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JC Economics: 5 Common Mistakes Students Make And How To Avoid Them

A Level Economics is one of the most widely studied subjects in junior colleges. It works as a core subject for students in the Arts Streams while serving as the contrasting subject for the many Science students in every cohort. However, as it is a subject new to most, if not all students, A Level Economics can be a tough nut to crack. To streamline your learning process, Zenith, Singapore’s top Economics tuition center, breaks down the 5 common mistakes students make in A Level Economics for you in this article. Check to see if you’re making the same mistakes as you read the article, and find out how to fix them now!

Mistake #1: Considering factors in isolation resulting in answers that lack nuance.

Analysis and evaluation are often lacking in students’ responses at the A Level Economics examinations when they do not adequately consider how various Economic factors can interact with each other.

For instance, the demand for Coca-Cola drinks can be simultaneously influenced by a change in consumer preferences and the price of related goods. Let’s say that the price of a Pepsi drink (a close substitute for Coca-Cola) has become 50% cheaper than that of Coca-Cola. At the same time, consumers’ preference for Coca-Cola has increased because BTS is promoting the drink. The decrease in the price of Pepsi, on its own, should theoretically result in an increase in demand for Pepsi. However, the increased popularity of Coca-Cola due to effective advertising might mean that consumers are still willing to purchase it despite Pepsi being significantly cheaper.

Understanding how the two factors interact with each other and explaining how they might affect the eventual demand will earn you evaluation marks at the A Level Economics examinations. It is critical to note here that a valid explanation matters more than finding a “correct” answer––some students might argue that the 50% decrease in price outweighs the effect of advertising as it is a significant discount, however, others might leverage BTS’ extreme popularity to suggest that consumers will be willing to pay a hefty price tag to purchase a “BTS-approved” item. So long as students are able to reasonably justify their stance with ample consideration of the information provided, evaluation marks will be awarded. It is more important that you do not ignore one factor completely in favour of the other. This applies to all questions at the A Level Economics examinations, including the case studies component. You should not cherry-pick information from the case to use in your responses unless the question has asked you to focus on a particular phenomenon or statistic.

Get dibs on exclusive tips and tricks for blasting through the A Level Economics CSQ (applicable to both H1 and H2 students) here. H2 A Level Economics students can find out how to ace your essay section here.

Mistake #2: Confusing the changes in the Demand and Supply curves, which leads to inaccurate analysis.

Shifts of a curve and movements along a curve are understood to be different in the study of A Level Economics. However, many students often get confused about which is which. For the following examples, we will be looking at shifts of and movements along the supply curve. The exact same changes apply to the demand curve, with respect to the factors which govern demand and quantity demanded respectively. The factors which affect Demand and Supply are elaborated on by Zenith in this article.

Shifts of a curve

Shifts of a curve are due to non-price factors.

Let’s take the following graph as an example, and assume that a drop in the costs of production (COP), a non-price factor, has resulted in the supply of Good A increasing from quantity C to E. The supply curve shifts to the right, and instead of intersecting the demand graph at D, now it meets at F. The price of Good A thus drops from B to G as demand does not increase but supply has increased. More units of the good are thus sold at the lower price and the market reaches a new equilibrium at F.

Fig 1. Shift of supply curve

Movements along a curve

Movements along a curve are due to price factors.

Let’s assume that the demand and supply curves initially intersect at D. If an increase in the price of Good A occurs, it will cause an upward movement along the supply curve, from D to E. This occurs as producers are inclined to increase the quantity supplied of a good when its price increases to maximise profit. The demand curve and supply curve no longer intersect. As price increases to C, quantity demanded falls to G, as an increase in own price causes decrease in quantity demanded due to consumers’ desire to maximise utility. Market equilibrium is not reached as quantity supplied is at H while quantity demanded is at G, which results in a surplus of Good A.

Fig 2. Movement along supply curve

Mistake #3: Blindly reproducing diagrams without explanations

All diagrams in your examination script at the A Level Economics examinations should be accompanied by a detailed explanation. You should at no point assume that your marker will take it for granted that your diagram is relevant to the argument you are putting forth. A clear, concise, and accurate explanation is required for you to establish the relevance of your diagram in explaining a concept.

Let’s take for example that you are explaining how taxes, as a form of government intervention, prevent the overconsumption of alcohol.

Fig 3. Graph showing the effect of taxes on the market economy for alcohol

A government imposes taxes on goods to reduce consumption of them. Before the imposition of the tax, as seen in Fig 3, the demand curve and the supply curve for alcohol meet at Point D. Consumers were willing to consume E units of alcohol, which has negative impacts on health, at price B. However, with the introduction of the tax, producers now have to sell the good at price G instead, to recoup the costs of the tax. However, at G price, consumers only want to consume C units of alcohol, due to an increase in price. This results in a reduction in the quantity exchanged of goods from E units to C units. This means that there is a lower consumption of alcohol, which is deemed undesirable as it can result in health problems, as well as accidents resulting from driving under influence. Governments tend to impose such taxes on undesirable goods such as cigarettes and alcohol to reduce the consumption of them since they have negative impacts on society at large.

This explanation does the following:

  • defines what taxes in general do (prevent negative externalities)

  • contextualises the graph in the case of alcohol, which the question is on

  • identifies the changes in price and quantity exchanged of alcohol as a result of taxation

Without the explanation, the link between price and quantity consumed is not established. Your answer will not be as able to convince your marker at the A Level Economics examinations that taxation can indeed be a means of reducing negative externalities caused by undesirable goods.

Note that you should also label your diagrams clearly so that you can refer to them easily in your explanation. This will make it easier for your marker at the A Level Economics examinations to read your explanation alongside the diagram. Remember that your diagram is a visual aid that helps to more evidently demonstrate your understanding of a concept––it isn’t supposed to confuse the marker and jeopardise your grades! Therefore, it is crucial that your diagram is neat, easy to decipher, and tallies with your explanation.

Mistake #4: Missing out crucial information in the question

At the A Level Economics examinations, contextual information is always provided in the question. For case studies questions, students should take note to consider all the information that is provided in the case. Multiple sources, sometimes with opposing views or contradicting statistics, are provided to prompt students’ evaluation of the case that is being presented. As a general rule of thumb, it is advisable to utilise the information from every source. For instance, a case might state that a supply shock has occurred, causing the supply of Good A to fall. At the same time, consumer preferences have changed, and demand for Good A has increased. Applying the concepts of Demand and Supply, it is logical to deduce that the price of Good A will increase in such a situation. However, the case could state that the price of Good A has actually fallen. In this case, students should attempt to explain how this unprecedented phenomenon has come about. The case should not be ignored as students try to force-fit the theory into their explanation. It is critical to remember that the case study requires you to work with the information that is provided. Inconsistencies in data collection are not a form of evaluation, and you should not suggest that the numbers have been miscalculated. You can only comment on the type of measurement used, for example, that real GDP is a more accurate measure of SOL as it is adjusted for inflation, while nominal GDP is not.

Refer to this article on Market Structure for more examples on how to ace questions on the topic, which frequently appear in the A Level Economics CSQs.

As for the essay questions, which H2 students have to attempt, questions sometimes provide a preamble with extra information. Take for example this question from the 2013 A Level Economics examinations:

The Urban Redevelopment Authority (URA) announced that prices of private residential properties in Singapore rose by 1.3% in the third quarter of 2011, but the rise in the prices has been slowing for eight consecutive quarters. At the same time, it reported that the total supply of new private residential properties nearing completion was at a record high. *Source: http://www.ura.gov.sg/pr/text/2011/pr11-135.html, accessed 28 October 2011 Discuss the different supply and demand factors and their likely importance in determining the reported changes in the prices of private residential properties in Singapore. [25]

*The link to the source is no longer valid.

It is imperative for you to consider in your answer not just the 1.3% rise in prices of private residential properties, but also why the rate at which the prices are increasing is slowing down. Your answer will also need to account for why supply is increasing even as quantity demanded is likely to be decreasing as price is increasing. This is where you will also need to examine the interaction of Supply and Demand concepts. Referring to the statistics provided will ensure that you have a focused response. It helps you to more clearly identify which factors you should discuss, as quantity demanded and demand are understood to be different. The former is affected by price factors while the latter is not. Reading the question closely will prevent you from losing marks from discussing less relevant factors.

Mistake #5: Not defining key terms in your responses

A Level Economics, as a Social Science, requires your use of a specialised language. Students are required to understand a whole glossary of terms and what they refer to. For instance, the term full employment in A Level Economics does not simply refer to a 0% unemployment rate. Y