PMT

Mark Scheme (Result)

October 2021

Pearson Edexcel International Advanced

Subsidiary Level in
Economics (WEC11)
Unit 1: Markets in action
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October 2021
Publications Code WEC11_01_2110_MS
All the material in this publication is copyright
© Pearson Education Ltd 2020
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General Marking Guidance

• All candidates must receive the same treatment. Examiners must mark
the first candidate in exactly the same way as they mark the last.
• Mark schemes should be applied positively. Candidates must be
rewarded for what they have shown they can do rather than penalised
for omissions.
• Examiners should mark according to the mark scheme not according to
their perception of where the grade boundaries may lie.
• There is no ceiling on achievement. All marks on the mark scheme should
be used appropriately.
• All the marks on the mark scheme are designed to be awarded.
Examiners should always award full marks if deserved, i.e. if the answer
matches the mark scheme. Examiners should also be prepared to award
zero marks if the candidate’s response is not worthy of credit according
to the mark scheme.
• Where some judgement is required, mark schemes will provide the
principles by which marks will be awarded and exemplification may be
limited.
• When examiners are in doubt regarding the application of the mark
scheme to a candidate’s response, the team leader must be consulted.
• Crossed out work should be marked UNLESS the candidate has replaced
it with an alternative response.
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Section A
Question Quantitative skills assessed Answer Mark
1 – The only correct answer is D- To
introduce a tradeable pollution (1)
permit scheme to reduce external
costs

A is not correct because rationing

occurs without government
intervention within the price
mechanism
B is not correct because indirect
taxes would be used for goods with
external costs
C is not correct because subsidies
would be paid to encourage external
benefits
2 The only correct answer is B-
Consumers aiming to maximise (1)
utility

A is not correct because being

valued by the original supplier would
mean they would not change
supplier
C is not correct because being poor
at computation would mean they
cannot calculate the benefit from
changing supplier and would not
change
D is not correct because changing
supplier will save money that can be
used to gain utility from purchasing
other goods

3 QS8: Make calculations of The only correct answer is C- The

elasticity and interpret the demand for refrigerators is price (1)
result inelastic
QS9: Interpret, apply and
analyse information in A is not correct because the demand
written, graphical, tabular for clothes dryers is price inelastic
and numerical forms B is not correct because the price
elasticity of demand for dishwashers
is not zero
D is not correct because washing
machines have price inelastic
demand
4 QS6: Calculate total revenue The only correct answer is A-
QS9: Interpret, apply and Total revenue will rise by €13 500 (1)
analyse information in
written, graphical, tabular and B is not correct because €58 500 is
numerical forms the total revenue after the price is
reduced to €1.30
C is not correct because revenue will
rise as demand is elastic in this
section of the demand curve
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D is not correct because €45 000 is

the total revenue before the price
rise
5 QS9: Interpret, apply and The only correct answer is C-
analyse information in Excess demand will be equal to Q0Q2 (1)
written, graphical, tabular
and numerical forms A is not correct because quantity
supplied contracts from Q1 to Q0
B is not correct because quantity
supplied extends from Q1 to Q2
D is not correct because excess
supply would occur if a minimum
price was introduced
6 QS8: Make calculations of The only correct answer is B- The
elasticity and interpret the demand for water will be most (1)
result responsive to a change in the price
QS9: Interpret, apply and of sugar-sweetened drinks
analyse information in
written, graphical, tabular A is not correct because coffee has
and numerical forms the lowest cross elasticity of demand
showing it will be least responsive
C is not correct because an increase
in the price of sugar sweetened
drinks will lead to a less than
proportionate increase in the
demand for milk
D is not correct because an increase
in the price of sugar-sweetened
drinks will lead to an increase in the
demand for water, milk and coffee
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Section B
Question China aims to increase electricity generation from renewable Mark
resources. China’s Government has introduced a subsidy for solar
panel manufacturers.
Draw a diagram to illustrate the impact of the introduction of a subsidy
on the market for solar panels.
Show the new equilibrium price and quantity and the area of
government expenditure on the subsidy in your diagram.

Answer
7 Knowledge 1, Application 3
Quantitative skills assessed:
QS4: Construct and interpret a range of standard graphical forms
QS9: Interpret, apply and analyse information in written,
graphical, tabular and numerical forms.

Knowledge
• Original supply and demand with equilibrium price and quantity
(1)

Application
Up to 3 marks for the following information included on diagram:
• Shifting supply to the right (1)
• The new equilibrium quantity and price (1)
• The area of government expenditure on the subsidy is P1ABC (1)

The supply curve may be pivoted or shifted

(4)
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Question With reference to the table, explain the difference between ‘capital Mark
goods’ and ‘consumer goods’.

Answer
8 Knowledge 2, Application 2
Quantitative skills assessed:
QS9: Interpret, apply and analyse information in written, graphical,
tabular and numerical forms.
QS2: Calculate, use and understand percentages, percentage
changes and percentage point changes.

Knowledge
1 mark for defining ‘capital goods’
• Capital goods are man-made aids to production/goods used in the
production of other goods/examples such as machinery/tools,
buildings (1)
1 mark for defining ‘consumer goods’
• Consumer goods sold to individuals to satisfy their wants and
needs (1)

Application
1 mark for applying explicitly to the data in the table linked to capital
goods e.g.:
• Sales of capital goods declined 6.5% in April compared to March/
sales of capital goods grew 2.3% in May 2020 compared to April
2020 (1)
1 mark for applying to the data in the table linked to consumer
goods e.g.:
• Sales of consumer goods declined 14.7% in April compared to
March/ sales of capital goods grew 17.7% in May 2020 compared
to April 2020 (1) (4)
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Question Most of the Netherlands is below sea level and is therefore liable to Mark
flooding. The Dutch Government spends €1 billion per year on flood
defences.
Explain one reason for the provision of this public good by the Dutch
Government.

Answer
9 QS9: Interpret, apply and analyse information in written, graphical,
tabular and numerical forms.
Knowledge 1, Application 1, Analysis 2

Knowledge
1 mark for definition of public goods e.g.:
• Public goods are non-excludable and non-rival (1)

Application
1 mark for applying to the stem, e.g.:
• The Dutch Government spends €1 billion per year on flood
defences (1)

Analysis
Up to 2 marks for explaining one reason e.g.:
• Due to the free rider problem (1) consumers would use the flood
defences without paying (1)
• Not being able to generate revenue from providing flood defences
(1) means it is unlikely firms will generate profit from providing
the goods (1)
• Due to non-excludability people can benefit from flood defences
(1) without paying for their provision or upkeep (1)
• Due to non-rivalry one person benefiting does not reduce the
protection for others (1) so if one person was to put flood
defences in place all locals would benefit without paying (1)
• Flood defences would not be provided by the private sector (1) as
the private sector has no profit incentive to provide flood defences
(1)
(4)
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Question Ceteris paribus, calculate the price elasticity of supply for coffee Mark
beans. Show your workings.

Answer
10 Knowledge 1, Application 3
Quantitative skills assessed:
QS8: Make calculations of elasticity and interpret the result.
QS9: Interpret, apply and analyse information in written, graphical,
tabular and numerical forms.

Knowledge
1 mark for definition/the formula for price elasticity of supply
% change in quantity supplied
% change in price

Application
Up to 3 marks for calculations:
• Change in quantity supplied ÷ original quantity supplied x100
-1.6 ÷ 169 x 100 = -0.9467% (1)
• Change in price ÷ original price x100
-0.34 ÷ 1.36 x 100 = -25% (1)

% change in quantity supplied

% change in price
• -0.9467 ÷ -25 = 0.04 (1)

NB: if correct answer (e.g. 0.04/0.038/0.0379/0.037868/

0.0378698225) is given, award full marks regardless of
working.
NB: other appropriate working is rewarded (4)
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Question Between January 2020 and May 2020 the price of bananas charged Mark
by retailers in the USA increased from $1.17 to $1.30 per kg. This
was mainly caused by increased costs of transportation from banana
growers to markets in North America.
Explain the likely impact of this change in price on consumer
surplus.
Illustrate your answer with a diagram.

Answer
11 Knowledge 1, Application 1, Analysis 2
Quantitative skills assessed:
QS4: Construct and interpret a range of standard graphical forms

Knowledge
1 mark for defining consumer surplus
• Consumer surplus is the difference between the price which
consumers are willing to pay and the market price/gap between
the equilibrium price and the demand curve (1)

Application
1 mark for the following diagram, showing the correct shift in supply

Analysis
Up to 2 marks for likely impact on consumer surplus
• Consumer surplus is originally PeWX (1)
• Consumer surplus decreases (1) to P1VX (1)
• Consumer surplus decreases (1) by PeP1VW (1) (4)
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Section C
Question Define the term ‘complementary goods’ (Extract A, line 8). Mark

Answer
12 (a) QS9: Interpret, apply and analyse information in written,
graphical, tabular and numerical forms

Knowledge 2
Up to 2 marks for defining ‘complementary goods’, e.g.:
• Goods that are used/consumed together/in joint demand (1)
• Negative XED/XED value below 0 (1)
• When the price of one increases the demand for the other
decreases or when the price of one decreases the demand for the
other increases (1)
• Only accept explicit reference to Extract A: Tyres and cars are
complementary goods (1) (2)
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Question With reference to Figure 1 and Extract A, analyse why ‘between Mark
January and May 2020 the price of rubber fell from $1.67 to $1.35
per kg’.
Illustrate your answer with a supply and demand diagram.
Answer
12 (b) Knowledge 2, Application 2, Analysis 2
Quantitative skills assessed:
QS4: Construct and interpret a range of standard graphical forms
QS9: Interpret, apply and analyse information in written,
graphical, tabular and numerical forms.

Knowledge
Up to 2 marks for the diagram showing:
• Original supply, demand and equilibrium (1)
• Final equilibrium showing lower price (1)

Analysis
Up to 2 marks for analysis with linked development. The price of
rubber fell because e.g.:
• Decreased demand for rubber tyres (1)
• In Europe/North America/South America/as the car usage fell (1)
• Temporary closures of car factories (1)
• Less demand for tyres as less cars are made (1)
• Large impact as tyre production uses 75% of the world’s natural
rubber (1)
• Cars and tyres are complementary goods (1) when the demand
for cars/tyres fell the demand for tyres/rubber falls also (1)

Application

1 mark for reference to Figure 1/ Extract A:

• Price decreased by 19.2%/by $0.32 per kg (1)

Up to 2 marks for diagram:

• Leftwards shift in demand (1)
• Reduction in equilibrium quantity (1)

(6)
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Question With reference to the first paragraph of Extract B, explain what is meant Mark
by ‘the supply of rubber is price inelastic’

Answer
12 (c) QS9: Interpret, apply and analyse information in written,
graphical, tabular and numerical forms.

Knowledge
2 marks for understanding of price inelastic supply
• Price inelastic supply is where a change in price results in a
less than proportionate change in quantity supplied (1)
• Where PES is between 0 and 1 (1)
• Supply cannot respond quickly to a change in price (1)
• Diagram to show (perfectly or relatively) price inelastic
supply (1)

Application
Up to 2 marks for application:
• Trees only grow where there is heavy rainfall (1)
• Trees only grow with temperatures between 20-35°C (1)
• Thailand, Indonesia, China, West Africa supply 85% of the
market (1)
• 6 years before rubber trees produce a crop (1)

(4)
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Question Examine the effect on producer surplus of the change in market Mark
conditions for rubber gloves as described in Extract C. Include a
diagram in your answer.

Answer
12(d) QS4: Construct and interpret a range of standard graphical forms
QS9: Interpret, apply and analyse information in written,
graphical, tabular and numerical forms
Knowledge 2, Application 2, Analysis 2, Evaluation 2

Knowledge

1 mark for definition of producer surplus

Producer surplus is the difference between the price firms are willing
to sell at and the market price (1)

1 mark for original supply and demand and equilibrium (1)

Application

• Rapidly rising demand for rubber gloves/increased number of sales

to healthcare sector/366% increase in profits in Q2 at Top Glove
(1)
• Diagram showing demand shifting right (1)

Analysis
• Original producer surplus ACPe (1) and New producer surplus BCP1
(1)
OR
• Producer surplus increases (1) by ABP1Pe (1)

Evaluation
Up to 2 marks for evaluative comments (2+0 or 1+1), e.g.:

• Magnitude of change in producer surplus significant (1) as

indicated by 366% increase in profits for Top Glove (1) (8)
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• This may only be a temporary issue (1) as demand from

healthcare may decrease (1)
• Increased production may also increase costs (1) and it depends
on the size of this increase compared to the size of the increase in
demand (1)

Question With reference to Extract B, discuss the external costs associated with tyre
production and consumption.

Indicative content
12(e) Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance.
The indicative content below exemplifies some of the points that candidates
may make but this does not imply that any of these must be included. Other
relevant points must also be credited.
Quantitative skills assessed
QS9: Interpret, apply and analyse information in written, graphical,
tabular and numerical forms.

Knowledge, Application and Analysis (8 marks) – indicative content

• External costs – negative impacts on third parties/ the cost incurred by
an individual, firm or community as a result of an economic transaction
which they are not directly involved in / where MSC > MPC or
MPB > MSB

External costs of production

• Costs to third parties associated with the production of rubber- tyres use
75% of world’s supply
• Deforestation (3 million hectares) in Mekong region causes a loss of
natural habitats for animals, loss of biodiversity, future medicines
• Reward external costs of production diagram

External costs of consumption

• Costs to third parties associated with consumption of tyres emitted 1 000
times more particles than from exhaust fumes.
• Increased risk of lung cancer/Cardiovascular diseases affecting the heart
and causing strokes- cost to healthcare/loss of workforce
• Tyres contain chemicals and heavy metals that are released into the
environment over time causing cancer and genetic mutations-costs to
clean up

If tyre production or consumption is omitted limit to Level 2

Level Mark Descriptor

0 No rewardable material
Level 1 1–3 Displays isolated, superficial or imprecise knowledge and understanding
of economic terms, principles, concepts, theories and models.
Use of generic material or irrelevant information or inappropriate
examples.
Descriptive approach, which has no chains of reasoning.
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Level 2 4–6 Displays elements of knowledge and understanding of economic terms,

principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the
question. Some evidence and contextual references are evident in
the answer.
Chains of reasoning in terms of cause and/or consequence are evident
but they may not be developed fully or some stages are omitted.
Level 3 7–8 Demonstrates accurate and precise knowledge and understanding of
economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using relevant
examples which are fully integrated to address the broad elements of
the question.
Analysis is clear, coherent, relevant and focused. The answer
demonstrates logical and multi-stage chains of reasoning in terms of
cause and/or consequence.
Evaluation (6 marks) – indicative content
• Magnitude: the size of the impact of tyres is significant with so many
cars on the roads
• Measurement of the impact of tyres may be difficult
• Innovations in tyre technology may reduce impact in future
• Research was based on testing one fully loaded car and one type of road
surface. Emissions from tyres could be much lower or higher depending
on the car-load or road surface- question reliability of test on tyres
• Environmental impacts reduced thanks to tyre recycling- reduced the
number of used tyres left in the environment. One billion used tyres
down to 60 million
• Tyres now recycled to produce fuel which produced 25% more energy
than coal
• The ash from the tyres is less polluting than burning coal

Level Mark Descriptor

0 No rewardable material.
Level 1 1–2 Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3 5–6 Evaluation recognises different viewpoints and/or is critical of the
evidence.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.
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Section D
Question In 2018 the Government of Uganda introduced an indirect tax on mobile
internet usage. The aim was to raise tax revenue. Consumers had to pay 200
shillings per day to use services including Facebook, Twitter and Instagram. In
the six months that followed the introduction of the tax, mobile internet usage
decreased from 47.4% to 35% of the population.
Evaluate the likely microeconomic effects of the introduction of this indirect tax.

Indicative content
13 QS9: Interpret, apply and analyse information in written, graphical,
tabular and numerical forms.

Indicative content guidance

Answers must be credited by using the level descriptors (below) in line with the
general marking guidance.
The indicative content below exemplifies some of the points that candidates
may make, but this does not imply that any of these must be included. Other
relevant points must also be credited.

Knowledge, application and analysis (12 marks) – indicative content

• Define indirect tax- expenditure tax
• Specific tax as it is 200 shillings per day/supply shifts and does not pivot

Possible impacts of indirect tax:

• Increases costs to firms
• Decreases supply/shifts left
• Quantity consumed falls- significant fall in internet usage
• Mobile internet usage decreased from 47.4% to 35% of the population
• Price increases
• Consumer surplus falls
• Producer surplus falls/lower profits for Facebook/Twitter/Instagram
• Consumer/producer incidence of the tax
• Increases tax revenue for the government- 200 shillings per day per
person
• Tax revenue can be used to support/subsidise Ugandan companies
• Reduce the willingness of firms to set up or operate in Uganda
• Job losses likely within Facebook/Twitter/Instagram/mobile companies
• Government can target the tax revenue to improve infrastructure
• External benefits- may impact productivity positively
• External costs- may reduce reward from advertising as fewer people will
see advertising if consumption of mobile data falls

Possible government failures:

• Information gaps- where the government lacks perfect information and
sets the wrong level of taxation
• Lack of incentives- where the policy fails to create the incentives for
firms and consumers to change their behaviour appropriately- tax may
be too low
• Unintended consequences- where a policy leads to an outcome that was
not anticipated, this could include stopping people from accessing
information/ communicating
• Excessive administrative costs- where the costs to administer the tax is
greater than any benefit of the government intervention
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When government failures is presented as microeconomic effects it should be

rewarded as KAA but may alternatively be rewarded when offered as evaluation

Positive effects may be offered as KAA and negative effects as Evaluation or

vice versa

Candidates should be rewarded for illustrating impacts using a diagram.

Level Mark Descriptor
0 No rewardable material.
Level 1 1–3 Displays isolated, superficial or imprecise knowledge and
understanding of economic terms, principles, concepts, theories and
models.
Use of generic material or irrelevant information or inappropriate
examples.
Descriptive approach which has no chains of reasoning.
Level 2 4–6 Displays elements of knowledge and understanding of economic terms,
principles, concepts, theories and models.
Limited application of knowledge and understanding to economic
problems in context.
A narrow response or superficial, only two-stage chains of reasoning in
terms of cause and/or consequence.
Level 3 7–9 Demonstrates accurate knowledge and understanding of economic
terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the
question. Some evidence and contextual references are evident in the
answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause
and/or consequence are evident but they may not be developed fully or
some stages are omitted.
Level 4 10–12 Demonstrates accurate and precise knowledge and understanding of
economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context, using
appropriate examples which are fully integrated to address the broad
elements of the question.
Analysis is clear, coherent, relevant and focused. The answer
demonstrates logical and multi-stage chains of reasoning in terms of
cause and/or consequence.
Evaluation (8 marks) – indicative content

Evaluation linked to stem

• Measurement problem- difficult to measure the right level - 200 shillings
may too high or low
• Magnitude- sizeable tax so likely to have a large impact on reducing
consumption- significant change
• 200 shillings may not be a significant tax as a proportion of a persons
income in Uganda
• Might disadvantage certain groups with higher income groups finding it
affordable but poorer groups struggling, some business people may have
costs covered by employer
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• Government revenue may be misused/misdirected

• Impact on business costs reduces profits and tax paid to government
• Impact on Facebook/Twitter/Instagram may not be significant if
Ugandan market is relatively small
• Impact depends on the elasticity of demand – if inelastic little change in
mobile usage
• No data provided on the minutes of mobile internet usage to see the
true impact
• Black market may emerge where people access mobile data illegally

Level Mark Descriptor

0 No rewardable material.
Level 1 1–3 Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 4–6 Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3 7–8 Evaluation recognises different viewpoints and/or is critical of the
evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.
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Question In 2019, in Sweden, on average:

• households saved 16.5% of their incomes
• households borrowed 189% of their incomes
• a consumer made 349 debit card payments

With reference to the information above and your own knowledge, evaluate the
role of financial markets in an economy.

Indicative content
14 QS9: Interpret, apply and analyse information in written, graphical,
tabular and numerical forms.

Indicative content guidance

Answers must be credited by using the level descriptors (below) in line with the
general marking guidance.
The indicative content below exemplifies some of the points that candidates
may make but this does not imply that any of these must be included. Other
relevant points must also be credited.

Knowledge, application and analysis (12 marks) – indicative content

• Define financial markets- any market where financial products are traded
• Roles of financial products include
o To facilitate saving- 16.5% of income saved by households
▪ So that consumers can save for future purchases of
consumer goods/luxury goods/expensive goods/save for
emergencies
▪ So that producers can save for future purchases/capital
goods/save for when they have cash flow problems
▪ So financial providers have funds to be able to lend to
consumers and firms
▪ Without the financial sector providing funds to businesses
they will struggle to buy capital goods to improve the
business/households will spend a long time saving to be
able to make large purchases such as housing/cars
o To make funds available to businesses
▪ Enabling businesses to fund investment in capital goods to
make them more productive
o To make funds available to individuals - households borrow 189%
of their income
▪ Enabling consumers to improve their living standards by
being able to consume more consumer goods
▪ Enabling consumers to consume now and to then pay back
in future
o To facilitate the exchange of goods and services- 349 debit card
payments per year
▪ Reducing the need for firms to hold large quantities of
cash- which is expensive to handle for businesses
▪ Enabling purchases to be made online without the need for
cash to be transferred
▪ Making it easier for consumers and producers to trade
with each other quickly
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▪ Without the financial sector facilitating the exchange of

goods and services consumers will need to use cash, this
is difficult for online purchases and larger purchases/costs
businesses to hold money
o To provide forward markets in commodities and currencies
▪ This helps firms to buy products today at an agreed future
price
▪ This helps make buying products from abroad/
commodities more predictable
▪ By agreeing the exchange using a forward market ensures
that adverse movements in the exchange rate do not
affect the business
▪ Without forward markets orders of commodities would be
made and the price paid could vary significantly making it
difficult to plan for both producer and consumer
o To provide a market for equities
▪ Enables consumers to buy equities/shares in firms- to
later earn a dividend each year
▪ Enables firms to raise finance by selling shares which
helps businesses to expand/spend on capital goods
▪ Enables individuals to invest in businesses to earn
dividends and to buy and sell shares to make profits
▪ Without providing a market for equities businesses would
struggle to find the funds to expand
Level Mark Descriptor
0 No rewardable material.
Level 1 1–3 Displays isolated, superficial or imprecise knowledge and understanding
of economic terms, principles, concepts, theories and models.
Use of generic material or irrelevant information or inappropriate
examples.
Descriptive approach, which has no chains of reasoning.
Level 2 4–6 Displays elements of knowledge and understanding of economic terms,
principles, concepts, theories and models.
Limited application of knowledge and understanding to economic
problems in context.
A narrow response or superficial, only two-stage chains of reasoning in
terms of cause and/or consequence.
Level 3 7–9 Demonstrates accurate knowledge and understanding of economic
terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the
question. Some evidence and contextual references are evident in the
answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause
and/or consequence are evident but they may not be developed fully or
some stages are omitted.
Level 4 10– Demonstrates accurate and precise knowledge and understanding of
12 economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using
appropriate examples which are fully integrated to address the broad
elements of the question.
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Analysis is clear, coherent, relevant and focused. The answer

demonstrates logical and multi-stage chains of reasoning in terms of
cause and/or consequence.
Evaluation (8 marks) – indicative content

• With low interest rates the reward from savings will be minimal and few
will save
• Market bubbles e.g. businesses and households may borrow too much
causing asset prices to rise significantly
• Over lending by financial institutions may mean that businesses and
households are not able to repay loans
• During economic crises businesses/households may not always be able
to repay
• Moral hazard: financial providers may offer high risk loans which are
unlikely to be paid back
• Banks may stop lending if they are worried about bad debts
• Financial providers often charge to facilitate the exchange of goods and
services which increases costs of doing business
• Forwards markets in commodities and currencies may see you agree a
price but you end up paying more than you would had you paid the
market price on the future date
• Stock markets can be highly volatile such that firms can have share
prices fall leading to losses
• There are no guarantees that dividends will be paid for example when
firms make losses or invest
Level Mark Descriptor
0 No rewardable material.
Level 1 1–3 Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 4–6 Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3 7–8 Evaluation recognises different viewpoints and/or is critical of the
evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.