Process
Edexcel A-Level Economics A 9EC0
The Nature of Economics
Topic overviewEconomics as a social sciencePositive and normative economic statementsThe economic problemWhat a production possibility frontier showsShifts in the PPF, and capital against consumer goodsThe division of labour and its advantagesSpecialisation for trade between countriesThe four functions of moneyFree market, command and mixed economiesThe advantages and disadvantages of the free marketCommand and mixed economies assessed
How Markets Work
Topic overviewRational decision makingDemandPrice, income and cross elasticity: formulae and valuesInterpreting income and cross elasticity of demandWhat determines the elasticity of demandUsing elasticities: taxes, subsidies and business planningElasticity and total revenueSupplyPrice elasticity of supply and its valuesWhat determines elasticity of supply, and the short and long runPrice determinationPrice mechanismConsumer and producer surplusIndirect taxes and the incidence of a taxSubsidies and how their benefit is sharedAlternative views of consumer behaviour
Market Failure
Government Intervention
Measures of Economic Performance
Topic overviewMeasuring growth: real GDP, GDP per capita and GNIPurchasing power parity and the limitations of GDPNational wellbeing and the Easterlin paradoxInflation, deflation and how the CPI measures themThe limitations of the CPI, and the RPIDemand-pull, cost-push and monetary causes of inflationThe effects of inflationMeasuring employment, unemployment and inactivityThe causes of unemployment, migration and skillsThe effects of unemploymentThe components of the current accountCurrent account deficits, surpluses and global imbalances
Aggregate Demand
Aggregate Supply
National Income
Topic overviewThe circular flow of incomeThe distinction between income and wealthInjections, withdrawals and the equilibrium conditionWhat counts as an injection and a withdrawalMacroeconomic equilibrium and shifts in AD and ASThe shape of AS, demand-pull inflation and stagflationThe multiplier processMarginal propensities to consume, save, tax and importCalculating the multiplier and why its size matters
Economic Growth
Topic overviewWhat causes economic growthActual against potential growth, and export-led growthTrend growth and positive and negative output gapsIdentifying an output gap on an AD/AS diagramThe four phases of the trade cycle, and the boomRecession, recovery and the output gapThe impact of economic growth
Macroeconomic Objectives and Policies
Topic overviewPossible macroeconomic objectivesMonetary policy: interest rates and quantitative easingFiscal policy: spending, taxation and the budgetDemand-side policy on an AD/AS diagramThe Bank of England, and policy in the 1930s and 2008The strengths and weaknesses of demand-side policyMarket-based and interventionist supply-side policiesLabour market, skills and infrastructure policiesThe strengths and weaknesses of supply-side policyConflicts between growth, inflation and the current accountThe Phillips curve and the trade-offs in a policy mix
Business Growth
Business Objectives
Revenues, Costs and Profits
Topic overviewTotal, average and marginal revenueRevenue, elasticity and the revenue-maximising outputTotal, fixed, variable, average and marginal costWhy short-run cost curves take their shapeThe long-run average cost curve and returns to scaleTypes of economies and diseconomies of scaleInternal and external economies of scaleNormal profit, supernormal profit and lossesThe short-run and long-run shut-down points
Market Structures
Topic overviewEfficiencyThe assumptions of perfect competition and its revenue curvesPerfect competition: equilibrium and efficiencyThe characteristics of monopolistic competitionMonopolistic competition: short-run and long-run equilibriumExcess capacity and efficiency in monopolistic competitionThe characteristics of oligopoly and concentration ratiosCollusive and non-collusive behaviourGame theory, price and non-price competitionThe characteristics of monopoly and its equilibriumThird degree price discriminationThe costs and benefits of monopoly, and natural monopolyWhat monopsony is and where its power comes fromThe costs and benefits of monopsonyContestable markets and hit-and-run competitionBarriers to entry and exitSunk costs and the degree of contestability
The Labour Market
Topic overviewDemand for labourWhat determines the supply of labourGeographical and occupational immobility of labourWage determination in competitive and monopsony marketsCurrent issues in the UK labour marketMinimum and maximum wages, and public sector payThe elasticity of demand for and supply of labour
Government Intervention in Markets
International Economics
Topic overviewWhat globalisation is and what has driven itThe winners and losers from globalisationAbsolute and comparative advantageThe assumptions and limitations of comparative advantageThe gains and costs of international specialisationPattern of tradeTerms of tradeTypes of trading bloc and the hierarchy of integrationTrade creation, trade diversion and the costs of trading blocsThe World Trade OrganisationWhy governments restrict trade, and the instruments usedThe effects of protectionismBalance of payments in a global contextExchange rate systems, and appreciation against revaluationWhat moves a floating rate, and how governments interveneThe Marshall-Lerner condition and the J-curve effectMeasuring competitiveness: unit labour costs and export pricesWhat determines competitiveness, and the cost of losing it
Poverty and Inequality
Emerging and Developing Economies
Topic overviewThe Human Development Index and its three dimensionsThe limits of the HDI, and other development indicatorsPrimary product dependency, the savings gap and Harrod-DomarPopulation, debt, financial exclusion and infrastructureGovernance, corruption, conflict and geographyMarket-orientated strategies: trade liberalisation and FDIInterventionist strategies: human capital and protectionismInfrastructure, joint ventures and buffer stock schemesThe Lewis model, tourism, primary industries and FairtradeAid, debt relief, the World Bank, the IMF and NGOs
The Financial Sector
The Role of the State in the Macroeconomy
Topic overviewCapital, current and transfer spending, and what drives itThe effects of public expenditure, and crowding outProgressive, proportional and regressive taxesThe Laffer curve and the effects of tax changesAutomatic stabilisers, deficits and the national debtWhat drives deficits and debt, and why their size mattersReducing fiscal deficits and national debtPolicies to reduce poverty and inequalityMonetary, exchange rate and supply-side policy across countriesDirect controls, and why policy works differently elsewhereWhat an external shock is, and the kinds that occurFiscal, monetary and supply-side responses to a shockPolicy lags and the constraints on respondingMeasures to control global companies' (transnationals') operationsProblems facing policymakers when applying policies
Government Intervention in Markets
- 3 subtopics
- 9 things to know
- Papers 1 and 3
What Government Intervention in Markets covers
Covers what a government does about market power: controlling mergers, regulating price, profit and quality, opening markets to competition, and the limits on what regulation can achieve.
Where it is assessed
Papers 1 and 3
Markets and business behaviour, then the synoptic paper.
Check the Pearson Edexcel specification ↗The 3 subtopics
Each one has its own page.
- Controlling mergers, and price, profit and quality regulationRecall questions on how a regulator handles a proposed merger, and on price capping, profit regulation, quality standards and performance targets.Open →
- Deregulation, tendering, privatisation and nationalisationRecall questions on deregulation, competitive tendering and privatisation as ways to promote competition, restricting monopsony power, and nationalisation as a way to protect suppliers and employees.Open →
- The impact of government interventionRecall questions on the effect of intervention on prices, profit, efficiency, quality and choice, and on regulatory capture and asymmetric information as limits.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Evaluation
What limits what regulation of a monopoly can achieve?
Key term
What is profit regulation?
Key term
Give three methods government may use to restrict monopsony power.
Key term
How can nationalisation protect suppliers and employees?
Key term
How can government intervention raise prices in a market?
Key term
What is the role of regulatory bodies in controlling mergers?
Key term
What is competitive tendering for government contracts?
Key term
Explain how government regulation can reduce firm profits.
Take Government Intervention in Markets further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Privatisation vs Nationalisation
Privatisation: the transfer of an asset or service from state ownership into the private sector. Nationalisation: the transfer of an asset or service from private ownership into state hands.
Price regulation vs Profit regulation
Price regulation: a cap on what a firm may charge, commonly set by a formula linked to inflation. Profit regulation: a limit on the rate of return a firm may earn on the capital it employs.
Regulatory capture vs Deregulation
Regulatory capture: the outcome in which a regulator comes to act in the interest of the industry it oversees. Deregulation: the removal of rules restricting entry or conduct, intended to raise contestability.
Questions from this topic
Each one with the model answer underneath.
- 1
What is the role of regulatory bodies in controlling mergers?
Model answer
Regulatory bodies assess proposed mergers to determine whether they would substantially lessen competition in a market.
- 2
What outcome occurs when a regulatory body determines a merger would severely harm competition?
Model answer
The merger is blocked outright and cannot proceed.
- 3
Under what circumstances might a merger be approved unconditionally?
Model answer
When the regulatory body determines the merger will not substantially lessen competition or harm consumers.
- 4
What does it mean when a merger is approved with conditions?
Model answer
The merger can proceed but with requirements attached, such as divestment of certain assets, to address competition concerns.
- 5
Define price regulation as a method of controlling monopolies.
Model answer
A method where government or a regulator sets maximum prices that a monopolist can charge consumers.
- 6
What is the primary aim of price regulation for monopolies?
Model answer
To prevent monopolists from exploiting consumers by charging prices significantly above marginal cost.
What is inside Levo
Six ways to work the same material.
Government Intervention in Markets revision questions
- What does Government Intervention in Markets cover in Edexcel A-Level Economics A?
- 3 subtopics: controlling mergers, and price, profit and quality regulation, deregulation, tendering, privatisation and nationalisation and the impact of government intervention. Each one has its own page with questions and model answers.
- How is Government Intervention in Markets organised?
- By the Edexcel 9EC0 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Government Intervention in Markets, on a schedule.
Attempt a question from memory, write the correct version, then attempt it again. Levo records the jump between your first attempt and your last, and brings each question back on the day you are due to forget it.
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