How would you structure a 25 mark essay question? For example if the question was " how will an increase in interest rates affect the rental market?"

First in a 25 mark essay, you would generally in your introduction, want to sign post your stance, arguments and concluson very clearly, making it easy for the examiner to follow. I will now do a "skeleton plan for the interview"
For example,
Introduction: A rise in interest rate will lead to a rise in the equilibrium price and quantity in the market, however the extent of increases is indeterminable due to a lack of information about the exact rise in interest rates and if existing landlords have fixed mortgage rates.
Second paragraph: Explain why there is a rise in equilibrium Qe and Pe. It is important to explain that a rise in interest rates will lead to a rise in mortgage repayment rates, making it less attractive to buy a home. This causes prospective landlords to turn to renting as it is a substitute. This point can be countered and evaluated depending on the spike in interest rates, if there's a large increase - large rise in equilibrium Qe and Pe, but if its a small rise in interest rates, small rise in equilibrium Qe and Pe. Now conclude that there will be rise in qs and qd but its indeterminable due to lack of information
Third paragraph: You would start with your first counter point, explaining why if all existing landlords have do not fixed term mortgage rates, supply may shift leftwards concurrently with demand. Explain that there landlords have maintenance costs- The loss in revenue may cause them to pull out of the market to cut their losses as it may not cover the existing maintenance costs.Evaluate this point by pointing out if there are fixed term mortgage rates.the leftward shift in supply will be minute as no extra costs is borne by the landlords. Hence, causing the rightward shift in the demand to be proportionately more than the leftward shift in supply -overall Qe and Pe increases. Conclude in this paragraph that overall Qe and Pe increases because you assume that landlords have fixed term mortgage rates.
Last Paragraph: The conclusion, you will-again outline your main arguments, conclusions and why you think the Qe and Pe will rise, but the rise is indeterminable.

Answered by Sean T. Economics tutor

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