Key term
OCR A-Level Economics H460
Introduction to Microeconomics
Topic overviewEconomic and free goods, scarcity and positive and normative statementsEconomic agents and the factors of productionFactor rewards, rationality and the objectives of economic agentsIncentives and the functions of the price mechanismMarket, planned and mixed economies and allocative and productive efficiencyOpportunity cost, trade-offs and the production possibility curveShifts of the production possibility curve and uses of opportunity cost
Microeconomics: The Role of Markets
Topic overviewSpecialisation, the division of labour and barterMoney as a medium of exchange and the gains from specialisationIndividual and market demand and joint, competitive and composite demandMovements along and shifts of the demand curveIndividual and market supply and joint and competitive supplyMovements along and shifts of the supply curveConsumer surplus and producer surplusHow changes in price affect consumer and producer surplusCeteris paribus and market equilibrium and disequilibriumChanges in demand and supply and their effects on related marketsPrice and income elasticity of demand and total revenueCross elasticity, price elasticity of supply and the uses of elasticityMarginal utility, marginal cost and decisions at the marginMarket failure and marginal social cost and benefitPositive and negative production and consumption externalitiesInformation failure, asymmetric information and merit and demerit goodsMerit and demerit good diagrams and correcting information failurePublic, private and quasi-public goodsThe free rider problem and the provision of public goodsIndirect taxes and subsidies to correct market failureState provision, price controls, buffer stocks and legislationRegulation, tradable pollution permits and government failure
Microeconomics: Business Objectives
Topic overviewProfit maximisation and alternative business objectivesCorporate social responsibility and the principal-agent problemFixed, variable, average and marginal costsDiminishing returns and economies and diseconomies of scaleTotal, average and marginal revenueProfit, loss and normal and supernormal profit
Microeconomics: Market Structures
Topic overviewPerfect competition in the short and long run and allocative efficiencyProductive efficiency and perfect competition as a benchmarkMonopoly characteristics, equilibrium and static efficiencyDynamic efficiency, price discrimination and natural monopolyCharacteristics of monopolistic competition and its short run equilibriumLong run equilibrium and efficiency in monopolistic competitionCharacteristics of oligopoly, concentration ratios and the kinked demand curveNon-price competition, collusion and the pros and cons of oligopolyCharacteristics of contestable markets, sunk costs and hit-and-run entryEfficiency, barriers and the limits of contestable markets
Microeconomics: The Labour Market
Topic overviewDerived demand for labour and wage elasticity of demandLabour productivity, unit labour costs and marginal revenue productSupply of labour and wage elasticity of supplyShort and long run labour supply, transfer earnings and economic rentWage differentials, labour mobility and monopsonyTrade unions, bilateral monopoly and the effects of monopsonyWage determination in a competitive labour market and labour market flexibility
Macroeconomics: Aggregate Demand and Aggregate Supply
Topic overviewThe circular flow of income, injections and leakagesMethods of measuring national incomeComponents of aggregate demand and their determinantsThe slope of the aggregate demand curve and what shifts itConsumption, income and the role of expectationsShort run and long run aggregate supply curvesShifts in short run and long run aggregate supplyMacroeconomic equilibrium and the effects of demand and supply shiftsThe national income multiplier and marginal propensitiesThe accelerator, the economic cycle and output gaps
Macroeconomics: Economic Policy Objectives
Topic overviewEconomic growth, real and nominal GDP and GDP per capitaShort and long run growth, the economic cycle and the effects of growthEconomic structure, deindustrialisation and sustainable developmentLimitations of GDP and the Human Development IndexEmployment, unemployment rates and the objective of full employmentMeasures, types and costs of unemployment and the effects of full employmentInflation, deflation, real values and the CPI and RPICalculating inflation with index numbers and its causes and consequencesBalance of payments accounts and current account calculationsCauses and consequences of current account imbalancesKey trends in UK macroeconomic performanceComparing UK performance internationally and the limits of economic dataIncome and wealth, redistribution and absolute and relative povertyLorenz curves, the Gini coefficient and the causes of povertyThe natural rate of unemployment and Keynesian and neo-classical aggregate supplyShort and long run Phillips Curves and their usefulness
Macroeconomics: Implementing Policy
Topic overviewThe government budget, types of tax and the budget balanceNational debt, cyclical and structural deficits and crowding outThe Laffer curve, average and marginal tax rates and limits of fiscal policyInterest rates, the money supply and inflation targetsQuantitative easing, the exchange rate and limits of monetary policyPrivatisation, deregulation and subsidies as supply side policiesCompetition policy, infrastructure, education and tax and benefit reformLabour market flexibility, immigration control and limits of supply side policyConflicts between macroeconomic policy objectives
Macroeconomics: The Global Context
Topic overviewPatterns of international trade and global supply chainsAdvantages and disadvantages of international tradeExchange rate calculations and how exchange rates are determinedExchange rate changes, the Marshall-Lerner condition and exchange rate systemsGlobalisation, international competitiveness and comparative advantageTerms of trade and the impact of globalisation and emerging economiesProtectionism and the effects of a tariffQuotas, trade creation, economic integration and the World Trade Organisation
Macroeconomics: The Financial Sector
Topic overviewFunctions of money, credit creation and narrow and broad moneyThe quantity theory of money and interest rates in the money marketRoles of the financial sector, saving and investmentThe Harrod-Domar model and microfinanceFinancial regulation and the functions of a central bankMonetary policy effectiveness, limits of regulation and the IMF
Quantitative Skills for Economics
Themes in Economics: Synoptic Application
Microeconomics: Market Structures
- 10 subtopics
- 30 things to know
- Component 01
What Microeconomics: Market Structures covers
Market Structures is examined on component 01 of OCR Economics, Microeconomics. 121 recall questions across 10 subtopics.
Where it is assessed
Component 01
Microeconomics, the whole of the first paper.
Check the OCR specification ↗The 10 subtopics
Each one has its own page.
- Perfect competition in the short and long run and allocative efficiencyRecall questions on the characteristics of perfect competition, price-taking firms, short and long run equilibrium, supernormal profit and losses, and allocative efficiency.Open →
- Productive efficiency and perfect competition as a benchmarkRecall questions on productive efficiency in perfect competition, the firm's short run supply curve, weak dynamic efficiency, and perfect competition as a benchmark model.Open →
- Monopoly characteristics, equilibrium and static efficiencyRecall questions on the characteristics of monopoly, barriers to entry, the monopoly diagram and supernormal profit, and why a monopolist is allocatively and productively inefficient.Open →
- Dynamic efficiency, price discrimination and natural monopolyRecall questions on dynamic efficiency and X-inefficiency, price discrimination and its effect on consumers, natural monopoly, and the advantages and disadvantages of monopoly.Open →
- Characteristics of monopolistic competition and its short run equilibriumRecall questions on the characteristics of monopolistic competition, how it differs from perfect competition and oligopoly, and the firm's short run profit and loss diagram.Open →
- Long run equilibrium and efficiency in monopolistic competitionRecall questions on long run tangency equilibrium in monopolistic competition, excess capacity, efficiency, advertising, and the advantages and disadvantages of this market structure.Open →
- Characteristics of oligopoly, concentration ratios and the kinked demand curveRecall questions on the characteristics of oligopoly, interdependence, calculating and interpreting concentration ratios, and the kinked demand curve model with its criticisms.Open →
- Non-price competition, collusion and the pros and cons of oligopolyRecall questions on non-price competition and product differentiation, overt and tacit collusion, cartels, price leadership, price wars, and the advantages and disadvantages of oligopoly.Open →
- Characteristics of contestable markets, sunk costs and hit-and-run entryRecall questions on contestable markets, sunk costs, hit-and-run entry, limit pricing, how the threat of entry changes incumbent behaviour, and long run profit.Open →
- Efficiency, barriers and the limits of contestable marketsRecall questions on how contestability promotes productive and allocative efficiency, barriers that reduce contestability, predatory versus limit pricing, and the limitations of contestability theory.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Process
In perfect competition, where on the cost curves does productive efficiency occur, and in which run is it achieved?
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What is on each axis of the monopoly diagram, and which curves appear on it?
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How are a monopolist's price and output read off the monopoly diagram?
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Why would a profit-maximising monopolist never operate on the inelastic section of its demand curve?
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How is third-degree price discrimination shown on a diagram?
Evaluation
Give two ways price discrimination can benefit consumers.
Process
What distinguishes monopolistic competition from perfect competition?
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What is on each axis of the diagram for a firm in monopolistic competition, and which curves appear?
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Why does a monopolistically competitive firm's demand curve slope downwards yet remain relatively elastic?
Process
Where does the long run equilibrium of a firm in monopolistic competition sit on its diagram?
Evaluation
Is contestability determined by the number of firms in a market?
Key term
Give three barriers that reduce contestability.
Process
Why do oligopolists rely so heavily on non-price competition?
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What is the difference between overt and tacit collusion?
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What level of profit will a perfectly contestable market yield in the long run?
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How can a market be efficient without being perfectly competitive?
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What are the characteristics of perfect competition?
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Which efficiency condition does perfect competition meet in both runs, and which only in the long run?
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Firms in monopolistic competition are making supernormal profits. What happens over the long run?
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What are the characteristics of an oligopoly?
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Define interdependence.
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What is the price elasticity of demand facing an individual firm in perfect competition?
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Which area on a perfectly competitive firm's diagram represents total revenue at equilibrium?
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What happens to consumer surplus under price discrimination?
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Is a firm in monopolistic competition productively efficient in the long run?
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What does the kink in an oligopolist's demand curve imply about marginal revenue, and why does that reinforce price stability?
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Define product differentiation.
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Define a contestable market.
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Why does contestability promote productive efficiency?
Take Microeconomics: Market Structures further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Dynamic efficiency vs X-inefficiency
Dynamic efficiency: improvement over time through investment, innovation and better technology. X-inefficiency: the waste of resources that follows when a firm faces too little pressure to control its costs.
Natural monopoly vs Monopolistic competition
Natural monopoly: a market where economies of scale are so large that one supplier serves it most cheaply. Monopolistic competition: a market of many small firms selling differentiated versions of a similar product.
Overt collusion vs Tacit collusion
Overt collusion: a formal and openly agreed arrangement between firms to restrict competition. Tacit collusion: an understanding reached without agreement, by firms watching and following one another.
Questions from this topic
Each one with the model answer underneath.
- 1
What are the characteristics of perfect competition?
Model answer
Very many buyers and sellers, a homogeneous product, perfect information, freedom of entry and exit, and no firm large enough to influence the market price.
- 2
What does it mean to call a firm a price taker?
Model answer
It must accept the price set by industry supply and demand and cannot influence that price by altering its own output.
- 3
Two panels are used to show a price-taking firm. What is on each axis, and how do the two demand curves differ?
Model answer
Both panels carry quantity on the horizontal axis and price on the vertical; the industry panel has a downward-sloping demand curve meeting an upward-sloping supply curve at the market price, while the firm's panel shows a horizontal demand curve at that market price.
- 4
Why is the individual firm's demand curve horizontal?
Model answer
The product is homogeneous and buyers have perfect information, so at any price above the market price the firm would sell nothing, while at the market price it can sell as much as it wishes.
- 5
What is the price elasticity of demand facing an individual firm in perfect competition?
Model answer
Demand facing the individual firm is perfectly elastic.
- 6
For a price taker, how are price, average revenue and marginal revenue related?
Model answer
They are all equal, so the single horizontal line is at once the demand, average revenue and marginal revenue curve.
What is inside Levo
Six ways to work the same material.
Microeconomics: Market Structures revision questions
- What does Microeconomics: Market Structures cover in OCR A-Level Economics?
- 10 subtopics: perfect competition in the short and long run and allocative efficiency, productive efficiency and perfect competition as a benchmark, monopoly characteristics, equilibrium and static efficiency, dynamic efficiency, price discrimination and natural monopoly, characteristics of monopolistic competition and its short run equilibrium, long run equilibrium and efficiency in monopolistic competition, characteristics of oligopoly, concentration ratios and the kinked demand curve, non-price competition, collusion and the pros and cons of oligopoly, characteristics of contestable markets, sunk costs and hit-and-run entry and efficiency, barriers and the limits of contestable markets. Each one has its own page with questions and model answers.
- How is Microeconomics: Market Structures organised?
- By the OCR H460 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Microeconomics: 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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