structure of a 25 marker economics essay

Example 25-Mark Essay in style of AQA Economics A-level

Below is an example model answer to a 25 mark question in the style of AQA Economics A-level.

For extra practice questions or exam technique advice, check out the following posts:

Question for model answer

Consider the following question. This is a question I have written in the style of a 25-mark AQA Economics A-level question for section B:

Taking effect from 1st April 2023, the UK Government has committed to increasing the corporation tax rate from 19% to 25% for companies with profits above £250,000 per year. For firms with profits below £50,000, there is no increase in corporation tax rates. But for firms with profits between £50,000 and £250,000 there will be a smaller increase in corporation tax rates.

(Source: here )

Evaluate the effects on the UK economy of increasing corporation tax rates on firms making high profits (25 marks) .

This is a key macroeconomics essay on current affairs. A quick essay plan is here:

• Define key terms.
• Laffer curve – higher government revenue.
• Evaluation – position on Laffer curve.
• AD effect – lower investment and negative multiplier effect.
• Evaluation – proportion of AD that comes from investment.
• LRAS effect – reduced incentives and productivity.
• Evaluation – need to compare corporation tax rates to those of other economies.

Conclusion.

Possible model answer

Corporation tax is a tax on firms’ profits. Aggregate demand (AD) is the total demand in the economy, AD = C+I+G+X-M. 

Increasing corporation tax rates may increase tax revenue for the UK Government. The Laffer curve shows this. An increase in tax rates from T to T1 raises tax revenue from R to R1. This revenue could go towards reducing the budget deficit. The government’s budget deficit is very high at 14.9% of the UK’s GDP in 2020-21. This is because of government spending in the pandemic on for example the furlough scheme. Reducing the budget deficit may lead to government borrowing and hence reduced debt interest payments. With less spending on debt interest the UK Government could choose to spend more money in the future on other priorities such as healthcare spending. Sounder public finances might also make investors more confident in the UK Government’s ability to make bond repayments. This may reduce the interest rates at which investors are willing to buy government bonds and thus reduce future borrowing costs.

Whether the tax increase raises government revenue depends on the position of the UK economy on the Laffer curve. If instead the economy is at point (T1,R1) before raising corporation taxes, then increasing the corporation tax rate to T2 may decrease revenue to R. This is because a corporation tax rise may reduce incentives to start or grow a business, reducing the size of the tax base. The UK Government does predict that tax revenue would rise by over £10bn a year because of the corporation tax rate rise. With corporate tax rates relatively low now, it is likely that there will be higher revenue. But the effect of higher taxes on incentives may reduce the extent to which revenue increases.

Increasing corporation tax rates “from 19% to 25% for companies with profits above £250,000 per year”  reduces the post-tax profits of these firms. This leaves reduced funds for investment, so investment may fall. Also as firms know any future profits will be taxed at a higher rate, this will disincentivise investment further. This is because firms will have reduced returns (lower post-tax profits) from any new investment. So investment falls and as investment is a component of aggregate demand (AD=C+I+G+X-M), aggregate demand shifts left from AD to AD1. This may cause a negative multiplier effect. This is where a fall in investment leads to a larger than proportionate fall in A. Lower investment results in lower incomes for firms and cuts in wages, so consumers cut their spending, meaning consumption also falls and so on. So AD shifts further left to AD2. This results in lower real GDP as real GDP falls from Y to Y2. Hence corporation tax may lower real GDP, likely resulting in lower living standards.

However this argument depends on the proportion of AD influenced by the corporation tax rate rise. Only firms making larger profits are facing a corporation tax rise. So firms making lower profits, for example small businesses, are less likely to reduce their investment. Also consumption is the largest component of AD, making up roughly 60% of AD, not investment. So a given percentage fall in investment may have only a smaller effect on AD. Corporation tax is likely to reduce AD leading to lower real GDP. But these impacts are limited by the relative importance of investment to AD and the design of the policy to target high profit firms only.

Decreased investment can also influence the supply side of the economy. Lower investment could mean reduced firm spending on capital goods and human capital. So this could reduce productivity and hence the productive capacity of the economy. This means the LRAS could shift to the left. Higher corporation taxes could mean higher business costs, shifting the short-run aggregate supply curve left too. Lower productivity and higher business costs could lead to a higher price level in the UK economy, reducing the competitiveness of the UK as a place to do business. Productivity for the UK economy is 15% below the average of other G7 economies (as of 2015), so corporate tax rises could further worsen this UK productivity gap with other nations. So there may be fewer businesses choosing to set up in the UK, preferring to set up abroad.

However this depends on the level of corporation tax rates in other economies. The UK has the lowest corporate tax rate among the G7 economies, even after the tax rise. Hence there may be fewer incentives to set up a business abroad, so the effect on competitiveness is reduced. Also many economies have agreed to a global minimum corporation tax of 15%, further reducing the risk to competitiveness from raising corporation taxes. While the corporation tax rate rise may reduce investment, it is less likely to have a significant impact on competitiveness.

Overall raising corporation tax on firms making high profits is likely to be effective in raising revenue. While raising corporation tax will reduce aggregate demand and aggregate supply, by raising taxes only on higher-profit firms, the impact is limited. The impact of the tax rise does depend on how other countries respond – if other countries maintain or reduce their tax rates to attract more businesses, then increasing corporate taxes could significantly reduce the incentive for international businesses to set up in the UK. However, given the increasing degree of tax cooperation globally, as shown by the 15% minimum corporate tax rate agreement, it seems likely that countries will not seek to undercut each other’s corporate tax rates.

Application is throughout using examples from the short extract and from own knowledge to support analysis and evaluation.

Analysis is detailed, using chains of reasoning and graphs to support the answer.

Evaluation is also detailed, making use of chains of reasoning and where relevant, data about the economy. The conclusion addresses the question and justifies the answer.

Note for the conclusion you could have picked another side for this policy too depending on the arguments used. You could also use other possible points – there is no right way of doing this. For example with interest rates at historical lows, how does that impact the cost of government borrowing and the necessity of raising taxes? What other factors may matter for investment beside corporate tax rates?

This essay would likely score level 5 according to AQA Economics A-level criteria.

For more guidance on AQA exam technique (25 markers, 15 markers, 9 markers and more), check out the blue button below:

Other Questions

How many words should there be in a 25 marker economics.

Most 25 mark responses, that can be replicated within exam conditions, are within the range of 700 to 1100 words.

However this is arbitrary – word count does not matter as much, provided you answer the question and write in depth.

Achieving depth in analysis and evaluation, answering the question – see my economics resources here for more information on essay structures and how to evaluate.

How should you structure a 25 marker economics essay?

Introduction

Depending on depth of your previous points, add another round of analysis and evaluation.

For more information on AQA Economics essay structure, I recommend the following article linked here .

How should you write a conclusion for 25 markers economics?

A conclusion has these key elements:

• Answer the question.
• Justify your answer in step 1.
• Consider other evaluation points, including real-world context, for further justification or that may go against your answer.

How should you evaluate in economics 25 markers?

I recommend the “depends on” structure for AQA Economics style evaluation. For more information on this, see my AQA Economics style evaluation guide here .

More Resources

Here is a link to an online course for AQA Economics A level exam technique:

For practice questions on microeconomics, please see the button here:

For macroeconomics practice questions, please see the button here:

If you are interested in more A-level Economics resources, please feel free to click the button below:

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Tips for writing economics essays

Some tips for writing economics essays  Includes how to answer the question, including right diagrams and evaluation – primarily designed for A Level students.

1. Understand the question

Make sure you understand the essential point of the question. If appropriate, you could try and rephrase the question into a simpler version.

For example:

Q. Examine the macroeconomic implications of a significant fall in UK House prices, combined with a simultaneous loosening of Monetary Policy.

In plain English.

• Discuss the effect of falling house prices on the economy
• Discuss the effect of falling interest rates (loose monetary policy) on economy

In effect, there are two distinct parts to this question. It is a valid response, to deal with each separately, before considering both together.

It helps to keep reminding yourself of the question as you answer. Sometimes candidates start off well, but towards the end forget what the question was. Bear in mind, failure to answer the question can lead to a very low mark.

2. Write in simple sentences

For clarity of thought, it is usually best for students to write short sentences. The main thing is to avoid combining too many ideas into one sentence. If you write in short sentences, it may sound a little stilted; but it is worth remembering that there are no extra marks for a Shakespearian grasp of English. (at least in Economics Exams)

Look at this response to a question:

Q. What is the impact of higher interest rates?

Higher interest rates increase the cost of borrowing. As a result, those with mortgages will have lower disposable income. Also, consumers have less incentive to borrow and spend on credit cards. Therefore consumption will be lower. This fall in consumption will cause a fall in Aggregate Demand and therefore lead to lower economic growth. A fall in AD will also reduce inflation.

I could have combined 1 or 2 sentences together, but here I wanted to show that short sentences can aid clarity of thought. Nothing is wasted in the above example.

Simple sentences help you to focus on one thing at once, which is another important tip.

3. Answer the question

Quite frequently, when marking economic essays, you see a candidate who has a reasonable knowledge of economics, but unfortunately does not answer the question. Therefore, as a result, they can get zero for a question. It may seem harsh, but if you don’t answer the question, the examiner can’t give any marks.

At the end of each paragraph you can ask yourself; how does this paragraph answer the question? If necessary, you can write a one-sentence summary, which directly answers the question. Don’t wait until the end of the essay to realise you have answered a different question.

Discuss the impact of Euro membership on UK fiscal and monetary policy?

Most students will have revised a question on: “The benefits and costs of the Euro. Therefore, as soon as they see the Euro in the title, they put down all their notes on the benefits and costs of the Euro. However, this question is quite specific; it only wishes to know the impact on fiscal and monetary policy.

The “joke” goes, put 10 economists in a room and you will get 11 different answers. Why? you may ask. The nature of economics is that quite often there is no “right” answer. It is important that we always consider other points of view, and discuss various different, potential outcomes. This is what we mean by evaluation.

Macro-evaluation

• Depends on the state of the economy – full capacity or recession?
• Time lags – it may take 18 months for interest rates to have an effect
• Depends on other variables in the economy . Higher investment could be offset by fall in consumer spending.
• The significance of factors . A fall in exports to the US is only a small proportion of UK AD. However, a recession in Europe is more significant because 50% of UK exports go to EU.
• Consider the impact on all macroeconomic objectives . For example, higher interest rates may reduce inflation, but what about economic growth, unemployment, current account and balance of payments?
• Consider both the supply and demand side . For example, expansionary fiscal policy can help to reduce demand-deficient unemployment, however, it will be ineffective in solving demand-side unemployment (e.g. structural unemployment)

Example question :

The effect of raising interest rates will reduce consumer spending.

• However , if confidence is high, higher interest rates may not actually discourage consumer spending.

If the economy is close to full capacity a rise in interest rates may reduce inflation but not reduce growth. (AD falls from AD1 to AD2)

• However , if there is already a slowdown in the economy, rising interest rates may cause a recession. (AD3 to AD3)

Micro-evaluation

1. The impact depends on elasticity of demand

In both diagrams, we place the same tax on the good, causing supply to shift to the left.

• When demand is price inelastic, the tax causes only a small fall in demand.
• If demand is price elastic, the tax causes a bigger percentage fall in demand.

2. Time lag

In the short term, demand for petrol is likely to be price inelastic. However, over time, consumers may find alternatives, e.g. they buy electric cars. In the short-term, investment will not increase capacity, but over time, it may help to increase a firms profitability. Time lags.

3. Depends on market structure

If markets are competitive, then we can expect prices to remain low. However, if a firm has monopoly power, then we can expect higher prices.

4. Depends on business objectives

If a firm is seeking to maximise profits, we can expect prices to rise. However, if a firm is seeking to maximise market share, it may seek to cut prices – even if it means less profit.

5. Behavioural economics

In economics, we usually assume individuals are rational and seeking to maximise their utility. However, in the real world, people are subject to bias and may not meet expectations of classical economic theory. For example, the present-bias suggest consumers will give much higher weighting to present levels of happiness and ignore future costs. This may explain over-consumption of demerit goods and under-consumption of merit goods. See: behavioural economics

Exam tips for economics – Comprehensive e-book guide for just £5

8 thoughts on “Tips for writing economics essays”

I really want to know the difference between discussion questions and analysis questions and how to answer them in a correct way to get good credit in Economics

Analysis just involves one sided answers while Discussion questions involve using two points of view

This is a great lesson learnd by me

how can I actually manage my time

The evaluation points in this article are really useful! The thing I struggle with is analysis and application. I have all the knowledge and I have learnt the evaluation points like J-curve analysis and marshall learner condition, but my chains of reasoning are not good enough. I will try the shorter sentences recommended in this article.

What kind of method for costing analysis is most suitable for a craft brewery, in order to analyze the cost of production of different types of beer_

Really useful!Especially for the CIE exam papers

Does anyone know how to evaluate in those advantages/disadvantages essay questions where you would basically analyse the benefits of something and then evaluate? Struggling because wouldn’t the evaluation just be the disadvantages ?? Like how would you evaluate without just stating the disadvantage?

Leave a comment Cancel reply

AQA A-Level Economics | Every 25 Mark Essay

Y13 microeconomics.

Use the extracts and your knowledge of economics to assess whether the benefits outweigh the costs when the Government privatises organisations such as Royal Mail and opens up the market to competition. (June 2017)

Use the extracts and your knowledge of economics to evaluate the policies that government might use to reduce the gender pay gap. (June 2017)

Evaluate the view that government regulation of monopolistically competitive markets is unnecessary, and that polices to encourage competition and prevent the abuse of monopoly power should focus entirely on oligopolies and monopolies. (June 2017)

To what extent can the problem of poverty in the UK be solved through the operation of market forces? Justify your answer. (June 2017)

Evaluate the view that imposing a tax is the most effective government policy for reducing the market failures arising from overconsumption of unhealthy food and drink. (June 2017)

Use the extracts and your knowledge of economics to assess the view that the government should intervene further in the banking sector to promote greater competition. (June 2018)

Use the extracts and your own knowledge of economics to evaluate whether governments should allow markets to respond freely to the opportunities and challenges presented by technological progress, without any state intervention. (June 2018)

Assess the view that regulation is a better policy for dealing with the problem of air pollution than the allocation of property rights or taxation. (June 2018)

Assess the view that, in the UK, the consequences of wealth inequality are more damaging than the consequences of income inequality. (June 2018)

Evaluate the view that a firm making low profits must be inefficiently managed. (June 2018)

Use the extracts and your knowledge of economics to assess the view that the increasing scarcity of sand is a problem best solved by market forces, rather than through government intervention. (June 2019)

Use the extracts and your knowledge of economics to evaluate the case for renationalising railways in the UK. (June 2019)

Using examples to illustrate your answer, assess the usefulness of behavioural economic theory compared to traditional economic policies in helping governments to correct market failures (June 2019)

Discuss the validity of the traditional economic assumption that the main objective of firms is to maximise profits. (June 2019)

Discuss the view that a national minimum wage is beneficial for an economy. (June 2019)

Using the extracts and your knowledge of economics, evaluate policies, if any, that governments in developed countries should pursue to reduce waste and encourage the recycling of waste products. (June 2020)

Using the extracts and your knowledge of economics, assess policies that might be used to improve the provision of social care in the UK. (June 2020)

Discuss whether governments should consider increasing the regulation and taxation of technology firms which have acquired significant global monopoly power. (June 2020)

Evaluate the view that government intervention to reduce inequality will lead to an improvement in economic welfare. (June 2020)

Assess the view that price discrimination is always damaging. (June 2020)

Using the extracts and your knowledge of economics, assess the view that the market structure of the pharmaceutical industry is damaging for consumers. (November 2021)

Using the extracts and your knowledge of economics, evaluate possible government policies to reduce the ethnic pay gap. (November 2021)

Evaluate the view that technological change tends to bring industries closer to the market structure of perfect competition. (November 2021)

Discuss the view that individual economic agents will always act as rational decision makers so as to maximise their utility. (November 2021)

Discuss how the divorce of ownership from control may affect both the conduct and performance of firms. (November 2021)

Assess the view that government intervention in the UK labour market is necessary to protect the interests of people who are working in the gig economy. (June 2022)

Evaluate the view that the supermarket sector is serving customers' interests well.

Assess the view that high-speed Internet connection is a necessity for modern life and should be provided by the government, free of charge, to all households. (June 2022)

Evaluate the view that government failure means that government intervention in markets will rarely lead to an improvement in economic welfare. (June 2022)

Evaluate whether the best way to reduce inequality in disposable income is to reduce differences in pre-tax incomes rather than through taxes and welfare benefits. (June 2022)

Using the data in the extracts and your economic knowledge, assess whether you agree that fixing a maximum price for energy that is sold to households is the best way of dealing with market failure in the UK energy industry? (Specimen)

Using the data in the extracts and your economic knowledge, assess the view that inequality is ‘good for us all.’ (Specimen)

Discuss the view that price discrimination only benefits suppliers, such as Apple. (Specimen)

The Government would like to improve the well-being of the population by encouraging people to adopt a healthy diet. Using your knowledge of both traditional economic theory and behavioural economics, assess alternative policies that the Government might adopt to try to achieve its objective. (Specimen)

Assess the view that a system of road-pricing is the best way to tackle the problem of worsening traffic congestion in the UK. (Specimen)

Y13 Macroeconomics

Using the data in the extracts and your knowledge of economics, evaluate the view that greater use of market-based strategies is the best way to improve the economic development of India.

Using the data in the extracts and your knowledge of economics, evaluate the view that monetary policy is the most effective way of tackling deflation in developed economies such as the UK and Japan (June 2017)

Discuss the view that falling unemployment will inevitably lead to trade-offs with other macroeconomic policy objectives. (June 2017)

Evaluate the measures that might be taken to reduce a deficit on the current account of the UK’s balance of payments. (June 2017)

Evaluate the economic consequences for the UK economy of a significant shift in the burden of taxation from direct taxes to indirect taxes. (June 2017)

Using the data in the extracts and your knowledge of economics, assess the impact of a persistent current account deficit on the macroeconomic performance of the UK economy. (June 2018)

Using the data in the extracts and your knowledge of economics, evaluate the view that maintaining low interest rates for a sustained period of time may be damaging to the UK’s macroeconomic stability. (June 2018)

Evaluate the view that MNCs play a positive role in the development of LEDCs. (June 2018)

Evaluate whether achieving a budget surplus is a desirable objective of economic policy (June 2018)

Assess the view that falling unemployment will inevitably lead to an improvement in the standard of living for people in the UK. (June 2018)

Using the data in the extracts and your knowledge of economics, assess the view that to improve the living standards of their citizens, governments across the world should prioritise achieving economic growth. (June 2019)

Using the data in the extracts and your knowledge of economics, evaluate the view that there is a strong case for significant increases in UK income tax rates (June 2019)

Assess the view that a depreciation of the pound against other currencies is likely to improve the UK’s macroeconomic performance. (June 2019)

Evaluate the view that strict rules and regulations on financial markets are essential to help create a more stable economy. (June 2019)

Evaluate the view that inflation is always preferable to deflation. (June 2019)

Using the data in the extracts and your knowledge of economics, evaluate the view that free market supply-side reforms to labour markets are beneficial to the UK economy. (June 2020)

Using the data in the extracts and your knowledge of economics, assess the view that developing economies, such as Brazil and China, should pursue protectionist policies to achieve greater economic development. (June 2020)

To what extent do you agree that reducing the budget deficit is more important to the UK’s macroeconomic performance than reducing the current account deficit on its balance of payments? Justify your answer. (June 2020)

Evaluate the view that the main objectives of UK government macroeconomic policy can be achieved without conflicting with each other. (June 2020)

Evaluate the costs and benefits for a country of joining a currency union, such as the eurozone. (June 2020)

Using the data in the extracts and your knowledge of economics, evaluate the view that an increase in a country’s national debt is damaging for its economy (November 2021)

Using the data in the extracts and your knowledge of economics, evaluate policies which could be used to boost South Korea’s exports and increase its trade surplus. (November 2021)

Evaluate the possible impact on the cost of living and the standard of living in the UK of a sustained rise in the value of the pound sterling against other currencies, such as the euro and the US dollar. (November 2021)

To what extent do you agree that a fall in savings is beneficial for the UK economy? Justify your answer. (November 2021)

Assess policies which can be used to reduce cyclical instability in the UK. (November 2021)

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Privatisation | aqa a-level economics model essay, financial market failure | a-level economics model essay, wage differentials | a-level economics model essay, gender pay gap | aqa a-level economics model essay, edexcel a-level economics | every 25 marker.

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A Level Economics Essays [20/25 markers]

Subject: Economics

Age range: 16+

Resource type: Assessment and revision

Last updated

20 September 2022

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This resource offers 14 high mark essays (in the highest mark band) and covers topics from all areas of the A Level Economics course (OCR/AQA and Edexcel). It is perfect when used as model answers following exams or as a task to assess what makes the essay stand out - and where its limitations may be.

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AQA A Level Paper 1 (25 Mark Essays) - Planning the Essay

Last updated 7 Jun 2017

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In the first in a series of short videos on Paper 1 (25 mark) essay technique, I've had a go at providing a worked example of how to plan the two PeCAn PiE paragraph points and AJIM conclusion for a 25 mark essay on AQA A Level Business Paper 1.

AQA PeCAn PiE AJIM Answer Planner

7th June 2017

Practice Exam Papers (Vol 1) for AQA A-Level Business for exams up to 2024

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Year 1 (AS) Practice Exam Papers for AQA A-Level Business for exams up to 2024

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