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Eduqas A-Level Economics A520QS
Scarcity, Choice and the Economic Problem
Topic overviewScarcity, choice and the basic economic problemThe factors of production and their rewardsOpportunity cost for individuals, firms and governmentEconomic goods, free goods and the three fundamental questionsThe production possibility frontier and its shapeMovements along and shifts in the frontierEfficiency, unemployed resources and the frontierSpecialisation, the division of labour and exchangeProductivity and how it is raised
Demand, Supply and Market Equilibrium
Topic overviewProduct markets and the objectives of economic agentsMarginal utility and the derivation of demandThe demand curve and why it slopes downwardThe conditions of demand and shifts in the demand curveSupply and why the supply curve slopes upwardThe conditions of supply and shifts in the supply curveEquilibrium price and output in a competitive marketShifts in demand and supply and the new equilibriumConsumer surplus, producer surplus and market welfare
Elasticities of Demand and Supply
Topic overviewPrice elasticity of demand and its calculationWhat determines price elasticity of demandPrice elasticity of demand and total revenueElasticity along a straight-line demand curveIncome elasticity of demand, normal and inferior goodsCross price elasticity of demand, substitutes and complementsPrice elasticity of supply and its determinantsElasticity and the incidence of taxes and subsidiesElasticity in decision-making by firms and government
The Labour Market
Topic overviewThe demand for labour and what shifts itThe supply of labour and what shifts itWage determination in a competitive labour marketThe elasticity of demand and supply of labourWage differentials and their causesLabour market flexibility and trade union powerWelfare payments, income tax and labour market performanceThe national minimum wageMigration and the labour market
Costs, Revenues, Profits and the Growth of Firms
Topic overviewPrices, profit and the allocation of resourcesThe short run, the long run and diminishing returnsTotal, average and marginal productFixed and variable costs in the short runAverage and marginal cost curves and their shapesTotal, average and marginal revenueEconomies and diseconomies of scale and the long run average cost curveProfit maximisation and the MC = MR ruleNormal profit, abnormal profit and economic profitInternal and external growth and types of integrationProductive, allocative, dynamic and Pareto efficiency
Market Structures
Topic overviewMarket structure, contestability and barriers to entryBusiness objectives and satisficingPerfect competition and its assumptionsShort run and long run equilibrium in perfect competitionThe efficiency of perfect competitionMonopolistic competition and its assumptionsShort run and long run equilibrium in monopolistic competitionThe efficiency of monopolistic competitionMonopoly and its assumptionsMonopoly compared with perfect competitionThe costs and benefits of monopolyOligopoly, interdependence and concentration ratiosPrice and non-price competition, collusion and price leadershipGame theory and the Nash equilibrium
Competition Policy and Privatisation
Topic overviewWhy governments are concerned about monopoly powerMerger control and market investigationsCartels, restrictive practices and abuse of dominanceCompetition authorities and how they workRegulating natural monopolies and the utilitiesContestable markets and barriers to entryThe limits of competition as a policy goalPrivatisation and the forms it takesEvaluating privatisation and the case for renationalisation
Market Failure and Government Intervention
Topic overviewMarket failure and economic efficiencyExternalities, welfare loss and the socially efficient outputPublic goods, free riding and property rightsMerit goods, demerit goods and information failureMonopoly power, factor immobility and volatile pricesTaxation, subsidies and tradable pollution permitsRegulation, state provision and information provisionMaximum and minimum prices in agriculture, housing and labourGovernment failure and distortions in marketsIncome inequality as a market failure
The Circular Flow and Aggregate Demand
Topic overviewThe circular flow of incomeInjections, withdrawals and equilibrium national incomeThe multiplierThe acceleratorAggregate demand and its componentsConsumption and savingInvestment and its determinantsGovernment spending and net tradeThe AD function: why it slopes down and what shifts it
Aggregate Supply and the Phillips Curve
Topic overviewAggregate supply and the AD/AS frameworkThe short run aggregate supply curveShifts in short run aggregate supplyThe Neo-Classical long run aggregate supply curveThe Keynesian long run aggregate supply curveShifts in long run aggregate supplyMacroeconomic equilibrium and adjustment to the long runThe short run Phillips curveExpectations, the long run Phillips curve and the NAIRUShifts in the long run Phillips curve
Economic Growth
Topic overviewMacroeconomic policy objectives and the conflicts between themMeasuring economic growthActual growth and potential growthIllustrating growth on the PPF and in AD/AS analysisOutput gapsThe business cycle and recessionThe causes of economic growthPolicy instruments used to create growthThe benefits and costs of economic growth
Unemployment
Topic overviewThe labour force, economic activity and inactivityMeasuring unemploymentProblems in measuring unemployment accuratelyThe economic and social costs of unemploymentCyclical unemployment and demand side causesFrictional, structural and seasonal unemploymentReal wage unemployment and incentives to workThe natural rate of unemploymentDemand side solutions to unemploymentSupply side solutions to unemploymentChoosing between demand side and supply side approaches
Inflation and Deflation
Topic overviewInflation, deflation and disinflation definedPrice indices, the basket and weightingCalculating index numbers and the inflation rateThe main measures of inflation comparedDemand-pull inflationCost-push inflationThe quantity theory of money and inflation expectationsThe costs of inflationPolicies to control inflationDeflation and the deflationary spiral
The Balance of Payments
Topic overviewThe balance of payments accountsThe current account and its four componentsThe capital and financial accountsWhy the balance of payments sums to zeroCauses of current account imbalancesThe terms of trade and the current accountThe consequences of a deficit or a surplusPolicies to correct a current account deficit
Control of the National Debt
Topic overviewDeficits, surpluses and the national debtMeasurement of the deficit and the debtStructural and cyclical deficitsDiscretionary policy and automatic stabilisersThe cost of servicing debt and credit ratingsRefinancing, confidence and market disciplineCrowding out and the effect of debt on growthAusterity in a downturn and whether debt is always bad
Fiscal Policy
Topic overviewThe budget and the fiscal stanceGovernment spending and where it goesTaxation and the sources of government revenueDirect and indirect taxesFiscal policy, aggregate demand and AD/AS analysisThe Keynesian case for demand side fiscal policyCriticisms of demand side fiscal policyThe Laffer curve and tax ratesSupply side fiscal policy
Monetary Policy and Financial Stability
Topic overviewThe Bank of England and monetary stabilityThe inflation target and the Bank of England remitThe Monetary Policy Committee and how Bank Rate is setThe transmission mechanism of monetary policyInterest rates, aggregate demand and inflationInterest rates and the exchange rateEvaluating interest rates as a policy toolQuantitative easing and how it worksThe risks of quantitative easing and its unwindingDirect intervention in bank lendingThe financial sector and the real economyAsset bubbles and the financial crisis of 2007-08Systemic risk, moral hazard and the lender of last resortRegulating the financial systemUK economic turning points since 1990
Exchange Rates and Supply Side Policies
Topic overviewExchange rate determination in a free marketFactors that cause a currency to appreciate or depreciateThe exchange rate index and effects on households and firmsExchange rates, aggregate demand and the macroeconomic objectivesManaged floats, fixed rates and central bank interventionThe terms of trade and the Marshall-Lerner conditionSupply side policies and long-run aggregate supplyMarket-based and interventionist supply side policiesEvaluating supply side policies
International Trade and Protectionism
Topic overviewWhy countries tradeAbsolute and comparative advantageCalculating comparative advantageThe gains from trade and the terms of tradeLimits and criticisms of comparative advantageThe case for free tradeThe case against free tradeTariffs and their effectsQuotas, subsidies and other methods of protectionThe arguments for and against protectionism
Globalisation and the UK in the World Economy
Topic overviewWhat globalisation is and what drives itThe benefits of globalisationThe costs of globalisationThe United Kingdom in the world economyThe World Trade OrganisationEconomic problems of developed, developing and emerging economiesThe European Union and the single marketThe advantages and disadvantages of membershipEnlargement of the European UnionEconomic and monetary union and the euroOptimal currency areas and the European Central Bank
Economic Development
Topic overviewWhat economic development meansNational income as a measure of developmentPurchasing power parity and comparing countriesThe Human Development IndexOther indicators of developmentEconomic structure and developmentObstacles: health, education and populationObstacles: capital, infrastructure and institutionsObstacles: trade, resources and external conditionsSolutions: liberalisation and foreign investmentSolutions: aid and debt reliefSolutions: industrialisation strategies
Market Structures
- 14 subtopics
- 42 things to know
- All three components
What Market Structures covers
Market Structures is examined in Microeconomics — assessed across all three components. It covers market structure, contestability and barriers to entry, business objectives and satisficing, perfect competition and its assumptions, short run and long run equilibrium in perfect competition, the efficiency of perfect competition, monopolistic competition and its assumptions, short run and long run equilibrium in monopolistic competition, the efficiency of monopolistic competition, monopoly and its assumptions, monopoly compared with perfect competition, the costs and benefits of monopoly, oligopoly, interdependence and concentration ratios, price and non-price competition, collusion and price leadership and game theory and the Nash equilibrium.
Where it is assessed
All three components
Microeconomics, assessed across Components 1, 2 and 3.
Check the Eduqas specification ↗The 14 subtopics
Each one has its own page.
- Market structure, contestability and barriers to entryFour market structures studied in economic theory, hit-and-run entry and structural and behavioural barriers to entry.Open →
- Business objectives and satisficingFour objectives a firm may pursue other than profit maximisation, social and community objectives and divorce of ownership from control.Open →
- Perfect competition and its assumptionsMany small firms, an identical product, free entry and perfect information — and why each assumption matters to the conclusions drawn from the model.Open →
- Short run and long run equilibrium in perfect competitionNormal profit position for a firm in the short run, long run equilibrium for a firm in perfect competition and long run industry supply curve in a constant cost industry.Open →
- The efficiency of perfect competitionProductive efficiency at the bottom of average cost and allocative efficiency where price equals marginal cost, together with what the model still leaves out.Open →
- Monopolistic competition and its assumptionsMonopolistic competition and product differentiation.Open →
- Short run and long run equilibrium in monopolistic competitionShort run equilibrium with abnormal profit in monopolistic competition, short run equilibrium with a loss in monopolistic competition and long run equilibrium in monopolistic competition.Open →
- The efficiency of monopolistic competitionWhy differentiation buys variety at the cost of excess capacity, and why long-run profit is competed away without the efficiency of perfect competition.Open →
- Monopoly and its assumptionsPure monopoly, working monopoly and underpinning assumptions of monopoly.Open →
- Monopoly compared with perfect competitionHigher price and lower output set against economies of scale and the funds for innovation — the case each way, rather than a verdict.Open →
- The costs and benefits of monopolyPrice discrimination and link between monopoly and international competitiveness.Open →
- Oligopoly, interdependence and concentration ratiosMain features of an oligopolistic market, concentration ratio and kinked demand curve model of oligopoly.Open →
- Price and non-price competition, collusion and price leadershipNon-price competition, price war and overt and tacit collusion.Open →
- Game theory and the Nash equilibriumGame theory, payoff matrix and dominant strategy.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
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Why does a firm in perfect competition face a horizontal demand curve?
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What determines the structure of a market?
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How does a perfectly competitive firm choose its output in the short run?
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Is a perfectly competitive firm allocatively efficient in the long run?
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Define monopolistic competition.
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How does a firm in monopolistic competition choose its output?
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Is monopolistic competition allocatively efficient?
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Define a pure monopoly.
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Compare the price charged in monopoly with that in perfect competition.
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Give three costs of monopoly to consumers.
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What are the main features of an oligopolistic market?
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How are oligopolistic markets characterised in terms of competition?
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What is game theory?
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Name the four market structures studied in economic theory.
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Why do firms not always aim to maximise profit?
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Define perfect competition.
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Describe short run equilibrium when a perfectly competitive firm earns abnormal profit.
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Why does price equal marginal cost in perfect competition?
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State the underpinning assumptions of monopolistic competition.
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Describe short run equilibrium with abnormal profit in monopolistic competition.
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Why does price exceed marginal cost in monopolistic competition?
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What is a working monopoly?
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Compare the output produced in monopoly with that in perfect competition.
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What is price discrimination?
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What does interdependence mean in oligopoly?
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What is non-price competition?
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What is a payoff matrix?
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What makes a market contestable?
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State four objectives a firm may pursue other than profit maximisation.
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State the main assumptions of perfect competition.
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Describe short run equilibrium when a perfectly competitive firm makes a loss.
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Is a perfectly competitive firm productively efficient in the long run?
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How does monopolistic competition differ from perfect competition?
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Describe short run equilibrium with a loss in monopolistic competition.
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Is monopolistic competition productively efficient?
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State the underpinning assumptions of monopoly.
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Why does a monopolist produce where marginal revenue is below price?
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In what forms does price discrimination occur?
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Why does interdependence make oligopoly hard to model?
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Why do oligopolists often prefer non-price competition?
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What is a dominant strategy?
Take Market Structures further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Satisficing vs Profit maximisation
Satisficing: settling for an acceptable outcome. Profit maximisation: it means pushing to the highest attainable result.
Questions from this topic
Each one with the model answer underneath.
- 1
What determines the structure of a market?
Model answer
The structure of a market depends on the number of firms selling in it. The ability of firms to enter and leave the market freely is equally important.
- 2
Name the four market structures studied in economic theory.
Model answer
Perfect competition, monopolistic competition, oligopoly and monopoly are the four market structures. The four differ in the number of firms and the height of barriers to entry.
- 3
What makes a market contestable?
Model answer
A contestable market is one that firms can enter and exit freely and cheaply. The threat of new entry disciplines the firms already inside the market.
- 4
Why are sunk costs the key obstacle to contestability?
Model answer
Sunk costs cannot be recovered when a firm leaves the market. High sunk costs deter entry, because a failed entrant loses the whole outlay.
- 5
What is hit-and-run entry?
Model answer
Hit-and-run entry occurs when a firm enters to capture abnormal profit and leaves once it disappears. The possibility of quick entry keeps incumbent prices close to average cost.
- 6
How does contestability affect the behaviour of an existing monopolist?
Model answer
A monopolist in a contestable market keeps prices low to discourage entrants. Abnormal profit is sacrificed in order to protect the firm's position in the long run.
What is inside Levo
Six ways to work the same material.
Market Structures revision questions
- What does Market Structures cover in Eduqas A-Level Economics?
- 14 subtopics: market structure, contestability and barriers to entry, business objectives and satisficing, perfect competition and its assumptions, short run and long run equilibrium in perfect competition, the efficiency of perfect competition, monopolistic competition and its assumptions, short run and long run equilibrium in monopolistic competition, the efficiency of monopolistic competition, monopoly and its assumptions, monopoly compared with perfect competition, the costs and benefits of monopoly, oligopoly, interdependence and concentration ratios, price and non-price competition, collusion and price leadership and game theory and the nash equilibrium. Each one has its own page with questions and model answers.
- How is Market Structures organised?
- By the Eduqas A520QS specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Market Structures, 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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