As and a level Economics a scheme of work



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AS and A Level

Economics A



Scheme of work

AS and A level thematic approach



AS and A level Economics A: scheme of work

Introduction

This document provides a sample scheme of work for AS and A level Economics A that can be adapted by centres to fit their ordering of topics and teaching approaches. It is meant as an example only and it is not intended to be prescriptive. It assumes the course is


co-taught with the AS. If a more integrated approach is adopted then this scheme can be adapted to fit – the integrated course planner could be used as a guide for re-organising this scheme of work.

The ordering of the topics, suggested activities/resources and teaching points to note reflect the preferences of the writer and are not intended to be prescriptive or fully comprehensive. The specification must be referred to as the authoritative source of information.

The suggested resources at times have been specific, but are intended to demonstrate the type of resources which can be found on the internet. References have not been made to particular textbooks and a separate suggested resources list is provided on the subject pages of the Edexcel website. More recent topical events can be incorporated into the scheme of work and used as examples to illustrate the core principles in economics as appropriate.

The sample assessment materials can be used for question practice to enable students to build up the confidence and skills as part of their revision and exam practice.


Theme 1: Year 12 Autumn Term

Week


Topic

Content

Some suggested activities/resources

Teaching points to note

1


1.1 Nature of Economics


1.1.1 Economics as a social science

a) Thinking like an economist: the process of developing models in economics, including the need to make assumptions

b) The use of the ceteris paribus assumption in building models

c) The inability in economics to make scientific experiments



1.1.2 Positive and normative economic statements

a) Distinction between positive and normative economic statements

b) The role of value judgements in influencing economic decision making and policy
1.1.3 The economic problem

a) The problem of scarcity – where there are unlimited wants and finite resources

b) The distinction between renewable and non-renewable resources

c) The importance of opportunity costs to economic agents (consumers, producers and government)



1.1.4 Production possibility frontiers

(Introduction)

a) The use of production possibility frontiers to depict:


  • the maximum productive potential of an economy



There are some interesting resources on the Economic and Social Research Council website, such as an animated clip that explains the social science method.

Introduce a topical issue, e.g. ‘Free school meals for children at infant school will reduce the cost burden in the future for the NHS’. Students could then brainstorm the assumptions which might underlie this economics argument. Further discussion can then take place on the importance of ceteris paribus and therefore what other factors might influence the future cost for the NHS.
Many textbooks and Tutor2u have examples of positive and normative statements for students to classify.

Value judgements: BBC news clips often contain politicians making value judgements about the economy.

The desert island scenario raises many useful economic concepts.

After introducing factors of production (resources) students can be split into pairs to discuss factors of production relating to different scenarios. They can then feedback to the rest of the class, e.g. factors of production required to provide air transport services. Use examples relating to health care, the car industry, a school, etc.


Scarcity: A homework task might be to find examples from recent news stories. For example: a lack of snow ploughs provided by the local authority; the story of a drug being unavailable for a patient. BBC news, newspaper websites and local newspapers.
Split students into groups to come up with a range of opportunity cost statements relating to consumers, producers and government.
Discuss the opportunity cost of going to university – not just the tuition fees!

In any examples used, relate to contexts which students will be familiar with.

Stress that Economics appears in both national news and local news stories; it is therefore vital to start watching news and reading newspapers!

Students need to understand that opportunity cost arises because resources are limited but wants are infinite.

Highlight that approaching decisions using the concept of opportunity cost helps decision makers assess options. They should pick the option that has the lowest opportunity cost

Students need to be clear on the definition of a PPF (underlying assumptions).

Students need to be clear why a movement along a PPF must involve an opportunity cost. They must also be clear that a PPF just presents maximum combination of options available and will be achievable if there is productive efficiency.


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1.1.4 Production possibility frontiers

(Continued from Week 1)

a) The use of production possibility frontiers to depict:


  • opportunity cost (through marginal analysis)

  • economic growth or decline

  • efficient or inefficient allocation of resources

possible and unobtainable production

b) The distinction between movements along and shifts in production possibility curves, considering the possible causes for such changes

c) The distinction between capital and consumer goods

If there is time, could consider actual growth versus potential growth and look at growth figures in the UK economy.


To begin with students could be asked to construct a straight line PPF in a situation where a given collection of resources (factors of production) can produce a maximum of 5 tractors or 300 tables. Students could then construct a second PPF curve using the following points:

5 tractors, 0 tables

4 tractors, 100 tables

3 tractors, 180 tables

2 tractors, 240 tables

1 tractor, 280 tables

0 tractor, 300 tables

Students can then discuss why the PPF is likely to be concave in practice rather than a straight line.

With all examples they can be extended to discuss why the PPF may shift outwards or inwards and why the combination produced might end up being inside the PPC.
Tutor2u has a range of short answer questions and multiple choice questions on this topic.
An example of a PPF with consumer and capital goods on the axis will be useful for economic growth discussions later on.

Students could consider National Statistics (ONS) long-term profile of GDP in the UK since 1948.



Students need to understand that the marginal cost of a good is the opportunity cost of producing one more unit of it. Students could plot the MC of tractors in terms of tables when the PPF is concave. This then helps to reinforce the shape of the MC curve later.
A range of examples should be set so students can practice drawing graphs and working out the marginal cost of producing one extra unit of a good as well as total opportunity cost. For example the marginal cost of producing the second tractor is 40 tables whereas the opportunity cost of producing 2 tractors is 60 tables.
A quick overview of causes of economic growth can be discussed.
Students need to understand that the PPF represents the production possibilities for a particular time period only, e.g. a year. The economy will have built up a stock of capital goods before, which can then be used, with other resources, to produce more capital goods and/or consumer goods. Some students might appreciate that a certain production of capital goods is needed to just balance the ones which get broken!
This is a useful introduction.

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1.2 How markets work




1.1.5 Specialisation and the division of labour

a) Specialisation and the division of labour: reference to Adam Smith

b) The advantages and disadvantages of specialisation and the division of labour in organising production

c) The advantages and disadvantages of specialising in the production of goods and services to trade

d) The functions of money (as a medium of exchange, a

measure of value, a store of value, a method of deferred payment)




1.2.1 Rational decision making

a) The underlying assumptions of rational economic

decision making:


  • consumers aim to maximise utility

  • firms aim to maximise profits


1.2.10 Alternative views of

consumer behaviour

a) The reasons why consumers may not behave rationally:




  • consideration of the influence of other people's behaviour

  • the importance of habitual behaviour

  • consumer weakness at computation




Tutor2u has a video on specialisation across the ages using examples of Model T Ford and Mercedes-Benz. Watch this and get students to identify key benefits and disadvantages to firms and employees of division of labour.

Get students to brainstorm ideas.

The Open University has a video clip – 60 seconds adventure in economics – to illustrate Rational Choice Theory.

Students could find articles from sensationalist newspapers – such as the Daily Mail, to find ‘scare food product’ stories or ‘wonder food’ stories. Bring to next lesson to suggest how individuals spending patterns may change in reaction to these stories – is it always rational? – people exaggerate very small probabilities in their reaction.

Discuss why consumers choose to smoke even though they are aware of health risks in future.

Discuss why consumers keep wanting the next updated iPhone.


There are likely to be many new resources in this area on Tutor2u.

This is a new area of the syllabus so check textbooks for extent of coverage.


Emphasise that it is the failure to forecast future feelings correctly which results in consumers not maximising utility.
Consumers tend to underestimate the addictive nature of some consumption decision and consumers tend to overestimate impact of a present consumption decision.

4



1.2.2 Demand

a) The distinction between movements along a demand curve and shifts of a demand curve

b) The factors that may cause a shift in the demand curve (the conditions of demand)

c) The concept of diminishing marginal utility and how this influences the shape of the demand curve


1.2.4 Supply

a) The distinction between movements along a supply curve and shifts of a supply curve

b) The factors that may cause a shift in the supply curve (the conditions of supply)


Students should get plenty of practice. There are likely to be exercises in textbooks. Tutor2u is also likely to have worksheets in this area. There is currently one called ‘Exercises in market demand’ which gives plenty of real-life examples.
It might be useful to set up the following type of examples, e.g.

Pints of beer TU



  1. 10

  2. 19

  3. 27

  4. 34

  5. 37

  6. 35

  7. 30

Students should then add a column for MU. It would also be useful to plot both TU and MU against pints of beer.

Once the law of diminishing marginal utility is understood this can then be loosely linked to the why the demand curve is downward sloping.
Plenty of practice is important.


Students can find this topic confusing to begin with. It is important to stress that a demand curve shows how much of a good would be demanded over a given time period for a full range of possible prices, assuming anything else affecting demand is fixed – precise use of terminology can then be reinforced once basics are grasped.
Make sure students begin to use terminology precisely, i.e. if economists say there has been an increase in demand they mean the demand curve has shifted to the right. (This is slightly different from saying there is an increase in quantity demanded which can be caused by an increase in supply – they will discover this the following week). This helps to reinforce the relationship between total and marginal concepts later on in the course.
Gifted and talented students could be directed towards utility theory and the equilibrium position to extend the analysis.
Mnemonics quite useful in this area and throughout the course
For example, for supply: PINTS WC

P productivity

I indirect tax

N number of firms

T Technology

S subsidies


W weather

C costs of production


Note: students often confuse production with productivity.

5



1.2.6 Price determination

a) Equilibrium price and quantity and how they are determined

b) The use of supply and demand diagrams to depict excess supply and excess demand

c) The operation of market forces to eliminate excess demand and excess supply

d) The use of supply and demand diagrams to show how shifts in demand and supply curves cause the equilibrium price and quantity to change in real-world situations

1.2.7 Price mechanism

a) Functions of the price mechanism to allocate resources:



  • rationing

  • incentive

  • signalling

b) The price mechanism in the context of different types of markets, including local, national and global markets
1.2.3 Price, income and cross elasticities of demand

a) Understanding of price, income and cross elasticities of demand

b) Use formulae to calculate price, income and cross elasticities of demand


It might be useful to play an auction game.
Students should complete plenty of examples; textbooks are likely to have examples to use as well as worksheets on Tutor2u.
The sample assessment materials (Paper 1 Question 2) could be used to highlight some examples to use in worksheets.

The Open University has a video clip – 60 seconds adventure in economics – to illustrate the invisible hand.


Calculations are needed for this topic.



Emphasise that a change in demand does not cause a change in supply and vice versa. Stress the precise use of terminology throughout this section.

It is important to stress cause and effect when going through some examples. This is an area where students get confused. For example, a successful advertising campaign will cause an increase in demand which in turn causes an increase in price. The new equilibrium shows a higher price co-existing with a higher quantity demanded. Students will then try and argue that a higher price will cause a fall in demand! Hence it is always important to stress what is causing the changes.

Teachers will have to go through how to work out % changes clearly since students often struggle in this area.





6




1.2.3 Price, income and cross elasticities of demand

c) Interpret numerical values of:



  • price elasticity of demand: unitary elastic, perfectly and relatively elastic, and perfectly and relatively inelastic

  • income elasticity of demand: inferior, normal and luxury goods; relatively elastic and relatively inelastic

  • cross elasticity of demand: substitutes, complementary and unrelated goods

d) The factors influencing elasticities of demand

e) The significance of elasticities of demand to firms and government in terms of:



  • changes in real income

  • changes in the prices of substitute and complementary goods

(Note: the significance of elasticities of demand to firms and the government, in terms of the imposition of indirect taxes and subsidies, could be taught following 1.2.9)

f) The relationship between price elasticity of demand and total revenue (including calculation)




When teaching this relate to real-life examples, e.g. university fees and elasticity of demand. Tutor2u may have good links, e.g. an article appeared on the BBC website on the effect of higher university fees on demand for higher education. Good for discussion on how PED will differ with respect to different types of consumers as well as XED with overseas universities.

Get students off their seats. Give each student a card with a good/service written on it. Get students to move to different zones if they think:


  • demand for their product is price elastic/inelastic

  • demand for their product is income elastic/inelastic

Note: ask students to justify their decision.

Then get students to group with other goods/services if they think they have a substitute or complementary relationship. Do they think it is weak or strong?


In worksheets try to relate questions to particular contexts in the real world, e.g. how a private dentist practice could make use of YED data for private dental implants for low income earners, medium income earner and above average income earners.
Get students to work out from price and quantity demanded data what the relationship is.

Avoid students making statements such as ‘in this case consumers react a lot to a price change’.

It is useful to clarify that total revenue is not the same as profit. Also stress that with movements along a demand curve, price and quantity demanded always move in opposite directions. What we are looking at here is total revenue; not quantity demanded!




7



1.2.5 Elasticity of supply

a) Understanding of price elasticity of supply

b) Use formula to calculate price elasticity of supply

c) Interpret numerical values of price elasticity of supply: perfectly and relatively elastic, and perfectly and

relatively inelastic

d) Factors that influence price elasticity of supply

e) The distinction between short run and long run in economics and its significance for elasticity of supply

1.2.6 Price determination

Return to this topic (started in week 5). Highlight how equilibrium price and quantity changes will depend upon both:


  • how much a demand or supply curve shifts in a given situation

  • the PED or PES on the curve in which there is a movement along

Plenty of examples will be needed for this topic.

It is best to relate to real-world markets, e.g. a farmer. Tutor2u has some good slide presentations.


A teacher worksheet can be prepared here to consolidate the work already covered.



Stress that this is particularly useful as a way of evaluating.



8




1.2.8 Consumer and producer surplus

a) The distinction between consumer and producer surplus

b) The use of supply and demand diagrams to illustrate

consumer and producer surplus

c) How changes in supply and demand might affect consumer and producer surplus
1.2.9 Indirect taxes and subsidies

a) Supply and demand analysis, elasticities, and:



  • the impact of indirect taxes on consumers, producers and government

  • the incidence of indirect taxes on consumers and producers

  • the impact of subsidies on consumers, producers and government

  • the area that represents the producer subsidy and consumer subsidy


1.2.3 Price, income and cross elasticities of demand

e) The significance of elasticities of demand to firms and government in terms of:



  • the imposition of indirect taxes and subsidies

1.1.6 Free market economies, mixed economy and command economy

Revisit 1.2.7 here as functions of price mechanism leads nicely into advantages of free market economies.

a) The distinction between free market, mixed and command economies: reference to Adam Smith, Friedrich Hayek and Karl Marx

b) The advantages and disadvantages of a free market economy and a command economy

c) The role of the state in a mixed economy

Note: the discussions in general on advantages and disadvantages of free market will help to lead fluently onto the topic of market failure.


Use examples so students can see how the PED and PES affects the size of the consumer and producer surplus.

It might be useful to make up a hypothetical example which students plot on graph paper.


Make up figures for price, Qd, Qs. Students plot the initial graph. Then introduce a specific tax of so many pounds per unit. See if students can work out how to plot the new supply curve.
Mathematical computation required – see Question 3 in the sample assessment Paper 1. Use examples like this in worksheet exercises.

Look at data on how much revenue is raised by the government from cigarette and alcohol duties. Why are these goods taxed? Quick discussion.

It might be worth looking on YouTube, etc. for an introductory video on this topic.
Students could be put into groups to work on a poster display – some allocated free market economies and some allocated command economies. Give them a sheet to clarify what sorts of things they must include. Students to present poster to class. A summary sheet could be provided of the key points after the presentations.

Make sure students can understand the mathematical calculations required.

Students should have an awareness of the perspective of Smith, Hayek and Marx. There is no requirement for detailed consideration of the work of each economist.


9

1.3 Market failure

1.3.1 Types of market failure

a) Understanding of market failure

b) Types of market failure (quick introduction):


  • externalities

  • under-provision of public goods

  • information gaps


1.3.2 Externalities

a) Distinction between private costs, external costs and social costs

b) Distinction between private benefits, external benefits

and social benefits

c) Use of a diagram to illustrate:


  • the external costs of production using marginal analysis

  • the distinction between market equilibrium and social optimum position

  • identification of welfare loss area

d) Use of a diagram to illustrate:

  • the external benefits of consumption using marginal analysis

  • the distinction between market equilibrium and social optimum position

  • identification of welfare gain area

e) The impact on economic agents of externalities and government intervention in various markets.

Could make up hypothetical example for students to plot graph. Could integrate some discussion on how a money value could be placed on an external cost and the difficulties with this.


Education is a good example: video clips useful to introduce BBC video clips on benefits of university – get students to research benefits for a student of going to university and benefits for society in general. It is vital that students can differentiate between private benefits and external benefits of consuming education.

Healthcare, public libraries, local sports facilities are also good examples to discuss.


It is useful to point out to students that the efficient level of pollution is not zero. Most pollutants of production are producing something useful (e.g. steel) and pollution is a by product of this production, unless cleaner technology can be developed over time. At present, some pollution is inevitable since the benefits of steel to society justify it. Hence the optimum output of steel will not eliminate pollution; it will just reduce it.

It may be helpful to integrate methods of correcting market failure as you go along – meaning weeks 9,10 and 11 are integrated.


10


Finish externalities

1.3.3 Public goods

a) Distinction between public and private goods using the concepts of non-rivalry and non-excludability

b) Why public goods may not be provided by the private sector: the free rider problem
1.3.4 Information gaps

a) The distinction between symmetric and asymmetric information

b) How imperfect market information may lead to a misallocation of resources


Discuss whether there is such a thing as a public good. Do this by giving students a selection of goods/services and get them to say whether they are private goods or public goods. Are they non-rivalrous or non-excludable or do they only contain elements of both



  • a playground

  • broadcasting

  • a firework display

  • police protection

Give students scenarios to discuss to feedback to class – who knows more and what will be the effect?



  • a private dentist tells you that you need a filling

  • a secondhand care salesman tells me the car is a good runner

  • the seller of a pension scheme who says the future will be well provided for

  • the cigarette manufacturer who does not inform potential consumers of the true health risk from smoking

Education could be used again in context of individuals misunderstanding the true benefits for themselves Discuss why it is hard to decide what mobile phone to buy, what pension plan to take out, etc.

With information gaps, it is fairly quick to link methods to correct this type of market failure.



11


1.4 Government intervention



1.4.1 Government intervention in markets

a) Purpose of intervention with reference to market failure and using diagrams in various contexts:



  • indirect taxation (ad valorem and specific)

  • subsidies

  • maximum and minimum prices

Possible examples to use include:

  • resources on the internet (i.e. BBC news, etc.) relating to carbon tax, etc.

  • subsidies for firms in the green sector

  • Scotland’s attempts to introduce a minimum price for alcohol


Stress that government intervention is to try and move the market equilibrium to the optimum level.

12




1.4.1 Government intervention in markets

b) Other methods of government intervention:



  • trade pollution permits

  • state provision of public goods

  • provision of information

  • regulation

Discuss relative advantages and disadvantages of a carbon tax compared with using pollution permits.
Review news websites on themes such as ‘Industry warns carbon tax could cause huge job losses’ and research EU Emissions Trading Scheme.




13



1.4.2 Government failure

a) Understanding of government failure as intervention that results in a net welfare loss

b) Causes of government failure:


  • distortion of price signals

  • unintended consequences

  • excessive administrative costs

  • information gaps

c) Government failure in various markets

Discuss theory and then get students to research some key examples which illustrate government failure – see examples of markets from content guidance booklet.




14

Revision


Practice exam-style questions from Theme 1 content and /or use AS Paper 1 for practice.

Consolidate work from autumn term.



Refer to Paper 1 Introduction to markets and market failure in the sample assessment materials.





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