All your hard work means nothing if you don't put what you know into paper properly. If you missed part 1 check it out here: Exam Tips 1
1. Create links
Create links with your question and other relevant topics. For example, if you are talking about inflation link it to other macro-economic factors such as balance of payments or the exchange rate. Show the examiner that your knowledge is not just limited to what you read from the textbook, analyze the question in light of its context.
That being said, make sure your answer actually answers the question and you don't go off and talk about another topic.
2. News events
As said above, show that you can do more than regurgitate what is in the textbook, be able to apply knowledge to situations. The current "economic meltdown" is prime for you! Use your knowledge of news events and show how you can apply your theory. Don't be afraid to use local news as well, that is okay! The examiners are not ignorant, they understand that you are doing an international examination and you can use what is happening in your own country. In fact, they encourage it.
3. Think before you ink!
Think about what you are going to write before you write it. Otherwise half-way through your answer you will realise you need to add things here and there and it gets messy. Sure the examiners can follow your stars and arrows, but why not just make it easy for them to give you marks? A planned answer shows! Do you know what shows even more though? An unplanned answer, the lack of coherency will not give the marker confidence in your ability.
4. Manipulate data
When given tables or graphs, don't just straight copy down data. Do some manipulation even things as simple as percentage changes (which you should know how to do by the way) will do. Just don't copy and paste.
Usually answers will involve some sort of data manipulation and most of the time it is basic arithmetic.
5. Have courage!
Have the courage to challenge statements and data. Do not fall into the trap of accepting everything you see, ask questions and do not be afraid to contradict what is being said.
An excellent demonstration of your knowledge is to be able to challenge the question. That being said, challenge within reason, be able to state your case clearly. Challenging data is not that drastic, it can be as simple as pointing out pitfalls in a certain indicator!
I know many of you have exams coming up now, I try my best to help you get those marks!
Sign up for email updates for further parts!
Types of Businesses- Joint Stock Companies
What are joint stock companies?
Joint stock companies are owned by shareholders, there is usually a separation between ownership and management.
The company is divided up into many shares which are held by people or groups. They elect a board of directors who oversee the day to day running of the business, these people have a duty to protect the interests of the shareholders. The board of directors can also appoint others to look after the day to day running of the business as well as other employees.
Joint stock companies benefit from limited liability, this means that should the business fail the shareholders liability is only limited to the price they paid for the shares or has left to pay. e.g. if the shareholder bought 1 share at $10, and paid $8 for it, should the business fail the shareholder will only have to pay $2 for it (the remainder of his share).
In most countries there are two types of companies that issue stock.
Joint stock companies are owned by shareholders, there is usually a separation between ownership and management.
The company is divided up into many shares which are held by people or groups. They elect a board of directors who oversee the day to day running of the business, these people have a duty to protect the interests of the shareholders. The board of directors can also appoint others to look after the day to day running of the business as well as other employees.
Joint stock companies benefit from limited liability, this means that should the business fail the shareholders liability is only limited to the price they paid for the shares or has left to pay. e.g. if the shareholder bought 1 share at $10, and paid $8 for it, should the business fail the shareholder will only have to pay $2 for it (the remainder of his share).
In most countries there are two types of companies that issue stock.
- Private limited company- which is owned by private individuals and the shares are not sold on the market
- Public limited company- owned by individuals in the public, the shares can be bought and sold on the stock-exchange.
- limited liablity - see above
- easier to raise finance as they can sell shares to raise capital, and they are usually larger so have more credibility (not always true), and they can also raise finance through debenture or bond issues
- can take advantage of specialised knowledge of managers
- they have to publish accounts yearly
- they are more expensive to set up and have more requirements under the law
- original owners can lose control of the business
- ownership and management are separate and often conflict of interests may occur.
Types of Businesses- Partnerships
Partnerships are much like sole traders, the only exception is that there is more than 1 owner. This usually occurs in the professional industries e.g. lawyers, accountants, doctors. When you hear about a law firm or an accounting firm that word 'firm' refers to a partnership.
Often businesses may start out as sole traders, and then move on the partnerships. What may be the reasons for this?
Often businesses may start out as sole traders, and then move on the partnerships. What may be the reasons for this?
- need extra funding without wanting to borrow money (interest costs)
- extra skills
- share in the workload
- unlimited liability exists just like a sole trader business
- profits must be shared
- one partner's actions can ruin the entire business
- if a partner leaves, the partnership is dissolved and a new partnership agreement must be formed
- a partnership agreement is usually required, however if one does not exist there are some default terms that are available.
Types of Businesses - Sole Trader
Welcome to part 1 of the Types of Businesses. This post talks about sole traders we also have partnerships, joint stock companies, and co-operatives later on.
Sole trader businesses, like the name suggests, is a business which is owned by one person. This person usually works inside the business and is involved in the day-to-day operations. However, this does not mean that they cannot employ staff.
Sole Trader businesses have unlimited liability, this means that should the business fails the owner's personal assets may be affected by the business' debts. This may mean that if the business fails, the owner may have to sell off his car in order to pay for its debts.
Money for a sole trader business usually comes from his own savings or loans on the trader's house (known as a mortgage).
Advantages:
Sole trader businesses, like the name suggests, is a business which is owned by one person. This person usually works inside the business and is involved in the day-to-day operations. However, this does not mean that they cannot employ staff.
Sole Trader businesses have unlimited liability, this means that should the business fails the owner's personal assets may be affected by the business' debts. This may mean that if the business fails, the owner may have to sell off his car in order to pay for its debts.
Money for a sole trader business usually comes from his own savings or loans on the trader's house (known as a mortgage).
Advantages:
- owner has complete control over business and its runnings
- easy to set up - there is usually much less legal documents to submit
- owner keeps all the profits (less taxes)
- there is no need to publish a set of annual accounts (you do with registered businesses)
- have to compete with larger firms - these firms may have lower costs (called economies of scale- more on that later)
- banks may be reluctant to loan money
- difficult to take a holiday - as the business often can't function without the owner
- unlimited liability - read above
- convenience store
- hairdresser
- tourism
- electrician
- plumber
Examination Tips Part 1
There is a certain point where all your hours of study and hardwork does not count for much, sure it'll get you the basic marks but you need to know how to tackle an economics exam properly.
This is part 1 of a series of articles on how you can use simple yet effective techniques to do well in that exam. These tips are compiled not only from years of examination experience from many many different people, it is from your actual examiners! That's right, the examiner's reports which are made after your scripts are marked.
1. Do not feel like you have to offer all the information you know about a topic!
Classic mistake, a question comes up which is specific in the topic e.g. arguments against trade protectionism. Students who have studied hard in this topic feel like they have to tell the examiner everything they know about the topic. STOP! Not only are you wasting precious time in the exam, you are actually moving the focus of your answer to an irrelevant part of the topic which actually ruins the good part of your answer!
Do read the question properly and make sure you answer to that question!
2. Answer the question that is asked and not the question you think is asked!
Another common mistake. It is because of the so-called model answers and essays that students prepare when studying and when they see a question similar to the one they wrote out, they go and write out their own essay they prepared!
How do you expect the examiner to give you marks for an answer he didn't ask for?
Now some students still insist on writing out model answers and that's fine if that is what works for them. What you should be doing however is tailoring that answer to the question, that may mean dropping out sections of your answer which you don't need. Be dynamic! Learn to be flexible with your answers.
3. Do not answer the next part of your question in the first part.
Be careful when answering the question to not answer part (b) in part (a). The simplest way to avoid this is to read your entire question and bullet point out what you want to say on the actual question paper. That way you'll avoid the embarrassing situation where you repeat what you say in the previous part of the question. Plus you'll save time by being economical with what you write.
4. Read the entire question, not just the trigger words like "discuss" and "explain"
Schools have this strange habit of hammering into you the trigger words, yes they are important, but you still need to read the entire question properly. Some students go into the exam, perhaps under considerable stress, read the first word of discuss see somewhere down the line it says externalities and then jump right into the answer without reading the whole question.
Not only will reading the entire question help you answer the question properly, it'll slow you down a little and calm your nerves.
5. Use mark allocations as guides
Simple and straight forward, if part (a) says [3 marks] part (b) says [7 marks] then part (b) should have a more in depth and longer answer than (a).
Also use these as point guides, if part (a) was "state the functions of money" and it was 3 marks, it wouldn't hurt to give them 3 functions of money would it? Generally the examiners are pretty good and they will ask you the question well.
----------------------------------------------------------------------------
Have you seen a general theme in all these tips? Read the question thoroughly! It's really a silly thing to lose marks on.
Keep checking back for part 2 of the examination tips which are out soon!
This is part 1 of a series of articles on how you can use simple yet effective techniques to do well in that exam. These tips are compiled not only from years of examination experience from many many different people, it is from your actual examiners! That's right, the examiner's reports which are made after your scripts are marked.
1. Do not feel like you have to offer all the information you know about a topic!
Classic mistake, a question comes up which is specific in the topic e.g. arguments against trade protectionism. Students who have studied hard in this topic feel like they have to tell the examiner everything they know about the topic. STOP! Not only are you wasting precious time in the exam, you are actually moving the focus of your answer to an irrelevant part of the topic which actually ruins the good part of your answer!
Do read the question properly and make sure you answer to that question!
2. Answer the question that is asked and not the question you think is asked!
Another common mistake. It is because of the so-called model answers and essays that students prepare when studying and when they see a question similar to the one they wrote out, they go and write out their own essay they prepared!
How do you expect the examiner to give you marks for an answer he didn't ask for?
Now some students still insist on writing out model answers and that's fine if that is what works for them. What you should be doing however is tailoring that answer to the question, that may mean dropping out sections of your answer which you don't need. Be dynamic! Learn to be flexible with your answers.
3. Do not answer the next part of your question in the first part.
Be careful when answering the question to not answer part (b) in part (a). The simplest way to avoid this is to read your entire question and bullet point out what you want to say on the actual question paper. That way you'll avoid the embarrassing situation where you repeat what you say in the previous part of the question. Plus you'll save time by being economical with what you write.
4. Read the entire question, not just the trigger words like "discuss" and "explain"
Schools have this strange habit of hammering into you the trigger words, yes they are important, but you still need to read the entire question properly. Some students go into the exam, perhaps under considerable stress, read the first word of discuss see somewhere down the line it says externalities and then jump right into the answer without reading the whole question.
Not only will reading the entire question help you answer the question properly, it'll slow you down a little and calm your nerves.
5. Use mark allocations as guides
Simple and straight forward, if part (a) says [3 marks] part (b) says [7 marks] then part (b) should have a more in depth and longer answer than (a).
Also use these as point guides, if part (a) was "state the functions of money" and it was 3 marks, it wouldn't hurt to give them 3 functions of money would it? Generally the examiners are pretty good and they will ask you the question well.
----------------------------------------------------------------------------
Have you seen a general theme in all these tips? Read the question thoroughly! It's really a silly thing to lose marks on.
Keep checking back for part 2 of the examination tips which are out soon!
Economic Decisions and Types of Economies
Remember that post a while ago when we talked about the basic economic question? How to best allocate those scarce resources to satisfy as many needs and wants?
From this 3 more questions arise:
- What to produce?
- How to produce?
- For whom to produce?
Well how countries answer these questions determine the type of economy they are. We have 3 different types:
- Planned or Command Economies
- Market Economies
- Mixed Economies
Planned or Command Economies
These are economies where the government decides what to produce, how to produce and for whom to produce. There is little input from market forces i.e. the forces of demand and supply.
A great deal of planning is involved in these economies. The government aims to create greater equality among the people, and the reason for producing goods and services is to satisfy needs. Because the government decides how to produce goods and services there is often only one of each good available and a single producer. That producer, as it is controlled by the government lacks the profit incentive so there is no need to improve goods and services or efficiency.
Today there are no true command economies but the closest examples would be China and North Korea.
| Advantages | Disadvantages |
| Most basic needs are provided for | Less Choice in Goods and Services |
| Greater equality | Lower quality of goods and services as there is no competition |
| | Less efficiency, higher waste as there is no competition or profit incentive |
Free Market Economy
In a market economy the economic decisions are made by individuals through the forces of demand and supply. The goods and services that are produced are made on the basis of demand, so there is a profit incentive. Many firms produce goods and services which creates competition and in turn greater efficiency as firms need to keep costs low in order to survive.
There is greater consumer sovereighty, the ability of consumers to choose what they want to consume. As a result, there is a greater range of goods and services.
Resources are owned by individuals who will produce goods and services for profit.
Again at this end of the continuum there are no true free market economies, the closest will most likely by the United States of Ameria.
| Advantages | Disadvantages |
| Greater range of goods and services | Those who can’t afford goods miss out on them |
| Higher quality | Greater inequality |
| Better efficiency | |
| Better satisfaction of wants and needs | |
Mixed Economy
The middle ground of the two economies and where most of the world is at, there is production by both the private sector and the public sector. The government intervenes when the market fails (check out the post on market failure)
Limited Means and Resources+ Factors of Production
We have limited means.
We only have 24 hours in a day, a limited amount of skills (we are not the good at everything as much as we hope we are), and we have limited money (it doesn’t grow on trees!)
We have limited resources.
Resources can be divided into 3 categories:
- natural: these are what is provided for by nature e.g. raw materials
- human: work done by people e.g. teacher, driver, lawyer
- human-made: goods made to produce other goods e.g. machinery, hammer
When resources are used in production they are known as factors of production.There are 4 of them:
- Land: provided for by nature with little or no human input
- Labour: work done by people to produce goods and services
- Capital: machinery and all other goods that are used to produce other goods and services
- Enterprise: the act of combining the other factors of production in order to produce goods and services. The entrepreneur assumes the risk of enterprise in order to make a profit.
The factors of production earn.
Land earns rent
Labour earns wages or salaries
Capital earns interest and dividends
Entrepreneurs earn profits
Scarcity, Choice and Opportunity Cost
Scarcity is the situation where there are unlimited wants and needs but there are only limited resources.
We constantly want more, and when we get it we just want a bit more. These goods and services that we want are produced by resources. While most of our basic human needs- food, water, shelter, housing and clothing can be satisfied with the resources. Our wants for better things cannot all be satisfied.
Here lies the basic economic problem- how do we use our limited resources to fulfill our infinite wants and needs?
Because of scarce resources, we need to make decisions on how to use them, we need to make choices.
A choice is a decision to use a scarce resource between competing uses.
When we make a choice an opportunity cost is immediately created.
An opportunity cost refers to the next best alternative forgone
Let’s look at an example!
A large piece of land can be used to build a shopping mall or a hospital.
Scarcity- a limited resource of land has numerous uses.
A decision is made to build a hospital- choice. An opportunity cost then created, the forgone shopping mall.
If you do AS or above, find the post on production possibilities frontiers where these concepts are displayed graphically.
Tips
Here you will find all the tips on acing those end of year exams!
These tips have been compiled through many years of examinations by many people who did great in their exams AND from the examiner's reports!
You will find tips on exams, study, psychology and more!
Examination Tips Part 1
Examination Tips Part 2
These tips have been compiled through many years of examinations by many people who did great in their exams AND from the examiner's reports!
You will find tips on exams, study, psychology and more!
Examination Tips Part 1
Examination Tips Part 2
Theory
This is where all the theory is, save some time and use the search function if you are after something specific. Do you need something that is not here? Use the comments feature to request it!
Are you doing IGCSE? Click here!
Microeconomics
Basic Economic Theory
Limited Means and Resources+ Factors of Production
Services
We offer numerous quality services for you the student that is not only affordable but effective. Because we understand that you need to allocate your limited means to gain maximum utility!
- Proof reading
- Essay improvement
- Question analysis (make sure that you understand the question you are given, and some tips on how to answer
The above services are only $1 US or $1 NZ (if you live in NZ) per 100 words submitted!! If we think we can’t help you either because you have done a killer essay or because of any other reason we will let you know.
How it works is that you send us the question and your answer, we will review it and then get you to pay through Paypal or other means. Then we send you back the reviewed work. Please allow 2 working days, don’t send stuff to us last minute!
Please note that we will not do your work for you! The work you submit to your teachers should be of your own, we do not condone plaigarism!
Tutoring is also available either live in Auckland or through internet chat. Please contact auckland.tutor [at] gmail [dot] com for more information.
Subscribe to:
Posts (Atom)