Exam-style question
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Tax-change scenario on 3.1.6.6 The National Minimum Wage: which option best explains the economic mechanism in Individuals, firms, markets and market failure?.
- A.Define labour markets, apply it to the market context, explain the cause, transmission mechanism and effect, then judge why the result depends on context.
- B.Government intervention always removes market failure with no trade-off.
- C.A tax shifts demand rather than affecting supply incentives and costs.
- D.Give a definition of labour markets only, without application, chain of analysis, evaluation or judgement.
Model answer
What a good answer should say
- Correct answer: Define labour markets, apply it to the market context, explain the cause, transmission mechanism and effect, then judge why the result depends on context..
- It is correct because it links 3.1.6.6 the national minimum wage to welfare change and keeps the reasoning within the evidence supplied by the question.
Explanation
Why this works
The reasoning should move from cause to transmission mechanism to consequence. Use a diagram, calculation or data point if it is relevant, then test the answer with Economics evaluation: size of effect, time period, elasticity or responsiveness, assumptions, and distribution of gains and losses.
This keeps the response specific to The labour market rather than repeating a generic question template.
Common mistake
No common mistake is linked to this question yet.