Higher National Unit Specification
General information for centres
Unit title: Economics D: Applied Economics — A Comparison of Public and
Private Sector Delivery
Unit code: DP42 35
Unit purpose: This Unit is designed to build on previous study of economics by examining the
application of economic concepts to the delivery of goods and services. It will engage the candidate
in the debate about the relative merits of public and private involvement in the delivery of important
goods and services. In addition, it provides an opportunity for candidates to critically evaluate
current opinions for the public/private sector delivery of goods and services.
On completion of this Unit the candidate should be able to:
1.
2.
3.
Explain the types of market structure through which goods and services are delivered in the
private sector.
Explain the economic issues relating to public sector involvement in the delivery of goods and
services.
Evaluate the economic impact of different public/private sector options for the delivery of
goods and services.
Credit points and level: 1 HN Credit at SCQF level 8: (8 SCQF credit points at SCQF level
8)
*SCQF credit points are used to allocate credit to qualifications in the Scottish Credit and Qualifications
Framework (SCQF). Each qualification in the Framework is allocated a number of SCQF credit points at an
SCQF level. There are 12 SCQF levels, ranging from Access 1 to Doctorates.
Recommended prior knowledge and skills:
Candidates should have good
communication and research skills. Other knowledge, skills and experience relevant to the unit
would be beneficial, for example, knowledge of the basic principles of resource allocation and the
operation of markets.
In addition, candidates should have achieved HN Unit DP3Y 34 Economics A: An Introduction to
Economics and HN Unit DP40 34 Economics B: Micro and Macro Economics Theory and
Applications.
Ultimately, entry is at the discretion of the centre.
Core skills:
There will be opportunities to gather evidence towards core skills in this Unit,
although there is no automatic certification of core skills or core skills components. Further detail is
provided in the Support Notes.
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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General information for centres (cont)
Context for delivery: If this Unit is delivered as part of a group award, it is recommended that
it should be taught and assessed within the subject area of the group award to which it contributes.
This Unit is included in the framework of the HNC/D Social Sciences.
Assessment: This unit will be holistically assessed by a single instrument of assessment covering
all Unit Outcomes. This will take the form of one open book essay/report of 2000 – 3000 words.
The assessment topic should be handed out or negotiated at an appropriate point in the delivery of the
unit and a submission date set. A feedback session with the candidate should ensure the authenticity
of the candidate’s work.
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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Higher National Unit specification: statement of standards
Unit title: Economics D: Applied Economics — A Comparison of Public and
Private Sector Delivery
Unit code: DP42 35
The sections of the Unit stating the Outcomes, knowledge and/or skills, and evidence requirements
are mandatory.
Where evidence for Outcomes is assessed on a sample basis, the whole of the content listed in the
knowledge and/or skills section must be taught and available for assessment. Candidates should not
know in advance the items on which they will be assessed and different items should be sampled on
each assessment occasion.
Outcome 1
Explain the types of market structure through which goods and services are delivered in the private
sector.
Knowledge and/or skills
 Perfect competition
 Monopoly
 Oligopoly
Evidence requirements
In order to provide evidence for this Outcome, the candidate will be required to draw on the
knowledge and/or skills items above to describe and evaluate a current situation which illustrates
private sector involvement in the delivery of goods and services.
The candidate will need evidence to demonstrate his/her knowledge and/or skills by showing that
s/he can:
 accurately relate each item to the chosen situation
 correctly explain the economic concepts involved
Diagrammatic evidence is not mandatory although the candidate may make use of this to enhance
his/her explanation of economic concepts.
Evidence should be generated through an open book essay/report of 2000–3000 words in length. The
essay/report need not be written up under supervision.
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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Higher National Unit specification: statement of standards (cont)
Unit title: Economics D: Applied Economics — A Comparison of Public and
Private Sector Delivery
Assessment guidelines
Assessment of this Outcome can be combined with assessment of Outcomes 2 and 3 in a single
assessment event.
Outcome 2
Explain the economic issues relating to public sector involvement in the delivery of goods and
services.
Knowledge and/or skills
 Case of government intervention, ie causes of market failure — imperfect markets; inequality;
lack of information; immobility of factors; public goods; merit goods; externalities; social
inclusion and access
 Policy instruments — taxes and subsidies; legal restrictions; regulatory bodies; direct provision;
public ownership; provision of information
 Case against government intervention, ie advantages of laissez faire
Evidence requirements
In order to provide evidence for this Outcome, the candidate will be required to draw on the
knowledge and/or skills items above to describe and evaluate a current situation which illustrates
public sector involvement in the delivery of goods and services.
The candidate’s response will be judged to be sufficient to meet the evidence requirements where the
evidence provided demonstrates that the candidate is able to:
 explain the case for government intervention in the chosen situation by correctly using concepts
taken from the knowledge and/or skills items above and explaining them accurately.
 correctly identify a policy instrument or instruments relevant to the chosen situation and explain
them accurately.
 explain the case against government intervention in the chosen situation by correctly using
concepts taken from the knowledge and/or skills items above and explaining them accurately.
Assessment guidelines
Assessment of this Outcome can be combined with assessment of Outcomes 1 and 3 in a single
assessment event.
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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Higher National Unit specification: statement of standards (cont)
Unit title: Economics D: Applied Economics — A Comparison of Public and
Private Sector Delivery
Outcome 3
Evaluate the economic impact of different public/private sector options for the delivery of goods and
services.
Knowledge and/or skills
 Inter-sectoral transfer in the delivery of goods and services from the public to the private sector
 Use of market principles in public sector delivery, eg internal markets, market testing,
competitive tendering
 Current examples of public sector involvement in the provision of goods and services, eg golden
share, Public Private Partnership, regulatory bodies
 Economic impact of different options on relevant stakeholders, eg shareholders, consumers,
employees, taxpayers, private sector businesses
 Implications of different options for the raising of funds in the public sector
Evidence requirements
In order to provide evidence for this Outcome, the candidate will be required to draw on the
knowledge and/or skills items above to describe and evaluate a current situation which illustrates
public/private sector involvement in the delivery of goods and services.
The candidate must provide evidence relating to all the knowledge and/or skills items in this
Outcome. The candidate’s response will be judged to be sufficient to meet the evidence requirements
where the evidence provided demonstrates that the candidate is able to:
 select and explain a suitable current example of the use of market principles in public sector
delivery or of public sector involvement in the provision of goods and services
 accurately explain how this example illustrates inter-sectoral transfer in the delivery of goods and
services from the public sector to the private sector
 compare this example with two other instances of the use of market principles in the public sector
delivery and/or public sector involvement in the provision of goods and services
 provide a critical evaluation of the impact that the example may have on three relevant
stakeholders, one of whom must be the direct recipients of the good or service concerned. This
evaluation should be based on the correct use of economic concepts
 provide a critical evaluation of the implications of the example for the raising of public funds.
This evaluation should also be based on the correct use of economic concepts and should cover
the methods of raising funds and the amounts likely to be involved.
Overall, therefore, the evidence must cover three suitable situations. These should include one
illustrating the use of market principles in public sector delivery and exemplifying public sector
involvement.
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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Higher National Unit specification: statement of standards (cont)
Unit title: Economics D: Applied Economics — A Comparison of Public and
Private Sector Delivery
This unit will be holistically assessed by a single instrument of assessment covering all Unit
Outcomes. This will take the form of one open book essay/report of 2000 – 3000 words. The
assessment topic should be handed out or negotiated at an appropriate point in the delivery of the unit
and a submission date set. A feedback session with the candidate should ensure the authenticity of
the candidate’s work.
For the report, the candidate will be required to research a current situation which illustrates the
debate between public and private sector involvement in the delivery of goods and services.
The report must draw on the knowledge and skills developed in Outcomes 1 — 3 to provide:
 a description of the situation which places it in the context of current debates regarding the
delivery of goods and services between the private and public sectors
 a comparison of this situation with other related examples of inter-sectoral transfer of the
delivery of goods and services
 a critical summary of the case for and against the extent of government intervention in the
particular situation
 an evaluation of the economic impact of the situation on relevant stakeholders and the
implications of the situation for government finances.
Assessment guidelines
Assessment of this Outcome can be combined with assessment of Outcomes 1 and 2 in a single
assessment event.
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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Administrative Information
Unit code:
DP42 35
Unit title:
Economics D: Applied Economic — A Comparison of Public
and Private Sector Delivery
Superclass category:
EB
Date of publication:
August 2005
Version:
01
Source:
SQA
© Scottish Qualifications Authority 2005
This publication may be reproduced in whole or in part for educational purposes provided that no
profit is derived from reproduction and that, if reproduced in part, the source is acknowledged.
SQA acknowledges the valuable contribution that Scotland’s colleges have made to the development
of Higher National qualifications.
Additional copies of this Unit specification can be purchased from the Scottish Qualifications
Authority. Please contact the Customer Contact Centre for further details, telephone 0845 279 1000.
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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Higher National Unit specification: support notes
Unit title: Economics D: Applied Economics — A Comparison of Public and
Private Sector Delivery
This part of the Unit specification is offered as guidance. The support notes are not mandatory.
While the exact time allocated to this Unit is at the discretion of the centre, the notional design length
is 40 hours.
Guidance on the content and context for this Unit
This Unit is designed to enable candidates to develop their study of economics within a social
sciences framework. It is one of a cluster of four economics Units included in the framework of the
HNC/D Social Sciences. The context for this Unit is that of society as a whole and particularly the
public/private interface in the delivery of goods and services. The Unit is directly linked to the
experience of the UK economy and relates closely to the trend in recent decades of greater market
involvement in the provision of goods and services previously delivered as part of the apparatus of
the state. As a result the Unit has strong links with other social science disciplines such as politics,
sociology and social policy.
Outcomes 1 and 2 are essentially scene-setting Outcomes which are based on ideas introduced in HN
Unit DP3Y 34 Economics A: An Introduction to Economics and HN Unit DP40 34 Economics B:
Micro and Macro Economic Theory and Applications. Their major purpose is to cover the economic
concepts which will be needed for the evaluation of policy in Outcome 3.
Outcome 1 deals with the delivery of goods and services in the private sector. As such, it centres on
market structures and competition and builds on cost concepts introduced in Outcome 2 of HN Unit
DP40 34 Economics B: Micro and Macro Economic Theory and Applications. It also paves the way
for Outcome 2 in this Unit. Candidates should recognise the importance of perfect competition as an
ideal and the significance of profit maximisation in the perfectly competitive model. However, the
Outcome also allows candidates to appreciate the fact that not all markets work in this way. A
monopoly structure can be used to show the opposite of a perfect market. It is important because the
presence of monopoly has been used in the past to justify state ownership. It remains a reason for the
state to adopt regulatory powers. Imperfect markets are also illustrated by oligopoly. For this,
candidates should be aware of the key issues of inter-dependence and the possibility of collusion.
Any suitable framework (eg kinked demand curve, game theory, price leadership) could be used to
illustrate this. Candidates should also understand that alternatives to profit maximisation exist.
Suitable examples include satisficing, cost plus pricing, growth maximisation and sales maximisation.
These could be taught in conjunction with oligopoly.
Diagrams are widely used in the teaching of market structures. The underpinning knowledge for
market structure diagrams is contained in HN Unit DP3Y 34 Economics A: An Introduction to
Economics and HN Unit DP40 34 Economics B: Micro and Macro Economic Theory and
Applications, so candidates should be well prepared for diagrammatic explanations. Candidates are
not, however, required to draw diagrams for assessment purposes, although they may make use of
diagrams if they wish.
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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Higher National Unit specification: support notes (cont)
Unit title: Economics D: Applied Economics — A Comparison of Public and
Private Sector Delivery
Outcome 2 takes forward concepts introduced in HN Unit DP3Y 34 Economics A: An Introduction to
Economics, Outcome 3, and further developed in Outcome 2 of HN Unit DP40 34 Economics B:
Micro and Macro Economic Theory and Applications. The main focus is the case for and against
market intervention. This is approached from a strong economics base and candidates should have a
good understanding of social efficiency and Pareto optimality as well as general equilibrium. If
government intervention is to take place, candidates should recognise that the extent and effects of
this may be unclear and that the theory of second best, cost benefit analysis and public choice theory
may all contribute to this discussion. Candidates are not expected to have a detailed knowledge of
these concepts but should understand what each involves and why each is important. Various generic
forms of intervention are introduced in this Outcome to provide the framework for the specific
examples of Outcome 3. Outcome 3 is the key Outcome in the Unit. It deals with actual examples of
the delivery of goods and services and the tensions between public and private delivery mechanisms.
The choice of examples is not prescribed and may be determined by the current political situation,
local experience, the background and interests of the particular class group etc. A broad distinction is
drawn between the use of market principles in public provision (eg internal markets in the NHS,
market testing of civil service departments, competitive tendering) and private delivery of goods and
services previously provided by the state (eg Public Private Partnerships, contracting out, railway
provision). This distinction is not hard and fast and is intended merely to help distinguish between
the various forms of public/private delivery. Other suitable examples of the changing nature of
private/public goods and service delivery include the privatisations of the 1980s and 1990s and the
associated regulatory bodies such as OFTEL, OFFER; Private Finance Initiative (PFI); air traffic
control and the use of the golden share; London Underground; social housing; hospital trusts;
transport deregulation.
The stakeholders involved will vary depending on each situation but consumers of the goods or
service and employees involved in its provision will be involved in each case. The financial
implications will also vary from example to example. Detailed knowledge of government financial
arrangements is not required. However, candidates should be aware of the differing impact of
various types of taxation and of the effects of government spending and borrowing on the economy as
a whole. Most of the relevant ideas are introduced in Outcomes 3 and 4 of HN Unit DP40 34
Economics B: Micro and Macro Economic Theory and Applications.
Outcome 3 uses the term ‘raising funds’. It is intended to cover the situation where a change in the
method of delivery may require the state to raise a smaller or a greater amount of finance.
Guidance on the delivery and assessment of this Unit
This Unit will be delivered as the final Unit in the cluster of four economics Units in the HNC/D
Social Sciences. Candidates who have not successfully completed the mandatory economics Units,
especially HN Unit DP3Y 34 Economics A: An Introduction to Economics, are likely to encounter
difficulties in coping with this Unit. Candidates who have not completed HN Unit DP40 34
Economics B: Micro and Macro Economic Theory and Applications may lack some background
knowledge and may require additional help and support.
Throughout, economics should be seen as a social science and links can be drawn between it and
other social science subjects such as politics and sociology in terms of examples.
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Higher National Unit specification: support notes (cont)
Unit title: Economics D: Applied Economics — A Comparison of Public and
Private Sector Delivery
The use of current examples is a crucial part of the Unit. Outcomes 1 and 2 are designed to give
candidates the economic tools to enable them to develop a critical approach to the evaluation of
particular examples of public/private delivery in Outcome 3. Candidates should be encouraged to
undertake their own research into local and national examples using sources such as newspapers,
magazines, textbooks, journals and the Internet. It may be possible also to make use of guest
speakers from organisations such as local councils or housing associations as well as from locally
based civil service departments or agencies. Other primary sources may be interviews with those
affected by changes in the delivery of services, eg those requiring medical or dental treatment.
Assessment will be by one open book report of 2000-3000 words in length. Candidates will be
expected to work on this in their own time and do not require direct supervision when completing the
work. The report will centre on one example of public/private delivery of goods or services and
candidates will be required to gather information on their chosen situation. However, they are
required to contrast this situation with two other examples and may need to collect a limited amount
of information on these also. Candidates can be allowed to choose their examples for themselves but
may require guidance especially with respect to selecting their main example. The main focus of the
report is a critique of their main example and, as a result, the teaching of the Unit should encourage
candidates to develop their critical and evaluative skills. The nature of the assessment means it
cannot take place until the delivery of the Unit has been completed. However, candidates could be
made aware of the need to choose examples at an early stage and encouraged to make their final
choice as soon as possible, eg early in the teaching of Outcome 3.
Opportunities for developing Core Skills
This Unit provides a range of opportunities for developing 4 of the 5 Core Skills. The extent of
development will depend on the learning opportunities chosen by the candidate or the delivery and
assessment methods selected by the tutor.
Communication - The delivery and assessment of this Unit may contribute towards the component
Written Communication at Higher if the assessment is an essay. The general skill for this component
is ‘Produce well-structured written communication on complex topics’. Opportunity also exists for
the development of the oral component ‘Produce and respond to oral communication on a complex
topic’ through class/group debates.
In both formative and summative assessment the candidate should be encouraged to present all
essential ideas/information and supporting detail in a logical and effective order; use a structure that
takes account of purpose and audience and links major and minor points in ways which assist the
clarity and impact of the writing; use conventions which are effective in achieving the purpose and
adapted as necessary for the target audience and use spelling, punctuation and sentence structures
which are consistently accurate.
These skills can be developed through formative activities, such as short essays, without being
formally assessed for Core Skill certification.
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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Higher National Unit specification: support notes (cont)
Unit title: Economics D: Applied Economics — A Comparison of Public and
Private Sector Delivery
Working with Others – A tutor may actively choose to develop the general skill of ‘Work with
others in a group to analyse, plan and complete an activity’ at Intermediate 2 level by setting tasks for
group activity and arranging joint information feedback sessions. Candidates could be encouraged to
collaborate at the early stages of their search activities.
Information Technology - Opportunities to develop this skill can easily be incorporated into the
delivery of the unit by supporting the candidate to carry out information searches using efficient and
effective search strategies. This will contribute towards the component Using an IT system
effectively and responsibly to process a range of information, specifically the skill ‘carry out two
searches to extract and present relevant information from electronic data sources’ at Intermediate 2
level. This Core Skill could be developed without formal certification.
Problem Solving - This Core Skill will be developed at Higher level throughout this unit particularly
in planning the tasks. Tutors should encourage learners to explore appropriate strategies for
managing their time and evaluating the considerable amount of data available on the topics contained
in this unit. Tutors may actively choose to further develop this skill by setting tasks for group activity
and arranging joint information feedback sessions. This will contribute towards the component
Critical Thinking where the general skill of ‘analysing a complex situation or issue will be
developed’, the component Planning and Organising where the general skill of ‘planning, organising
and completing a complex task’ will be developed and the component Reviewing and Evaluating
where the general skill of ‘reviewing and evaluating a complex problem solving activity’ will be
developed. This Core Skill could be developed without formal certification.
Open learning
This Unit could be delivered by open or distance learning. However, it will require planning by the
centre to ensure the sufficiency and authenticity of candidate evidence.
Candidates with additional support needs
This Unit specification is intended to ensure that there are no artificial barriers to learning or
assessment. The additional support needs of individual candidates should be taken into account when
planning learning experiences, selecting assessment instruments or considering alternative Outcomes
for Units. For information on these, please refer to the SQA document Guidance Assessment
Arrangements for Candidates with Disabilities and/or Additional Support Needs, which is available
on the SQA website www.sqa.org.uk
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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General information for candidates
Unit title: Economics D: Applied Economics — A Comparison of Public and
Private Sector Delivery
This Unit is a one credit Unit at HND level. You can use it to extend your study of economics gained
through HN Unit DP3Y 34 Economics A: An Introduction to Economics and HN Unit DP40 34
Economics B: Micro and Macro Economic Theory and Applications. If you have taken HN Unit
DP41 35 Economics C: Applied Economics — The Global Perspective, it enables you to complete the
cluster of economics Units which are included in the HND Social Sciences. By so doing you will
have an excellent platform on which to develop your economics still further.
The Unit looks at the role of the state in the delivery of goods and services. This is a major issue in
contemporary society and one that has been, and still is, controversial. The current debate began with
the privatisations of the Thatcher administration in the 1980s and other measures such as the sale of
council houses. Since then it has developed to include contracting out of services by local authorities
and government departments, the introduction of internal markets in the NHS as well as the private
provision of services such as air traffic control. It includes new ways of financing the delivery of
goods and services such as Public Private Partnerships (PPPs) and the Private Finance Initiative
(PFI).
The Unit has three Outcomes. The first two Outcomes give you the economic concepts and tools that
you will need for the third Outcome, which asks you to evaluate the economic impact of current
examples of public/private delivery of goods and services. In particular, you will look at the effects
on consumers of the goods and services involved as well as the implications for other stakeholders
such as employees.
In order to complete this Unit successfully, you will be required to achieve a satisfactory level of
performance on one piece of assessed work. At the end of the Unit, you will be required to complete
a report of 2000-3000 words. You will do this in your own time and will not be directly supervised
when you are carrying out the work. For the report, you will have to evaluate a current situation of
public/private delivery of goods or services. As part of the evaluation, you will have to contrast your
situation with two other examples of public/private sector delivery. You will be able to choose which
examples you use and will have to gather information on them. Most of your research should centre
on your main example and you will be able to choose for yourself which situation to use. A feedback
session with your tutor/lecturer will ensure the authenticity of your work.
HN Unit (DP42 35): Economics D: Applied Economics — A Comparison of Public and Private Sector Delivery
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