Economics Tuition Online by Mr Koh: If you have faced questions requiring you to “Discuss the factors considered by a decision-maker in making a decision”, you may struggle to identify the correct structure based on the R1, E1, R2 and E2 format. Understanding the decision-making process e.g. factors considered by governments in choosing policy solutions is crucial, and it’s akin to unraveling the decision-making framework, which is essentially an expanded form of cost-benefit analysis. Let’s shed some light on how you can effectively plan your answers to such questions.
Benefits: The Gateway to Policy Explanation
The benefits serve as the gateway for explaining how a policy works. When confronted with questions such as factors considered by governments in addressing issues like market failure, it’s important to start with the benefits of the proposed policies, so you can present your ‘rehearsed’ write-ups on how a policy works (usually backed up by diagrammatic analysis).
However, if commencing with benefits feels unconventional, you can reframe them as the root cause of the problem. For instance, if the root cause is externalities, taxation could be the remedy. Similarly, if imperfect information is the root cause, campaigns could be deployed. Remember to infuse diagrams to bolster your arguments and score marks in Economic rigour.
Limitations: Counting the Costs, Constraints and Unintended Consequences
Transitioning from benefits, it’s important to delve into the limitations, primarily focusing on costs. This encompasses monetary costs and opportunity costs measured in terms of the next best alternative foregone.
In addition, constraints such as budgetary limitations or information deficits can be considered. In the macroeconomic landscape, constraints could manifest as the size of the multiplier or the nature of the economy. By examining the costs, constraints, and unintended consequences, commonly known as tradeoffs, you can provide a comprehensive analysis of factors which may inhibit the use of a policy.
By structuring your response around these factors – benefits (or root cause), costs, constraints, and unintended consequences – you can effectively address questions pertaining to factors considered by governments in devising policy solutions. This strategic approach not only demonstrates your understanding of the decision-making process but also showcases your ability to critically analyze and evaluate policy options. If you need more clarity, Economics tuition online services by Mr Koh include Youtube videos which offer more explanations.
As you navigate the intricate terrain of policy analysis, remember that while the structure of the question has changed, the substance of your answer largely remains the same. While different from typical questions relating to the ‘appropriateness of a policy to tackle micro or macroeconomic problems’, you are still required to demonstrate an understanding of policy pros (including rigorous explanation of how a policy works) and policy limitations. If you need help, Mr Koh offers Economics tuition online and in person (hybrid-format). You may contact him to find out more.
