OCR Level 3 Advanced GCE In Economics (H460)

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A LEVELSpecificationECONOMICSH460For first assessment in 2017ocr.org.uk/aleveleconomics

We will inform centres about any changes to the specification. We will alsopublish changes on our website. The latest version of our specification willalways be the one on our website (ocr.org.uk) and this may differ fromprinted versions.Copyright 2014 OCR. All rights reserved.CopyrightOCR retains the copyright on all its publications, including the specifications.However, registered centres for OCR are permitted to copy material from thisspecification booklet for their own internal use.Oxford Cambridge and RSA Examinations is a Company Limited byGuarantee. Registered in England. Registered company number 3484466.Registered office: 1 Hills RoadCambridgeCB1 2EU.OCR is an exempt charity.

Contents12345Introducing A Level Economics (from September 2015)iiTeaching and learning resourcesiiiProfessional developmentivWhy choose an OCR A Level in Economics?11a.Why choose an OCR qualification?11b.Why choose an OCR A Level in Economics?21c.What are the key features of this specification?31d.How do I find out more information?3The specification overview42a.Overview of A Level in Economics (H460)42b.Content of A Level in Economics (H460)52c.Content of Component 1: Microeconomics (H460/01)62c.Content of Component 2: Macroeconomics (H460/02)172c.Content of Component 3: Themes in economics (H460/03)282d.Prior knowledge, learning and progression28Assessment of OCR A Level in Economics293a.Forms of assessment293b.Assessment objectives (AO)303c.Assessment availability303d.Retaking the qualification313e.Assessment of extended responses313f.Synoptic assessment313g.Calculating qualification results31Admin: what you need to know324a.Pre-assessment324b.Accessibility and special consideration334c.External assessment arrangements334d.Results and certificates344e.Post-results services344f.Malpractice34Appendices355a.Overlap with other qualifications355b.Avoidance of bias355c.Quantitative skills annex35 OCR 2016A Level in Economicsi

Introducing A Level Economics (from September 2015)We want our Economics qualifications to captivate theimagination of students so that, when they leave theclassroom, they’ll want to explore and read around thesubject further.While serving as an introduction to the study ofeconomics, the specification will also provideopportunities for Stretch and Challenge to extendstudents’ understanding of the world of economics.With this in mind, this specification will appeal tostudents across the ability range.The classroom is where the majority of students willbe introduced to the study of economics. It’s withinthis environment that they will confront issues, tacklethe challenges that these issues raise, and engage indebate and discussion with fellow students.Meet the teamWe have a dedicated team of people working on our ALevel Economics qualifications.Find out more about our Economics team atocr.org.uk/economicsteamIf you need specialist advice, guidance or support, getin touch as follows: 01223 553998 economics@ocr.org.uk @OCR examsThis exciting atmosphere will be supported by acomplete, comprehensive and high-quality OCREconomics support package, with materials for you toadapt and use to suit your class as appropriate. Thispackage will respect your professionalism to constructthe course of learning in your own way.At the heart of our Economics qualifications will betheir relevance to the modern world; their topicalityis designed to engage students and facilitate anunderstanding of their role in society. The stimulatingspecification content will encourage them to developtheir skills as independent learners, critical thinkersand decision-makers – all personal assets that canmake them stand out as they progress to highereducation and/or the workplace.ii OCR 2016A Level in Economics

Teaching and learning resourcesWe recognise that the introduction of a newspecification can bring challenges for implementationand teaching. Our aim is to help you at every stage andwe’re working hard to provide a practical package ofsupport in close consultation with teachers and otherexperts, so we can help you to make the change.Designed to support progression for allOur resources are designed to provide you with arange of teaching activities and suggestions so you canselect the best approach for your particular students.You are the experts on how your students learn andour aim is to support you in the best way we can.We want to Support you with a body of knowledgethat grows throughout the lifetime of thespecification Provide you with a range of suggestions soyou can select the best activity, approachor context for your particular students Make it easier for you to explore andinteract with our resource materials, inparticular to develop your own schemesof work Create an ongoing conversation so we candevelop materials that work for you. OCR 2016A Level in EconomicsPlenty of useful resourcesYou’ll have four main types of subject-specific teachingand learning resources at your fingertips: Delivery Guides Transition Guides Topic Exploration Packs Lesson Elements.Along with subject-specific resources, you’ll also haveaccess to a selection of generic resources that focuson skills development and professional guidance forteachers.Skills Guides – we’ve produced a set of Skills Guidesthat are not specific to Economics, but each covers atopic that could be relevant to a range of qualifications– for example, communication, legislation and research.Download the guides at ocr.org.uk/skillsguidesActive Results – a free online results analysis serviceto help you review the performance of individualstudents or your whole school. It provides access todetailed results data, enabling more comprehensiveanalysis of results in order to give you a more accuratemeasurement of the achievements of your centre andindividual students. For more details refer toocr.org.uk/activeresultsiii

Professional developmentTake advantage of our improved ProfessionalDevelopment Programme, designed with you in mind.Whether you want to look at our new digital training orsearch for training materials, you can find what you’relooking for all in one place at the CPD Hub.An introduction to the new specificationsWe’ll be running events to help you get to grips withour A Level Economics qualification.ivThese events are designed to help prepare you for firstteaching and to support your delivery at every stage.Watch out for details at cpdhub.ocr.org.ukTo receive the latest information about the trainingwe’ll be offering, please register for A Level emailupdates at ocr.org.uk/updates OCR 2016A Level in Economics

1 Why choose an OCR A Level in Economics?1a. Why choose an OCR qualification?Choose OCR and you’ve got the reassurance thatyou’re working with one of the UK’s leading examboards. Our new A Level in Economics course has beendeveloped in consultation with teachers, employersand Higher Education to provide learners with aqualification that’s relevant to them and meets theirneeds.We’re part of the Cambridge Assessment Group,Europe’s largest assessment agency and a departmentof the University of Cambridge. Cambridge Assessmentplays a leading role in developing and deliveringassessments throughout the world, operating in over150 countries.We work with a range of education providers, includingschools, colleges, workplaces and other institutionsin both the public and private sectors. Over 13,000centres choose our A Levels, GCSEs and vocationalqualifications including Cambridge Nationals andCambridge Technicals.Our SpecificationsWe believe in developing specifications that help youbring the subject to life and inspire your students toachieve more.We provide a range of support services designed tohelp you at every stage, from preparation through tothe delivery of our specifications. This includes:1 A wide range of high-quality creative resourcesincluding:oDelivery GuidesoTransition GuidesoTopic Exploration PacksoLesson Elementso and much more. Access to Subject Advisors to support youthrough the transition and throughout thelifetimes of the specifications. CPD/Training for teachers to introduce thequalifications and prepare you for first teaching. Active Results – our free results analysis serviceto help you review the performance of individualstudents or whole schools.All A level qualifications offered by OCR are accreditedby Ofqual, the Regulator for qualifications offered inEngland. The accreditation number for OCR’s A Level inEconomics is QN: 601/4799/4.We’ve created teacher-friendly specifications based onextensive research and engagement with the teachingcommunity. They’re designed to be straightforwardand accessible so that you can tailor the delivery ofthe course to suit your needs. We aim to encouragelearners to become responsible for their own learning,confident in discussing ideas, innovative and engaged. OCR 2016A Level in Economics1

1b. Why choose an OCR A Level in Economics?1The OCR Economics specification gives astrong grounding in both microeconomics andmacroeconomics, through a three-componentexternally assessed qualification. The specificationcontent has been designed to capture and inspire thelearner’s interest in making links to modern life andthe world around them. It provides the opportunity tostudy a wide range of concepts which can be applied ina variety of contexts.At the heart of OCR Economics is its relevance to themodern world; its topicality will engage the learnerand facilitate an understanding of their role in society.The stimulating specification content will encouragelearners to develop their skills as independent learners,critical thinkers and decision makers – all personalassets that can make them stand out as they progressto higher education and/or the workplace.The aims of the OCR A Level in Economics are toencourage the learners to think as economists. Theywill develop the skills necessary (including thoserelating to analysis, evaluation and quantitativemethods) in order to achieve that aim. In additionthe learners will develop a knowledge andunderstanding of those aspects of microeconomicsand macroeconomics which are assessed within thequalification in order to develop an enquiring, criticaland thoughtful approach to the study of economics.Aims and learning outcomesA level specifications in Economics must encouragelearners to: use an enquiring, critical and thoughtfulapproach to the study of economics and developan ability to think as an economist develop an interest in and enthusiasm for thesubject appreciate the contribution of economics to theunderstanding of the wider economic and socialenvironmentunderstand that economic behaviour can bestudied from a range of perspectives develop an understanding of a range of conceptsand an ability to use those concepts in a varietyof different contextsdevelop analytical and quantitative skills,together with qualities and attitudes which willequip them for the challenges, opportunitiesand responsibilities of adult and working life.2 OCR 2016A Level in Economics

1c. What are the key features of this specification?This specification will enable: learners to develop the necessary analytical,questioning and quantitative skills to learn howto ‘think as economists’ and to progress towardshigher education in economics or a relatedsubject the captivation of the learner’s imagination sothat they will want to explore the subject further the co-teachability with AS Level in EconomicsH060, with the interaction of the two central tothe planning and writing of this specification.The OCR A level specification in Economics providesthe ideal foundation for those learners who wish topursue further study of economics or related work, atthe same time as offering a complete course for thosewho are interested in achieving greater understandingof what they see in the news and the world aroundthem. There is a simple, straight-forward assessmentstructure with no coursework, just three two-hourexaminations at the end of the course.1There are three mandatory components, focusingon microeconomics, macroeconomics and themesin economics, with the latter offering an excitingopportunity for learners to apply theories andconcepts to up-to-date contexts. This content structuregives a superb grounding in economic theory, beforelearners have the opportunity to apply the technicaland analytical tools they have acquired in an engagingcontent which is relevant to the modern world.1d. How do I find out more information?If already using OCR specifications you can contact usat: www.ocr.org.ukIf you are not yet an approved centre and would like tobecome one go to: www.ocr.org.ukIf you are not already a registered OCR centre thenyou can find out more information on the benefits ofbecoming one at: www.ocr.org.ukFind out more? OCR 2016A Level in EconomicsAsk a Subject Advisor: economics@ocr.org.uk3

2 The specification overview2a. Overview of A Level in Economics (H460)Learners must complete all components (01, 02 and 03) to be awarded the OCR A Level in Economics.Content Overview2 Microeconomic theory Theoretical working of the freemarket Imperfections and marketfailures Macroeconomy functions on adomestic and global level Policy approaches Changes in macroeconomicsover timeAssessment OverviewMicroeconomics(01)80 marks2 hour written paperMacroeconomics(02)80 marks2 hour written paperThemes in economics*(03)80 marks2 hour written paper33.33%of totalA level33.33%of totalA level33.33%of totalA level* Indicates synoptic assessment4 OCR 2016A Level in Economics

2b. Content of A Level in Economics (H460)The OCR A Level in Economics content encouragesthe learners to ‘think as economists’ and developthe appropriate range of analytical, questioning andreasoning skills to achieve this objective. In additionthe qualification will enable learners to developstrong grounding in both microeconomics andmacroeconomics, drawing on local, national and globalcontexts.The qualification also encourages learners to applythe concepts and techniques which they have learnedthroughout the course to a range of ‘real world’ issuesand contexts. In particular, Themes in economics(component 3) draws together both microeconomicand macroeconomic concepts in relation to a specificunseen theme.This specification enables learners to foster anunderstanding of economics concepts and theoriesin a range of contexts and to develop a criticalconsideration of their value and limitation in explaining OCR 2016A Level in Economicsreal world phenomena. As a result of following thiscourse of study learners will be able to explain, analyseand evaluate the strengths and weaknesses of themarket economy and the role of the governmentwithin a market economy, and be able to criticiseeconomic models of enquiry, recognising thelimitations of economic models.In addition, learners will understand microeconomicand macroeconomic market models and will be able touse these to explore current economic behaviours andmake causal connections. They will be able to developan understanding of how the models shed light on theeconomy as a whole.The detailed specification content is presented in threecolumns. The first column details the areas of study,the second column details the topics which need to becovered during the A level course and the third columndetails the actual content which needs to be addressedwithin each individual topic.52

2c. Content of Component 1: Microeconomics (H460/01)2Component 1 of OCR’s A Level in Economics focuseson microeconomics. From a base of microeconomictheory, this component enables learners to discussand evaluate how well microeconomic theories explainour observations of economic agents in the real world.The theoretical workings of the free market providea useful starting point for explanation and analysis.Imperfections and market failures provide a lead into adiscussion of the merits and drawbacks of governmentintervention. The study of microeconomics encouragesthe learners to consider the usefulness of theory inThe content of the specification is expressed in threecolumns in relation to components 1 and 2. The firstcolumn identifies the areas of study (taken from theSubject Criteria), the second column states the topicswhich need to be covered within each area of studyand the third column lists the actual content whichlearners should be able to do.Area of StudyTopicLearners should be able to:Scarcity andchoiceThe basiceconomicproblem explain what is meant by economic goods and free goodsdistinguish between economic goods and free goodsexplain what is meant by the basic ‘economic problem’evaluate the implications of the basic ‘economic problem’explain what is meant by normative and positive statementsdistinguish between normative and positive statementsexplain what is meant by ‘needs’ and ‘wants’distinguish between ‘needs’ and ‘wants’explain what is meant by scarcityevaluate, using examples, the problem of scarcity and therequirement to make choicesexplain, using examples, the impact of sustainability on scarcity andchoiceexplain the role of economic agents:o governmento firmso householdsexplain the nature and role of the different factors of production aseconomic resourcesexplain the rewards to the factors of production.The marketeconomy evaluate the strengths and weaknesses of the market economyevaluate the role of government within the market economy.The concept ofthe margin explain what is meant by the concept of the margincalculate the appropriate marginal value from a given set of dataevaluate the extent to which the marginal concept is useful toeconomic agents in decision makingevaluate the concept of rationality as a way of understanding thebehaviour of economic agents. 6explaining observations taken from the real world ofeconomics. OCR 2016A Level in Economics

Area of StudyTopicLearners should be able to:Scarcity andchoiceOpportunity cost Specialisationand trade Howcompetitivemarkets workAllocation ofresources explain what is meant by resource allocationexplain the impact of incentives on the behaviour of economicagents and resource allocationevaluate the effectiveness of incentives on the behaviour ofeconomic agents and resource allocationexplain how market, planned and mixed economies allocateresourcesevaluate the advantages and disadvantages of different types ofeconomy in allocating resources. explain, using examples, what is meant by maximisationidentify possible objectives of economic agentsevaluate the different objectives of the economic agents in aneconomy.Supply anddemand and theinteraction ofmarkets explain what is meant by a market and by sub-marketsexplain the relationship between individual and market demandexplain what is meant by derived, joint, composite and competitivedemandexplain the relationship between price and quantity demandedusing marginal utility theory and income and substitution effectsexplain, with the aid of a diagram, the difference between amovement along the demand curve (extension/contraction) and ashift of the demand curve (increase/decrease)explain the factors which cause a shift of the demand curveexplain, with the aid of a diagram, what is meant by consumersurplusexplain and calculate how changes in price affect consumer surplusevaluate the impact of changes in price on consumer surplus 2explain what is meant by specialisation and the division of labourevaluate the role of specialisation and the division of labour inaddressing the problem of scarcityexplain how specialisation encourages trade and exchange in aneconomyexplain how money facilitates trade and exchange compared tobarter systems.The objectives ofeconomic agents OCR 2016A Level in Economicsexplain the concept of opportunity costexplain what is meant by a ‘trade-off’explain what is meant by a production possibility curve/frontier(PPC/F)explain the factors causing a PPC/F to shiftexplain how a PPC/F can be used to illustrate scarcity, choice,opportunity cost and productive efficiencyevaluate the usefulness of the concept of opportunity cost.7

2Area of StudyTopicLearners should be able to:Howcompetitivemarkets workSupply anddemand and theinteraction ofmarkets 8explain the relationship between individual supply and marketsupplyexplain what is meant by joint, composite and competitive supplyexplain the relationship between price and quantity suppliedexplain, with the aid of a diagram, the difference between amovement along the supply curve (extension/contraction) and ashift of the supply curve (increase/decrease)explain the factors which cause a shift of the supply curveexplain, with the aid of a diagram, what is meant by producersurplusexplain and calculate how changes in price affect producer surplusevaluate the impact of changes in price on producer surplusexplain, with the aid of a diagram, how demand and supply interactto produce market equilibrium in product markets, financial marketsand the markets for factors of productionevaluate the impact of changes in demand and/or supply in onemarket on a related market(s)explain the causes and consequences of disequilibrium in a marketexplain, with the aid of a diagram, how changes in the factorsaffecting supply and demand will impact on equilibrium price andquantity in moving from an initial equilibrium to a new equilibriumexplain, with the aid of a diagram, why the price and output of somegoods and services may be volatileevaluate, with the aid of a diagram, the usefulness of demand andsupply in analysing markets, such as commodities, housing andtransportexplain the assumptions underlying the model of supply anddemandexplain the way in which the model of supply and demand operatesusing a range of techniquesanalyse the model to describe and predict economic behaviourevaluate the usefulness and limitations of the economic model ofsupply and demand in explaining real world phenomena. OCR 2016A Level in Economics

Area of StudyTopicLearners should be able to:Howcompetitivemarkets workElasticity Productiveand allocativeefficiency OCR 2016A Level in Economicsexplain what is meant by elasticityexplain what is meant by price elasticity of demand (PED)calculate PED using point elasticityexplain, with the aid of a diagram, the different values of PEDexplain why price elasticity of demand varies along a straight linedemand curveexplain, with the aid of a diagram, the relationship between PED anda firm’s total revenueevaluate the factors which determine the degree of PEDevaluate the effect of PED on the impact of an indirect tax and of asubsidyexplain what is meant by income elasticity of demand (YED)calculate YEDevaluate the significance of the numerical value and sign of YEDexplain the difference in YED of inferior, normal and superior goodsexplain what is meant by cross elasticity of demand (XED)calculate XEDevaluate the significance of the numerical value and sign of XEDexplain the difference in XED of substitute, complementary and nonrelated goodsexplain what is meant by price elasticity of supply (PES)calculate PES using point elasticityexplain, with the aid of a diagram, the different values of PESevaluate the factors which determine the degree of price elasticityof supplyevaluate the usefulness of and significance of PED, YED, XED and PESto all economic agents.2explain what is meant by productive efficiencyexplain what is meant by allocative efficiencyexplain what is meant by economic efficiencydistinguish between static and dynamic efficiencyexplain what is meant by x-inefficiencyexplain the conditions under which productive and allocativeefficiency can be achievedevaluate whether other market structures may not always lead toproductive and allocative efficiencyevaluate the importance of productive, allocative and dynamicefficiency.9

Area of StudyTopicLearners should be able to:Competitionand marketpowerBusinessobjectives 2 Marketstructures andtheir implicationsfor the wayresources areallocated and theinterdependenceof firms 10evaluate the assumptions underlying profit maximisation as abusiness objectiveevaluate the relevance of profit maximisation to businessesevaluate alternative maximisation objectives for businesses to profitmaximisation, including sales revenue maximisation, sales volumemaximisation, growth maximisation and utility maximisationevaluate non-maximising objectives for businesses, such as profitsatisficing, social welfare, corporate social responsibility (CSR)explain the principle agent problemevaluate the factors which influence the choice of objectives.distinguish between the short run and long run in terms of fixed andvariable factorsexplain the law of diminishing returnsevaluate the significance of the law of diminishing returnsexplain what is meant by: total cost (TC), total fixed cost (TFC),total variable cost (TVC), average cost/average total cost (AC/ATC),average fixed cost (AFC), average variable cost (AVC), marginal cost(MC)calculate: TC, TFC, TVC, AC (ATC), AFC, AVC, MCexplain, with the aid of a diagram(s), the relationship between costsand outputexplain the relationship between short run AC and long run ACexplain what is meant by internal and external economies anddiseconomies of scaleevaluate the causes of internal and external economies anddiseconomies of scaleevaluate the significance of economies and diseconomies of scale tobusinesses and other economic agentsexplain what is meant by the minimum efficient scale (MES)evaluate the importance of MESexplain what is meant by:o total revenue (TR), average revenue (AR), marginal revenue(MR) OCR 2016A Level in Economics

Area of StudyTopicLearners should be able to:Competitionand marketpowerMarketstructures andtheir implicationsfor the wayresources areallocated and theinterdependenceof firms OCR 2016A Level in Economicscalculate: TR, AR, MRcalculate profit/lossexplain, with the aid of a diagram(s), the relationship between price,revenue, PED and outputexplain what is meant by accounting profit and economic profitdistinguish between accounting profit and economic profitexplain what is meant by supernormal (abnormal) profit, normalprofit and lossexplain, using calculations and/or diagrams, the relationshipbetween supernormal profit, normal profit, loss, TR and TCexplain, using diagrams, why supernormal profits are maximised(losses minimised) at the level of output where MC MRexplain the characteristics of perfect competitionexplain, with the aid of a diagram, why the individual firm in perfectcompetition is a price takerexplain, with the aid of a diagram, the equilibrium price and outputfor a firm in perfect competition in the long runexplain, with the aid of a diagram, why the individual firm in perfectcompetition can make supernormal profits or losses in the short runexplain, with the aid of a diagram, why the individual firm in perfectcompetition can only earn normal profits in the long runexplain, with the aid of a diagram, why the individual firm in perfectcompetition will be allocatively efficientexplain, with the aid of a diagram, why the individual firm in perfectcompetition will be productively efficient in the long runevaluate, with the aid of a diagram, the usefulness of perfectcompetition theoryexplain the characteristics of monopolyexplain what is meant by monopsonyexplain, with the aid of a diagram, a natural monopolyevaluate the impact of the existence of a natural monopolyexplain, with the aid of a diagram, why a monopolist is a price makerexplain, with the aid of a diagram, the equilibrium price and outputfor a profit maximising monopolistexplain, with the aid of a diagram, why a monopolist can makesupernormal profits in both the short run and the long runexplain, with the aid of a diagram, why the profit maximisingmonopolist may be neither allocatively nor productively efficientexplain, with the aid of a diagram, what is meant by pricediscrimination by a business with monopoly powerevaluate, with the aid of a diagram, the advantages anddisadvantages of monopoly powerexplain the characteristics of monopolistic competition112

Area of StudyTopicLearners should be able to:Competitionand marketpowerMarketstructures andtheir implicationsfor the wayresources areallocated and theinterdependenceof firms 2 12explain, with the aid of a diagram, the equilibrium price and outputfor a business in monopolistic competition in the short run and thelong runexplain, with the aid of a diagram, why a business in monopolisticcompetition can make supernormal profits or losses in the short runbut only normal profits in the long runevaluate, with the aid of a diagram, the advantages anddisadvantages of monopolistic competitionexplain the characteristics of oligopolyexplain what is meant by non-price competitionexplain the significance of interdependence in oligopoly marketsusing, for example, game theory and the kinked demand curveexplain the significance of types of collusion in oligopoly marketsexplain the significance of product differentiation in oligopolymarketsevaluate, with the aid of a diagram, the advantages anddisadvantages of oligopoly marketsexplain and calculate concentration ratiosexplain barriers to entry and exitusing diagrams, compare and contrast the outcomes of perfectcompetition, monopolistic competition, oligopoly and monopolyevaluate, using examples, the extent to which theory of the firmexplains the behaviour and performance of firmsexplain the characteristics of a perfectly contestable marketexplain why a business in a perfectly contestable market will be bothallocatively and productively efficientevaluate, with the aid of a diagram, the a

A Level in Economics i Contents Introducing A Level Economics (from September 2015) ii Teaching and learning resources iii Professional development iv 1 Why choose an OCR A Level in Economics? 1 1a. Why choose an OCR qualification? 1 1b. Why choose an OCR A Level in Economics? 2 1

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