2018 H2 Economics Paper 2 Essay 1: Suggested Answers
How to use these essay answers. The responses below, including the part (a) answer, are structured guides to the requirements of the question, the content, analysis and evaluation a strong answer must cover, rather than full essay prose with a written introduction and conclusion. Use them to see what to include and how to build the argument, then write it up in your own continuous prose, adding your own introduction and conclusion.
This essay uses the sold-out Ed Sheeran concerts to explain why a fixed ticket price below equilibrium creates excess demand and a high resale price, then asks what strategies organisers could use to improve the market outcome for producers and consumers.
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Using supply and demand curves, explain why there is an excess demand for tickets and why there is a high resale price.
The equilibrium price is where the quantity demanded equals the quantity supplied. A price ceiling is a price held below the market equilibrium, which causes a shortage. A fixed ticket price set by organisers can act as an unintended price ceiling, producing excess demand and a secondary market where prices exceed the fixed price.
Excess demand for tickets. Organisers set a fixed price before sale, without perfect knowledge of demand. For a high demand performer, demand is likely to be underestimated, so the fixed price ends up below the equilibrium price. The fixed price then behaves as a binding price ceiling: at this price the quantity demanded exceeds the quantity supplied, leaving a shortage. On a supply and demand diagram, demand and supply intersect at a price above the fixed price, and the horizontal gap between quantity demanded and quantity supplied at the fixed price measures the size of the shortage.
High resale price. The shortage gives rise to a secondary or resale market. Scalpers exploit the excess demand by reselling tickets at prices close to or above the equilibrium price, which reflects the true market valuation rather than the lower fixed price. Buyers who value the experience more than the fixed price are willing to pay these higher resale prices, so the underpricing at the primary sale is the direct cause of the high resale price.
Define equilibrium and a price ceiling, show the fixed price below equilibrium creating a shortage, then link the shortage to a resale market at a higher price.
Discuss the possible strategies that concert organisers could use to improve the market outcome for this type of concert for producers and consumers.
- Frame the problem as underpricing and excess demand, and set out the goal of improving outcomes for both producers and consumers.
- Develop a first strategy aimed at the information gap and note its practical limitation.
- Develop a second strategy that adjusts the supply side and the risk of overshooting.
- Develop a pricing based strategy and explain the mechanism by which it captures more of the demand.
- Weigh the strategies against each other on producer and consumer outcomes and conclude with a supported judgment.
This part is gated. The full model answer with the worked strategies, the supporting examples and the evaluation, with the diagrams and the full evaluation, is in the ETG TYS Answers book from SAP and is worked live in the TYS Crashcourse. ETG students also get the AI TYS coach that guides them through this exact question. Message the team to find out more.
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Where can I get the full worked answers to the 2018 H2 Economics paper 2 essay 1?
The full model answers, with the diagrams and the higher mark evaluation, are in the ETG TYS Answers book published by SAP and sold at Popular, and are worked live in the TYS Crashcourse. Every ETG student also gets the AI TYS coach on our learning management system, which guides you through how to tackle every essay and every case study question from the last ten years.
Are these the official 2018 A Level Economics answers?
No. SEAB sets and marks the A Level paper. These are suggested answers by Mr Eugene Toh, author of the H1 and H2 A Level Economics TYS answer keys, published by SAP and sold at Popular.
How should I use these suggested essay answers?
Treat them as a guide to the requirements of the question, the content, analysis and evaluation a strong answer must cover, not as full essay prose. Write the essay up in your own continuous prose, with your own introduction and conclusion.
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