the training schemes and increase pay, as they could have the perception that MRP has remained low. Overall, better education and training schemes are arguably worth introducing as they are more of a permanent solution to the gender pay gap issue rather than a quick fix such as an increase in the minimum wage which distorts markets. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Evaluate the level of contestability in the fragrance industry or another industry of your choice URL: https://www.a-level-economics-tutor.com/evaluate-the-level-of-contestability-in-the-fragrance-industry-or-another-industry-of-your-choice/ Last updated: 2026-04-10T08:19:13.000Z ## Edexcel A-Level Economics 25 Mark Essay Plan Bytedance, which owns TikTok, has launched its own fragrance ‘Emotif’. The Beijing-based social media giant has already entered the food and drink markets. **Evaluate the level of contestability in the fragrance industry or another industry of your choice.** (June 2024) **Paragraph 1** - **Argument**: one reason the supermarket industry is non-contestable as supermarkets develop high levels of customer loyalty through non-price competition - **Diagram**: game theory, monopoly diagram - **Evaluation**: social media has made it easier and cheaper for small brands to improve their marketing **Paragraph 2** - **Argument**: another reason the supermarket industry is not contestable is because of high sunk costs and high barriers to entry - **Diagram**: L-shaped lrac diagram - **Evaluation**: deregulation can make it easier for new firms to enter the market, Lidl and Aldi are able to compete --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Non-Price Competition | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/non-price-competition-a-level-economics-model-paragraph/ Last updated: 2026-04-09T09:45:53.000Z On the other hand, you could argue that supermarkets serve customers well. This is largely because of non-price competition. The supermarket sector is quite likely to be a more competitive oligopoly because authorities such as the CMA usually investigate potential mergers and prevent them if they lead to a firm having too much monopoly power. For example, the CMA prevented Sainsbury's and Asda from merging in 2019 (Extract C). This means that supermarkets is more likely to be a competitive oligopoly where firms are unable to compete on price. Firms know that they cannot raise prices as they would lose market share. Firms also know that it is not worth reducing prices as they would only gain a small amount of market share as other firms would also reduce their prices. The Kinked Demand below shows this. This means that firms would focus on non-price competition to try to increase their market share. This allows customers to benefit from variety and quality of customer service, recipes, taste, quality, and special offers from each supermarket. Depending on prices, firms may also make enough profit to re-invest which would lead to dynamic efficiency and greater improvements in products over time through innovation. So, overall competitive oligopolies can be hugely beneficial for consumers. ![Education resources for teachers, schools & students | EzyEducation](https://www.ezyeducation.co.uk/images/Lexicon_Images/kinked_demand_curve.jpg) However, oligopolies can greatly vary from one to another so factors such as concentration ratio and market share can make a big difference. For example, the theory of the Kinked Demand curve and price rigidity may not hold in real life because some firms may have some price making power due to brand loyalty, or also in the case of local monopolies. For example, Burger King at an airport or a petrol station on a motorway would be one of the only firms of its kind in the area. Therefore, in that particular branch, they have the ability to set higher prices and exploit customers. So, theories about oligopolies are not always fully consistent with markets in the real world. We also see this with supermarkets like Tesco owning multiple shops in each area which can act as a barrier to entry to other supermarkets. Furthermore, supermarkets may own petrol stations on motorways and this would be another example of a local monopoly where they can set higher prices. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Collusion | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/collusion-a-level-economics-model-paragraph/ Last updated: 2026-04-09T09:45:00.000Z The supermarket sector could be damaging to consumers due to the risk of collusion. Extract F Line 1 mentions that economists have been worried about the lack of competition in the industry. Despite collusion being illegal in the UK, there is always a risk of tacit collusion taking place as it is informal and harder to spot. Collusive oligopolies can form if firms with a high market share secretly agree to limit quantity and set high prices. Game theory allows us to understand the benefits and the risks of different pricing strategies. Prisoner's Dilemma explains how firms that are interdependent may approach pricing. Firms know that they cannot set a high price unless they collude. This is because there is a huge risk a competitor would undercut them and steal all the profits. Therefore, the Nash equilibrium is for both firms to set lower prices. However, firms know that they could both set a high price if there is trust between them. If they can form an agreement not to undercut each other, firms can set a higher price and maximise profits. The first diagram shows this in terms of prisoners who may both choose to deny a crime assuming they have full trust that the other prisoner does not confess. The second diagram shows that these oligopolistic firms could then benefit from colluding by exploiting their price-making power and profit maximising. This leads to a high price and a low output of p1 and q1\. This outcome is allocatively inefficient as AR does not equal to MC, which means that consumer surplus is nowhere near maximised. Extract F described that the second and third largest supermarkets attempted a merger, which would have given them signficant monopoly power, alongside Tesco, compared to any other supermarket. ![Prisoner's Dilemma | Microeconomics](https://s3-us-west-2.amazonaws.com/courses-images/wp-content/uploads/sites/2042/2018/02/10211025/PrisonersDilemma1-1024x1022.png) ![](https://www.tootingtutors.co.uk/content/images/2024/05/Screenshot-2024-05-02-at-10.45.59.png) However, even if firms could collude, there is arguably the benefit that they could use the high profits for re-investment and this would lead to innovations and quality products in the long run. This is called dynamic efficiency and this would benefit consumers over time. For example, pharmaceutical companies make a lot of profit but this also enabled them to quickly create innovative products, including the Covid vaccine at a very fast rate. We might also see supermarkets often re-investing in their recipes and their bakeries to create the best products for consumers. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Natural Monopoly | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/natural-monopoly-a-level-economics-model-paragraph/ Last updated: 2026-05-30T14:34:11.000Z ## Evaluate the need to regulate natural monopolies Natural monopolies should be regulated as they are allocatively inefficient. Monopoly power is when firms have a high market share (above 25%), high barriers to entry, and price-making power. Natural monopolies like Thames Water in particular have extremely high fixed costs such as infrastructure, so these firms have an L-shaped LRAC curve since their economies of scale outweigh their diseconomies of scale over a much larger range of output. ![](https://www.tootingtutors.co.uk/content/images/2025/03/Screenshot-2025-03-24-at-13.57.44.png) The diagram is similar to that of a monopoly, except for the L-shaped average cost curve and marginal cost curve. The energy firm is likely to operate at the profit-maximising quantity q1 (where MC = MR), and set a price of p1\. This is a misallocation of resources, so the government may consider nationalisation as the best solution. The allocatively efficient outcome would be at the point where AR = MC, which is shown by q2 and p2\. The problem is, there would be no incentive for a firm to operate at this point. Even if the government enforced this maximum price, the firm would make a loss as shown by the red dotted rectangle. Therefore, the government would have to subsidise these losses to keep the firm in business. Therefore, it could be sensible to nationalise this industry. Nationalisation will lead to lower prices for consumers which the private firm would have no incentive to sell at. There would be a more efficient allocation of resources. However, the monopoly was previously making a high amount of profit as shown by the black dotted rectangle. This meant that they had more chance of achieving dynamic efficiency, which is due to the re-invest of long run supernormal profits. This can lead to innovation and improvements in quality, which will benefit consumers over time. The government have to juggle a lot of different priorities, which means every decision has a greater opportunity cost. Therefore, they are less likely to invest in the energy industry, even if it is nationalised. They are not further incentivised by profit in the same way that a privately owned firm would be. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [94+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Provision of Information (Negative Externalities) | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/provision-of-information-a-level-economics-model-paragraph/ Last updated: 2026-08-09T15:04:37.000Z ### Provision of information One way the government could intervene in the market for fast food is through provision of information. The market for fast food has negative externalities in consumption, as consumers are driven by immediate satisfaction and under-value the long-term health costs to themselves and the burden this places on the NHS. The government could provide information through health campaigns, warning labels, or advertising restrictions, highlighting the links between fast food and conditions like obesity and heart disease. As people become more aware of these risks, their perceived benefit from consuming fast food falls, causing demand to shift to the left. This results in a lower equilibrium quantity, moving the market closer to the socially optimal level of output. Opportunity cost Information may be ignored However, there is a large opportunity cost associated with setting up a national information campaign. The government would have to consider the value of the next best alternative, as spending on these advertising campaigns might mean that the government have to cut spending in other areas such as education or healthcare. The government should be confident on the effect of the information campaigns on demand, and that it won't be a waste of their budget. However, there is a chance that the information provided will be ignored by consumers if it is not presented carefully enough, meaning there may not be enough of a change in consumer behaviour, as they might not be able to see the value in reducing their demand for the good or service. Behavioural economics also teaches us that consumers do not always make rational decisions, as they suffer from bounded rationality. Consumers have a limited ability to process and act on information, due to habitual behaviour and a poor capacity to absorb new information. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Analyse the impact on grocery consumers of interdependence between supermarkets URL: https://www.a-level-economics-tutor.com/analyse-the-impact-on-grocery-consumers-of-interdependence-between-supermarkets/ Last updated: 2026-04-08T10:06:02.000Z ### AQA A-Level Economics Paper 1 June 2022 **Extract E (lines 16–17) states that, ‘Supermarkets set prices interdependently, and price wars look very likely.’ With the help of a diagram, analyse the impact on grocery consumers of interdependence between supermarkets. (9 marks)** The supermarket sector is an oligopolistic market structure. This means that there are a few firms dominating the market. Firms in an oligopoly are interdependent, which means that one firm's decisions affect the other firms, especially in terms of pricing. The Kinked Demand curve model demonstrates the effects of interdependence as unlike a regular demand curve, firms in an oligopoly have a demand curve which is price elastic in demand at higher prices, and price inelastic in demand at lower prices. PED is the responsiveness of quantity demanded to a change in price. The diagram below shows that firms would lose significant market share if they raise their prices, since they would be more expensive than their competitors. The diagram also shows that firms only gain a small amount of market share if they reduce their prices. This is because other firms would be forced to reduce their prices as well, and this would start a price war. Many supermarkets have a policy of Aldi Price Match to scare Aldi away from further reducing their prices. Overall, any time a firm decreases their prices, there is an effect on the other firms as it could start a price war. Alternatively, firms could maitain a stable price and this would encourage forms of non-price competition such as improving branding and customer service. ![Kinked demand curve oligopoly diagram A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/04/image-4.png) Kinked demand curve oligopoly diagram A-Level Economics --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain why imperfect and asymmetric information may lead to market failure in the market for food URL: https://www.a-level-economics-tutor.com/explain-why-imperfect-and-asymmetric-information-may-lead-to-market-failure-in-the-market-for-food-june-2024/ Last updated: 2026-07-28T12:54:21.000Z ### AQA A-Level Economics Paper 1 June 2024 **Explain why imperfect and asymmetric information may lead to market failure in the market for food. (June 2024)** Market failure is when there is a misallocation of resources. Imperfect information occurs when economic agents are unable to easily access all the information they need to make rational decisions. This, alongside a lack of time, can lead to consumers relying on rule of thumb to make decisions and this can lead to biases. Biases can lead to economic agents making irrational decisions, and this explains the idea of bounded rationality suggested by behavioural economists. Examples of biases include both social norms and availability bias. Social norms can worsen the extent of market failure in the food market. For example, people who go to a fast food restaurant with their friends may feel uncomfortable explaining that they are trying to be healthy, as it may ruin the fun of the experience. Availability bias is the idea that economic agents make judgements about the probability of future events based on their own memories of similar events. This is likely to happen if consumers have imperfect information or data about food. They may know someone who is healthy that consumes sugary drinks and this may lead to them assuming that sugary drinks are not as bad as they actually are. Asymmetric information can cause further issues in the market for food. Asymmetric information can occur when one party knows more than another. This is a common occurence in the market for second hand cars, but the same theory could apply to the market for takeaway food. When tourists are on holiday, or ordering takeaway from an unfamiliar restaurant, the restaurant has more information about the quality of the food than the customer. This can lead to a misallocation of resources as buyers are unsure what price the food is worth before trying it. As a result, some consumers may be disappointed as they may pay more for their food than they are actually willing and able to had they known the taste and portion size in advance. This would in theory mean that some consumers may have had a negative consumer surplus from the transaction. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain how a firm may benefit from both internal and external economies of scale. URL: https://www.a-level-economics-tutor.com/explain-how-a-firm-may-benefit-from-both-internal-and-external-economies-of-scale/ Last updated: 2026-04-07T11:47:03.000Z ### AQA A-Level Economics Paper 1 June 2021 **Explain how a firm may benefit from both internal and external economies of scale. (15 marks)** Economies of scale are when long run average costs fall as output increases. Internal economies of scale occur when a specific firm's long run average costs fall as their output increases. Firms could benefit from purchasing economies of scale as they get larger as they could save money when purchasing factors of production or equipment. Buying in bulk works out cheaper per item, and this means that a large firm would see a fall in their long run average costs compared to a smaller firm who cannot buy in bulk. Another example of internal economies of scale are technical. A larger firm would be able to save cost when setting up new technology such as self checkout machines. They may cost a lot to set up, but would be used a lot more. Therefore, the average cost of acquiring the machinery would be lower as it is the same total cost, but a large firm could divide it across a greater output. External economies of scale are when long run average costs fall for all the firms in the industry. For example, better transport would allow all firms in the given industry to become more productive, allowing an increase in output from the same factors of production. For example, all clothing businesses can depend on reliable delivery from companies like Royal Mail and Evri, and therefore they can all benefit from lower costs. Another example of external economies of scale is an improvement in education and training. This would allow firms would be able to choose from more skilled workers, allowing them to increase their productivity at all output levels, and reduce their average costs. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain the main problems for an economy of having a large positive output gap URL: https://www.a-level-economics-tutor.com/explain-the-main-problems-for-an-economy-of-having-a-large-positive-output-gap/ Last updated: 2026-04-07T13:18:47.000Z ### AQA A-Level Economics Paper 2 June 2022 **Explain the main problems for an economy of having a large positive output gap. (15 marks)** A positive output gap is when the actual rate of economic growth is greater than the trend rate of economic growth, which relates to the capacity of the economy. Economic growth is when there is an increase in real GDP. A positive output gap would mean there is high inflation. One problem with high inflation is a wage price spiral. Inflation is when average price level is rising, and this usually happens whilst wages stay low and stable. If this happens, people have lower disposable incomes so they may as for higher wages. If they do not get higher wages, then living standards and welfare would fall, and so would confidence. If firms accept to pay higher wages, they may raise prices further or they may lay off workers, which causes more problems. Another problem with high inflation is that it would worsen the balance of payments on the current account. If prices are rising rapidly in the UK, whilst staying low and stable in other countries, then UK consumers and firms would stop spending money in the UK where possible and import goods and services instead. Similarly, consumers in other countries would stop buying goods and services from the UK, which is getting expensive, so UK exports would fall. The trade balance is made up of the value of exports minus the value of imports, and this would worsen. Maintaining a balance of payments on the current account is one of the main four macroeconomic objectives. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain why, in a free market, sugary drinks may be overconsumed URL: https://www.a-level-economics-tutor.com/explain-why-in-a-free-market-sugary-drinks-may-be-overconsumed/ Last updated: 2026-04-07T11:36:04.000Z ### AQA A-Level Economics Paper 1 June 2017 **Explain why, in a free market, sugary drinks may be overconsumed. (15 marks)** A market is a place where buyers and sellers meet to exchange goods and services. A free market has no government intervention so price and quantity is determined by demand and supply. 1. The first reason why sugary drinks are overconsumed in free markets is because of market failure. 2. Demerit goods like sugary drinks have negative externalities in consumption. 3. These get **ignored** in the free market. 4. When sugary drinks are consumed, there is a cost imposed on the third party. 5. The third party can refer to anyone apart from the buyer or seller. 6. For example, a regular consumer of sugary drinks enjoys the taste but may have worse health. This creates a burden on the NHS, which creates a burden on taxpayers. 7. The diagram shows a free market equilibrium where MPC = MPB. 8. Since social benefit = private benefit + external benefit, there is a divergence between the MSB curve and the MPB curve. 9. The MSB curve is lower than the MPB curve as it factors in the negative externalities in consumption. 10. q1 is the free market equilibrium and qs shows the socially optimal quantity where externalities are considered. It is where MSC=MSB. 11. Therefore, this diagram shows sugary drinks are being over-consumed. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/03/Screenshot-2024-04-25-at-11.57.04-1.png) 1. Another reason why sugary drinks are over-consumed can be explained by behavioural economics. 2. Behavioural economics uses psychology to understand the limitation of the assumption that consumers are completely rational. 3. Behavioural economics allows us to understand that consumers have bounded rationality and bounded self-control. 4. Bounded rationality exists because of a lack of time, poor information, and computational weakness.consumers. 5. This means that agents instead rely on rule of thumb (mental shortcuts) to make day-to-day decisions. 6. Rule of thumb allow consumers to save time and mental effort but also lead to consumers making decisions that are not optimised. 7. These rules of thumb lead to biases and issues such as social norms, where someone may feel that society finds it strange that someone never drinks sugary drinks, despite the fact that they are unhealthy. 8. Hence, demand for sugary drinks is higher than it should be and this could be reduced by government intervention such as provision of information or through behavioural economics techniques such as nudges. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Behavioural Economics | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/behavioural-economics-notes/ Last updated: 2026-09-04T16:43:28.000Z These revision notes cover everything you need to know about **Behavioural Economics** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What are the three causes of bounded rationality? Bounded rationality is the idea that, in reality, people are unable to make rational decisions. Bounded rationality is caused by 1. lack of time 2. poor information 3. computational weakness ### What is bounded self control? Bounded self-control is the idea that people lack the self-control to act in a way that they know is in their own best interest. ### What is rule of thumb? Bounded rationality leads to the idea that people rely on rules of thumb to make decisions. Rules of thumb (heuristics) refer to mental shortcuts which allow people to save time and mental effort when making decisions, however this can also lead to imperfect outcomes, and biases. ### What is anchoring? Anchoring is a type of bias and happens when people rely too much on a single piece of information, frequently the first piece of information, when making decisions. For example, people may go with the first price they see in the first shop they see instead of looking around and comparing. ### What is availability bias? Availability bias is when people make judgements about the probability of future events based on their own memories of similar events. The recent occurrence of a particular event, and its consequences, is not necessarily a good guide to the probability of such events occurring in the future. For example, a memory that it rained the last time you went somewhere should not affect the forecast there in the future. ### What are social norms? Social norms are the views that are held by the people around us, and the idea that this influences our decision making. ### What is altruism? Altruism is the idea that self-interest is not always the primary motive for economic activity. For example, a business may prefer to pay their staff well despite the ability to pay them the market equilibrium. ### What is framing? Framing is the idea that people are affected by the way a choice is presented or worded to them. This means that governments and organisations are increasingly relying on choice architecture as a way to improve outcomes in society. _This post is for subscribers only._ ### Explain two factors that could cause a fall in consumption URL: https://www.a-level-economics-tutor.com/explain-two-factors-that-could-cause-a-fall-in-consumption/ Last updated: 2026-04-06T10:32:24.000Z ### [AQA AS-Level Paper 1 June 2020 Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2020-1.pdf?ref=a-level-economics-tutor.com) **Extract C (lines 3–4) states: ‘Household consumption accounts for approximately 60% of aggregate demand so has a vital role to play in the economy.’ Explain two factors that could cause a fall in consumption. (10 marks)** One factor that could cause a fall in consumption is higher income tax rates. In the UK, income taxes are progressive and they are a form of a direct tax, meaning that they can't be passed on to others. As income increases, the proportion that is taxed also increases. If income tax increases, consumers are left with less disposable income. This means that consumer spending would fall. This would have an even greater effect on consumer spending if income tax rates rise for lower income households. This is because they have a higher marginal propensity to consume, which means that if their income falls, their spending would have to fall by a lot more as they do not have much wealth or savings. Another factor that could cause a fall in consumption is higher interest rates. Interest rates are the cost of borrowing or the reward for saving. Higher interest rates mean that it is more rewarding to save, which would lead to lower consumer spending. Additionally, higher interest rates could mean that demand for housing falls, and this could lead to a negative wealth effect for homeowners, which might reduce their consumer confidence. Those who are paying their mortgage will also have a higher monthly interest payment, which could also cause their consumer confidence and spending to fall. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss whether providing substantial government financial support to banks is the best policy response during a financial crisis URL: https://www.a-level-economics-tutor.com/discuss-whether-providing-substantial-government-financial-support-to-banks-is-the-best-policy-response-during-a-financial-crisis/ Last updated: 2026-05-12T13:41:39.000Z ### [Edexcel A-Level Economics Paper 2 June 2019 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2019-Paper-2.pdf?ref=a-level-economics-tutor.com) **Discuss whether providing substantial government financial support to banks is the best policy response during a financial crisis. (15 marks)** **Paragraph 1** 1. One reason why it is best that the government provide financial support to banks during a financial crisis is to reduce the damage from a recession. 2. During a financial crisis, customers lose confidence in the financial system. 3. This causes them to withdraw money from banks, which is known as a bank run. 4. When this happens, banks lose liquidity, and this liquidity crisis can quickly spread across the financial system as financial markets are strongly interconnected. 5. As banks lose liquidity, some may have to shut down, or cut jobs. 6. Additionally, as consumers have low confidence, spending and aggregate demand can fall in the economy. This can lead to a decrease in aggregate demand and possibly a negative multiplier effect. 7. This causes unemployment and causes economic growth to fall and the price level to fall. 8. This effect can also cause a deflationary spiral, which is why it's so important that the government acts early to prevent the financial market failure spreading from one bank to another **Evaluation 1** 1. However, one problem with providing financial support to banks is an increase in national debt. 2. National debt is the accumulation of budget deficits over the years, and this can be expensive, especially in terms of repayment of interest. 3. Last year, the government spent £100 billion roughly on interest alone. 4. The opportunity cost of this is that the government has less money to spend on health care or education, which means that living standards are worse off than they could be if the country was debt-free. **Paragraph 2** 1. Another reason why it is important that the government supports banks during a financial crisis is to reduce the size of externalities. 2. A failure of the entire financial system would lead to a recession which means that the government would have to increase spending on welfare payments caused by an increase in unemployment. 3. Additionally, due to lower business profits, and less output, the government would collect less revenue from income taxes and corporation taxes. 4. this would lead to an increase in the budget deficit and therefore an increase in national debt levels. 5. This means that the government would have to increase taxes or decrease spending in the future to pay off national debt, which is known as austerity. 6. A decrease in spending on increasing taxes, as we are seeing in the economy now, affects people's living standards. For example, an income tax freeze currently means that people have less disposable income, which means that living standards fall. 7. Therefore, it makes more sense for the government to prevent one bank from failing than to allow the economy to suffer a recession, which causes even more harm to society. 8. The extract mentions that the government ‘recovered every penny of its investment in Lloyds’ as the economy grew. **Evaluation 2** 1. However, the problem with the government financially supporting banks is that it causes moral hazard. 2. In the future, financial institutions may expect the government or the central bank to bail them out if there is a risk of financial market failure. 3. If firms expect this, they may act in a more risky way, making the failure more likely. 4. Additionally, there is a huge cost of supporting financial institutions. 5. For example, the extract mentions the £65bn bailout of RBS and LBG. 6. This would lead to an increase in the budget deficit and also national debt levels, which means higher taxes and lower government spending for future generations. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Subsidies | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/subsidy-model-paragraph/ Last updated: 2026-04-05T21:18:43.000Z ## Discuss the Effects of a Subsidy on a Market with Positive Externalities A subsidy is a payment given by the government to firms, causing supply to shift to the right. The diagram below shows the impact of a subsidy on gym membership. Supply is the number of goods and services that firms are willing and able to produce at each price. The right shift in supply causes an extension in demand and a fall in price from p1 to p2\. Therefore there are more people who are willing and able to buy a gym membership so the equilibrium quantity increases from q1 to q2\. This reduces the market failure in the market for gym memberships, where they were previously being under-consumed due to the externalities being ignored in the free market. ![](https://www.tootingtutors.co.uk/content/images/2025/03/Screenshot-2025-03-13-at-15.16.45.png) However, a subsidy has a huge opportunity cost and there is a risk of a further misallocation of resources and therefore a risk of government failure. The first issue with subsidies is the huge opportunity cost. Opportunity cost is the value of the next best alternative, and the size of the subsidy is shown by the shaded rectangle. For example, the money used on the subsidy could go into the NHS or to solve other more importnat market failures. Additionally, firms could become dependent on the subsidies, causing the government to maintain this cost over many years. An even worse outcome would be firms misusing the subsidies and not using it to increase output. This could be a more likely outcome when firms have monopoly power in a market. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Indirect Taxes | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/indirect-taxes-model-paragraph/ Last updated: 2026-04-05T20:55:37.000Z ## Discuss the Effects of an Indirect Tax on a Market with Negative Externalities An indirect tax is an extra cost of production imposed on firms by the government. It causes supply to shift to the left, as shown by the diagram below. Supply is the quantity of goods and services that firms are able to produce at each price. As firms have greater costs, they are willing and able to produce less at each price. The left shift in supply causes a contraction in demand and an increase in price from p1 to p2, and a fall in quantity from q1 to q2\. This means that fast food consumption decreases, which reduces the size of the negative externalities and reduces the size of the market failure. ![](https://www.tootingtutors.co.uk/content/images/2025/03/Screenshot-2025-03-12-at-17.14.10.png) --- However, an indirect tax could be ineffective and it could cause government failure in the form of information gaps and unintended consequences. For example, the government may not be able to identify if the good or service is inelastic in demand. However, goods like fast food are actually more likely to be inelastic in demand because it is somewhat addictive and also it costs a small proportion of income, so consumers would continue to buy it despite an increase in price. This means that there would be a small decrease in quantity demanded relative to the change in price, as shown by the diagram below. Therefore, the externalities and the market failure would still remain. Additionally, the shaded rectangles show that the consumer burden is far higher than the producer burden. Indirect taxes are regressive and therefore they will affect low-income households more. One positive is the tax revenue that is generated. This is shown by the shaded rectangle and it can be used on other forms of government intervention such as subsidies for healthy food or gyms. ![](https://www.tootingtutors.co.uk/content/images/2025/03/Screenshot-2025-03-12-at-17.25.28.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Negative Externalities in Production | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/negative-production-externalities-model-paragraph/ Last updated: 2026-04-05T20:37:27.000Z ## Negative Externalities in Production Market failure occurs when there is a misallocation of resources. The market for magazines have negative externalities in production, as shown by the diagram below. Negative externalities occur when there is a cost to the third party from the production of the good or service. The third party can be anyone apart from the buyer or the seller. For example, magazines are made using paper, which means trees need to be cut down. This causes damage to the environment, which is a burden on taxpayers and future generations. The diagram shows that there is a divergence between marginal social cost and marginal private cost. Social cost = private cost + external cost. This means that social cost is higher than private cost in the market for magazines as it factors in cost to the third party. These externalities get ignored in the free market, where MPC=MPB. The socially optimal quantity would be qs where MSC=MSB. Magazines are over-produced in the free-market. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/04/image-2.png) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Positive Externalities in Consumption | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/positive-consumption-externalities-model-paragraph/ Last updated: 2026-06-01T11:59:08.000Z ## Positive Externalities in Consumption Market failure occurs when there is a misallocation of resources. A bicycle helmet is a merit good, as it causes positive externalities in consumption, shown by the diagram below. Positive externalities occur when there is a cost to the third party from the consumption of the good or service. The third party can be anyone apart from the buyer or the seller. For example, consumers who wear a bicycle helmet would be more safe and this would cause a smaller burden on the NHS which in turn saves taxpayer money. The diagram shows that there is a divergence between marginal social benefit and marginal private benefit at each level of output. Social benefit = private benefit + external benefit. This means that social benefit is higher than private benefit in the market for helmets as it factors in the benefit to the third party. These externalities get ignored in the free market, where MPC=MPB. The socially optimal quantity would be qs where MSC=MSB. Bicycle helmets are under-consumed in the free-market. ![Positive externalities in consumption diagram A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/04/image-1.png) Positive externalities in consumption diagram A-Level Economics --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Negative Externalities in Consumption | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/negative-consumption-externalities-model-paragraph/ Last updated: 2026-04-05T20:33:42.000Z ## Negative Externalities in Consumption Market failure occurs when there is a misallocation of resources. Fast food is a demerit good, as it causes negative externalities in consumption, shown by the diagram below. Negative externalities occur when there is a cost to the third party from the consumption of the good or service. The third party can be anyone apart from the buyer or the seller. For example, consumers of fast food would have worse health and this would be a burden on the NHS which in turn burdens the taxpayer. The diagram shows that there is a divergence between marginal social benefit and marginal private benefit. Social benefit = private benefit + external benefit. This means that social benefit is lower than private benefit in the fast food market as it factors in cost to the third party. These externalities get ignored in the free market, where MPC=MPB. The socially optimal quantity would be qs where MSC=MSB. Fast food is over-consumed in the free-market. ![Negative externalities in consumption diagram A-Level Economics](https://www.tootingtutors.co.uk/content/images/2024/11/Screenshot-2024-11-17-at-18.17.27.png) Negative externalities in consumption diagram A-Level Economics --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Diseconomies of Scale | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/diseconomies-of-scale-model-paragraph/ Last updated: 2026-04-05T20:16:46.000Z ## Explain how a firm can experience Diseconomies of Scale When a firm become larger and produces more output, they are impacted by both economies of scale and diseconomies of scale at the same time. After the minimum efficient scale, diseconomies of scale will outweigh economies of scale. Diseconomies of scale occur when long run average costs increase due to an increase in output. Firms like Starbucks are large, so staff may have less motivation. For example, they may feel less important so they may not demonstrate great customer service skills compared to the staff at a local cafe. This means a larger firm may see a decrease in productivity. Therefore, average costs of hiring staff are greater. These are known as communication problems. Secondly, if something is wrong in a large firm, such as a technical fault, or an unproductive member of staff, it would take far longer to identify and solve the problem compared to this same issue in a small firm. These are known as co-ordination diseconomies of scale. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Causes of a Price Change | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/causes-price-change-model-paragraph/ Last updated: 2026-08-06T18:56:22.000Z ### Increase in demand Related goods Population Income One factor that could cause an increase in the price of tea is an increase in the price of coffee. Demand is the number of goods and services that people are willing and able to buy at each given price. If demand for tea increases, then the price of tea would also increase. One factor that can cause demand for tea to shift to the right is if the price of coffee increases. Tea and coffee are substitute goods, which means they have a positive cross elasticity of demand (XED). If the price of coffee increases, many consumers would consider switching to tea, as they see it as a close substitute. This means there is an increase in the quantity of tea that people are now willing and able to buy at each price. The diagram below shows a rightward shift in demand. This leads to an extension in supply and an increase in the price of tea from P1 to P2. One cause of a price change is an increase in demand. For example, if there's an increase in the population, then there would be an increase in the number of people who are willing and able to buy a good or service at each price point. As a result, the demand curve would increase (shift to the right). As demand increases, there is an expansion along the supply curve. This leads to a new equilibrium quantity at Q2 and P2. One cause of a price change is an increase in demand. For example, if there's an increase in incomes, then people are more willing and able to buy a good or service at each price point. As a result, the demand curve would increase (shift to the right). As demand increases, there is an expansion along the supply curve. This leads to a new equilibrium quantity at Q2 and P2. ### Increase in supply Changes in technology One cause of a price change is an increase in supply. For example, if there's a change in technology that reduces the costs of production, then firms are more willing and able to supply the good or service at each price point. As a result, the supply curve would increase (shift to the right). As supply increases, there is an expansion along the demand curve. This leads to a new equilibrium quantity at Q2 and P2. ### Decrease in demand Population Income One cause of a price change is a decrease in demand. For example, if there's a decrease in the population, then there would be a decrease in the number of people who are willing and able to buy a good or service at each price point. As a result, the demand curve would decrease (shift to the left). As demand decreases, there is a contraction along the supply curve. This leads to a new equilibrium quantity at Q2 and P2. One cause of a price change is a decrease in demand. For example, if there's a decrease in incomes, then people are less willing and able to buy a good or service at each price point. As a result, the demand curve would decrease (shift to the left). As demand decreases, there is a contraction along the supply curve. This leads to a new equilibrium quantity at Q2 and P2. ### Decrease in supply Costs of production (energy) Productivity One cause of a price change is a decrease in supply. For example, if there's an increase in the costs of production, such as rising energy bills, then firms are less willing and able to supply the good or service at each price point. As a result, the supply curve would decrease (shift to the left). As supply decreases, there is a contraction along the demand curve. This leads to a new equilibrium quantity at Q2 and P2. The price of tea could also increase due to a leftward shift in the supply curve for tea. Supply is the quantity of goods and services that firms are willing and able to sell at each price. Supply could decrease due to a decrease in productivity. Productivity can be measured as output per worker per hour. If workers are slower, or they are working with older machinery, then output per worker falls, which raises the cost of producing each unit. As a result, firms are less willing and able to supply the good at each price point, so supply would shift to the left. This is because there would be a decrease in the quantity of tea that firms are willing and able to produce at each given price. This leftward shift in supply would cause a contraction in demand and an increase in the equilibrium price of tea from P1 to P2. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### A-Level Economics Model Paragraphs URL: https://www.a-level-economics-tutor.com/model-paragraphs/ Last updated: 2026-08-30T15:16:56.000Z ## A-Level Economics Model Paragraphs for all exam boards ### Year 12 Microeconomics **Markets** 1. [Explain the causes of a price change](https://www.a-level-economics-tutor.com/explain-the-causes-of-a-price-change/) 2. [Explain the functions of the price mechanism](https://www.a-level-economics-tutor.com/explain-the-functions-of-the-price-mechanism/) **Market failure and government intervention** 1. [Explain the cause of complete market failure](https://www.a-level-economics-tutor.com/complete-market-failure-a-level-economics-model-paragraph/) 2. [Explain the causes of partial market failure](https://www.a-level-economics-tutor.com/externalities-a-level-economics-model-paragraph/) 3. [Evaluate the the measures that can be used to correct negative externalities](https://www.a-level-economics-tutor.com/measures-to-correct-negative-externalities/) 4. [Evaluate the measures that can be used to correct positive externalities](https://www.a-level-economics-tutor.com/measures/) 5. [Evaluate whether the government should intervene in a market](https://www.a-level-economics-tutor.com/evaluate-whether-the-government-should-intervene-in-a-market/) ### Year 12 Macroeconomics **Macroeconomic objectives** 1. [Explain the effects of inflation](https://www.a-level-economics-tutor.com/effects-of-inflation/) 2. [Explain the effects of deflation](https://www.a-level-economics-tutor.com/explain-the-effects-of-deflation/) **Macroeconomic policies** 1. [Discuss the best policies to prevent deflation](https://www.a-level-economics-tutor.com/discuss-the-best-policies-to-prevent-deflation/) 2. [Discuss the best policies to reduce inflation](https://www.a-level-economics-tutor.com/discuss-the-best-policies-to-reduce-inflation/) 3. [Discuss the best policies to reduce cyclical unemployment](https://www.a-level-economics-tutor.com/policies-to-reduce-cyclical-unemployment/) 4. [Discuss the best policies to reduce structural unemployment](https://www.a-level-economics-tutor.com/policies-to-reduce-structural-unemployment/) 5. [Discuss the best policies to increase economic growth](https://www.a-level-economics-tutor.com/policies-to-increase-economic-growth-a-level-economics-model-paragraph/) 6. [Discuss the best policies to increase potential growth](https://www.a-level-economics-tutor.com/supply-side-policies-a-level-economics-model-paragraph/) 7. [Supply-side policies](https://www.a-level-economics-tutor.com/supply-side-policies-a-level-economics-model-paragraph/) **Macroeconomic objectives and trade-offs** 1. Discuss the possible trade-offs when trying to reduce inflation 2. Discuss the possible trade-offs when trying to prevent deflation 3. Discuss the possible trade-offs when trying to achieve greater economic growth 4. Discuss the possible trade-offs when trying to reduce unemployment ### Year 13 Microeconomics **Costs and revenue** 1. Evaluate whether profit maximisation is the most realistic business objective **Market structures** 1. Discuss the advantages and disadvantages of monopoly power 2. Discuss the advantages and disadvantages of monopolistic competition 3. Discuss the advantages and disadvantages of an oligopoly 4. Discuss the advantages and disadvantages of nationalisation and privatisation **Labour markets** 1. Explain the causes of wage differentials ### Year 13 Macroeconomics **Globalisation and trade** 1. Discuss the advantages and disadvantages of globalisation, free trade and protectionism **Current account and exchange rates** 1. Explain the causes of a currency appreciation 2. Explain the causes of a currency depreciation 3. Discuss the macroeconomic impact of a currency depreciation 4. Discuss the macroeconomic impact of a currency appreciation 5. Discuss whether a current account deficit is a cause for concern 6. Discuss the measures that can be used to reduce a current account deficit **Economic development** 1. Explain the main barriers to economic development **Macroeconomic objectives and trade-offs** 1. Discuss the possible trade-offs when trying to reduce the budget deficit 2. Discuss the possible trade-offs when trying to reduce the current account deficit 3. Discuss the possible trade-offs when trying to reduce inequality 4. Discuss the possible trade-offs when trying to achieve environmental protection --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Free Trade | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/free-trade-model-paragraph/ Last updated: 2026-03-31T20:15:34.000Z One impact of trade agreements is lower prices. Trade agreements mean that countries can trade freely without protectionist measures such as tariffs. A tariff is a tax on imports and the diagram shows the effects of removing tariffs on the economy. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/03/CleanShot-2026-03-31-at-18.21.47@2x.png) The diagram shows a regular demand and supply curve for goods and services in the domestic economy. World supply is perfectly elastic as there are infinite sellers around the world relatively to the UK. Removing tariffs causes world supply to increase (as shown by a shift from Sworld+tariff to Sworld. This means that imports become more competitive. This means that imports increase from q1q2 to q3q4\. Additionally, domestically produced goods and services become less competitive relative to imports. This means that domestic consumption decreases from 0q1 to 0q3\. There is an expansion in demand and a contraction in supply, and overall a fall in prices from p1 to p2\. This means that domestically, firms are able to benefit from lower costs of production for factors of production that they import and consumers are also able to benefit from lower prices. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Comparative Advantage | A-Level Economics Model Paragraph URL: https://www.a-level-economics-tutor.com/comparative-advantage-model-paragraph/ Last updated: 2026-04-05T20:08:46.000Z One benefit of free trade is that it enables countries to specialise. Specialisation can lead to an increase in world output. Free trade is the act of trading without protecionist barriers. Comparative advantage is when a country produces the good or service with the lowest opportunity cost. Comparative advantage theory can be described by using a model of two countries producing two goods (country A and B producing cars and bikes). The diagram below shows the production possibility curves for this. ![](https://www.tootingtutors.co.uk/content/images/2024/05/Screenshot-2024-05-18-at-21.10.07.png) In this example, if each country produced at the half way point on their PPF, then country A would be able to make 50 bikes and 50 cars whilst country B would be able to make 45 bikes and 25 cars. The total world output would be 170 units. However, if country A specialised in cars and country B specialised in bikes then the total world output would be 190\. Therefore, total world output would be higher with each country specialising in the good that it has comparative advantage in. We know that country A has a comparative advantage in cars because it has an opportunity cost of 1 bike per car, whereas country B has an opportunity cost of 1.8 bikes per car. However, there are two reasons why specialisation may not actually lead to a significant increase in output. Firstly, the model only applies to when there is free trade and no additional costs such as transport. Secondly, the model assumes constant returns to scale which is when average costs remain the same at all levels of output. In reality, a country may not seem to have a comparative advantage but if they were to increase output and benefit from economies of scale, they could instead develop a comparative advantage. This means it is better for countries to produce multiple goods or services, especially when developing. Additionally, any economic shocks caused by sudden fluctuations in currencies, protectionism, natural disasters, or conflict could cause sudden shifts in a country's PPF, and this would also have a signficant effect on any trade partners. Cost-push inflation is a common consequence of an external shock. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Evaluate the view that the supermarket sector is serving customers' interests well URL: https://www.a-level-economics-tutor.com/evaluate-the-view-that-the-supermarket-sector-is-serving-customers-interests-well/ Last updated: 2026-04-12T18:43:47.000Z ### AQA A-Level Economics Paper 1 June 2022 **Evaluate the view that the supermarket sector is serving customers' interests well. (25 marks)** - **Plan** - **Paragraph 1** - **Argument: threat of collusion** - **Diagram: two-firm, two-outcome model, monopoly power** - **Evaluation: unlikely in supermarket sector due to CMA** - **Paragraph 2:** - **Clear argument: possibility of non-price competition** - **Diagram: kinked demand curve** - **Evaluation: high costs, local monopoly, dynamic efficiency?** - **Judgement: it is serving customers well but we should monitor to prevent any collusion** Oligopolies are market structures with a few firms. Oligopolies can often serve customers well but this significantly depends on the behaviour of firms in the market and the threat of collusion. They can be collusive or competitive. The supermarket sector could be damaging to consumers due to the risk of collusion. Extract F Line 1 mentions that economists have been worried about the lack of competition in the industry. Despite collusion being illegal in the UK, there is always a risk of tacit collusion taking place as it is informal and harder to spot. Collusive oligopolies can form if firms with a high market share secretly agree to limit quantity and set high prices. Game theory allows us to understand the benefits and the risks of different pricing strategies. Prisoner's Dilemma explains how firms that are interdependent may approach pricing. Firms know that they cannot set a high price unless they collude. This is because there is a huge risk a competitor would undercut them and steal all the profits. Therefore, the Nash equilibrium is for both firms to set lower prices. However, firms know that they could both set a high price if there is trust between them. If they can form an agreement not to undercut each other, firms can set a higher price and maximise profits. The first diagram shows this in terms of prisoners who may both choose to deny a crime assuming they have full trust that the other prisoner does not confess. The second diagram shows that these oligopolistic firms could then benefit from colluding by exploiting their price-making power and profit maximising. This leads to a high price and a low output of p1 and q1\. This outcome is allocatively inefficient as AR does not equal to MC, which means that consumer surplus is nowhere near maximised. Extract F described that the second and third largest supermarkets attempted a merger, which would have given them signficant monopoly power, alongside Tesco, compared to any other supermarket. ![Prisoner's Dilemma | Microeconomics](https://s3-us-west-2.amazonaws.com/courses-images/wp-content/uploads/sites/2042/2018/02/10211025/PrisonersDilemma1-1024x1022.png) ![](https://www.tootingtutors.co.uk/content/images/2024/05/Screenshot-2024-05-02-at-10.45.59.png) However, even if firms could collude, there is arguably the benefit that they could use the high profits for re-investment and this would lead to innovations and quality products in the long run. This is called dynamic efficiency and this would benefit consumers over time. For example, pharmaceutical companies make a lot of profit but this also enabled them to quickly create innovative products, including the Covid vaccine at a very fast rate. We might also see supermarkets often re-investing in their recipes and their bakeries to create the best products for consumers. On the other hand, you could argue that supermarkets serve customers well. This is largely because of non-price competition. The supermarket sector is quite likely to be a more competitive oligopoly because authorities such as the CMA usually investigate potential mergers and prevent them if they lead to a firm having too much monopoly power. For example, the CMA prevented Sainsbury's and Asda from merging in 2019 (Extract C). This means that supermarkets is more likely to be a competitive oligopoly where firms are unable to compete on price. Firms know that they cannot raise prices as they would lose market share. Firms also know that it is not worth reducing prices as they would only gain a small amount of market share as other firms would also reduce their prices. The Kinked Demand below shows this. This means that firms would focus on non-price competition to try to increase their market share. This allows customers to benefit from variety and quality of customer service, recipes, taste, quality, and special offers from each supermarket. Depending on prices, firms may also make enough profit to re-invest which would lead to dynamic efficiency and greater improvements in products over time through innovation. So, overall competitive oligopolies can be hugely beneficial for consumers. ![Education resources for teachers, schools & students | EzyEducation](https://www.ezyeducation.co.uk/images/Lexicon_Images/kinked_demand_curve.jpg) However, oligopolies can greatly vary from one to another so factors such as concentration ratio and market share can make a big difference. For example, the theory of the Kinked Demand curve and price rigidity may not hold in real life because some firms may have some price making power due to brand loyalty, or also in the case of local monopolies. For example, Burger King at an airport or a petrol station on a motorway would be one of the only firms of its kind in the area. Therefore, in that particular branch, they have the ability to set higher prices and exploit customers. So, theories about oligopolies are not always fully consistent with markets in the real world. We also see this with supermarkets like Tesco owning multiple shops in each area which can act as a barrier to entry to other supermarkets. Furthermore, supermarkets may own petrol stations on motorways and this would be another example of a local monopoly where they can set higher prices. In conclusion, I would judge that the supermarket sector is currently serving customers well because of the non-price competition leading to great variety in branding, and good customer service at each of the supermarkets. However, it is important to continue to monitor the supermarket sector to prevent any potentially large mergers, as signifgicant monopoly power could lead to higher prices for customers. The CMA should also consider regulating local monopolies from exploiting customers. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Consumer & Producer Surplus | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/consumer-surplus-producer-surplus-notes/ Last updated: 2026-09-04T16:51:56.000Z ### What is consumer surplus? Consumer surplus is the difference between the price consumers are **willing** to pay compared to the price they **actually** pay. _This post is for subscribers only._ ### Market Failure | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/market-failure-notes/ Last updated: 2026-09-04T16:52:06.000Z These revision notes cover everything you need to know about **Market Failure** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ## What is market failure? Market failure occurs when there is a misallocation of resources. _This post is for subscribers only._ ### Evaluate the disadvantages of a current account deficit URL: https://www.a-level-economics-tutor.com/evaluate-the-disadvantages-of-a-current-account-deficit/ Last updated: 2026-05-26T13:42:09.000Z ### Edexcel International A-Level Economics Unit 4 January 2026 A **In 2023 the current account deficit on the balance of payments in South Africa was $6.14bn and in Argentina it was $21.5bn. Evaluate the disadvantages of a current account deficit. Refer to a country of your choice in your answer. (20 marks)** **Plan** - **Paragraph 1** - **Argument: CA deficit slows down economic growth** - **Diagram: AD shifting left** - **Evaluation: X-M is only a small % of AD** - **Paragraph 2** - **Argument: CA deficit causes currency deprecation** - **Diagram: demand and supply of curency** - **Evaluation: depends if deficit is structural/cyclical** A current account deficit occurs when there is more money leaving the country than entering in a given year. The current account includes trade in goods, services, primary income and secondary income. An equilibrium on the current account is one of the main macroeconomic objectives for many countries. One disadvantage of a current account deficit in the UK is that it can slow down economic growth. A current account deficit occurs when the value of imports is greater than the value of exports. Net exports (X-M) is one of the determinants of aggregate demand, which is the total planned spending in the economy. If the UK experiences a current account deficit, there would be a decrease in the value of (X-M) and therefore a left shift in the AD curve. The diagram below shows that the outcome is a decrease in output from y1 to y2\. This suggests there would be a fall in real GDP (negative economic growth) and also an increase in unemployment. This is because demand for labour is derived from the demand for goods and services, which is now lower due to a fall in demand for UK exports and also a fall in consumer spending (as consumers are buying more imports instead). An increase in unemployment is damaging as it means that more people have low or no disposable income and this can lead to an increase in inequality and a fall in living standards. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/05/CleanShot-2026-05-26-at-11.39.28@2x.png) However, in the UK, consumer spending (C) is the largest determinant of aggregate demand (around 60%) so a fall in net exports may not have a significant impact on aggregate demand as long as consumer spending remains high. A trade deficit could be cyclical, meaning it is actually a sign of strong economic growth in the UK. As the economy grows, the trade balance will naturally worsen due to two main reasons. Firstly, as the average price level increases, competitiveness worsens, whilst imports become relatively cheaper. Secondly, as the economy grows, incomes increase, therefore consumers have a higher marginal propensity to import things like cars, holiday packages, and clothing, which are considered luxury goods, so demand increases in line with incomes. Another disadvantage of a persistent current account deficit is that means that the country is more vulnerable to an economic shock. One of the main causes of a current account deficit is poor competitiveness, which could itself be caused by low productivity or high costs. If a country like the UK has not implemented sufficient supply-side policies, it becomes increasingly difficult for them to export goods. This slowly makes consumers and firms in the UK dependent on imports, which leaves them vulnerable to shocks. Examples of UK imports include oil and gas, as well as manufactured goods. If there is an external shock, such as conflict or a shortage in supply, this means the price of imports suddenly rise. As a result of factors such as high oil prices, firms in the UK face significantly higher costs of production, due to higher energy bills. The effect of this is cost push inflation, as seen in the diagram below. UK inflation exceeded 10% in 2022 and this could happen again in 2026, due to higher energy, fuel and food costs. High inflation is damaging as it reduces the value of money and consumers see a decline in standards of living unless they are provided an increase in pay. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/05/CleanShot-2026-05-26-at-11.42.50@2x.png) However, many people would argue that a current account deficit is not a cause for concern if a country is running a floating exchange rate system. This is when the value of the currency is determined by market forces. So, when a country has a current account deficit, there is higher demand for imports and lower demand for exports. This means there is a higher supply of the pound on the market and a lower demand for the pound. This would cause the pound to depreciate. A weaker pound makes UK exports cheaper and more competitive and makes imports into the UK more expensive. Therefore, in theory, exports should increase and imports should decrease, which means that a current account deficit can self-correct without any government intervention. In conclusion, the main disadvantages of a current account deficit are slower economic growth and over-dependence on other countries. Whether a current account deficit is significantly bad depends more on the cause of the deficit. As mentioned, a cyclical current account deficit is a sign of a strong economy, and deficits naturally tend to increase during periods of growth. This would not be a cause for concern. However, persistent current account deficits due to a weak supply side or poor competitiveness are a cause for concern, as they lead to overdependence on other economies. This makes countries prone or vulnerable to economic shocks when oil prices rise and protectionist measures are put in place. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Edexcel International A-Level Economics URL: https://www.a-level-economics-tutor.com/edexcel-international-a-level-economics/ Last updated: 2026-05-12T21:15:05.000Z [Edexcel International A-Level Economics Specification](https://qualifications.pearson.com/content/dam/pdf/International%20Advanced%20Level/Economics/2018/Teaching-and-Learning-Materials/ial-economics-getting-started-guide-final.pdf?ref=a-level-economics-tutor.com) [A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) [Edexcel A-Level Economics 20 Mark Question - Unit 2](https://www.a-level-economics-tutor.com/edexcel-international-a-level-economics-20-mark-question-unit-2/) [Edexcel A-Level Economics 20 Mark Question - Unit 3](https://www.a-level-economics-tutor.com/edexcel-international-a-level-economics-20-unit-3/) [Edexcel A-Level Economics 20 Mark Question - Unit 4](https://www.a-level-economics-tutor.com/edexcel-international-a-level-economics-20-unit-4/) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Explain the factors a profit-maximising firm will take into account when deciding whether to shut down or to carry on operating, both in the short run and in the long run URL: https://www.a-level-economics-tutor.com/explain-the-factors-a-profit-maximising-firm-will-take-into-account-when-deciding-whether-to-shut-down-or-to-carry-on-operating-both-in-the-short-run-and-in-the-long-run/ Last updated: 2026-03-27T16:23:51.000Z ### AQA A-Level Economics Paper 1 June 2019 **Explain the factors a profit-maximising firm will take into account when deciding whether to shut down or to carry on operating, both in the short run and in the long run. (15 marks)** 1. The short-run shutdown condition is AR < AVC. 2. In the short-run, at least one factor of production is fixed, such as the rent for a factory or office. 3. Then, in the short-run, a firm would choose to shut down if average revenue is lower than average variable cost (AR < AVC). 4. We can make a reasonable assumption that a firm would not be able to recover its fixed costs (such as its rent) if it chooses to shut down. 5. This means that they would not take its fixed costs into account regardless of whether they shut down or continue to operate. 6. This means that if they continue to operate, they will aim to make average revenue that exceeds their average variable costs. 7. If they do this, they can pay money towards their fixed costs, which will eventually be cleared. 8. Then, in the long run, where thee are no fixed costs, the firm would be able to make a supernormal profit. 9. For example, if a firm is making AR: £1000, AVC: £500 and AFC: £600, it would choose not to shut down. This is because, if it chooses to shut down, it will have wasted £600 on fixed costs. 10. If it continues to operate , it would make £500 per unit which can be used to pay off the fixed costs. 1. The long-run shutdown condition is AR MC, the firm should increase production as each additional unit adds more to revenue than costs, increasing total profit. 3. Conversely, if MC > MR, the firm should reduce output as each additional unit costs more than it generates in revenue, reducing total profit. ### What is revenue maximisation? Revenue maximisation occurs when a firm produces at the quantity where MR=0. ### What is the main benefit of revenue maximisation? Revenue maximisation can be used as a strategy to increase market share. This can allow firms to benefit from increased brand loyalty and economies of scale, _This post is for subscribers only._ ### Comparative Advantage | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/comparative-advantage-notes/ Last updated: 2026-09-04T17:00:06.000Z These revision notes cover everything you need to know about **Comparative Advantage** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is absolute advantage? Absolute advantage is when a country is able to produce a good or service at a lower cost. ### What is comparative advantage? Comparative advantage is when a country is able to produce a good or service at a lower opportunity cost. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/01/image-18.png) ### How do you calculate opportunity cost? Make a ratio for good A : good B. Simplify the ratio in the form 1 to n. _This post is for subscribers only._ ### Discuss the likely benefits of increased economic integration for sub‑Saharan African countries URL: https://www.a-level-economics-tutor.com/discuss-the-likely-benefits-of-increased-economic-integration-for-sub-saharan-african-countries/ Last updated: 2026-04-22T20:47:39.000Z ### [Edexcel A-Level Economics June 2020 Paper 2 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2020-Paper-2.pdf?ref=a-level-economics-tutor.com) Discuss the likely benefits of increased economic integration for sub‑Saharan African countries. (15 marks) **Paragraph 1** 1. One benefit of increased economic integration is an increase in potential growth through specialisation. 2. When free trade is possible, countries are encouraged to specialise in the goods and services where they have a comparative advantage. 3. This is the good or service where they have a lower opportunity cost. 4. This means that countries can produce more goods and services when their factors of production are fully employed. 5. This means there is increase in potential output around African countries, which can be illustrated by an increase in long-run aggregate supply. 6. This can lead to an increase in potential growth and a fall in the inflation rate. **Evaluation** 1. One downside with an increase in specialisation and trade is that it can cause structural unemployment. 2. Workers in certain industries could lose their jobs when their industry declines and those goods and services get imported instead. 3. This costs the government as they have to increase spending on welfare payments but also on re-training schemes. **Paragraph 2** 1. Another benefit of increased economic integration is lower prices 2. As trade agreements are formed, countries can reduce protectionist measures such as tariffs. 3. This means that countries are able to import goods and services cheaper. 4. This means that firms can benefit from lower costs of production. 5. For example, figure 1 mentions farm equipment, which could become cheaper. 6. This would mean that short-run aggregate supply can increase, leading to economic growth and a fall in cost-push inflation. 7. Extract A also mentions the aim of helping farmers 'earn a living income'. 8. As the economy grows, there the derived demand for labour increases which provides more job opportunities allowing people to increase their income. **Evaluation** 1. However, trade agreements would lead to a loss of domestic output. 2. As imports became cheaper, domestic firms become less competitive so they lose out on demand. 3. This means they have to reduce output, causing producer surplus to fall. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss two macroeconomic policies, apart from protectionism, that a government could use to reduce the negative effects of globalisation. URL: https://www.a-level-economics-tutor.com/discuss-two-macroeconomic-policies-apart-from-protectionism-that-a-government-could-use-to-reduce-the-negative-effects-of-globalisation/ Last updated: 2026-07-13T10:35:57.000Z ### [Edexcel A-Level Economics Paper 2 June 2018 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2018-Paper-2.pdf?ref=a-level-economics-tutor.com) **With reference to Extract A, discuss two macroeconomic policies, apart from protectionism, that a government could use to reduce the negative effects of globalisation. (12 marks)** Extract A mentions that globalisation has contributed to “low wages, insecure employment, stateless corporations and striking inequalities”. Expansionary fiscal policy can be used to reduce unemployment rates. This involves the government increasing spending or reducing taxes. For example, the government could reduce income taxes. This allows people to keep more of their income. As disposable income and consumer confidence increases, consumer spending is likely to increase. This is a component of aggregate demand (AD) so AD would then increase. This causes an increase in real gdp as more goods and services are produced to meet greater spending. This means that firms would increase their derived demand for labour, which should then reduce unemployment rates. However, this particular policy would cause the budget defict to increase, which can cause further problems. This is when government spending exceeds tax revenue in the fiscal year. Consistently high budget deficits lead to an accumulation of national debt, which leads to higher interest repayments, which carry an opportunity cost against future spending in other areas. 'More progressive taxes' can be used to reduce inequality. This is mentioned in extract a line 16\. Taxes are progressive if the tax rate increases as income increases. For example, earnings above roughly £50,000 are taxed at 40% compared to a tax rate of 20% on earnings between roughly £12,000 and £50,000 in the UK. If the government were to make taxes more progressive, this would involve reducing tax rates for low and middle earnings and increasing taxes for high earners, such as those earning above £125,000\. More progressive income taxes would reduce levels of relative poverty, as shown on the Lorenz curve below. This means that there would be fewer people earning less than, say, 60% of median income. However, reducing income inequality can often disincentivise people from working harder, which can cause productivity to fall in the economy. This happens because people are rewarded less when they earn promotions or change career paths. This can reduce the productive potential of the economy. Extract C mentions that 'some level of inequality is desirable' for this very reason. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the likely impact on Rwandan consumers and clothing manufacturers of the increase in the tariff on imports of second-hand clothes URL: https://www.a-level-economics-tutor.com/discuss-the-likely-impact-on-rwandan-consumers-and-clothing-manufacturers-of-the-increase-in-the-tariff-on-imports-of-second-hand-clothes/ Last updated: 2026-07-11T14:17:05.000Z ### [Edexcel A-Level Economics Paper 2 June 2021 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2021-Paper-2.pdf?ref=a-level-economics-tutor.com) Discuss the likely impact on Rwandan consumers and clothing manufacturers of the increase in the tariff on imports of second-hand clothes. Use an appropriate diagram to support your answer. (12 marks) Firstly, the increase in the tariff on second-hand clothing will lead to an increase in prices for Rwandan consumers. Extract A mentions a $2.50 tariff per kg of used clothes. A tariff is a tax imports. An increase in the tariff will cause a leftward shift in the perfectly elastic world supply curve for second-hand clothing. The diagram shows this from Sworld to Sworld + tariff. Consumers will pay more for clothing as seen be the price increase. This can reduce their living standards as they would be able to satisfy less of their needs and wants. The tariff can benefit local clothing manufacturers and allow them to increase their output. The higher price for imports p2 causes a contraction in domestic demand and an expansion in domestic supply. Overall, this causes the quantity of imports to fall from q1q2 to q3q4 and it also causes an increase in domestic output from 0q1 to 0q3\. Extract A mentions that a clothing factory in Kigali was previously operating at just 40% capacity as it was 'hard to compete'. Local clothing manufacturers would now be relatively more competitive so they would be able to sell more clothes to consumers and local traders who were previously importing used clothing. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/07/image.png) However, the overall impact on consumers and manufactuers might depend on how the government use the tax revenue generated from the tariff. The government could actually improve outcomes for consumers if they are able to use the revenue to subsidise local clothing, or to improve services like healthcare and education. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the impact of improved transport links between African countries on economic growth rates URL: https://www.a-level-economics-tutor.com/discuss-the-impact-of-improved-transport-links-between-african-countries-on-economic-growth-rates/ Last updated: 2026-07-09T13:47:22.000Z ### [Edexcel A-Level Economics Paper 2 June 2023 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2023-Paper-2.pdf?ref=a-level-economics-tutor.com) **Discuss the impact of improved transport links between African countries on economic growth rates. (12 marks)** Better transport links is likely to increase economic growth because it enables African countries to specialise more. As countries in Africa won’t have to rely as heavily on road transport each time they trade, they will be encouraged to trade more. This enables them to specialise. Typically, countries or regions should specialise in the good or service where they have a comparative advantage; the good or service they can produce at the lowest opportunity cost. The extract mentions attempts from Zambia to produce copper and Malawi to produce tea, which was previously hindered by ‘queues for miles’. When specialisation happens properly, producers can improve productivity through repetition. As productivity increases, it becomes cheaper to produce the same number of goods and services comp Better transport links is also likely to increase economic growth because it can make African countries more internationally competitive. The extract mentions that ‘poor infrastructure is a major barrier to trade’. As transport links improve, it makes it cheaper and faster to ship goods and services, for example from factories to airport or cargo terminals. As this improves, African countries can pass down their lower costs to customers around Africa and around the world. As exports is a component of aggregate demand (AD), AD would increase so there would be an increase in real gdp; economic growth. However, the disadvantages of improving transport links are both the opportunity cost and possible time lags. Firstly, there is a huge cost to governments when improving infrastructure and transport links. Extract B mentions one example of Angola already struggling with debt and opting for debt relief. Even if other African countries were able to afford investment in transport, they may have to sacrifice spending in other areas like education or healthcare, which can potentially harm development even further. If this were to happen, human capital would worsen, and this would make it harder for citizens to get jobs in the manufacturing or service sector, making it harder for them to increase their incomes and their living standards. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Externalities | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/externalities-notes/ Last updated: 2026-09-04T16:26:11.000Z These revision notes cover everything you need to know about **Externalities** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- 💡 ****EDEXCEL STUDENTS ONLY NEED TO LEARN POSITIVE EXTERNALITIES IN CONSUMPTION AND NEGATIVE EXTERNALITIES IN PRODUCTION** ### What is an externality? Externalities are the spillover effects from a transaction, on a third party. ### What is a third party? A third party is anyone apart from the producer or consumer. ### What causes externalities to happen in a free market? 1. In a free market, externalities get ignored by buyers and sellers due to self-interest. 2. This means that goods and services get over-consumed or under-consumed or over-produced or under-produced. 3. This means that there is a market failure as there is a misallocation of resources. 4. Social welfare is not maximised. ### What is a negative externality in consumption? 1. A negative externality in consumption occurs when the consumption of a good or service has a negative impact on a third party. 2. A third party is someone apart from the buyer or the seller. 3. For example, when someone regularly eats unhealthy fast food, their health worsens, which means they are likely to put more burden on the NHS, and therefore taxpayers. 4. In a free market, these externalities are likely to be ignored. 5. This means that fast-food is over-consumed in a free market. ![negative consumption externality diagram](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/01/image-14.png) ### What is a positive externality in consumption? 1. A positive externality in consumption occurs when the consumption of a good or service has a negative impact on a third party. 2. A third party is someone apart from the buyer or the seller. 3. For example, when someone regularly goes to the gym, their health improves, which means they are likely to have less burden on the NHS, and therefore taxpayers. 4. In a free market, these externalities are likely to be ignored. 5. This means that gym memberships are under-consumed in a free market. ![positive consumption externality diagram](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/01/image-15.png) _This post is for subscribers only._ ### Edexcel A-Level Economics URL: https://www.a-level-economics-tutor.com/edexcel-a-level-economics/ Last updated: 2026-07-31T10:17:30.000Z [Edexcel A-Level Economics Specification](https://qualifications.pearson.com/content/dam/pdf/A%20Level/Economics/2015/specification-and-sample-assessment-materials/A%5FLevel%5FEcon%5FA%5FSpec.pdf?ref=a-level-economics-tutor.com) [A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) [Edexcel A-Level Economics Past Papers](https://www.a-level-economics-tutor.com/edexcel-a-level-economics-past-papers/) [Edexcel AS Level Economics Past Papers](https://www.a-level-economics-tutor.com/edexcel-as-level-economics-past-papers/) [Edexcel A-Level Economics Exam Technique](https://www.a-level-economics-tutor.com/edexcel-a-level-economics-exam-technique/) [Edexcel A-Level Economics 25 Mark Question](https://www.a-level-economics-tutor.com/edexcel-a-level-economics-25/) [Edexcel A-Level Economics 15 Mark Question](https://www.a-level-economics-tutor.com/edexcel-a-level-economics-15/) [Edexcel A-Level Economics 12 Mark Question](https://www.a-level-economics-tutor.com/edexcel-a-level-economics-12/) [Edexcel A-Level Economics 10 Mark Question](https://www.a-level-economics-tutor.com/edexcel-a-level-economics-10/) [Edexcel A-Level Economics 8 Mark Question](https://www.a-level-economics-tutor.com/edexcel-a-level-economics-8/) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Edexcel A-Level Economics | 15 Mark Question URL: https://www.a-level-economics-tutor.com/edexcel-a-level-economics-15/ Last updated: 2026-07-07T12:06:15.000Z ### Edexcel A-Level Economics Paper 1 Discuss the likely impact of ‘a substantial lessening of competition in the cinema market in Aberdeen, Bury St Edmunds and Cambridge’ (Extract C, line 6–7). (Specimen) Discuss the likely problems for Sainsbury’s and Morrisons if the suggested merger between them goes ahead. Refer to Figure 1, Extract C and your own knowledge in your answer. (June 2017) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2017-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-problems-for-sainsburys-and-morrisons-if-the-suggested-merger-between-them-goes-ahead/) With reference to Extract C and your own knowledge, discuss policies businesses and government might implement to reduce labour immobility to benefit the energy sector. (June 2018) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2018-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-policies-businesses-and-government-might-implement-to-reduce-labour-immobility-to-benefit-the-energy-sector/) Discuss methods of government intervention to protect consumers within the utilities markets, such as energy and telecommunications. (June 2019) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2019-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-methods-of-government-intervention-to-protect-consumers-within-the-utilities-markets-such-as-energy-and-telecommunications/) Discuss the likely benefits of price discrimination to rail passengers. Use a diagram to support your answer. (June 2020) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2020-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-benefits-of-price-discrimination-to-rail-passengers-use-a-diagram-to-support-your-answer/) With reference to the information provided, discuss the decision by Jet2 to increase its package holiday prices. (June 2021) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2021-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-decision-by-jet2-to-increase-its-package-holiday-prices/) With reference to the information provided, discuss whether the coffee shop market is contestable. (June 2022) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2022-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-whether-the-coffee-shop-market-is-contestable/) Using examples from Figure 2 or Extract B, discuss the likely impact of price discrimination on a firm’s profits. Use a relevant diagram to support your answer. (June 2023) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2023-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/price-discrimination-notes/) With reference to Extract D, discuss possible methods of government intervention to reduce electronic waste. (June 2024) | [Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2024-Paper-1.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-possible-methods-of-government-intervention-to-reduce-electronic-waste/) Discuss the likely benefits of mergers for firms such as Microsoft. (June 2025) | [Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-1-June-2025-Extract.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-benefits-of-mergers-for-firms-such-as-microsoft/) --- ### Edexcel A-Level Economics Paper 2 Discuss the likely costs and benefits of monetary union to the five members of the EAC. (Specimen) | Extract Discuss ‘looser fiscal policy’ and ‘supply-side reforms’ (Extract A, lines 20 and 21) that may be used by governments of Eurozone countries to increase economic growth. (June 2017) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2017-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-looser-fiscal-policy-and-supply-side-reforms-that-may-be-used-by-governments-of-eurozone-countries-to-increase-economic-growth/) Discuss the role of the financial sector in the growth and development of developing countries. (June 2018) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2018-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-role-of-the-financial-sector-in-the-growth-and-development-of-developing-countries/) Discuss whether providing substantial government financial support to banks is the best policy response during a financial crisis. (June 2019) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2019-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-whether-providing-substantial-government-financial-support-to-banks-is-the-best-policy-response-during-a-financial-crisis/) Discuss the likely benefits of increased economic integration for sub‑Saharan African countries. (June 2020) | [Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2020-Paper-2.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-benefits-of-increased-economic-integration-for-sub-saharan-african-countries/) Discuss policies, other than import tariffs, that the Rwandan government could use to develop its manufacturing industries. (June 2021) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2021-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-policies-other-than-import-tariffs-that-the-rwandan-government-could-use-to-develop-its-manufacturing-industries/) With reference to Extract B, discuss the benefits of an increase in infrastructure spending on the UK economy. Use an aggregate demand and aggregate supply diagram to support your answer. (June 2022) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2022-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-benefits-of-an-increase-in-infrastructure-spending-on-the-uk-economy/) Discuss market-orientated strategies the Angolan government could use to improve development. (June 2023) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2023-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-market-orientated-strategies-the-angolan-government-could-use-to-improve-development/) Discuss supply-side policies the UK government could introduce to stimulate economic growth. (June 2024) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2024-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-supply-side-policies-the-uk-government-could-introduce-to-stimulate-economic-growth/) Discuss supply‑side policies the German government could use ‘to improve its economic performance’ (Extract A, line 6). (June 2025) | [Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-2-June-2025-Extract.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-supply-side-policies-the-german-government-could-use-to-improve-its-economic-performance/) --- ### Edexcel AS-Level Economics Paper 1 With reference to Figure 1, Extract 2 and your own knowledge, discuss the reasons for subsidies being paid to Scottish farmers. (Specimen) With reference to Figures 1 and 2 and your own knowledge, discuss the functions of the price mechanism in allocating housing. (June 2016) | [Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---AS-June-2016-Paper-1.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-functions-of-the-price-mechanism-in-allocating-housing/) With reference to Figure 1, assess the likely reasons for the difference in price elasticity of demand for tobacco cigarettes and e-cigarettes. (June 2017) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2017-Paper-1.pdf?ref=tootingtutors.co.uk) The UK Government is considering introducing a maximum price for energy. Discuss the likely microeconomic effects of this decision on energy producers and consumers. Include a supply and demand diagram in your answer. (June 2018) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2018-Paper-1.pdf?ref=tootingtutors.co.uk) Discuss likely reasons why the prices of treatments in private sector hospitals are increasing. Draw a supply and demand diagram to support your answer. (June 2019) | [Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---AS-June-2019-Paper-1.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-likely-reasons-why-the-prices-of-treatments-in-private-sector-hospitals-are-increasing/) With reference to Figure 1 and Extract A, discuss the benefits of allowing universities to charge higher tuition fees for some degree courses. (June 2020) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2020-Paper-1.pdf?ref=tootingtutors.co.uk) The UK fishing industry employs about 24000 people, more than half of them working in Scotland. Discuss the likely impacts on an economy of specialising in the fishing industry. Use a production possibility frontier diagram in your answer. (June 2022) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2022-Paper-1.pdf?ref=tootingtutors.co.uk) Discuss likely reasons why the market price of streaming television content is increasing. Draw a supply and demand diagram to support your answer. (June 2023) | [Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---AS-June-2023-Paper-1.pdf?ref=a-level-economics-tutor.com) Discuss the likely private costs and external costs of the production of plastic. (June 2024) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2024-Paper-1.pdf?ref=tootingtutors.co.uk) With reference to Extract A, discuss the likely private costs and external costs caused by meat farming. Use an appropriate diagram in your answer. (June 2025) | [Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-AS-Level-Economics-Paper-1-June-2025-Insert.pdf?ref=a-level-economics-tutor.com) --- ### Edexcel AS-Level Economics Paper 2 Discuss the likely impact of both a lack of new investment and an appreciation of the British pound (£) on ‘inflationary pressures’ in the UK (Extract A line 36). (Specimen) With reference to Extracts A and B and your own knowledge, discuss whether the MPC should be concerned about the risk of deflation in the UK economy. (June 2016) | [Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---AS-June-2016-Paper-2.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-whether-the-mpc-should-be-concerned-about-the-risk-of-deflation-in-the-uk-economy/) Evaluate policies the government could use to increase the UK’s productivity. (June 2017) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2017-Paper-2.pdf?ref=tootingtutors.co.uk) With reference to Extract B and Figure 1, discuss the likely impact of migration on employment and unemployment in the UK. (June 2018) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2018-Paper-2.pdf?ref=tootingtutors.co.uk) With reference to Figure 4, Extract B and your own knowledge, discuss the limitations of using GDP data to compare living standards between the UK and developing countries. (June 2019) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2019-Paper-2.pdf?ref=tootingtutors.co.uk) Discuss the factors that might explain why ‘the UK’s forecast long-term trend rate of growth was reduced’ (Extract B lines 9–10). (June 2020) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2020-Paper-2.pdf?ref=tootingtutors.co.uk) With reference to the information provided, discuss the likely impact of a recession on the UK economy. (June 2022) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2022-Paper-2.pdf?ref=tootingtutors.co.uk) Discuss the likely economic effects of the high rate of UK inflation on consumers and workers. (June 2023) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2023-Paper-2.pdf?ref=tootingtutors.co.uk) Discuss factors, apart from changes in real wages, which the MPC may have considered when changing the base interest rate. (June 2024) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---AS-June-2024-Paper-2.pdf?ref=tootingtutors.co.uk) Discuss the likely macroeconomic effects of a decrease in government expenditure on the UK economy. Use an aggregate demand and aggregate supply diagram to support your answer. (June 2025) | [Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-AS-Level-Economics-Paper-2-June-2025-Insert.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-macroeconomic-effects-of-a-decrease-in-government-expenditure-on-the-uk-economy/) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss whether the MPC should be concerned about the risk of deflation in the UK economy URL: https://www.a-level-economics-tutor.com/discuss-whether-the-mpc-should-be-concerned-about-the-risk-of-deflation-in-the-uk-economy/ Last updated: 2026-05-12T12:53:07.000Z ### [Edexcel AS Economics Paper 2 June 2016 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---AS-June-2016-Paper-2.pdf?ref=a-level-economics-tutor.com) With reference to Extracts A and B and your own knowledge, discuss whether the MPC should be concerned about the risk of deflation in the UK economy. (15 marks) **Paragraph 1** 1. One reason the MPC should be concerned about deflation is that it can very easily trigger a deflationary spiral, which is damaging to the UK's macroeconomic performance. 2. Deflation is when there is a fall in the average price level. 3. When deflation first occurs, consumers form an expectation that prices will continue to decrease in the future. 4. Extract A Line 6 also mentions that inflation rates are 'expected to be negative'. 5. This means that they are likely to delay spending on big purchases, such as homes. 6. This leads to a fall in consumer spending, and a fall in aggregate demand in the economy. 7. This leads to further rounds of deflation and also an increase in unemployment due to a lack of demand for goods and services. 8. In 2015, the EU also experienced deflation with a rate of -0.5%, and inflation rates in the UK also fell to around 0.5% in October 2024. 9. Extract B mentioned the example that Japan averaged an inflation rate of -0.3% across 12 years, as they were stuck in a deflationary spiral. **Evaluation 1** 1. However, UK inflation rates remained positive as of January 2015, which means there is currently disinflation but not deflation. 2. Disinflation is when the rate of inflation falls but remains positive. 3. Also, Extract A Line 8 mentions 'Britain's economic recovery'. 4. This suggests that the MPC are aware that inflation is falling but they expect it to recover along with the economic cycle. 5. The initial cause of the fall in inflation rate seemed to be lower oil prices, but as aggregate demand increases along with the economic recovery, price level should begin to rise again, without the need for lower interest rates, which are already close to 0%. **Paragraph 2** 1. Another reason why the MPC should be concerned about deflation is due to the difficulty of correcting it. 2. Extract A Line 6 also mentions that inflation rates are 'expected to be negative'. 3. As inflation falls too low, the first response is often for the MPC to reduce interest rates, as this would lead to a lower cost of borrowing and therefore incentivise consumers and businesses to spend. 4. The extract however also mentions that interest rates are already close to 0.5% which means that there isn't much room to reduce interest rates further. 5. This means that they may have to rely on the government to use expansionary fiscal policy which is not ideal especially given that there is an aim to control the level of national debt in the economy. **Evaluation 2** 1. However, in case inflation gets even lower, the Bank of England can introduce quantitative easing. 2. This is when the central bank create money electronically and use it to buy assets from high street banks. 3. This gives them a boost in liquidity which should incentivise them to offer lower high street interest rates to consumers and businesses. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. 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KBdownload-circle](https://www.a-level-economics-tutor.com/content/files/2026/07/Edexcel-AS-Level-Economics-Paper-1-June-2017.pdf "Download") [Edexcel AS-Level Economics Paper 1 June 2017 MSEdexcel AS-Level Economics Paper 1 June 2017 MS.pdf516 KBdownload-circle](https://www.a-level-economics-tutor.com/content/files/2026/07/Edexcel-AS-Level-Economics-Paper-1-June-2017-MS.pdf "Download") [Edexcel AS-Level Economics Paper 2 June 2017Edexcel AS-Level Economics Paper 2 June 2017.pdf339 KBdownload-circle](https://www.a-level-economics-tutor.com/content/files/2026/07/Edexcel-AS-Level-Economics-Paper-2-June-2017.pdf "Download") [Edexcel AS-Level Economics Paper 2 June 2017 MSEdexcel AS-Level Economics Paper 2 June 2017 MS.pdf510 KBdownload-circle](https://www.a-level-economics-tutor.com/content/files/2026/07/Edexcel-AS-Level-Economics-Paper-2-June-2017-MS.pdf "Download") ### Price Mechanism | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/price-mechanism-notes/ Last updated: 2026-09-04T16:25:51.000Z These revision notes cover everything you need to know about the **Price Mechanism** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### Increase in demand 1. The diagram below shows an increase in demand, which can be caused by factors like an increase in income. 2. At the old market price p1, there is an excess demand. 3. Firms notice this through market **signals** as they may see larger queues of customers waiting to be served, 4. Firms **respond** by raising prices. 5. The new market price p2 is higher so firms are **incentivised** to expand their supply to make higher profits, whilst consumers are **incentivised** to contract their demand. 6. The market clears at the new equilibrium quantity of q2 where excess demand has been **rationed**. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/05/CleanShot-2026-05-12-at-20.02.10@2x.png) ### Decrease in demand 1. The diagram shows a decrease in demand. 2. At the old price p1, there is an excess supply. 3. This information is **signalled** to firms, for example they may empty shops. 4. Firms **respond** by decreasing prices. 5. This **incentivises** firms to consumers to expand demand and it **incentivises** firms to contract their supply due to lower profits. 6. Overall, the market clears at a new equilibrium at q2, where the excess supply is **rationed** away. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/05/CleanShot-2026-05-12-at-20.07.52@2x.png) _This post is for subscribers only._ ### Fiscal Policy | Notes URL: https://www.a-level-economics-tutor.com/fiscal-policy-notes/ Last updated: 2026-09-04T17:37:01.000Z These revision notes cover everything you need to know about Fiscal Policy for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is fiscal policy? Fiscal policy is the use of government spending or taxation in order to influence aggregate demand. ### What is expansionary fiscal policy? Expansionary fiscal policy is when the government increase spending or decrease taxes, causing aggregate demand to shift to the right. ### What is contractionary fiscal policy? Expansionary fiscal policy is when the government decrease spending or increase taxes, causing aggregate demand to shift to the left. ### What is a balanced budget? A balanced budget is when government spending = tax revenue ### What is a budget deficit? A budget deficit is when government spending is more than tax revenue ### What is a budget surplus? A budget deficit is when government spending is less than tax revenue ### What is national debt? National debt is an accumulation of the budget deficit each year. ### What are the possible advantages of expansionary fiscal policy? Expansionary fiscal policy can be useful in promoting faster economic growth or reducing unemployment. Expansionary fiscal policy can cause a higher inflation rate. ### What are the possible disadvantages of expansionary fiscal policy? Expansionary fiscal policy can cause a higher inflation rate. Expansionary fiscal policy can cause the budget deficit to worsen. ### What are the possible advantages of contractionary fiscal policy? Contractionary fiscal policy can reduce the inflation rate. Contractionary fiscal policy can reduce the budget deficit. _This post is for subscribers only._ ### Discuss possible methods of government intervention to reduce electronic waste URL: https://www.a-level-economics-tutor.com/discuss-possible-methods-of-government-intervention-to-reduce-electronic-waste/ Last updated: 2026-04-22T16:19:07.000Z ### [Edexcel A-Level Economics Paper 1 June 2024 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2024-Paper-1.pdf?ref=a-level-economics-tutor.com) With reference to Extract D, discuss possible methods of government intervention to reduce electronic waste. (15 marks) **Paragraph 1** 1. one method to reduce electronic waste is to impose an indirect tax on new electronic equipment 2. an indirect tax is an extra cost of production. 3. this causes supply to shift to the left. 4. this leads to an increase in the price of new electronic devices. 5. this leads to a lower equilibrium quantity of electronic devices being bought and sold. 6. extract D mentions that 'in 2018, 1.2 million tonnes of electronic devices were sold in the UK'. This number would go down if these devices were taxed. 7. if less new electronic devices are being bought, this reduces the burden to dispose of old devices as people will keep hold of them. **Evaluation** 1. however, an indirect tax shifts the burden of the problem onto both the consumers and producers. 2. even worse, when goods and services are inelastic in demand, the burden gets shifted even more heavily onto the consumers. 3. this is because they have to pay higher prices. 4. there is also a loss of consumer surplus and producer surplus due to the lower equilibrium quantity caused by the tax, which is called deadweight loss. 5. this is a potential example of government failure in the form of distorted markets. **Paragraph 2** 1. another method the government could reduce to reduce electronic waste is provision of information. 2. extract d, line 12 mentions 'education' as an option for policymakers. 3. in 2018, only '500,000 tonnes (of electronic devices) made it to recycling centres' despite far more being bought and sold. 4. if the government introduces advertising campaigns, this could allow consumers to understand the negative externalities in consuming new electronic devices. 5. negative externalities are the cost to a third party due to the consumption of a good or service. 6. these externalities include environmental damage or bad health for future generations which ends up burdening the government, the NHS, or the taxpayer. 7. if the people are better informed, they are less likely to ignore these exernalities. 8. consumers are likely to internalise the issues of electronic waste into their own decision making and they will reduce demand for new devices or remember to recycle old ones. **Evaluation** 1. however, information provision is expensive. 2. the government would have to invest a portion of the budget into booking advertisement slots on the radio or on tv, or take up resources from schools to educate kids about the issue of electronic waste. 3. these decisions always have an opportunity cost, as the government must give up some spending from another area such as education or healthcare. 4. this could lead to unintended consequences which is a form of government failure. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss likely reasons why the prices of treatments in private sector hospitals are increasing URL: https://www.a-level-economics-tutor.com/discuss-likely-reasons-why-the-prices-of-treatments-in-private-sector-hospitals-are-increasing/ Last updated: 2026-04-22T16:19:24.000Z ### [Edexcel AS Economics Paper 1 June 2019 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---AS-June-2019-Paper-1.pdf?ref=a-level-economics-tutor.com) Discuss likely reasons why the prices of treatments in private sector hospitals are increasing. Draw a supply and demand diagram to support your answer. (15 marks) **This question is currently in progress** The price of any good or service in a free market would increase if demand increases or if supply decreases. **Paragraph 1** 1. One possible reason for the increase in price of private sector treatments could be a decrease in quality of NHS. 2. Figure 1 shows that the gap is increasing between the government spending required to meet forecast demand, compared to government spending on the NHS. 3. NHS and private sector treatment are substitute goods. 4. A decrease in the quality of NHS treatment would lead to an increase in the demand for private sector treatment. 5. As demand shifts to the right, this leads to an increase in equilibrium price. 6. Extract B mentions that 'significant increases in the prices of treatment in private hospitals'. **Evaluation** 1. If price elasticity of supply of private treatments is low, an increase in demand for private treatments would lead to an even larger increase in the price. 2. One factor that could make supply of private treatment price inelastic could be high barriers to entry. 3. For example, it requires high qualifications to qualify as a doctor, and it may require high startup costs to setup a practice. **Paragraph 2** 1. Another reason for an increase in the price of private treatment could be a change in trends. 2. We know from behavioural economics that people are influenced by other people's behaviour. 3. So, as it becomes more trendy and popular for those on high incomes to take up private healthcare, this might encourage even more people to do the same. 4. This leads to an increase in demand, which leads to an increase in prices. 5. Extract B Line 20 mentions that the proportion of people taking up private health insurance has increased to 10.6%, which shows its popularity. **Evaluation** 1. However, there could be other more important reasons which makes the price of private healthcare go up too. 2. For example, if there was an increase in costs of production, that would cause a left shift in the supply of private treatment, which would also lead to an increase in price. 3. Extract B line 28 mentions high management and administrative costs. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the functions of the price mechanism in allocating housing URL: https://www.a-level-economics-tutor.com/discuss-the-functions-of-the-price-mechanism-in-allocating-housing/ Last updated: 2026-04-22T16:21:10.000Z ### [Edexcel AS Economics Paper 1 June 2016 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---AS-June-2016-Paper-1.pdf?ref=a-level-economics-tutor.com) With reference to Figures 1 and 2 and your own knowledge, discuss the functions of the price mechanism in allocating housing. (15 marks) **Paragraph 1** 1. The functions of the price mechanism are to ration, signal and incentivise. 2. Figure 2 shows that the UK house prices index has risen from 300 in Q1 2009 to nearly 375 in Q1 2015. 3. Equilibrium is the price and quantity at which supply meets demand. 4. In a free market, the equilibrium price increases whenever these is excess demand at the current market price. 5. For example, the population could increase in the UK. 6. This would lead to a right shift in the demand for housing. 7. This is shown by the diagram below. 8. At p1, there is an excess demand as shown by the difference between q1 and q2. 9. This is because the price is low enough that there are more houses that people are willing and able to buy compared to the number of houses that people are willing and able to sell. 10. This information is **signalled** to firms. Firms would notice that there are a lot of customers making enquiries or placing orders or queuing up. 11. Firms decide to increase prices in order to **ration** away the excess demand. 12. As a result of higher prices, demand contracts along the curve D2 and supply expands along the curve S1\. This is the **incentive** function of the price mechanism. 13. Supply increases because firms are willing and able to increase supply due to an increase in the potential profit. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/01/image-5.png) **Evaluation** 1. However, in the UK, the housing market may not be perfect in reality. 2. This is because of various imperfections. 3. For example, firms with monopoly power may have more price making power than other firms so prices won't always be at the market-clearing equlibrium. 4. Also, due to asymmetric information, firms may not be fully aware of the extent of changes in market demand and this could cause delays in price changes. 5. Lastly, the government intervenes in markets like housing, such as with grants or social housing, which can cause further changes to prices or quantities that are independent of the price mechanism. 6. For example, line 5 says that the government has a 'Help to Buy scheme' where they subsidise new homes for first time buyers. This would artificially cause an increase in the demand for homes at any given price. It also creates differences between buyers as younger people are more likely to qualify for the subsidy. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Labour Markets | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/labour-markets-notes/ Last updated: 2026-09-04T16:45:20.000Z These revision notes cover everything you need to know about **Labour Markets** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is a labour market? A labour market is a place where workers and firms meet to exchange labour in return for a wage ### What is demand for labour? Demand for labour is the number of workers that firms are willing and able to hire at each given wage. Remember that firms can choose between employing workers or capital. Firms will only employ a worker if they are able to generate more additional revenue per hour (marginal revenue product) than the extra cost in wages. ### Why is demand for labour downward sloping? Marginal productivity theory states that a firm will hire a worker if their wage is below their marginal revenue product (MRP). MRP is the extra revenue a firm can make if they hire one additional worker. As wages increase, there are fewer workers who are able to generate an MRP that is high enough, so demand for labour decreases. ### What are the factors (other than wage) that affect demand for labour? 1. marginal revenue product of workers 2. cost/ quality/ availability of capital 3. demand for the final good or service ### What is supply of labour? The number of workers that are willing and able to work at each given wage. Remember that workers can choose between working in a given labour market or working in a different labour market. Or, they could choose not to work. _This post is for subscribers only._ ### Price Discrimination | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/price-discrimination-notes/ Last updated: 2026-09-04T16:45:34.000Z These revision notes cover everything you need to know about **Price Discrimination** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is price discrimination? Price discrimination is when firms charge different prices to different customers for the same good or service. For example, - student discounts e.g. cinema/ Apple products/ Amazon Prime - peak vs off-peak rail travel ### What is first degree price discrimination? First degree price discrimination is when firms charge each customer the maximum price that they are willing to pay. This would require firms to read the mind of every customer, which is not possible. There would be no consumer surplus left in the market, and this would all be turned into producer surplus. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/05/CleanShot-2026-05-18-at-19.47.47@2x.png) ### What are the conditions necessary for third degree price discrimination? For 3rd degree price discrimination to be possible, 1. firms must have monopoly power (price-setting power). 2. firms must be able to split customers into two or more groups, and each of the customer groups must have a different PED for the good/service. 3. firms must be able to prevent seepage between the two markets. _This post is for subscribers only._ ### Supply-side Policies | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/supply-side-policies-notes/ Last updated: 2026-09-04T16:37:48.000Z These revision notes cover everything you need to know about **Supply-Side Policies** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What are supply-side policies? Supply-side policies are a range of policies that the government can use to increase the productive potential of the economy. The productive potential (LRAS) represents the output of the economy when all factors of production are fully employed. Supply-side policies cause a right shift in the long-run aggregate supply curve. This is due to an improvement in the **quality** or **quantity** of factors of production. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/06/CleanShot-2026-06-06-at-22.08.45@2x.png) ### What is the impact of supply-side policies on macroeconomic performance? Supply side policies cause a right shift in long-run aggregate supply curve when they are complete. This leads to an increase in economic growth and a decrease in the price level. This type of economic growth is known as long-run economic growth or potential growth. In the immediate future, supply-side policies can also affect aggregate demand due to changes in government spending or taxes. _This post is for subscribers only._ ### Edexcel A-Level Economics | 12 mark question URL: https://www.a-level-economics-tutor.com/edexcel-a-level-economics-12/ Last updated: 2026-07-17T12:12:09.000Z ### Edexcel A-Level Economics Paper 1 With reference to Figure 1, discuss the likely impact of price discrimination on Cineworld’s profit. Include an appropriate diagram in your answer. (Specimen) With reference to Figure 2 and Extract A, discuss the possible impact of supermarket monopsony power on both food suppliers and consumers. (June 2017) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2017-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-possible-impact-of-supermarket-monopsony-power-on-both-food-suppliers-and-consumers-2/) With reference to Extract A, discuss the likely effectiveness of ‘measures to open up and increase competition’ in the UK energy market. (June 2018) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2018-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-effectiveness-of-measures-to-open-up-and-increase-competition-in-the-uk-energy-market/) Discuss one likely reason for the rise in BT’s profit (Figure 2, Extracts B and C). Use a cost and revenue diagram to support your answer. (June 2019) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2019-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-one-likely-reason-for-the-rise-in-bts-profit/) With reference to Extract A, paragraph 3, discuss whether the rail network can be considered to be a natural monopoly. (June 2020) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2020-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-whether-the-rail-network-can-be-considered-to-be-a-natural-monopoly/) With reference to Extract C, discuss the proposed government subsidy to prevent Thomas Cook from reaching its shut-down point. (June 2021) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2021-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-proposed-government-subsidy-to-prevent-thomas-cook-from-reaching-its-shut-down-point/) Using a cost and revenue diagram, discuss the likely impact of ‘rising costs’ for coffee shops on their profitability (Extract A, line 2). (June 2022) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2022-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-impact-of-rising-costs-for-coffee-shops-on-their-profitability/) With reference to Extract C, discuss the likely private and external benefits of viewing educational websites and TV programmes. (June 2023) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2023-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-private-and-external-benefits-of-viewing-educational-websites-and-tv-programmes/) Discuss the likely concerns of the competition authorities regarding the proposed merger of the two companies referred to in Extract C. (June 2024) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2024-Paper-1.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-concerns-of-the-competition-authorities-regarding-the-proposed-merger-of-the-two-companies/) With reference to the information provided, discuss whether the price elasticity of demand for video games is elastic or inelastic. (June 2025) | [Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-1-June-2025-Extract.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-whether-the-price-elasticity-of-demand-for-video-games-is-elastic-or-inelastic/) --- ### Edexcel A-Level Economics Paper 2 With reference to Figure 1, discuss the use of GDP data as a means of comparing living standards among the five EAC member countries. Discuss the likely success of the ECB’s quantitative easing programme in moving Eurozone inflation closer to ‘the central bank’s ceiling of 2%’ (Extract A, line 17). (June 2017) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2017-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-success-of-the-ecbs-quantitative-easing-programme-in-moving-eurozone-inflation-closer-to-the-central-banks-ceiling/) With reference to Extract A, discuss two macroeconomic policies, apart from protectionism, that a government could use to reduce the negative effects of globalisation. (June 2018) | [Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2018-Paper-2.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-two-macroeconomic-policies-apart-from-protectionism-that-a-government-could-use-to-reduce-the-negative-effects-of-globalisation/) With reference to Extract C, discuss the potential conflicts between macroeconomic objectives when the central bank attempts to control inflation. (June 2019) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2019-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-potential-conflicts-between-macroeconomic-objectives-when-the-central-bank-attempts-to-control-inflation/) Discuss the problems for the Ivory Coast of dependency on cocoa for a large proportion of their exports. Refer to Figure 2 in your answer. (June 2020) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2020-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-problems-for-the-ivory-coast-of-dependency-on-cocoa-for-a-large-proportion-of-their-exports/) Discuss the likely impact on Rwandan consumers and clothing manufacturers of the increase in the tariff on imports of second-hand clothes. Use an appropriate diagram to support your answer. (June 2021) | [Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2021-Paper-2.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-likely-impact-on-rwandan-consumers-and-clothing-manufacturers-of-the-increase-in-the-tariff-on-imports-of-second-hand-clothes/) With reference to Extract C and your own knowledge, discuss methods the UK government could use to increase tax revenue. (June 2022) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2022-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-methods-the-uk-government-could-use-to-increase-tax-revenue/) Discuss the impact of improved transport links between African countries on economic growth rates. (June 2023) | [Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2023-Paper-2.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-impact-of-improved-transport-links-between-african-countries-on-economic-growth-rates/) With reference to Extract B, discuss the use of quantitative easing in preventing deflation. (June 2024) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2024-Paper-2.pdf?ref=tootingtutors.co.uk) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-use-of-quantitative-easing-in-preventing-deflation/) With reference to Extract B, discuss the impact of the planned investment by Intel in a new semiconductor factory on Germany’s aggregate demand. Use an aggregate demand and aggregate supply diagram in your answer. (June 2025) | [Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-2-June-2025-Extract.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-impact-of-the-planned-investment-by-intel-in-a-new-semiconductor-factory-on-germanys-aggregate-demand/) --- ### Edexcel A-Level Economics Paper 3 With reference to the information provided, discuss the likely impact of a change in the price of gas on the markets for solar energy and nuclear energy. (Specimen) Discuss the costs to the Argentine economy of an inflation rate “estimated by some economists to be over 25%” (Extract D, line 9). (Specimen) Apart from externalities, discuss the problems that Chile faces as a result of dependency on copper mining. (June 2017) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2017-Paper-3.pdf?ref=tootingtutors.co.uk) Discuss the likely impact of the National Living Wage on the profitability of firms. Use a cost and revenue diagram in your answer. (June 2017) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2017-Paper-3.pdf?ref=tootingtutors.co.uk) With reference to Figure 3 and other information provided, discuss the price and non-price strategies that Starbucks may use to increase profitability. (June 2018) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2026/03/Edexcel-A-Level-Economics-Paper-3-June-2018-Extract.pdf?ref=tootingtutors.co.uk) Discuss the benefits of aid to Indonesia. (June 2018) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2026/03/Edexcel-A-Level-Economics-Paper-3-June-2018-Extract.pdf?ref=tootingtutors.co.uk) In Extract A, lines 15–16, it was suggested that some firms may respond to the advertising ban by cutting the prices of their products. Using game theory and the information provided in Figure 1 and Extract A, discuss the effects on firms of cutting prices in an oligopolistic market. (June 2019) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2019-Paper-3.pdf?ref=a-level-economics-tutor.com) | [Model Answer](https://www.a-level-economics-tutor.com/discuss-the-effects-on-firms-of-cutting-prices-in-an-oligopolistic-market/) Discuss whether borrowers benefit from microfinance. Make reference to Mozambique in your answer. (June 2019) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2019-Paper-3.pdf?ref=tootingtutors.co.uk) Discuss the likely success of policies to reduce the consumption of single‑use plastic bags in cities such as Istanbul. (June 2020) | [Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-3-June-2020-Extract.pdf?ref=a-level-economics-tutor.com) Discuss factors that are causing many high street retailers in the UK to close some branches or shut down completely. Use a cost and revenue diagram to support your answer. (June 2020) | [Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-3-June-2020-Extract.pdf?ref=a-level-economics-tutor.com) Discuss the likely effects of changes in the level of migration on firms such as HCWs in the UK. Use a labour market diagram and the information provided to support your answer. (June 2021) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2021-Paper-3.pdf?ref=tootingtutors.co.uk) Discuss the likely impact of investment in new technology on the profitability of firms in Germany, as described in Extract C line 20\. Use a cost and revenue diagram to support your answer. (June 2021) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2021-Paper-3.pdf?ref=tootingtutors.co.uk) With reference to Extract C, discuss the likely effects of increasing integration within the food delivery market. (June 2022) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2022-Paper-3.pdf?ref=tootingtutors.co.uk) Using the example of cut flowers (Extract F), discuss how the concept of absolute advantage may lead to growth in Kenya. Use numerical or diagrammatic analysis in your answer. (June 2022) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2022-Paper-3.pdf?ref=tootingtutors.co.uk) Discuss the likely impact of a rise in gas prices on a firm that uses a large amount of gas in its production process. Use a cost and revenue diagram to support your answer. (June 2023) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2023-Paper-3.pdf?ref=tootingtutors.co.uk) Discuss possible methods of price and non‑price competition that firms could use to increase the value of sales on the high street. (June 2023) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2023-Paper-3.pdf?ref=tootingtutors.co.uk) With reference to Figure 2 and Extract B, discuss the possible constraints on business growth for firms supplying energy to households in the UK. (June 2024) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2024-Paper-3.pdf?ref=tootingtutors.co.uk) Discuss factors influencing the level of aggregate demand in Ghana. Use an aggregate demand and aggregate supply diagram in your answer. (June 2024) | [Extract](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2024-Paper-3.pdf?ref=tootingtutors.co.uk) With reference to Figure 1 and Extract C, discuss whether supermarkets charging similar prices for petrol is evidence of collusion. Use game theory to support your answer. (June 2025) | [Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-3-June-2025-Extract.pdf) With reference to Extract F, discuss the problems that might be involved with the buffer stock system in India. (June 2025) | [Extract](https://www.a-level-economics-tutor.com/content/files/2026/03/Edexcel-A-Level-Economics-Paper-3-June-2025-Extract.pdf) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Discuss the effects on firms of cutting prices in an oligopolistic market URL: https://www.a-level-economics-tutor.com/discuss-the-effects-on-firms-of-cutting-prices-in-an-oligopolistic-market/ Last updated: 2026-05-09T16:48:16.000Z ### [Edexcel A-Level Economics Paper 3 June 2019 Extract](https://www.tootingtutors.co.uk/content/files/2025/10/INSERT---June-2019-Paper-3.pdf?ref=a-level-economics-tutor.com) **In Extract A, lines 15–16, it was suggested that some firms may respond to the advertising ban by cutting the prices of their products.** **Using game theory and the information provided in Figure 1 and Extract A, discuss the effects on firms of cutting prices in an oligopolistic market.** **Paragraph 1** 1. one effect of cutting prices is that it would start a price war 2. firms are interdependent 3. this means that when one firm sees another firm cutting prices, 4. they would also reduce prices to avoid losing market share. 5. for example, the payoff matrix shows that if one firm sets a high price whilst the other firm sets a low price, they make a very low amount of profit. ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2025/12/image-10-1.png) **Evaluation** 1. however, a price war is not rational in an oligopolistic market 2. the firm who lowers prices first gains only a small amount of revenue 3. after all firms lower prices, all firms make less supernormal profits. **Paragraph 2** 1. another impact of firms cutting prices is that lower prices increase barriers to entry. 2. some of the existing firms may make a loss if they have to lower prices to maintain market share. 3. this means they have to shut down, especially if average costs are higher than average revenue in the long-run. 4. this means firms like Walkers and KP have increased monopoly power, and they have the power to charge higher prices. 5. Figure 1 mentions that Walkers has a market share of 55.3%. 6. they can also increase output and exploit economies of scale, making it even harder or other firms to compete. **Evaluation** 1. however, lower prices and the advertising ban may make it easier for smaller firms to grow and increase market share. 2. for example, firms like Walkers would not be banned from advertising so customers are forced to look around at all the options. 3. firms would rely on other forms of non-price competition such as taste or customer service. 4. Extract A Line 11 questions 'how firms in the market adapt their behaviour in response to the ban'. 5. this allows other firms to grow, even if they have a small advertising budget. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) [Back to A-Level Economics Notes](https://www.a-level-economics-tutor.com/a-level-economics-notes/) ### Oligopoly | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/oligopoly-notes/ Last updated: 2026-09-04T16:45:56.000Z These revision notes cover everything you need to know about Oligopoly for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is an oligopoly? An oligopoly is a market structure dominated by a few firms. Oligopolistic markets consist of: 1. High barriers to entry and exit 2. Interdependence of firms 3. Product differentiation Oligopolies can vary in terms of the way they conduct themselves. They can be collusive or non-collusive. ### Draw a simple game theory model ![Two firm, two outcome diagram A-Level Economics](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/05/CleanShot-2026-05-11-at-20.40.19@2x.png) Two firm, two outcome diagram A-Level Economics ### What is collusion? Collusion is when two or more firms agree to set high prices. This is more likely to be possible if the two firms have a high market share and a similar market share. After colluding, they act as a monopoly with their combined market share. ### What is tacit collusion? Tacit collusion is an informal agreement between firms to set higher prices. ### What is overt collusion? Overt collusion is an formal agreement between firms to set higher prices. ### Use game theory to explain the reasons for collusive behaviour 1. If we assume that Firm A sets a high price, Firm B would undercut them and set a low price. This would lead to the highest profit of 400 units. 2. If Firm A expects Firm B to set a low price, Firm A would match them as they don't want to lose market share or lose out on supernormal profit. 3. As a result, lower prices are the most likely outcome in an oligopoly (Nash Equilibrium). 4. Firms could agree to set high prices through tacit collusion. This requires trust but it would allow the firms to make £10m profit each. _This post is for subscribers only._ ### Monopoly | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/monopoly-notes/ Last updated: 2026-09-04T16:46:14.000Z These revision notes cover everything you need to know about Monopoly for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is a pure monopoly? Sole seller in the market ### What is monopoly power? When a firm has 25% or more market share. ### What are the charactertics of a monopoly? 1. high barriers to entry 2. product differentiation 3. imperfect information 4. firms are price makers ### What is the diagram for a monopoly in the long-run? ![](https://www.tootingtutors.co.uk/content/images/2025/12/image-23.png) ### Is a monopoly efficient? _This post is for subscribers only._ ### A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/a-level-economics-notes/ Last updated: 2026-09-04T17:45:26.000Z Welcome to my **A-Level Economics revision notes**. These notes cover all the key topics you need for **AQA, Edexcel** and **Edexcel International A-Level Economics**. Each topic includes clear definitions, diagrams, and chains of reasoning. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ## Past paper questions by exam board (AQA, Edexcel, Edexcel International A-Level Economics) [AQA](https://www.a-level-economics-tutor.com/aqa-a-level-economics/) [Edexcel](https://www.a-level-economics-tutor.com/edexcel-a-level-economics/) [Edexcel International](https://www.a-level-economics-tutor.com/edexcel-international-a-level-economics/) --- ## Other A-Level Economics Resources ### [A-Level Economics Model Paragraphs](https://www.a-level-economics-tutor.com/model-paragraphs/) [A-Level Economics Diagrams](https://www.a-level-economics-tutor.com/a-level-economics-diagrams/) --- ## A-Level Economics Notes for all exam boards ### Year 12 Microeconomics 1. The basic economic problem | [Notes](https://www.a-level-economics-tutor.com/basic-economic-problem-notes/) 2. Production possibility frontiers | [Notes](https://www.a-level-economics-tutor.com/production-possibility-frontiers-notes/) 3. Markets | [Notes](https://www.a-level-economics-tutor.com/markets-notes/) 4. Demand | [Notes](https://www.a-level-economics-tutor.com/demand-notes/) 5. Supply | [Notes](https://www.a-level-economics-tutor.com/supply-notes/) 6. Elasticity | [Notes](https://www.a-level-economics-tutor.com/elasticity-notes/) 7. PED | [Notes](https://www.a-level-economics-tutor.com/ped-a-level-economics-notes/) 8. YED | [Notes](https://www.a-level-economics-tutor.com/yed-notes/) 9. XED | [Notes](https://www.a-level-economics-tutor.com/xed-notes/) 10. PES | [Notes](https://www.a-level-economics-tutor.com/pes-notes/) 11. Price mechanism | [Notes](https://www.a-level-economics-tutor.com/price-mechanism-notes/) 12. Consumer and producer surplus | [Notes](https://www.a-level-economics-tutor.com/consumer-surplus-producer-surplus-notes/) 13. Free-market & command economies | [Notes](https://www.a-level-economics-tutor.com/free-market-command-economies-notes/) 14. Market failure | [Notes](https://www.a-level-economics-tutor.com/market-failure-notes/) 15. Public goods | [Notes](https://www.a-level-economics-tutor.com/public-goods-notes/) 16. Externalities | [Notes](https://www.a-level-economics-tutor.com/externalities-notes/) 17. Government intervention | [Notes](https://www.a-level-economics-tutor.com/government-intervention-y12-notes/) 18. Government failure | [Notes](https://www.a-level-economics-tutor.com/government-failure-notes/) ### Year 12 Macroeconomics 1. Inflation | [Notes](https://www.a-level-economics-tutor.com/inflation-notes/) 2. Unemployment | [Notes](https://www.a-level-economics-tutor.com/unemployment-notes/) 3. Economic growth | [Notes](https://www.a-level-economics-tutor.com/economic-growth-notes/) 4. Aggregate demand | [Notes](https://www.a-level-economics-tutor.com/aggregate-demand-notes/) 5. Aggregate supply | [Notes](https://www.a-level-economics-tutor.com/aggregate-supply-notes/) 6. Fiscal policy | [Notes](https://www.a-level-economics-tutor.com/fiscal-policy-notes/) 7. Monetary policy | [Notes](https://www.a-level-economics-tutor.com/monetary-policy-notes/) 8. Supply-side policies | [Notes](https://www.a-level-economics-tutor.com/supply-side-policies-notes/) 9. Trade-offs | [Notes](https://www.a-level-economics-tutor.com/macroeconomic-objectives-notes/) ### Year 13 Microeconomics 1. Behavioural economics **(AQA only)** | [Notes](https://www.a-level-economics-tutor.com/behavioural-econommics-notes/) 2. Economies of scale | [Notes](https://www.a-level-economics-tutor.com/economies-of-scale-notes/) 3. Costs & revenue | [Notes](https://www.a-level-economics-tutor.com/revenue-costs-notes/) 4. Shutdown points | [Notes](https://www.a-level-economics-tutor.com/shutdown-points-notes/) 5. Business growth **(not required for AQA)** | [Notes](https://www.a-level-economics-tutor.com/business-growth-notes/) 6. Business objectives | [Notes](https://www.a-level-economics-tutor.com/business-objectives-notes/) 7. Efficiency | [Notes](https://www.a-level-economics-tutor.com/efficiency-notes/) 8. Perfect competition | [Notes](https://www.a-level-economics-tutor.com/perfect-competition-notes/) 9. Monopolistic competition | [Notes](https://www.a-level-economics-tutor.com/monopolistic-competition-notes/) 10. Monopoly | [Notes](https://www.a-level-economics-tutor.com/monopoly-notes/) 11. Price discrimination | [Notes](https://www.a-level-economics-tutor.com/price-discrimination-notes/) 12. Oligopoly | [Notes](https://www.a-level-economics-tutor.com/oligopoly-notes/) 13. Natural monopoly | [Notes](https://www.a-level-economics-tutor.com/natural-monopoly-notes/) 14. Monopsony | [Notes](https://www.a-level-economics-tutor.com/monopsony-notes/) 15. Government intervention | [Notes](https://www.a-level-economics-tutor.com/government-intervention-notes/) 16. Labour markets | [Notes](https://www.a-level-economics-tutor.com/labour-markets-notes/) 17. Inequality **(not required for Edexcel)** | Notes ### Year 13 Macroeconomics 1. Globalisation | [Notes](https://www.a-level-economics-tutor.com/globalisation-notes/) 2. Comparative advantage | [Notes](https://www.a-level-economics-tutor.com/comparative-advantage-notes/) 3. Trade | [Notes](https://www.a-level-economics-tutor.com/trade-notes/) 4. Exchange rates | [Notes](https://www.a-level-economics-tutor.com/exchange-rates-notes/) 5. Current account | [Notes](https://www.a-level-economics-tutor.com/current-account-a-level-economics-notes/) 6. Economic development | [Notes](https://www.a-level-economics-tutor.com/economic-development-notes/) 7. Inequality **(not required for AQA)** | [Notes](https://www.a-level-economics-tutor.com/inequality-macroeconomics-notes/) 8. Quantitative easing | [Notes](https://www.a-level-economics-tutor.com/quantitative-easing-notes/) 9. Financial markets | [Notes](https://www.a-level-economics-tutor.com/financial-markets-notes/) --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique. [A-Level Economics Tutoring](https://www.a-level-economics-tutor.com/economics-tutoring/) [87+ 5-star Google Reviews](https://www.a-level-economics-tutor.com/reviews/) [Contact Me](https://www.a-level-economics-tutor.com/contact/) ### Monopolistic Competition | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/monopolistic-competition-notes/ Last updated: 2026-09-04T16:46:31.000Z These revision notes cover everything you need to know about Monopolistic Competition for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What are the characteristics of monopolistic competition? 1. low barriers to entry and exit 2. slight product differentiation ### Monopolistic competition diagram in the short-run ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2025/12/image-5.png) ### Efficiencies in the short-run - not productively efficient because MC≠AC at q1 - not allocatively efficient because AR≠MC at q1 ### What happens in monopolistic competition in the long-run? 1. since existing firms are making supernormal profit 2. and there are low barriers to entry, 3. new firms enter the market 4. market supply increases 5. each firm's average revene curve shifts to the left as they have a smaller market share ### Monopolistic competition diagram in the long-run _This post is for subscribers only._ ### Efficiency | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/efficiency-notes/ Last updated: 2026-09-04T16:46:40.000Z These revision notes cover everything you need to know about **Efficiency** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is productive efficiency? 1. productive efficiency is achieved at the quantity where MC=AC 2. this is when firms minimise their average costs 3. in the long-run, this means that firms are able to fully exploit their economies of scale 4. in a competitive market, firms can pass down lower prices to consumers. 5. in a non-competitive market, firms could use their economies of scale to increase their market share, and then increase profits and re-investment ### What is allocative efficiency? 1. allocative efficiency is achieved at the quantity where MC=AR 2. this is good for consumers because they benefit from an increase in output and a decrease in price 3. this means that consumer surplus is maximised. 4. consumer surplus is the difference between the price consumers pay and the maximum price they would be willing to pay 5. for example, Apple are not allocatively efficient as they set high prices. ### What is dynamic efficiency? _This post is for subscribers only._ ### Perfect Competition | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/perfect-competition-notes/ Last updated: 2026-09-04T16:46:49.000Z These revision notes cover everything you need to know about Perfect Competition for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What are the characteristics of perfect competition? 1. no barriers to entry or exit 2. perfect information 3. identical products 4. firms are price-takers ### Perfect competition diagram in the short-run ![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2025/12/image-2.png) ### Efficiencies in the short-run - not productively efficient because MC≠AC at q1 - allocatively efficient because AR=MC at q1 ### What happens in the long-run in perfectly competitive markets? 1. existing firms are making supernormal profit. 2. since there is perfect information and no barriers to entry, 3. new firms are attracted to join the market 4. market supply increases 5. each firm has less demand so AR and MR shifts to the left 6. existing firms attempt to profit maximise but now they are only able to make normal profits ### Perfect competition diagram in the long-run _This post is for subscribers only._ ### Aggregate Supply | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/aggregate-supply-notes/ Last updated: 2026-09-04T16:33:56.000Z These revision notes cover everything you need to know about Aggregate Demand for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is aggregate supply? The total planned level of output in the economy at each price level. ### What factors affect short-run aggregate supply? Short-run aggregate supply is influenced by any changes in a business' costs of production. 1. productivity 2. wages 3. raw material prices 4. exchange rates 5. indirect taxes ### What is long-run aggregate supply? The productive potential of the economy. _This post is for subscribers only._ ### Exchange Rates | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/exchange-rates-notes/ Last updated: 2026-09-04T16:59:52.000Z These revision notes cover everything you need to know about **Exchange Rates** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is an exchange rate? Exchange rates are the price of one currency in terms of another currency. ### What is a fixed exchange rate? A fixed exchange rate is when the value of the currency is controlled by the central bank. They central bank can buy or sell foreign currency reserves or domestic currency reserves. ### What is a floating exchange rate? A floating exchange rate is when the value of the currency is determined by market forces (supply and demand). ### What is the impact of a large trade deficit on the exchange rate? 1. a trade deficit is when the value of imports exceeds the value of exports 2. high imports means that supply of the pound is high 3. low exports means that demand for the pound is low 4. this means that the value of the pound would fall ### What is the impact of a large trade surplus on the exchange rate? 1. a trade surplus is when the value of exports exceeds the value of imports 2. high exports means that there is a high demand for the pound 3. low imports means that there is low supply of the pound. 4. this means that the value of the pound would increase ### What is the impact of higher interest rates on the exchange rate? 1. interest rates are the cost of borrowing or reward for saving 2. higher interest rates incentivises people to buy the pound as they can get a higher return on their savings 3. this is called hot money flows into the UK. 4. as there is an increase in demand for the pound, the value of the pound would increase. ### What is the impact of lower interest rates on the exchange rate? 1. interest rates are the cost of borrowing or reward for saving 2. people in the UK would sell the pound and buy another currency where they can get a higher return on their savings. 3. this means that there are hot money flows out 4. this means that there is an increase in supply of the pound 5. this means that the value of the pound would fall ### How does a central bank devalue a currency? 1. if the UK followed a fixed or managed exchange rate system 2. the central bank would own reserves of the pound and the dollar 3. the Bank of England would sell more pounds and buy more dollars 4. this leads to an increase in supply of the pound and an increase in demand for the dollar 5. this causes the price of the pound to decrease and the price of the dollar to increase, therefore a devaluation of the pound. ### How does a central bank revalue a currency? 1. if the UK followed a fixed or managed exchange rate system 2. the central bank would own reserves of the pound and the dollar 3. the Bank of England would sell more dollars and buy more pounds 4. this leads to an increase in supply of the dollar and an increase in demand for the pound 5. this causes the price of the pound to increase and the price of the dollar to decrease, therefore a revaluation of the pound. ### What are two impacts of a strong currency? **One impact of a strong currency is a worse trade balance** 1. imports become cheaper and exports become more expensive 2. this could cause the value of imports to increase and the value of exports to decrease 3. this means that the trade deficit would worsen 4. AD = C + I + G + (X-M) 5. this means that aggregate demand to shift to the left 6. this causes real gdp to decrease 7. this means that unemployment is likely to increase because demand for labour is derived from the demand for goods and services 8. the price level also decreases from pl1 to pl2 **Another impact of a strong currency is a decrease in costs of production** 1. imports become cheaper 2. this causes costs of production to decrease 3. this also causes short-run aggregate supply to shift to the right 4. gdp 5. unemployment 6. inflation _This post is for subscribers only._ ### Aggregate Demand | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/aggregate-demand-notes/ Last updated: 2026-09-04T16:33:36.000Z These revision notes cover everything you need to know about Aggregate Demand for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is aggregate demand? Aggregate demand is the total planned spending on goods and services in the economy at each price level. ### What are the factors of aggregate demand? AD = C + I + G + (X-M) - consumer spending - real incomes - consumer confidence - interest rates - business spending on capital goods - business confidence (accelerator theory) - interest rates - business profits - corporation tax rates - government spending - state of the economy - changes in fiscal policy - national debt - net exports - exchange rates - raw material prices - competitiveness ### What is the accelerator effect? The accelerator effect happens when an increase in national income (GDP) results in a proportionately larger rise in capital investment spending. ### What is the multiplier effect? The multiplier effect is when an increase in aggregate demand leads to a further increase in aggregate demand. _This post is for subscribers only._ ### Unemployment | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/unemployment-notes/ Last updated: 2026-09-04T16:38:05.000Z These revision notes cover everything you need to know about Unemployment for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is unemployment? The number of people who are willing and able to work, but cannot find a job. ### How is unemployment measured? Labour Force Survey is a quarterly survey asking 60,000 households about their employment status. An individual is counted as unemployed if they are out of work but able to start work in the next two weeks. Claimant Count is a count of those who are claiming unemployment benefits like Jobseekers Allowance. ### What is seasonal unemployment? When workers lose their jobs due to a lack of demand during a particular season e.g. tourism ### What is frictional unemployment? When workers are moving between jobs. ### What is structural unemployment? When there is lack of demand for the workers in one particular industry. For example, UK steel industry (it is cheaper to import steel from China). Workers need to re-train and work in another industry. ### What is cyclical unemployment? When there is a lack of aggregate demand in the economy, causing a lack of demand for workers across the economy. This changes along with the economic cycle. _This post is for subscribers only._ ### Economic Growth | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/economic-growth-notes/ Last updated: 2026-09-04T16:33:10.000Z These revision notes cover everything you need to know about **Economic Growth** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### What is the difference between real and nominal? Real - adjusted for inflation Nominal - not adjusted for inflation ### What does per capita mean? per person (divide by the population) ### What is real GDP? The total value of goods and services produced in the UK economy ### What are two limitations of using real GDP to measure living standards? Two limitations of using real GDP to measure living standards are that 1. it does not factor in inequality 2. it does not take into account subjective happiness as these might be influenced by stressful jobs or the number of hours worked ### What is (actual) economic growth? An increase in real GDP ### What is potential economic growth? An increase in the productive potential of an economy ### What is the trend rate of economic growth? The trend rate of growth is the average rate the productive potential is increasing at over a longer period e.g. 10 years. _This post is for subscribers only._ ### Inflation | A-Level Economics Notes URL: https://www.a-level-economics-tutor.com/inflation-notes/ Last updated: 2026-09-04T16:33:02.000Z These revision notes cover everything you need to know about **Inflation** for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017. --- ### How is inflation measured? Inflation is measured using the CPI (Consumer Price Index) It tracks the prices of a weighted basket of goods and services in the UK. ### What is inflation? A rise in the average price level. ### What is deflation? A fall in the average price level. ### What is disinflation? When the rate of inflation slows down (but remains positive) e.g. from 5% to 2% _This post is for subscribers only._