This article aims to provide a structured method for students to analyze and answer questions on Impact on Events on a market – a popular essay question taught in Mr Koh’s A level economics tuition classes. Detailed notes can be downloaded here.
ABC332 Approach for A Level Economics Questions on DDSS
A3: Analysis of Demand Shift (A refers to the diagram featuring a shift in Demand against a stationary Supply curve; while 3 refers to the 3 points below)
- Demand Factor Analysis: Students need to identify the non-price factors that led to the shift in demand, such as changes in consumer preferences, income levels, prices of related goods, or future expectations.
- Price Elasticity of Supply (PES) Analysis: Assess how responsive the quantity supplied is to a change in price. Students must explain how the degree of elasticity influences the magnitude of the price change when demand shifts. Identify relevant PES factors
- Market Impact: Articulate the consequences on equilibrium price (P), quantity (Q), total expenditure (aka total revenue).
B3: Analysis of Supply Shift (B refers to the diagram featuring a shift in Supply against a stationary Demand curve; while 3 refers to the 3 points below)
- Supply Factor Analysis: Students should identify the non-price determinants leading to a supply shift, such as technological advancements, changes input costs, taxes, subsidies, or the number of suppliers.
- Price Elasticity of Demand (PED) Analysis: Evaluate how the quantity demanded responds to a change in price, considering whether demand is elastic or inelastic, and discuss how this affects the overall market impact. Identify relevant PED factors
- Market Impact: Discuss outcomes on equilibrium price (P), quantity (Q), total revenue (as a proxy for total expenditure from producers’ standpoint).
C2: Combined Shift Analysis
- Dominant Curve Shift Determination: When both demand and supply shift, students need to determine which shift has a greater impact on the market and why, considering both the magnitude and relative elasticity of the shifts.
- Adjustment to Equilibrium: Describe the process by which the market reaches a new equilibrium, including intermediate steps and the final equilibrium point in terms of price (P) and quantity (Q), and impact on total expenditure or revenue.
Additional Components to Score for A Level Economics:
Diagrammatic Illustration Elaboration:
- Diagrams need to be labeled correctly, showing initial and new equilibrium.
- Shifts in demand or supply should be clearly marked as D1 to D2 (for demand shifts) and S1 to S2 (for supply shifts).
- Show the resultant changes in equilibrium price (P1 to P2) and quantity (Q1 to Q2).
- If required, highlight areas representing consumer and producer surplus before and after the shift to analyze the impact.
Preparation Tips:
- Practice interpreting different scenarios and applying ABC332 systematically to each.
- Engage in discussions with Mr Koh in his A level Economics tuition classes to gain diverse perspectives on the ABC332 approach.
- Work on past exam papers and real-world case studies to refine the application of this method.
Conclusion:
By following the ABC332 approach, students can systematically assess the impact on the market due to changes in demand and supply factors. Including elasticities in the analysis provides depth, aiding in a more accurate prediction of market outcomes. To fully master this study guide, it is imperative for students to consistently practice and be able to apply this approach to various market scenarios, utilizing both diagrammatic representations and written explanations to demonstrate their understanding.