Key term
Edexcel A-Level Economics B 9EB0
Scarcity, Choice and Potential Conflicts
Enterprise, Business and the Economy
Introducing the Market
Topic overviewConsumer objectives and the demand curveMovements along and shifts of the demand curveProducer objectives and the supply curveMovements along and shifts of the supply curveEquilibrium price and quantityExcess demand, excess supply and market forcesShifts in demand and supply in real marketsLimitations of the supply and demand modelFunctions of the price mechanismMass markets, niche markets and market growthMarket research and consumer insightMarket segmentationMarket mapping and competitive advantageAdding value, pricing decisions and dynamic markets
The Role of Credit in the Economy
Topic overviewBanks and the channelling of savings into investmentBank lending, interest rates and collateralRisk in business decision-makingLimited and unlimited liabilityLoans, overdrafts and trade creditVenture capital, share capital and leasingOwner's capital, retained profit and other sources of financeChallenges in obtaining credit and the impact of credit on the economy
Market Failure and Government Intervention
Revenue, Costs, Profits and Cash
Topic overviewSales volume and sales revenueFixed, variable, total and average costsPercentage change in revenue, costs and profitContribution and the break-even pointMargin of safety and the limitations of break-even analysisProfit as an incentive: market entry and exitGross, operating and net profitProfit margins and how firms increase profitCash flow, cash-flow forecasting and business survival
Business Growth and Competitive Advantage
Topic overviewObjectives of business growthInternal and external economies of scaleDiseconomies of scale and the problems of growthCorporate culture in a growing businessOrganic and inorganic growthHorizontal, vertical and conglomerate integrationInnovation, research and development and competitive advantageState funding for research and developmentThe product life cycle and extension strategiesMarket information in the digital economyDigital technology and the supply side of businessThe long tail and wider geographical marketsCosts, prices and firm survival in a digital marketHow small firms compete
Firms, Consumers and Elasticities of Demand
Topic overviewCalculating and interpreting price elasticity of demandFactors influencing price elasticity of demandPrice elasticity of demand and total revenuePrice elasticity of demand in niche and mass marketsPricing strategiesChoosing the right pricing strategyOnline sales, price comparison and pricing decisionsNon-price competition and the demand curveDevising a marketing approachIncome elasticity of demand
Productive Efficiency
Life in a Global Economy
Topic overviewCharacteristics of globalisationCauses of globalisation over the last fifty yearsGrowth in the UK and the BRIC economiesIndicators of growth and developmentDeveloped, emerging and developing economiesMean and median incomesSpecialisation and the gains from international tradeTrading blocsVisible and invisible trade and the impact of cheap importsExchange rate changes and their impact on firmsReading exchange rate and effective exchange rate data
The Economic Cycle
Topic overviewThe economic cycle: boom, slowdown, recession and recoveryImplications of the economic cycle for firmsThe circular flow of income, injections and withdrawalsAggregate demand and its componentsAggregate supply, input costs and productivityInflation, deflation and disinflationPrice indices and the rate of inflationReal and nominal values, constant and current pricesDemand-pull and cost-push inflationThe impact of inflation on firms and individualsEmployment, underemployment and the measurement of unemploymentThe causes of unemploymentThe impact of unemployment on firms and individuals
Introduction to Macroeconomic Policy
Globalisation
Topic overviewThe growing economic power of China and IndiaAfrica and other emerging marketsRising incomes, firms and shifting employment patternsNominal and real valuesIndex numbersTrade liberalisation and economic growthSpecialisation and comparative advantageForeign direct investment and growthTrade creation and trade diversionTrading blocs and the single marketTrading blocs, firms and growing interdependenceProtectionism: tariffs, quotas and other trade barriersTrade negotiations and international institutionsExchange rate changes and the Eurozone
Economic Factors in Business Expansion
Topic overviewPush factors: saturated markets and competitionPull factors: economies of scale and risk spreadingOffshoring and outsourcingExtending the product life cycle through overseas marketsRaising capacity utilisationAssessing a market: disposable income and exchange ratesEase of doing business, infrastructure and political stabilityLocation of production: costs, labour and natural resourcesLocation of production: trade blocs, incentives and return on investment
Impact of Globalisation on Global Companies
Topic overviewGlobalisation and glocalisationEthnocentric, polycentric and geocentric approaches to global marketsPrice and non-price competition in global marketsBranding and differentiation in global marketsCultural and language barriers in global marketsAdapting marketing strategy for niche and mass markets
Impact of Globalisation on Local and National Economies
Topic overviewMultinational corporations and local labour marketsMultinational corporations and local firmsMultinationals, the local community and the environmentForeign direct investment, growth and the balance of paymentsTechnology transfer, skills and business cultureMultinationals and consumersTax revenues and transfer pricingStakeholder conflicts, pay and working conditionsEmissions, waste disposal and supply chain ethicsEthical marketing: labelling and promotionControlling multinational corporations
Global Labour Markets
Inequality and Re-Distribution
Topic overviewAbsolute and relative poverty and how they are measuredMeasuring inequality: the Lorenz curve and the Gini coefficientReducing poverty: growth, development and international aidThe impact of inequality on individuals, firms and the economyRe-distribution of income and wealth through taxation and services
Competition and Market Power
Topic overviewMarket structures across the spectrum of competitionPerfect competition and what the model explainsMarket structure, pricing strategies and consumersNon-price competition and the limitations of perfect competitionContestability, ease of entry and barriers to entryBarriers to entry, market structure and economies of scaleConcentration ratios, interdependence and tacit agreementPrice discriminationAverage and marginal cost, revenue and profitContribution, business objectives and pricing strategiesProductive and allocative efficiencyProductivity, market orientation and interrelated markets
Market Power and Market Failure
Topic overviewCartels, collusion and restrictive practicesMonopsony, natural monopoly and power in the labour marketThe implications of market failure for firms, consumers and governmentPromoting competition: anti-competitive practices, mergers and privatisationRegulating natural monopolies and protecting consumers and employeesThe Competition and Markets Authority and EU competition policyThe benefits and costs of regulation
Market Failure Across the Economy
Macroeconomic Policies and Impact on Firms and Individuals
Topic overviewAggregate demand and its componentsAggregate supply, full capacity output and the output gapThe multiplier effectShifts in AD and AS: inflation, unemployment and growthFiscal policy: government spending and taxationMonetary policy: the Bank of England, interest rates and quantitative easingDemand-side policies on the AD/AS diagram: investment, jobs and pricesTime lags, policy conflicts and the limits of demand-side policyMarket-based supply-side policiesInterventionist supply-side policiesSupply-side policies on the AD/AS diagram: strengths and weaknessesComparing macroeconomic policies and judging their success
Risk and the Financial Sector
Topic overviewRisk and uncertainty in business decisionsEconomic shocks and their impact on firmsExchange rate risk and forward marketsInsurance and the management of business riskMobilising savings and lending for business investmentAssessing creditor risk and lending to individualsPayments, equity markets and the exchange of goods and servicesThe central bank: the MPC, monetary policy and financial regulationThe Global Financial Crisis and banking regulation
Global Labour Markets
- 6 subtopics
- 18 things to know
- Papers 2 and 3
What Global Labour Markets covers
Global Labour Markets is examined in Paper 2, Competing in the global economy, and in Paper 3, The economic environment and business. It covers growth of the global labour force and structural change, the demand for and supply of labour, skills, training and education, global competition, recession and redundancies, trade unions and professional bodies and minimum wage legislation, skill shortages and migration.
Where it is assessed
Papers 2 and 3
Competing in the global economy, then the synoptic paper on the pre-released context.
Check the Pearson Edexcel specification ↗The 6 subtopics
Each one has its own page.
- Growth of the global labour force and structural changeThe global labour force and why it has grown, female participation and the participation rate, low-skilled labour supply and wages in developed economies, ageing populations and the dependency ratio, structural change and deindustrialisation, structural unemployment, automation of middle-skill jobs, and interdependent labour markets through trade and offshoring.Open →
- The demand for and supply of labourLabour as a derived demand and its determinants, the price of capital, the marginal revenue product of labour and the hiring decision, the supply of labour to an occupation and its elasticity, net advantages, wage differentials, equilibrium wages after shifts in demand and migration, monopsony employers, slow-clearing labour markets, and regional pay.Open →
- Skills, training and educationEducation and potential output, general against firm-specific training, underinvestment in general training and its positive externalities on a diagram, government training policies, training length and labour supply elasticity, the return to education, skills mismatches, judging whether a training course is worthwhile, lifelong learning, and education quality and foreign investment.Open →
- Global competition, recession and redundanciesGlobal competition and wages in high-wage economies, unit labour cost and calculating it, competing with high hourly wages, offshoring against outsourcing, cyclical unemployment and overseas recessions, cutting hours before redundancies, labour hoarding, the wider costs of redundancy, hysteresis, and depreciation to protect export jobs.Open →
- Trade unions and professional bodiesTrade unions and collective bargaining, raising wages in competitive and monopsony labour markets, bilateral monopoly, sources of bargaining power, falling membership and globalisation, professional bodies and entry requirements, the benefits and costs of professional licensing, and calculating the cost effect of a union pay rise.Open →
- Minimum wage legislation, skill shortages and migrationThe national minimum wage and where it binds, its effects in competitive and monopsony labour markets, why job losses may not follow, minimum wages in developing countries and informal sectors, inequality, calculating a pay rise, skill shortages and their costs and remedies, internal and international migration, remittances, brain drain, and inequality as an incentive.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
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Why do labour markets rarely clear instantly?
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Why do firms often cut hours and freeze pay before making workers redundant?
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Why has union membership fallen in many developed economies?
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Explain two ways a skill shortage damages a country's international competitiveness.
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How does investment in education raise a country's potential output?
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What is meant by the global labour force?
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Why is the demand for labour described as a derived demand?
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Distinguish general training from firm-specific training.
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How does global competition put downward pressure on wages in a high-wage economy?
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What is a trade union?
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What is a national minimum wage?
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Give two reasons the global labour force has grown rapidly over recent decades.
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State three determinants of a firm's demand for labour.
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Why do firms tend to underinvest in general training?
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Why can a country with high hourly wages still compete internationally?
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Define collective bargaining.
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Why may a minimum wage raise employment where the employer is a monopsonist?
Take Global Labour Markets further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Cyclical unemployment vs Structural unemployment
Cyclical unemployment: joblessness caused by a fall in aggregate demand during a downturn, which reverses as the economy recovers. Structural unemployment: Joblessness caused by a mismatch between workers' skills or location and the jobs available, which a recovery on its own does not cure.
Minimum wage vs Living wage
Minimum wage: a legally enforced lowest hourly rate that an employer may pay. Living wage: A voluntary estimate of the hourly pay needed to cover a basic cost of subsistence, usually set above the legal floor.
Monopoly in a labour market vs Monopsony in a labour market
Monopoly in a labour market: a single seller of workers' services, such as a union that bargains for everyone in an occupation as one body. Monopsony in a labour market: A single or dominant buyer of one type of worker, which faces the whole supply curve and so hires fewer people at a lower wage than competition would give.
Questions from this topic
Each one with the model answer underneath.
- 1
What is meant by the global labour force?
Model answer
The total number of people worldwide who are either in work or actively seeking work.
- 2
Give two reasons the global labour force has grown rapidly over recent decades.
Model answer
Population growth and rising participation rates in populous developing economies, and the entry of formerly closed economies such as China and those of central and eastern Europe into world trade.
- 3
How does rising female participation affect a country's labour supply and potential output?
Model answer
It increases the supply of labour available to firms, shifting long-run aggregate supply to the right and raising potential output.
- 4
Define the participation rate.
Model answer
The participation rate is the percentage of the working-age population that is either employed or actively seeking work.
- 5
What happens to wages in developed economies when the world supply of low-skilled labour increases sharply?
Model answer
Firms can source that work abroad, so demand for low-skilled labour at home falls and its relative wage is held down.
- 6
Why does an ageing population slow the growth of a country's labour force?
Model answer
More workers reach retirement than young people enter employment, so the working-age share of the population falls and the dependency ratio rises.
What is inside Levo
Six ways to work the same material.
Global Labour Markets revision questions
- What does Global Labour Markets cover in Edexcel A-Level Economics B?
- 6 subtopics: growth of the global labour force and structural change, the demand for and supply of labour, skills, training and education, global competition, recession and redundancies, trade unions and professional bodies and minimum wage legislation, skill shortages and migration. Each one has its own page with questions and model answers.
- How is Global Labour Markets organised?
- By the Edexcel 9EB0 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Global Labour 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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