How to Evaluate for Edexcel Economics: 14 Points + Examples

What does evaluation actually mean?

For Edexcel A-level Economics, there are two possible ways to evaluate:

Offer the opposite side of the argument (however….)
State what the argument may depend on (depends on…)

Conclusions in 25 mark questions also count as evaluation.

To cover evaluation in more detail, you are welcome to check out my online course below:

Economics A Level Exam Technique Course | For Edexcel Economics A

How much evaluation to write?

The amount of evaluation to write depends on the question.

For 8 mark questions, there are only two marks allocated to evaluation. But for 25 mark questions there are 9 marks available for evaluation.

So the amount of evaluation should change accordingly – more marks means more evaluation needed.

For more information on this, see the article here.

Key Evaluation Factors

For particular questions you may wish just to consider the opposite side of the argument.

However you can also consider possible evaluation factors. Sometimes these will overlap with the opposite side of the argument.

I list these evaluation factors below.

For microeconomics, possible evaluation factors include:

Elasticities
Short run versus long run.
The percentage of consumers or firms impacted (most) by a policy.
Business objectives of a firm.
How a firm uses its profits.
Other firm or consumer responses.
Other factors may matter (more).

Similarly for macroeconomics, possible evaluative factors include:

Spare capacity / state of the economy.
Percentage of consumers or firms affected.
Level of business or consumer confidence.
Level of current policy, for example whether interest rates are low or the budget deficit is high.
Other factors may matter (more)
Short run versus long run.
Also Marshall-Lerner condition or J curve considerations.

This is just a list of some of the most common evaluation factors. Other points may be equally valid.

For the exam you will need more evaluation points, but this is a good starting point for most essays.

Evaluation Steps

I suggest the following steps in the evaluation for the 25 mark question:

State the point briefly.
Explain why that point matters, in detail if for a 25 mark question.
If you know any relevant information, use that to support the evaluation point.
Also you have the option of extending your analysis with an extra relevant point.
Finally link back to the question or the previous analysis.

Microeconomics Example

Question

Examples of microeconomics evaluation in a 25 mark question. Consider the following 25 mark question:

“Evaluate the microeconomic effects of a tax on sugar”.

For analysis you may have showed the effect of an increase on tax on a diagram. For example the tax shifts the supply curve to the left, leading to a lower quantity and higher price in equilibrium.

Thus the tax eliminates any market failure arising from negative externalities, for example that there are costs imposed on hospitals and UK taxpayers from those who consume an unhealthy amount of sugars.

Diagram showing the effect of an indirect tax on sugar.

Example Evaluation Paragraphs

To evaluate here are a few possible approaches:

Elasticities

However the tax may increase the cost of living. Sugar may be viewed as addictive and so we would expect the price elasticity of demand (PED) to be inelastic.

For sugar sweetened beverages for example, estimates for the PED are about -0.9, in other words slightly inelastic.

Hence a tax on sugar will increase total consumer spending on sugary drinks.

This will particularly harm those on lower incomes, as the price rise will constitute a greater proportion of their income. So the tax may harm inequality, rendering it less effective.

Size of Policy

This depends on the size of the tax. If the tax is set too low relative to the size of the externality, then the quantity of sugar consumed would not fall enough to completely eliminate the market failure.

This could occur if the government underestimates the size of the externality or suffers from regulatory capture by the interests of firms who lobby the government for lower sugar tax rates.

The NHS pays £5 billion a year to treat obesity and £10 billion a year to treat diabetes (Public Health England), some of which could be due to high sugar consumption.

If the tax rate is set higher than the size of the externality, then there would also be market failure because of underconsumption of sugar.

Short run versus long run

The effect of the tax depends on the time frame. In the short run there may be fewer substitutes, so the price elasticity of demand is more likely to be inelastic.

This means the tax will increase prices and reduce consumer surplus to a greater extent in the short term.

But over time more substitutes may be discovered for sugar, making the PED more elastic and reducing the extent to which prices increase and consumer surplus falls.

In the case of sugar the tax led to increased use of substitutes such as Stevia. So while the tax may harm consumers in the short run, in the long run the tax may be less harmful.

Summary

In a lot of cases the same evaluation point could be phrased as a “depends on” or a “however” point. Both would score credit with Edexcel Economics.

Other evaluation approaches can be viable. There is no one-size-fits-all approach. But the method above is a good way to get started.

Evaluation Practice

Note I would recommend putting this into practice by doing past papers or practice papers. For practice papers in the style of Edexcel Economics A, see the link here:

Practice Papers in the style of Edexcel A-level Economics A

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Tom Furber

Helping economics students online since 2015. Previously an economist and economics tutor, I now focus on providing economics resources on tfurber.com. Read more about me here.