Edexcel IAL Unit 1 · Markets in action (WEC11)
IAS · 25% of IAL · 1 hour 45 minutes · 80 marks
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The International A Level (YEC11) comprises four units. Units 1 and 2 form the International AS (XEC11); Units 3 and 4 complete the full qualification. Unit 3 can draw on Units 1–2, and Unit 4 on Units 1–3.
IAS · 25% of IAL · 1 hour 45 minutes · 80 marks
Browse this paper’s news →IAS · 25% of IAL · 1 hour 45 minutes · 80 marks
Browse this paper’s news →IA2 · 25% of IAL · 2 hours · 80 marks
Browse this paper’s news →IA2 · 25% of IAL · 2 hours · 80 marks
Browse this paper’s news →Units 1 and 2 include one 20-mark essay chosen from two; Units 3 and 4 include two 20-mark essays chosen from three. A 20-mark evaluation response allocates 12 marks to knowledge, application and analysis, and 8 to evaluation. Use the exact unit, session and question’s mark scheme. Official IAL assessment guidance →
This library covers selected news-friendly topics, not every part of the course. Keep revising the underlying models, calculations and diagrams alongside your classroom notes. An article about one topic is not a substitute for the rest of a unit.
LEARN / APPLY / CHECK
8 focused lessons for Edexcel International A Level Economics. Open a lesson for explanations, a worked exercise and two recall cards.
Original Dispatch practice, not official exam questions or teacher-reviewed Study Tips. Examples marked hypothetical are invented for learning. This is a selected revision library, not complete specification coverage.
8 lessons found
Price elasticity of demand measures how responsive quantity demanded is to a price change: percentage change in quantity demanded divided by percentage change in price. Use the absolute value to distinguish elastic demand from inelastic demand.
Price rises → consumers reconsider purchases → quantity falls. Whether revenue rises depends on the relative percentage changes, not simply whether sales fall.
Hypothetical calculation: price rises from £10 to £11 and quantity falls from 100 to 80. Using original values, price rises 10% and quantity falls 20%, so PED = −2. Revenue falls from £1,000 to £880.
Availability of substitutes, necessity, the share of income spent and time to adjust affect responsiveness. A measured sales change may also reflect income or advertising; it is not automatically caused by price alone.
Common mistake to avoid. Do not call demand elastic just because it slopes down. Elasticity concerns proportional responsiveness; the slope and elasticity are different concepts.
A firm raises its price by 5%; quantity demanded falls by 2%. Calculate PED and explain the likely revenue effect.
PED = −2 ÷ 5 = −0.4. Demand is inelastic over this change. Revenue increases: 1.05 × 0.98 = 1.029, an increase of 2.9%, assuming the same product and no other sales changes.
Answer from memory, then select a card to check.
A negative production externality is a cost imposed on third parties that producers do not fully bear. Marginal social cost exceeds marginal private cost.
Unpriced external harm → private production decisions ignore part of the cost → market output can exceed the socially efficient quantity. A corrective tax can make firms face more of that cost.
Hypothetical case: a factory releases pollution affecting nearby residents. Draw output horizontally and costs/benefits vertically. Show MSC above MPC, demand as MSB = MPB, and distinguish market output from the socially efficient output.
Compare a tax with regulation. A tax preserves flexibility but requires information about damages; regulation can impose a clear standard but may be costly to monitor. The best approach depends on measurement and enforcement.
Common mistake to avoid. A tax payment is not itself the welfare loss. Identify the loss from units whose social cost exceeds their social benefit.
Explain why taxing emissions might reduce pollution without closing the factory.
The tax raises the cost of emitting, encouraging cleaner technology or lower output. If abatement costs less than the tax avoided, the firm has an incentive to reduce emissions. The response depends on available substitutes and monitoring.
Answer from memory, then select a card to check.
Inflation is a sustained increase in the general price level. Disinflation means the inflation rate falls; deflation means the price level falls. Nominal values are measured in current money; real values adjust for price changes.
Nominal pay increases → compare with price growth → identify the change in purchasing power. Then consider whether the average index reflects the household’s actual spending pattern.
Hypothetical calculation: nominal pay rises 6% while prices rise 4%. Exact real pay growth is (1.06 ÷ 1.04 − 1) × 100 ≈ 1.92%. Subtracting inflation gives a useful approximation of 2%.
One national average conceals distributional differences. Essential spending, fixed incomes and borrowing commitments change the impact. Distinguish annual comparisons from monthly changes.
Common mistake to avoid. Inflation falling from 8% to 4% does not mean prices fell by 4%. It means they rose more slowly over the periods measured.
A price index rises from 125 to 130. Calculate inflation over the period.
(130 − 125) ÷ 125 × 100 = 4%. The five index-point increase is not a five per cent increase. Always state the comparison period.
Answer from memory, then select a card to check.
Aggregate demand combines consumption, investment, government spending and net exports. An initial injection can create further spending as one person’s expenditure becomes another person’s income.
Public investment increases → contractors receive income → some additional income is spent → demand rises further. Saving, taxation and imports reduce subsequent domestic spending rounds.
Hypothetical simplified model: with a marginal propensity to consume of 0.8 and no tax/import leakages, the multiplier is 1 ÷ (1 − 0.8) = 5. An initial £10 million injection implies £50 million additional equilibrium income in that model, not a guaranteed forecast.
Judge spare capacity, time lags, confidence and leakages. Near capacity, extra demand may raise prices more than real output. A policy targeting productive capacity may take longer to work.
Common mistake to avoid. Do not combine a large multiplier prediction with an assumption of no spare capacity without discussing inflation or supply constraints.
Build a balanced paragraph on public investment as a response to weak growth.
Explain the initial AD effect and subsequent spending rounds, apply it to a specific project, then weigh the supply benefit against delays, import leakage and opportunity cost. Conclude conditionally on spare capacity and project quality.
Answer from memory, then select a card to check.
Total profit equals total revenue minus total cost. Average cost is cost per unit; marginal cost is the extra cost of one additional unit. Economies of scale concern long-run average costs as the scale of production changes.
Output expands → fixed cost may be spread over more units in the short run → average fixed cost falls. In the long run, specialisation may lower average costs, while coordination problems can create diseconomies.
Hypothetical calculation: a firm sells 200 units at £15 each. Total cost is £2,400. Revenue is £3,000, profit is £600 and average cost is £12. These figures alone do not identify its profit-maximising output.
An expansion may improve unit costs but require finance and sufficient demand. Separate technical efficiency from whether the firm produces what consumers value most.
Common mistake to avoid. Maximum revenue and maximum profit are not the same objective. In a standard interior profit-maximisation model, compare marginal revenue and marginal cost.
Why might a business reject expansion even if average costs are expected to fall?
Extra demand may be insufficient, finance may be expensive, or integration risks may outweigh predicted savings. A lower cost per unit does not guarantee enough revenue to cover the enlarged operation.
Answer from memory, then select a card to check.
Market power is the ability to influence market conditions such as price. Contestability concerns how readily potential entrants can challenge incumbent firms. High concentration and weak competition are related possibilities, not identical statements.
Entry barriers protect incumbents → competitive pressure may weaken → prices or margins may rise. Credible potential entry can constrain behaviour even when few firms currently operate.
Hypothetical merger: two delivery businesses claim a combined network will reduce duplicated journeys. Investigate whether cost savings are credible and passed to customers, while checking whether rival access becomes harder.
Weigh short-run prices against quality, innovation and efficiency. Define the relevant market before citing market share. Entry costs, switching costs and buyer power affect your judgement.
Common mistake to avoid. A large firm is not automatically inefficient, and a small number of firms does not by itself prove collusion.
Outline a judgement on whether a merger will benefit consumers.
Compare likely cost savings and service improvements with reduced choice and higher pricing power. Identify evidence on entry and switching. A defensible conclusion explains which effect is likely to dominate and under what conditions.
Answer from memory, then select a card to check.
Depreciation is a fall in a currency’s value under a floating system. It can make exports cheaper to foreign buyers and imports more expensive domestically, depending on pricing decisions.
Depreciation → relative prices change → buyers adjust quantities → export and import values change. The quantity response may lag because contracts and production plans cannot adjust immediately.
Hypothetical example: sterling depreciates but an exporter imports many components. Its foreign sales may become more competitive while its production costs rise. Assess both channels before predicting profit or employment.
In the standard model, the Marshall–Lerner condition relates trade-balance improvement to export and import demand elasticities summing to more than one in absolute value, subject to assumptions. A J-curve is a possible adjustment path, not an inevitable outcome.
Common mistake to avoid. Do not equate the trade balance with the entire current account. Primary and secondary income also matter.
Why might a depreciation initially worsen the trade balance?
Import prices can rise before contracted quantities fall; export quantities may respond slowly. Later improvement depends on demand responsiveness, productive capacity and cost pressures. State the assumptions instead of predicting automatic recovery.
Answer from memory, then select a card to check.
Economic growth concerns real output; development also concerns living conditions and capabilities. A policy can increase GDP while leaving large groups with little benefit.
Identify a constraint → explain how it restricts productivity or opportunity → select a policy targeting that mechanism → assess who benefits and when.
Hypothetical case: unreliable electricity interrupts production and study. Investment may improve business output and educational opportunities, but maintenance capacity, access and finance determine whether the benefits persist.
Compare policies against local conditions rather than presenting a universal solution. Consider governance, debt servicing, opportunity cost, environmental effects and distribution. Use more than a single output indicator.
Common mistake to avoid. A correlation between aid and low growth does not establish that aid caused weak growth; assistance may be directed towards countries already facing severe problems.
Compare infrastructure investment with education spending as development strategies.
Explain the constraint addressed by each, how productivity and living standards may improve, and the time needed. Judge their complementarity: schools need access and power, while infrastructure needs skilled workers. Prioritise using the case’s binding constraints.
Answer from memory, then select a card to check.
Use this planning scaffold for IAL evaluation practice, alongside the exact question’s mark scheme. This is a practice method, not a guaranteed grade or compulsory examiner formula.
“Higher interest rates reduce inflation.”
“Higher borrowing costs may reduce credit-financed consumption and investment, weakening aggregate demand and demand-driven price pressure.”
“However, fixed-rate contracts may delay transmission, while supply-driven inflation can persist despite weaker demand.”
Find a dated example in a report you have read fully. Add one verified detail and explain why the condition matters in that case. These sentences illustrate reasoning, not a complete model answer.
Use this original practice routine with a story you have read in full. These prompts are not official exam questions or teacher-reviewed Study Tips.
Higher borrowing costs → weaker spending on credit → lower aggregate demand → reduced demand-side pressure on prices. This is a possible mechanism, not an automatic result. Fixed-rate mortgages may delay the spending response, and a supply shock may keep costs elevated.
Your next step: Find a report that supports or challenges this chain. Save it to your Revision Vault and add your own evidence and qualification.
Select a topic for an explanation, evidence checklist and practice question. The same connections appear in matching article study pages.
Edexcel IAL Unit 2 · Macroeconomic performance and policy (WEC12) · Edexcel IAL Unit 4 · Developments in the global economy (WEC14)
An interest-rate change can alter borrowing costs and saving incentives, affecting consumption and investment. Trace those spending changes through aggregate demand before discussing output and prices.
Record the rate decision, its date and the inflation measure cited. Separate the central bank’s forecast from outcomes already observed.
Fixed-rate borrowing, confidence and time lags can weaken transmission. A supply-driven price shock may respond differently from excess demand.
Construct a chain from a rate rise to household spending. Under what conditions would inflation fall with only a small reduction in output?
Find news for this topic →Edexcel IAL Unit 2 · Macroeconomic performance and policy (WEC12)
Distinguish a rise in demand from a rise in production costs. Both can raise prices, but they imply different output effects and policy choices.
Check whether the statistic is a price level or an annual rate of change. Identify the period, index and largest contributing categories.
A falling inflation rate usually means prices are rising more slowly, not falling. Different households face different effective cost increases.
Sketch the appropriate AD/AS shift and explain why one headline inflation figure may conceal different household experiences.
Find news for this topic →Edexcel IAL Unit 2 · Macroeconomic performance and policy (WEC12) · Edexcel IAL Unit 4 · Developments in the global economy (WEC14)
Government purchases contribute directly to aggregate demand; tax changes act through disposable income and incentives. Trace the spending response and possible multiplier effects.
Record the size, timing and funding of the measure. Distinguish an announced budget allocation from money already spent.
Spare capacity, import leakages, implementation delays and debt-servicing costs affect the result. Ask which groups receive the benefit.
Compare a tax cut with public investment as responses to weak growth. State the conditions behind your preferred policy.
Find news for this topic →Edexcel IAL Unit 2 · Macroeconomic performance and policy (WEC12) · Edexcel IAL Unit 3 · Business behaviour (WEC13)
Demand for workers depends partly on demand for their output. Changes in productivity, skills or bargaining power can alter wages and employment.
Look for real rather than only nominal pay, vacancies, hours worked and sector differences. Avoid treating one firm as the whole labour market.
A wage floor has different predicted effects in a competitive labour market and one with employer buying power. Explain the model you use.
Draw and explain a labour-market diagram for the reported change, then identify a feature of the actual market that limits the model.
Find news for this topic →Edexcel IAL Unit 1 · Markets in action (WEC11)
Identify the gap between private incentives and costs or benefits to others. Explain how that gap could lead to too much or too little of an activity.
Find a specific affected third party and evidence of the external effect. A high price alone is not proof of market failure.
Policy requires information and enforcement. Compare the likely welfare gain with administrative costs and unintended behaviour.
Explain how a tax, subsidy or regulation would change incentives in this case. Which information would you need to judge the policy?
Find news for this topic →Edexcel IAL Unit 3 · Business behaviour (WEC13)
Consider how barriers to entry and rival behaviour influence price, output and innovation. A merger may increase market power while also lowering unit costs.
Define the relevant market before using market shares. Look for entry barriers, substitutes and changes in price or quality.
Concentration is not sufficient proof of weak competition. Potential entry and the strength of buyers can constrain firms.
Develop one consumer-benefit argument and one consumer-harm argument about a merger. Explain what evidence would distinguish them.
Find news for this topic →Edexcel IAL Unit 2 · Macroeconomic performance and policy (WEC12)
Separate an increase in spending from an expansion of productive capacity. Explain whether the story concerns a short-run output change or long-run productivity.
Check real GDP, the comparison period and population growth. GDP per person can move differently from total GDP.
Growth may be unevenly shared or environmentally costly. Output data alone cannot establish an improvement in everyone’s living standards.
Connect one reported change to aggregate demand or aggregate supply, then qualify what it tells you about welfare.
Find news for this topic →Edexcel IAL Unit 4 · Developments in the global economy (WEC14)
A trade barrier changes relative prices and incentives for domestic producers and consumers. Trace effects on imports, production and resource allocation.
Identify the product, tariff rate, affected partners and whether retaliation has occurred or is only threatened.
Short-run protection of jobs may come with higher input costs and weaker competitive pressure. Elasticities and retaliation affect the balance.
Use a tariff diagram to distinguish transfers from welfare losses. Explain why a domestic producer and consumer might disagree.
Find news for this topic →Edexcel IAL Unit 4 · Developments in the global economy (WEC14)
Connect trade flows and income flows to the current account. A deficit can reflect strong import demand, weak exports or income payments abroad.
Check whether the report refers to goods trade alone or the whole current account. Use a consistent period and, where possible, a share of GDP.
The cause, persistence and financing of an imbalance matter. A deficit is not automatically proof of poor economic performance.
Explain two possible causes of a current-account deficit and how the appropriate policy response would differ.
Find news for this topic →Edexcel IAL Unit 4 · Developments in the global economy (WEC14)
A depreciation changes export and import prices, potentially affecting demand, production costs and inflation. Trace these channels separately.
Identify the currency pair, period and size of the change. Check whether firms pass exchange-rate movements into prices.
Contracts, capacity and demand elasticities affect adjustment. An improvement in trade performance may take time or fail to appear.
Build a case for and against depreciation improving the current account. Identify a short-run constraint.
Find news for this topic →Edexcel IAL Unit 4 · Developments in the global economy (WEC14)
Cross-border investment or production can change costs, employment and access to technology. Separate effects on the host economy from effects on the investing economy.
Identify whether investment creates new productive capacity or transfers ownership. Look for employment and local supplier evidence.
Benefits depend on skills, tax arrangements and the ability of domestic firms to learn. Mobile investment can also weaken bargaining power.
Explain one productivity benefit and one distributional risk of multinational investment, with a condition for each.
Find news for this topic →Edexcel IAL Unit 4 · Developments in the global economy (WEC14)
Link a specific constraint, such as unreliable infrastructure or limited education, to productivity and living opportunities. Explain how a policy addresses that constraint.
Pair output data with health, education or poverty indicators. Identify who receives the benefits and over what period.
Institutional capacity, debt obligations and local conditions can change a policy’s effectiveness. Rising GDP alone does not demonstrate broad development.
Compare two ways to address one development constraint. Explain why the choice may differ between countries.
Find news for this topic →Pearson International A Level Economics specification — Issue 2 (PDF) →
References checked 24 September 2026. Course facts and reference numbers are checked against the relevant Pearson or AQA specification. Explanations and practice prompts are original Dispatch material. Dispatch is independent of Pearson Edexcel and AQA; matches are suggested connections, not verified coverage of an article’s full text.