Economic theory is often very precise in its explanation but not very useful in its application to reality.

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

1. [12] L4 (9-12): for a clear explanation of the theory and derivation of equilibrium position, a comment about possible changes in MRP or supply with a comment about the precision of the theory. 7–8 marks if demand/supply approach used
2. [12] L3 (7-8): for a briefer explanation of the theory without any comment on possible changes or without a comment on the precision of the theory. 5–6 marks if demand/supply approach used
3. [12] L2 (5-6): for a much less developed answer with no comment on the precision of the theory and vague mention about equilibrium. 3–4 marks if demand/supply approach used
4. [12] L1 (1-4): for an answer that shows some knowledge but does not indicate that the question has been fully grasped or where the answer is mostly irrelevant. 1-2 marks if demand/supply approach used
5. [13] L4 (9-13): for a reasoned and clear explanation with accurate development of theoretical difficulties. 7–8 marks if demand/supply approach used
6. [13] L3 (7-8): for a clear but undeveloped explanation which is limited to either the demand side or the supply side. 5–6 marks if demand/supply approach used
7. [13] L2 (5-6): for a limited attempt to consider the theory and with a greater concentration on the descriptive elements. 3–4 marks if demand/supply approach used
8. [13] L1 (1-4): for an answer that shows some knowledge but does not indicate that the question has been fully grasped or where the answer is mostly irrelevant. 1-2 marks if demand/supply approach used