Examiners’ Report

June 2024
IAL Economics WEC13 01
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June 2024

Publications Code WEC13_01_2406_ER

All the material in this publication is copyright

© Pearson Education Ltd 2024

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 Introduction

The number of entries for WEC13 this June has increased on previous series. Across all parts
of the paper, there was a good number of impressive responses. Candidates have clearly
heeded the advice provided in previous series and are effectively using the case study when
supporting their answers and are providing more developed chains of analysis.

In Section A , the multiple-choice section, the first four questions were answered well. The
last two were the most commonly mis answered questions on this section.

Q1 required students to correctly identify the impact of technical economies of scale, this
was correctly identified as reducing long-run average costs by most candidates.

Q2 tested marginal costs. Most candidates calculated the correct answer, however there was
a large number who incorrectly calculated this. Students are advised to ensure they are
comfortable meeting all the QS skills including cost calculations.

Q3 tested students understanding reasons for a demerge, whist also testing their application
skills. Students correctly identified the reason for GlaxoSmithKline to demerge was to enable
it to focus on its core business.

Q4 asked for students to interpret a diagram showing a perfectly competitive market making
super-normal profits. Candidates needed to identify the long-run outcome of this situation. It
is evident that candidates are becoming increasingly confident when answering these
questions that require analysis of diagrams, and many correctly identified the answer as
additional famers would enter the market.

Q5 was commonly mis answered. It provided students with a small stem where a profit
maximising firm decided to change its objective to revenue maximisation. It then asked what
the change in price and output would be following this decision. A number of candidates
selected that both price and profit would change. Candidates are encouraged to use
diagrammatic analysis to help then when answering such questions.

For Q6, students needed to choose the most likely impact of a decrease in the geographical
mobility of labour. A number of candidates still read this as an increase and regularly
selected a distracter as their answer. An increase in the availability of affordable housing was
the most regularly chosen wrong answer for this question.

Section B, the data response section is based on information provided in the source booklet.
The Extracts focused on Uniqlo’s growth and competition.

Q7a, asked for the change in total costs for Uniqlo and required a correct answer in billions
for 2 marks.

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Q7b, required students to explain what is meant by the term ‘organic growth’. An accurate,
developed definition was required for two knowledge marks. The further two marks required
two applications to the context.

Q7c, candidates analyse two reasons why Uniqlo had been successful in establishing itself in
international markets. Candidates needed to identify two reasons, link both to the case study
and explain why it had been successful. Most candidates were able to do this, many wrote
significantly more than required, which may have caused timing issues. Marks were lost for
not providing two applications.

Q7d, asked students to examine to examine the likely impact of a reduction in Uniqlo’s costs
of production on their profits. A correctly drawn diagram showing falling AC and MC would
achieve four marks. Two application marks were available for reference to the case study.
Most candidates offered correct diagrams, however a large number were static and could
only achieve 2 out of 4 marks. This question required evaluation for two marks.

Q7e, asked candidates to discuss the likely barriers to entry for a business wishing to enter
the global fashion retail market. A strong understanding of barriers to entry was required for
level three and many candidates were able to do this. Some candidates focused too much on
competition rather than barrier to entry and these responses often didn’t reach level 2 for
KAA. Candidates used the case study well, however, sometimes the chains of analysis were
limited. It is recommended that candidates focus on two detailed points of analysis and two
detailed evaluations rather than providing lots of short points.

Section C, the essay section offered students the opportunity to choose between three
questions. Students were more likely to attempt Q8 and Q10 then 9. Students tended to
perform better on these questions as they were able to utilise a range of diagrams to support
their answers. Question 8 required students to evaluate policies a government could use to
control monopolies. Q9 questioned the likely effects of collusion on businesses and
consumers. Candidates used the stem well in answering these and supported their
responses with well-chosen diagrams. Q9 asked candidates to evaluate reasons for wage
differences in a industry of their choice. A large number of candidates didn’t focus on an
industry, and compared wage differences more generally, this limited their response to level
2. The use of diagrams was also lower on this question.

Most students were able to complete the paper in the time available. We did however see
several unfinished or very brief essays suggesting that some students had not planned their
time well. The performance on individual questions is considered in the next section of the
report.

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 Question 7 (a)

Students could typically access at all of the marks for this question as they were confident
calculating the change in Uniqlo’s total costs. Some students were awarded only 1 mark
because they omitted billions in their final answer.

This candidate miscalculated their answer and did not achieve any
marks.

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This candidate achieved full marks for calculating the percentage
change, though the question did not ask for this, full marks were still
given.

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 Question 7 (b)

This 4-mark question asked students to explain the term organic growth, referencing Extract
A. Most students could offer a definition, however growth using own finances was not
accepted. There were two marks available for correct application which most candidates
achieved. This question was very accessible and showed that the majority of candidates were
well practiced in the 4-mark question techniques. Centres are advised to encourage their
students to learn definitions of key terms on the specification.

Learn clear and full definitions for two knowledge marks. This
candidate lost marks for a vague definition.

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This candidate provided a confident definition, that was developed for
two marks. Providing examples can often support the definition; such
as research and development or investing in capital.

There is strong application, also worth 2 marks.

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 Question 7 (c)

In this question students were asked to analyse two reasons why Uniqlo had been successful
in establishing itself in international markets. This question proved to be very accessible to
most students and they were able to identify two reasons and included two references to
extract A for application marks. Not all students were able to fully develop the reason why it
had been successful, this stopped them from achieving the analysis marks available.

A few students didn’t separate their knowledge and application marks out and only received
one mark for identification and application.

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This candidate achieved all the marks effectively without over writing.

The first point identifies price competition, applies this to the low
prices and explains this will attract new customers.

The second point identifies non-price competition, such as fast moving

images and explains this will make Uniqlo's products more unique.

This achieved 6/6.

Try to write less in 6 mark questions to be time efficient in the exam.

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 This question required candidates to use Extract A for their application. The first application
point on this response was from a different part of the paper.

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Always use the section of the extract asked for in the question in your
answer.

The second point achieves the application marks as it clearly uses the
correct extract.

Carefully read the question and make sure you only use information
asked for the the question for your answer.

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 Question 7 (d)

This question required students to examine the impact of falling costs of production on the
profits of Uniqlo using a diagram.

Most candidates offered a cost and revenue diagram. Including a correctly drawn diagram
showing the initial supernormal profit area and equilibrium achieved knowledge marks.
Further marks were achieved by drawing a fall in both marginal cost and average costs with
an increase in supernormal profits. This would achieve the analysis marks available. There
were no marks for knowledge or analysis without a diagram.

Many candidates were able to include application to the case study, there are two marks
available for this and candidates should include two separate references.

The evaluation was strong on this question and candidates effectively used the case study
reference to the increase in wages as a counter for costs decreasing. Using the case study for
evaluation can be a very effective way to ensure high marks are achieved. Not all students
offered evaluation which is required by the command word ‘examine’.

This response was well constructed it starts of by offering two correct applications for two
marks.

It then offers a clear well labelled diagram to achieve two marks for the correct original
equilibrium and supernormal profit area, then two marks for the falling AC and MC and
increased supernormal profit area.

The evaluation is awarded two marks by identifying the wage costs as offsetting the falling
costs in other parts of the business.

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 If a question asks for a diagram, carefully check labels and include
shifts.

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This candidate did not include the equilibriums or shifts on their
diagram. Therefore they were not awarded any marks for knowledge
or analysis.

They were still able to achieve 4/8 for correct application and
evaluation.

Always fully label your diagram with equilibrium points.

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 Question 7 (e)

This question is the first of the levels based marking questions and requires candidates to
include chains of reasoning in both their analysis and evaluation.

This question required candidates to discuss the likely barriers to entry for a business
wishing to enter the global fashion retail market. To achieve level three, responses needed
strong application and an understanding of barriers to entry. A number of candidates
discussed the level of competition in the market which did not address the question asked.

There were a number of excellent responses to this question and most candidates found the
case study easy to apply. The better responses focused on two barriers to entry using both
Extract C and figure 2, these included; lower prices, bargaining power over suppliers, large
funds for investment, non-price competition and brand loyalty. For level 3, candidates would
need to explain how these factors make it more difficult for new firms to enter the market.

A large number of candidates included several short points, this scatter gun approach lacks
the development needed for the higher levels and candidates are encouraged to focus on
fewer developed points of analysis.

Evaluation was often well supported by the case study, with candidates identifying the large
number of small firms operating in countries such as China. Candidates also referenced the
lack of capital required to compete online. Level three evaluation requires both application
and developed chains of reasoning.

This is an excellent response that achieved full marks.

This candidate has clearly understood the question.

The response is well structured and has a sophisticated use of key terms and concepts.

The application is well chosen and embedded into the answer.

The evaluation and analysis is detailed and provides a logical flow.

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The application is well integrated through the analysis and evaluation
of this answer, providing excellent context.

This candidate focuses on developing two strong points both evaluated

in detail.

Focus on two points with lots of application for a higher level response.

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 This response attempted to link their application into their point, however this was limited
and not fully integrated.

Points were attempted, however not fully explained and the chains of reasoning often had
gaps or were not fully explored.

The evaluation was a list with limited context.

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 This response achieved 7/14.

To improve the candidate needed to improve the analysis to ensure

the application was fully embedded and the points were detailed
coherent and complete.

Focusing on two developed evaluations rather than lots of short points

would have moved the evaluation out of level 1.

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Aim for detailed coherent chains of reasoning with fully embedded
application for level 3.

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 Question 8

This question demanded an understanding of policies the government could adopt to control
a monopoly. To reach a level a diagram that showed the impact of the policy needed to be
included, a monopoly diagram was not sufficient. Most candidates understood what policies
a government could use to control a monopoly, however, many candidates were unable to
provide detailed analysis how they worked. Analysis was often superficial and not well
developed and candidates often provided statements of the impact of the policy, instead of
analysing how the impact occurred. In weaker responses, reasons were poorly explained and
generic. Stronger responses were able to use the stem to explore the US government's
control of Google. Many of these candidates included a correctly drawn maximum price on a
monopoly diagram.

The best evaluation provided context and identified government failure as one of the
limitations of intervention to control monopolies. There were some excellent examples of
candidates explaining the importance of a monopoly for a host economy, therefore the
limitations of the restrictions placed upon them. Candidates using the significance, or level of
fine/price cap often provided these as generic points and only reached level one. Many
candidates' evaluations lacked examples and were only supported by partially-developed
chains of reasoning, this could achieved only a Level 2.

This is an example of an excellent essay.

It provides a clear structure when the candidate explains the issues that Google causes, then
clearly identifies how the government may intervene to stop the inefficiencies.

Throughout there is excellent context that is well linked into the analysis.

The maximum price diagram is fully labelled and integrated into the candidate's answer.

The second point on legislation is also well developed and looks at both the impacts on costs
and reputation.

Evaluation is strong and critical of the analysis raised.

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Level four knowledge application and analysis always needs context
that is fully integrated. This candidate provides an excellent example of
how to integrate the context into their answer.

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 This answer lacks the development of how the government intervention impacts the
business.

It simply states that the maximum price is set below the equilibrium and increases consumer
surplus. This is linked to diagram, which moves this point into level two, however it lacks
application or chains of reasoning to move beyond this level.

The next point is also a statement.

Evaluation is given, however not developed or in context. Achieving level one for evaluation.

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 Always seek to develop points with application and chains of
reasoning.

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Question 9

This question required students to evaluate the possible reasons for wages differentials
within an occupation. This was the least popular of the three essays available and scored the
lowest mean mark.

To achieve a level 3 for knowledge application and analysis, students needed to include a an
appropriate diagram, many did not provide one which limited the score they could achieve.
The better candidates included an price elasticity of demand for labour diagram and used
this to support their analysis. Many candidates used the stem to explain why lawyers in
Switzerland were paid at different levels based on their skill level or productivity. However,
many candidates focused too heavily on the reasons why wage differentials exist between
occupations. This didn’t address the question. Very few candidates achieved level four on this
essay.

For evaluation, students needed to give reasons why these differentials may not exist and
some were able to explore the significance of the reasons they had provided. The evaluation
was very limited on this question and very few candidates were able to reach level two or
above. Most candidates listed reasons without development and very few candidates
provided any context.

This candidate has successfully focused on one industry using the stem.

They have identified supply of labour, skills and productivity as their reasons for difference in
wages.

The first of these would impact the whole industry and not wages within the industry,
therefore did not address the question.

The other reasons identified were correct, but had limited analysis.

The candidate would have benefitted on addressing fewer points and focusing on developing
these.

The evaluation was a list and not developed achieving the top of level one.

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 Carefully read the question; many candidates addressed why wage
differentials exist between industries rather than within one.

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This candidate did provide an accurate diagram, however, the level of development that
linked the diagram to their analysis was limited.

The candidate has provided lots of short reasons for wage differentials. These were not fully
explored and lacked the application required for level three.

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 This candidate would have benefited from including examples of the
theories identified to improve their analysis.

The question required application to one industry and this was not
present in this response, the candidate discusses 'jobs' rather than a
specific job within a chosen industry, therefore this answer could not
reach level three.

Focus on one industry when asked to do so in the question.

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Question 10

This question required candidates to evaluate the likely impact of collusion on businesses
and consumers. Candidates were required to include a game theory diagram to support their
answer. Most students were able to include a pay-off matrix and use this to identify the
higher profits generated from collusion. To achieve a level 4 candidates needed to refer to
game theory with a diagram and reference the impacts to both consumers and producers in
their answers. The reverse argument could be used for KAA or evaluation.

Most candidates were able to explain how companies such as Leicester City Football Club
and JD Sport could benefit from collusion, and a large number of candidates included the
stem reference in their answer. Increased profitability and improved quality of
products/services were the most commonly explored answers and many candidates were
able to access the higher levels by doing so. Candidates who were able to develop their
chains of reasoning in context often achieved high level 3 or level 4 for KAA. A number of
candidates still provided multiple short analysis points which only achieved level 2. A number
of students were drawing inaccurate diagrams and muddled the levels of revenue that need
to be identified in each quadrant. Candidates must ensure they are confident when
explaining game theory through the use of a diagram.

There were a significant number of candidates providing strong evaluation for this question.
Better candidates were able to identify the loss of consumer surplus, lack of choice and
possible fines for colluding firms as their points. The majority of students supported their
evaluation with the stem and correctly identified that Leicester city had to pay a £880 00 fine.

It was pleasing to see the level of quality provided by many of the candidates, and it is
evident they understand the exam requirements well.

A significant number did not put an "x" next to the question they had selected. It is helpful if
students remember to put an "x" in the box of the question they select. It is also helpful if
they change their mind to change the selected question by putting a line through the
incorrect question number and replacing the question attempted. Candidates must also
ensure they do not answer two essays on the same page.

This candidate scored 12/20.

The knowledge, application, analysis and evaluation achieved a level two.

The points raised in this response were statements with two-stage chains of reasoning,
therefore it lacked the development necessary for level three.

Though the context is provided, it is not fully integrated into the answer.

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 Focus on fewer points wth development.

Try to explain the links between cause and consequence to provide

more analysis for higher levels.

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This is an excellent response and achieved full marks for KAA.

The candidate clearly addresses the positive effects of collusion for both the businesses and
consumers of football clothing, using a correct and fully integrated diagram.

To achieve level four candidates should aim to provide two detailed analysis points, in
context with developed chains of reasoning.

The candidate uses correct terminology and economic theory throughout this answer and
fully addresses the question.

There is a good understanding of the links between supernormal profits and improved
efficiencies.

The evaluation is also contextual and offers some application and developed, this achieved a
level three evaluation but did not score full marks.

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 Always use the stem or context in your answer to achieve level 4.

If required, include a diagram and link it to your analysis.

Aim for fewer developed points.

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Paper Summary

Based on their performance on this paper, students are offered the following advice:

Section A:

Multiple Choice Questions

Students need to ensure they can calculate marginal costs

Carefully read the question asked
Students are encouraged to use diagrams to help them answer questions

Section B:

Data Response

When asked to a draw a diagram all marks can be achieved through the diagram and a
limited written explanation. The majority of students supported their response with a very
detailed written explanation is is not required.
6 mark questions do not require detailed chains of reasoning. They do require two
separate applications to the context asked for in the question.
Longer answer questions require depth more then breadth. Candidates should aim to
develop two detailed analysis points and two detailed evaluations to achieve the higher
levels.

Section C:

Essay

Diagrams should be drawn where helpful and many students successfully incorporated
cost-revenue diagram into their response. Stronger responses utilised their diagram to
explain the impacts on a business or different economic agents.
Students that did best were able to apply to the specific question and use relevant
examples that fitted with the context provided. This was used particularly well in question
10 discussing the collusion between Leicester City sportswear and JD Sport.
Candidates often provided lots of short points, rather than fewer detailed points. This
limits the quality of analysis and evaluation.

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 Grade boundaries

Grade boundaries for this, and all other papers, can be found on the website on this link:

https://qualifications.pearson.com/en/support/support-topics/results-certification/grade-
boundaries.html

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