Please be aware of the following changes to this topic in the new syllabus, especially when using or referring to resource for the previous course, such as past exam papers.

• Topic 2.1 is now "The role of markets in allocating resources" (formerly in Topic 2.2). However, the former Topic 2.1 ("Microeconomics and macroeconomics") has been removed from the syllabus. Other changes to Topic 2.1 are outlined in Table 3 below.

Topic 2: Outgoing vs New syllabus

• Topic 2.4 The price mechanism (previously in Topic 2.2.3) has been moved to Topic 2.4.2.
• Topic 2.6.2 (Calculation of PED) and Topic 2.7.2 (Calculation of PES) - The new syllabus includes reference to the terms: (i) perfectly inelastic, (ii) unitary elastic, and (iii) perfectly elastic.
• Topic 2.6.5 (Significance of PED) - The implications of PED for decision-making now include workers.
• Topic 2.7 Price elasticity of supply (PES) - The implications for decision making by consumers, producers and government has been removed (formerly Topic 2.8.4).
• Legacy Topic 2.10.1 (Definition of market failure) has been made clearer in the new Topic 2.9.2 (Definitions of terms associated with market failure). These definitions now include “monopoly” as a tenth item in addition to (i) public goods, (ii) merit goods, (iii) demerit goods, (iv) private benefits, (v) external benefits, (vi) social benefits, (vii) private costs, (viii) external costs, and (ix) social costs.
• Topic 2.9.3 (Causes of market failure) - "factor immobility" (legacy Topic 2.10.2) has been removed as a cause of market failure.
• Topic 2.9.4 (Consequences of market failure) - Two additional implications of misallocation of resources have been added to the syllabus in relation to: (i) the non-provision of public goods, and (ii) restricted supply causing higher prices under a monopoly.
• Topic 2.10.2 (The advantages and disadvantages of the mixed economic system) - The learning outcome "Arguments for and against the mixed economic system" has been added to the syllabus.
• Topic 2.10.2 has removed the minimum wage diagram (as part of government intervention to address market failures in legacy Topic 2.11.2). However, this has been moved to Topic 3.3.2 (Wage determination). Note that the minimum wage diagram is now explicitly mentioned in this section of the syllabus. i.e., drawing and interpretation of diagrams that illustrate the effects of national minimum wages.
• Topic 2.10.3 (Government intervention to address market failure) has been simplified with "the effects of maximum and minimum prices in labour and foreign exchange markets removed (only the effects of maximum and minimum prices in product markets remains). In addition, "The effectiveness of government intervention in overcoming the drawbacks of a market economic system." has been removed from the syllabus.
• Topic 2.10.3 (Government intervention to address market failure) - Regulation, privatisation, nationalisation, direct provision of goods and services, and quotas (such as for the extraction of natural resources) have been added to the syllabus as methods of government intervention to address market failures. Candidates are expected to provide definitions, advantages, and disadvantages for each of these.

Quotas are often imposed on the extraction of natural resources, such as minerals and fossil fuels