Question 1
Explain the view that an increase in price will lead to an increase in the quantity supplied whilst an increase in supply will lead to a decrease in price.
Answers may include:
- definition of supply
- diagrams to illustrate the difference between a movement along the supply curve and a shift in supply
- theory to explain that a movement along the supply curve is caused by price changes only and a shift is caused by changes in non-price determinants, such as a fall in wages
- examples where price and non-price determinants are, or have been, changed.
Assessment Criteria
Part (a) 10 marks
Level 0 (0 marks): The work does not reach a standard described by the descriptors below.
Level 1 (1-3 marks): There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors.
Level 2 (4-6 marks): There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors.
Level 3 (7-8 marks): There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors.
Level 4 (9-10 marks): There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors.