Higher Level: ALL Essays:

Microeconomics only
1.5 (old syllabus specimen)
a. Explain the main features of an oligopolistic market. [10]
b. Using real world examples to support your answer discuss whether oligopolies work in favor
of, or against the interest of consumers [15]

1.4 May 98
a. Explain what economists mean by ‘externalities’ or spillover effects. [10]
b. Using real world examples to support your answer discuss how an understanding of externalities
(spillover effects) assists economists in analyzing environmental problems. [15]

1.5 Nov 98
a. Explain the term ‘natural monopolies’ and why are they considered a danger if left unregulated.
[10]
1.2. May 99
a. Carefully explain what is it that price and income elasticities of demand are meant to measure.
[10]
b. Using real world examples to support your answer discuss the practical importance of the
concept of price elasticity of demand for (i) business organizations, and (ii) the government [15]

1.4 Nov 99
a. (not in 2013 syllabus)
b. Using real world examples to support your answer discuss solutions an economist might suggest
to the problem of overfishing. [15]

1.1 May 00
a. State the law of demand and distinguish between movements along the demand curve and shifts
of the demand curve. [10]
b. Explain, with the help of diagrams, the effect of an increase in the price of petrol is likely to
have on
(i) The market for cars.
(ii) The market for coal. [10]

1.5 May 00
a. ‘Monopoly price is higher and output smaller than is socially ideal. The public is a victim.’
[Galbraith, 1974]. Explain the economic reasoning behind the statement that “monopoly price
is higher and output smaller than is socially ideal. [10]
b. Using real world examples to support your answer examine whether you agree that the public
is always the victim of monopoly? [15]

Nov 00 1.4

a. Explain why environmental problems are considered to be examples of market failure. [10]
b. Using real world examples to support your answer examine the extent to which government
intervention can correct this failure? [15]

1.4 May 01
a. Using suitable diagrams, explain why there is likely to be an absence of long run economic
profits in perfect competition. [10]
b. Using real world examples to support your answer examine the extent to which consumers
might benefit from increased competition between firms? [15]

1.5 Nov 01
a. How does a monopoly maintain supernormal (or abnormal) profit in the long run? [10]

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 b. Using real world examples to support your answer discuss whether monopoly is always
undesirable. [15]

1.5 May 02
a. Using real world examples to support your answer evaluate the proposition that markets
approximating perfect competition are more efficient market structures than monopoly. [15]

1.4 Nov 02
a. Explain why pollution is an example of a market failure. [10]
b. Using real world examples to support your answer examine whether markets can protect the
environment. [15]

1.1 1.4 May 03

a. Explain the role that prices play in the allocation of resources in free market economies. [10]
b. Using real world examples to support your answer evaluate the options available to governments
to overcome the failure of markets arising from the production and consumption of demerit
goods. [15]

1.5 May 03
a. Explain how monopoly power might arise. [10]
b. Using real world examples evaluate the extent to which governments should seek to control the
growth of market power. [15]

1.4 Nov 03
a. ‘National policies and international agreements must be implemented in order to reduce global
environmental problems’. Using the concepts of market failure, explain the statement above
from an economist’s point of view. [10]
b. Using real world examples of both national policies and international agreements, evaluate
three solutions that could be recommended by economists to decrease such problems. [15]

1.4 1.3 May 04

a. (not in syllabus)
b. Using real world examples to support your answer discuss the economic arguments for and
against imposing substantially higher levels of taxation on the sale of alcohol. [15]

1.3 Nov 04
a. Explain the concepts of maximum and minimum price controls. [10]
b. Using real world examples to support your answer evaluate the idea that government
intervention in the form of price ceilings and price floors is well intentioned, but often leads to
undesirable side effects. [15]

1.5 (2006 syllabus Specimen)

a. Explain how a monopolist may be able to earn abnormal profits in the long run. [10]
b. ‘Production by a large firm with market power will always be against the interests of
consumers’. Discuss this statement using real world examples. [15]

1.5 May 05
a. Explain how profit is determined in perfect competition. [10]
b. “Whatever the type of market structure, profit maximization will always be the only goal of
firms”. Discuss this statement using real world examples. [15]

1.5 Nov 05
a. Explain the differences between monopolistic competition and oligopoly. [10]
b. Using real world examples to support your answer discuss the differences between a collusive
and a non-collusive oligopoly. [15]

1.4 May 06
a. Carefully distinguish between merit goods, demerit goods and public goods. [10]
b. Using real world examples to support your answer evaluate the view that governments should
always intervene in markets for such goods as cigarettes and alcohol. [15]

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1.5 May 07
a. Explain how barriers to entry may affect market structure. [10]
b. Using real world examples to support your answer evaluate the view that monopoly is an
undesirable type of market structure. [15]

1.5 Nov 07
a. Explain the difference between short run equilibrium and long run equilibrium in
monopolistic competition. [10]
b. ‘Markets approximating perfect competition are more desirable than monopolistically
competitive markets. Using real world examples to support your answer, discuss. [15]

1.5 May 08
a. Explain how a firm operating in an oligopolistic market might attempt to increase its market
share. [10]
b. Using real world examples to support your answer evaluate the view that producers, and not
consumers, are the main beneficiaries of oligopolistic market structures. [15]

1.2 Nov 08
a. Explain using illustrative examples three determinants of price elasticity of demand. [10]

1.1 1.5 Nov 08

a. Explain the concept of allocative efficiency. [10]
b. ’Large firms with significant market power are inefficient and therefore always act against the
public interest’. Using real world examples to support your answer discuss this statement. [15]

1.5 May 09
b. Using real world examples to support your answer evaluate the view that greater economic
efficiency will always be achieved in markets approximating perfect competition as compared
to monopoly. [15]

1.5 Nov 09
b. ‘Although a firm may pursue a range of goals, economists assume profit maximization as the
main goal’. Using real world examples to support your answer, discuss this statement. [15]

1.2 1.3 1.4 May 10

a. Explain the importance of price elasticity of demand and income elasticity of demand for
business decision making. [10]
b. Studies have shown that the demand for tobacco tends to be highly price inelastic. Using real
world examples to support your answer evaluate the view that governments can best reduce
smoking by substantially increasing taxes on cigarettes. [15]

1.4 Nov 10
a. Explain why negative externalities of production are lead to market failure. [10]
b. Using real world examples to support your answer evaluate two policies that governments
might implement to reduce negative externalities associated with the environment. [15]

1.5 May 11 TZ1

a. Using an appropriate diagram, explain how a monopolist might be able to make supernormal
(abnormal) profits in the short run, and why these profits might continue to be earned in the
long run. [10]
b. Using real world examples evaluate the view that monopolistically competitive markets are a
more economically desirable than monopoly. [15]

1.5 May 11 TZ2

a. Using at least one diagram, explain why a firm in perfect competition might only be able to
make supernormal (abnormal) profits in the short run and not in the long run. [10]
b. Using real world examples to support your answer evaluate the view that markets
approximating perfect competition are more desirable than oligopoly [15]

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1.5 May 12 TZ1
a. Using an appropriate diagram, explain how a monopolist might be able to make supernormal
profits in the short run, and why these profits might continue to be earned in the long run. [10]
b. Using real world examples to support your answer evaluate the view that monopolistic
competition is a more economically desirable market form than monopoly. [15]

1.5 May 12 TZ1

a. Explain the economic factors which may encourage the formation of a monopoly. [10]
b. Using real world examples to support your answer evaluate the view that natural monopoly is
more desirable than perfect competition. [15]

1.5 May 12 TZ2

a. Using at least one diagram, explain why a firm in perfect competition might only be able to
make supernormal (abnormal) profits in the short-run and not in the long-run. [10]
b. Using real world examples to support your answer evaluate the view that markets
approximating perfect competition are always more desirable than oligopoly [15]

1.5 May 12 TZ2

a. Explain why, in markets dominated by a few firms, prices may remain relatively stable. [10]
b. ‘An industry with a larger number of firms will experience lower prices and greater efficiency
than an industry with a smaller number of firms’. Using real world examples to support your
answer evaluate this view. [15]

1.5 (2013 Specimen)

a. Explain why firms in monopolistic competition can make economic (abnormal) profits only in
the short run. [10]
b. Using real world examples to support your answer compare the level of efficiency achieved in
monopoly and monopolistically competitive markets. [10]

1.4 (2013 Specimen)

a. Explain the possible negative externalities that might arise from the increased use of cars. [10]
b. Using real world examples discuss economic policy options that a government might use to
reduce negative externalities that might arise from the increased use of cars. [15]

1.5 May 13 TZ1

a. Explain why a monopoly can earn supernormal (abnormal) profits in the long - run. [10]
b. Using real world examples to support your answer evaluate the view that it is always
beneficial if a market is served by more than one firm. (or, by many firms?)
[15]

1.5 May 13 TZ1

a. Explain how welfare loss might result from monopoly power. [10]
b. Using real world examples to support your answer discuss the effectiveness of government
policies (legislation and regulation) to reduce monopoly power. [15]

1.5 May 13 TZ2

b. Using diagrams and real world examples, compare and contrast monopoly with markets
approximating perfect competition [15]

1.2 May 13 TZ2

b. Using real world examples to support your answer examine the importance of income
elasticity of demand for producers of primary products, manufactured products and services
[15]

1.3 Nov 13
a. Using a price ceiling diagram, analyze the impact a maximum price may have on the market
for food. [10]
b. Using real world examples to support your answer discuss three policies a government might
adopt to ensure that low-income households have greater access to food [15]

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1.3 1.4 Nov 13
a. Explain reasons why governments impose indirect taxes. [10]
b. Using real world examples to support your answer discuss two possible government responses
to threats to sustainability. [15]

1.1 1.3 May 14 TZ1

a. Using diagrams, explain how a change in one of the determinants of demand might increase
the price of rice and how a change in one of the determinants of supply might decrease the
price of rice. [10]
b. Using real world examples to support your answer discuss the consequences of providing a
subsidy on the production of farm products for producers, consumers and the government.[15]

1.5 May 14 TZ1

a. Using diagrams, explain why a perfectly competitive firm can make economic (abnormal)
profits only in the short run. [10]
b. (Using real world examples to support your answer) discuss the consequences of a perfectly
competitive industry becoming a monopoly. [15]

1.4 May 14 TZ2

a. Analyze the private and external benefits associated with the consumption of university
education. [10]
b. Using real world examples to support your answer evaluate policies governments might use to
increase university education. [15]

1.5 May 14 TZ2

a. Using a diagram, explain why firms in monopolistic competition are not allocatively efficient.
[10]
b. Using real world examples to support your answer examine the view that the market for food
is more beneficial to consumers if dominated by a few retailers (supermarket) rather than by a
large number of small shops operating under monopolistically competitive conditions. [15]

1.1 1.4 Nov 14

a. Using diagram(s), explain the signaling and incentive functions of price. [10]
b. Using real world examples to support your answer evaluate the view that the market failure
caused by the consumption of demerit goods is best dealt with through the use of indirect
taxation. [15]

1.5 Nov 14
a. Explain why firms might wish to collude. [10]
b. Using real world examples to support your answer discuss the view that governments should
always try to prevent a monopoly from occurring in a market. [15]

1.1 1.4 May 15 TZ1

a. Explain how changes in price work to reallocate resources in a market. [10]
b. Using real world examples to support your answer discuss the view that the overuse of
common access resources is best addressed by government. [15]

1.5 May 15 TZ1

a. Explain why prices tend to remain stable in oligopolistic markets. [10]
b. Oligopolists often possess too much market power. Using real world examples to support your
answer evaluate whether governments should intervene in oligopolistic markets. [15]

1.1 & 1.4 May 15 TZ2

a. Explain how changes in price work to reallocate resources in a market [10]
b. Using real world examples to support your answer discuss the view that the overuse of
common access resources is best addressed by government [15]

1.5 May 15 TZ2

a. Explain two possible government responses to the abuse of monopoly power. [10]

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 b. Using real world examples to support your answer evaluate the view that monopolies, despite
their inefficiencies, may be considered desirable. [15]

1.1 & 1.4 May 15 TZ2

a. Explain how changes in price work to reallocate resources in a market [10]
b. Using real world examples to support your answer discuss the view that the overuse of
common access resources is best addressed by government [15]

1.3 1.4 Nov 15

a. Explain why a government might decide to impose an indirect tax on the consumption of
cigarettes. [10]
b. Using real world examples to support your answer discuss the possible consequences of the
imposition on an indirect tax on cigarettes for the different stakeholders in the market. [15]

1.5 Nov 15
a. Explain why a firm in monopolistic competition will make only normal profit in the long run.
[10]
b. Using real world examples to support your answer evaluate the view that monopolistic
competition is a more efficient market structure than monopoly. [15]

1.3 1.4 May 16 TZ1

a. Explain how the incidence of a tax depends on the price elasticity of demand and the price
elasticity of supply. [10]
b. Using real world examples to support your answer discuss the consequences of imposing an
indirect tax on unhealthy food. [15]

1.5 May 16 TZ1

a. Explain why firms do not necessarily pursue the profit maximization. [10]
b. In monopoly, economic (abnormal) profit can be earned in both the short run and the long run.
Using real world examples to support your answer examine the role of barriers to entry in
earning economic profit. [15]

1.4 May 16 TZ2

a. Market failure can occur when there is asymmetric information, abuse of market power and
positive production externalities. Explain why any two of these represent market failure.
[10]
b. Using real world examples to support your answer evaluate the view that regulations are the
most effective government response to the market failure of negative externalities. [15]

1.5 May 16 TZ2

a. Explain why supply curves are typically upward sloping. [10]
b. Using real world examples to support your answer discuss reasons producers in oligopolistic
markets may collude. [15]

0.0 1.3 Nov 16

a. Using a production possibilities curve (PPC) diagram, explain why choices have to be made in
all economies [10]
b. Using real world examples to support your answer discuss the view that governments should
not intervene in the rental housing market. [15]

1.4 Nov 16

a. Explain why under-consumption of merit goods causes market failure [10]

b. Using real world examples to support your answer discuss whether there should always be
direct provision of public goods by the government [15]

1.4 May 17
a. Explain how the overuse of common pool resources can lead to negative externalities [10]

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 b. Using real world examples to support your answer discuss the view that the best way to
reduce the threat to sustainability arising from the use of fossil fuels is for government to
provide subsidies to firms that produce energy through renewable sources. [15]

1.5 May 17
a. Explain why a loss-making firm in perfect competition would shut down in the long run [10]
b. Using real world examples to support your answer discuss the view that markets
approximating perfect competition are more desirable than monopoly [15]

1.1 and 1.4 May 17

a. Explain how an increase in the costs of factors of production would affect the market price
and output of a good. [10]
b. Using real world examples to support your answer discuss the consequences for different
stakeholders in the economy of the government providing subsidies on renewable energy. [15]

1.1 and 1.4 Nov 17

a. With reference to demand and supply in competitive markets, explain how the economic
question ‘what to produce’ is answered. [10]
b. Using real world examples to support your answer discuss the consequences of the
government providing public goods [15]

1.5 Nov 17
a. Explain why firms in oligopolistic markets pay prefer to use non-price competition. [10]
b. Using real world examples to support your answer discuss reasons why firms often collude in
oligopolistic markets. [15]

1.1 and 1.3 May 18 TZ1

a. With reference to the concept of excess demand, explain how a decrease in supply of a good
would lead to a new market equilibrium. [10]
b. A government decided to impose an indirect tax on unhealthy drinks. Using real world
examples to support your answer discuss the consequences for the stakeholders in these
markets. [15]

1.5 May 18 TZ1

a. Explain two factors that might give rise to economies of scale. [10]
b. Using real world examples to support your answer discuss the view that legislation is the best
way of dealing with the problem of market power. [15]

1.3 and 1.4 May 18 TZ2

a. Explain two reasons why a government might want to subsidize subway (tube) tickets. [10]
b. Using real world examples to support your answer discuss the view that governments should
tax the consumption of gasoline. [15]

1.5 May 18 TZ2

a. Explain why fιrms may choose satisficing as a goal instead of profit maximization [10]
b. Using real world examples to support your answer discuss whether price will always be lower,
and output will always be higher in perfect competition compared to monopoly. [15]

1.1 and 1.4 Nov 18 TZ1

a. Explain how the price mechanism reallocates resources when there is an increase in demand
for a good or service. [10]
b. To what extent is advertising the most effective way of increasing the consumption of merit
goods? Use real world examples to support your answer . [15]

1.5 Nov 18
a. Explain why prices tend to be rigid in oligopolistic markets. [10]
b. Using real world examples discuss whether oligopolistic firms should collude. [15]

1.5 May 19 TZ1

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 a. Explain the relationship between the law of diminishing returns and a firm’s supply curve [10]
b. Using real world examples evaluate the view that large in size firms with market power are
undesirable as they fail to achieve allocative efficiency. [15]

1.2 May 19 TZ1

a. Explain why price elasticity of demand varies along the length of a straight-line demand
curve. [10]
b. Using real world examples examine the significance of price elasticity of demand for the
decision-making of firms and governments. [15]

1.4 May 19 TZ2

a. Using an appropriate externalities diagram, explain why a government might decide to
impose a price floor on a demerit good. [10]
b. Using real world examples evaluate the view that the most effective way in which the
government can discourage the consumption of demerit goods is through government
regulations. [15]

1.5 May 19 TZ2

a. Explain why monopoly power may be considered a type of market failure. [10]
b. Using real world examples examine the role of barriers to entry in making monopoly markets
less desirable than perfect competition. [15]

1.2 Nov 19
a. Explain two reasons why the demand for primary commodities might be price inelastic. [10]
b. Using real world examples discuss the significance of price elasticity of demand (PED) for a
government imposing an indirect tax on a good. [15]

1.5 Nov 19
a. Explain how two types of economies of scale can lead to a fall in long-run average costs. [10]
b. Using real world examples discuss the view that barriers to entry in a monopoly will always
lead to abnormal profits in the long run. [15]

Nov 20
a. Explain how knowledge of price elasticity of demand could be used by a firm that is
considering changing the price of its product. [10]
b. Using real world examples discuss how the introduction of a subsidy in a market will affect
consumers, producers and the government. [15]

Nov 20
a. Explain how a natural monopoly may arise. [10]
b. Using real world examples discuss how governments may restrict market power. [15]

May 21
a. Explain why governments impose price floors in the market for agricultural products. [10]
b. Using real world examples evaluate the effectiveness of government regulations in achieving
a reduction in the consumption of demerit goods. [15]

May 21

a. Explain why a monopolistically competitive firm can make economic (abnormal) profit in the
short run, but not in the long run. [10]
b. Using real world examples discuss the advantages and risks of large firms dominating a
market. [15]

May 21

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 a. Explain why governments provide subsidies. [10]
b. Using real world examples evaluate the effectiveness of price floors in achieving a reduction
in the consumption of demerit goods. [15]

May 21

a. Explain a natural monopoly may be advantageous in terms of resource allocation. [10]

b. Using real world examples discuss the view that governments should always try to prevent the
creation of market power. [15]

Nov 21

a. Explain why merit goods tend to be under-provided in a free market. [10]

b. Using real world examples evaluate the use of carbon taxes to reduce threats to sustainability.
[15]

Nov 21

a. Explain why producers in an oligopolistic market might choose to engage in non -price
competition. [10]
b. Using real world examples evaluate the view that the use of legislation and regulation by
government is the most effective way to control market power. [15]

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