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Economics

Subject Introduction

Studying Economics helps students to understand ‘the way things are’. Despite there being a degree of crossover with the A Level Business specification, content and detail vary significantly and the specification could be deemed to require a higher level of criticality, literacy and analytical skills that compare with the more ‘traditional’ academic subjects.

Course content covers both Microeconomics (the study of firm and consumer behaviour) and Macroeconomics (the study of regional, national and global economics). The subject therefore does involve consideration of politics and as such, it is important that as teachers, we critique opposing views without ever espousing our own political beliefs. Given that students will be able to vote in the general election, it is critical that students are presented information that enables them to make value judgements. 

Students that study economics tend to pursue courses or careers in Accounting, Finance and / or Politics and Philosophy. Given that significantly more students that choose to study economics on a national scale will be of a higher ability and attainment at GCSE than in other subjects such as Business and that a greater proportion of students may come from more privileged backgrounds and private tuition, grade boundaries have risen. With this in mind, it is important that teachers have excellent subject knowledge that enables them to explain concepts through examples that students can use in their exams that go beyond the expectations of the specification. Credit can be given to students who present concepts that are not identified in the specification e.g. the Kuznets curve, and so overteaching and presenting challenge should be a regular feature of lessons.

Aims 

The aims and objectives of the Pearson Edexcel Level 3 Advanced GCE in Economics A are to enable students to: 

  • develop an interest in, and enthusiasm for, the subject 
  • appreciate the contribution of economics to the understanding of the wider economic and social environment 
  • develop an understanding of a range of concepts and an ability to use those concepts in a variety of different contexts 
  • use an enquiring, critical and thoughtful approach to the study of economics and develop an ability to think as an economist 
  • understand that economic behaviour can be studied from a range of perspectives 
  • develop analytical and quantitative skills, together with qualities and attitudes that will equip them for the challenges, opportunities and responsibilities of adult and working life.

Course Overview

Theme 1: Introduction to Markets and Market Failure

Focus: Core microeconomic principles explaining how markets work, how resources are allocated, and why markets may fail.

Economic Problem and Methodology

  • Scarcity, choice and opportunity cost
  • Production possibility frontiers (PPFs) and efficiency
  • Positive vs normative statements
  • Economic assumptions and models

Demand and Supply

  • Factors affecting demand and supply
  • Movements along vs shifts of curves
  • Market equilibrium and disequilibrium
  • Price mechanism and rationing

Elasticities

  • Price elasticity of demand (PED)
  • Income elasticity of demand (YED)
  • Cross elasticity of demand (XED)
  • Price elasticity of supply (PES)
  • Determinants and applications of elasticity

Consumer and Producer Behaviour

  • Utility theory
  • Law of diminishing marginal utility
  • Consumer surplus and producer surplus

Market Failure

  • Externalities (positive and negative, production and consumption)
  • Public goods and quasi-public goods
  • Information asymmetry
  • Merit and demerit goods

Government Intervention

  • Indirect taxation and subsidies
  • Regulation and legislation
  • State provision
  • Price controls (maximum and minimum prices)
  • Government failure and unintended consequences
 

Theme 2: The UK Economy - Performance and Policies

Focus: How the macroeconomy operates, how performance is measured, and how governments manage economic activity.

Measures of Economic Performance

  • Gross Domestic Product (GDP)
  • Inflation (CPI, RPI)
  • Employment and unemployment
  • Balance of payments
  • Living standards and inequality

Aggregate Demand and Aggregate Supply

  • Components of aggregate demand
  • Short-run and long-run aggregate supply
  • Keynesian vs classical perspectives
  • Shifts in AD and AS

Economic Growth and the Trade Cycle

  • Causes and consequences of growth
  • Output gaps
  • Boom, recession and recovery phases

Macroeconomic Objectives

  • Economic growth
  • Low inflation
  • Low unemployment
  • Balance of payments stability
  • Conflicts and trade-offs

Macroeconomic Policies

  • Fiscal policy: taxation and government spending
  • Monetary policy: interest rates and quantitative easing
  • Supply-side policies: labour market, product market, education
  • Policy effectiveness and limitations
 

Theme 3: Business Behaviour and the Labour Market

Focus: Microeconomic analysis of firms, industries, labour markets and competition.

Business Growth

  • Organic growth
  • Integration: horizontal, vertical and conglomerate
  • Mergers, takeovers and demergers

Business Objectives

  • Profit maximisation
  • Revenue maximisation
  • Growth, survival and corporate social responsibility
  • Impact of ownership and size on objectives

Revenue, Costs and Profits

  • Total, average and marginal revenue
  • Fixed, variable, average and marginal costs
  • Short-run vs long-run cost curves
  • Economies and diseconomies of scale
  • Normal and supernormal profit

Market Structures

  • Perfect competition
  • Monopolistic competition
  • Oligopoly
  • Monopoly
  • Contestability and barriers to entry

Labour Markets

  • Demand for labour (derived demand)
  • Supply of labour
  • Wage determination
  • Labour market imperfections
  • Trade unions, minimum wage and discrimination
 

Theme 4: A Global Perspective

Focus: Application of economic theory to international trade, global development and the financial system.

International Trade

  • Specialisation and comparative advantage
  • Free trade vs protectionism
  • Tariffs, quotas and subsidies
  • Trading blocs and economic integration

Exchange Rates

  • Floating, fixed and managed exchange rate systems
  • Factors influencing exchange rates
  • Impact of exchange rate movements on the economy

Globalisation

  • Causes of globalisation
  • Role of multinational corporations (MNCs)
  • Impacts on developed and developing economies

Poverty and Inequality

  • Absolute and relative poverty
  • Causes of inequality
  • Policies to reduce poverty and inequality

Emerging and Developing Economies

  • Characteristics and constraints on growth
  • Role of aid, trade and foreign direct investment (FDI)
  • Development strategies

The Financial Sector

  • Role of commercial and central banks
  • Financial markets
  • Regulation of the financial sector
  • Causes and consequences of financial instability

Role of the State in the Macroeconomy

  • Taxation and public spending
  • Budget deficits and national debt
  • Evaluation of government intervention

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