Model Answer to 8 Mark Question in Style of Edexcel Economics

Here is a sample 8 mark question and model answer. This is in the style of Edexcel Economics A.

For Edexcel Economics A style practice papers and online course, check out the links below:

Sample question

Examine the externalities involved in the coal industry (8 marks).

Model answer

An externality is an effect on a third party not involved in the transaction.

The coal industry exhibits negative externalities in consumption. Consumers using coal fireplaces leads to emissions of greenhouse gases, such as CO2. This contributes to sea levels rising. This may cause more flooding, making parts of the country inhabitable. Those who live in these areas face a third-party cost. For example they cannot live in that area, so they lose their house and place of work and have to migrate. England will ban the use of coal for fireplaces from May 2023. This is because coal use is a “major source of particulate matter (PM2.5) pollution ” (UK Government).

The free market is unlikely to take the externality into account. So there is likely to be overconsumption of coal in the free market. This externality creates a welfare loss as a result of misallocation of resources. In this case consumers use too much coal relative to the socially optimal level. This means there is market failure. Market failure occurs when there is a misallocation of resources. There are also negative externalities in production. For example using coal to power manufacturing produces emissions. Coal contributed to 40% of the UK’s energy generation in 2012. While this has dropped to 1.8% in 2020, coal use still remains.

Yet coal is a relatively small part of the U.K. energy mix. So any effects of coal on carbon emissions are likely to be smaller all else equal. This means a smaller negative externality.

Also pollution can move across borders. Hence it could be difficult to work out how much of the increased emissions is due to coal. So it is difficult to measure the size of the externality.

Commentary

This answer has solid use of analysis, application and evaluation.

Note there will usually be an extract to quote from for application. For more information on UK Government policy towards coal fireplaces, check out this link.

This answer would likely score full marks or close to it.

Other possible points

Some other possible points:

• Other negative externalities of coal. This includes water pollution, toxicity, breathing problems, other air pollution effects.
• Coal as a more polluting fossil fuel. So negative externalities may be greater for coal when compared to say oil or gas.
• Indirect emission of coal. For example by overseas investments or purchasing items from abroad produced using coal.
• Positive spillovers such as the energy supply for firms and consumers. Suppose energy is in short supply. Then extra energy sources could help consumers heat their homes for example.
• Consumers may care about the impact of coal on the environment. So consumers may reduce coal use without intervention (altruism).

Common mistakes

There are two common mistakes for 8 mark questions:

1. Overwriting. The mark scheme for an 8 mark question is points-based and not level-based. There are two marks for analysis only – not much. Hence a decent length analysis chain is sufficient. No graph is required but can be drawn if you have time and it helps you explain. Keep your answer concise here, so you can write more for the later questions.
2. Forgetting a key component like application or evaluation. Have a mental checklist. Check you have included application and evaluation.

Note this is in the style of Edexcel Economics A questions.

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