Microeconomics: The Role of Markets

What Microeconomics: The Role of Markets covers

The Role of Markets is examined on component 01 of OCR Economics, Microeconomics. 267 recall questions across 22 subtopics.

The 22 subtopics

Each one has its own page.

• Specialisation, the division of labour and barterRecall questions on specialisation and the division of labour, their advantages and drawbacks for firms, workers and economies, and barter and the double coincidence of wants.Open →
• Money as a medium of exchange and the gains from specialisationRecall questions on money as a medium of exchange and its other functions, why specialisation depends on exchange, and why individuals, regions and countries specialise.Open →
• Individual and market demand and joint, competitive and composite demandRecall questions on the demand curve and its downward slope, income and substitution effects, effective and market demand, and joint, competitive and composite demand.Open →
• Movements along and shifts of the demand curveRecall questions on extensions and contractions of demand, the factors that shift the demand curve, inferior goods, expectations, and the difference between a change in demand and in quantity demanded.Open →
• Individual and market supply and joint and competitive supplyRecall questions on the supply curve and why it slopes upwards, market supply from individual firms, and joint and competitive supply with worked market examples.Open →
• Movements along and shifts of the supply curveRecall questions on extensions and contractions of supply, the factors that shift supply, how specific taxes, ad valorem taxes and subsidies appear, and short run versus long run supply.Open →
• Consumer surplus and producer surplusRecall questions on defining and locating consumer and producer surplus on a diagram, total community surplus, and calculating each surplus from linear demand and supply equations.Open →
• How changes in price affect consumer and producer surplusRecall questions on how price rises, shifts in demand and supply, and indirect taxes change consumer and producer surplus, deadweight welfare loss, and problems measuring consumer surplus.Open →
• Ceteris paribus and market equilibrium and disequilibriumRecall questions on the ceteris paribus assumption, market equilibrium, excess demand and excess supply, and how the price mechanism removes disequilibrium.Open →
• Changes in demand and supply and their effects on related marketsRecall questions on how changes in demand and supply move price and quantity, the rationing function of price, knock-on effects in related markets, and derived demand.Open →
• Price and income elasticity of demand and total revenueRecall questions on price elasticity of demand and income elasticity of demand calculations, their determinants and signs, perfectly and unit elastic demand curves, and how price elasticity affects total revenue.Open →
• Cross elasticity, price elasticity of supply and the uses of elasticityRecall questions on cross elasticity of demand and price elasticity of supply calculations and determinants, and how firms, governments and competition authorities use elasticity estimates.Open →
• Marginal utility, marginal cost and decisions at the marginRecall questions on marginal thinking, total and marginal utility and the law of diminishing marginal utility, the water-diamond paradox, and calculating marginal cost and marginal revenue.Open →
• Market failure and marginal social cost and benefitRecall questions on market failure and its causes, externalities, marginal private, external and social costs and benefits, and the socially optimum level of output.Open →
• Positive and negative production and consumption externalitiesRecall questions on diagrams and examples of negative and positive production and consumption externalities, welfare loss triangles, and internalising an externality.Open →
• Information failure, asymmetric information and merit and demerit goodsRecall questions on information failure, asymmetric information, adverse selection and moral hazard, and the definition, examples and normative nature of merit and demerit goods.Open →
• Merit and demerit good diagrams and correcting information failureRecall questions on merit and demerit good diagrams under information failure, welfare loss, policies to raise or reduce consumption, and the limits of correcting information failure.Open →
• Public, private and quasi-public goodsRecall questions on the characteristics of pure public goods including non-excludability and non-rivalry, private goods, and quasi-public goods such as roads and beaches.Open →
• The free rider problem and the provision of public goodsRecall questions on the free rider problem, missing markets, how public goods are financed and provided, technology's effect on public goods, and public versus merit goods.Open →
• Indirect taxes and subsidies to correct market failureRecall questions on why governments intervene, indirect taxes on goods with external costs, tax incidence calculations, and per-unit subsidies with their costs and drawbacks.Open →
• State provision, price controls, buffer stocks and legislationRecall questions on direct state provision, maximum and minimum prices, buffer stock schemes and why they fail, public-private partnerships, and legislation to correct market failure.Open →
• Regulation, tradable pollution permits and government failureRecall questions on regulation, tradable pollution permits, information provision, competition policy tools, and the causes and consequences of government failure.Open →

What you need to know

Answer each one before you reveal it.

Take Microeconomics: The Role of Markets further

The same content, four other ways.

Commonly confused

Pairs that lose marks when they are blurred together.

• Joint demand vs Composite demand

  Joint demand: demand for two goods that are wanted together, so a rise in one raises the other. Composite demand: demand for a good wanted for more than one use, so the uses compete for the same supply.

• Consumer surplus vs Producer surplus

  Consumer surplus: the difference between what buyers were willing to pay and what they actually paid. Producer surplus: the difference between what sellers received and the least they would have accepted.

• Joint supply vs Competitive supply

  Joint supply: the position where producing one good necessarily produces another alongside it. Competitive supply: the position where producing one good uses resources that could have made another.

Questions from this topic

Each one with the model answer underneath.

1. 1

   Define specialisation.

   Model answer

   The concentration of a worker, firm, region or country on producing a narrow range of goods, services or tasks.

2. 2

   What is the division of labour?

   Model answer

   Breaking a production process down into separate tasks, each carried out by a different worker.

3. 3

   What three advantages does the division of labour bring a firm?

   Model answer

   Workers become faster through repetition, no time is lost switching between tasks, and each worker can be matched to the job they do best.

4. 4

   Why does the division of labour reduce average costs?

   Model answer

   Higher output per worker spreads fixed costs over more units and makes specialised machinery worth installing.

5. 5

   State three drawbacks of the division of labour for workers.

   Model answer

   Repetitive tasks become boring, skills become so narrow that workers are hard to redeploy, and falling motivation can reduce quality.

6. 6

   Why does specialisation make an economy more vulnerable to shocks?

   Model answer

   Specialists depend on trade for everything they do not produce, so a break in the supply chain or a collapse in demand for the specialism causes widespread disruption.

What is inside Levo

Six ways to work the same material.

Microeconomics: The Role of Markets revision questions

What does Microeconomics: The Role of Markets cover in OCR A-Level Economics?

22 subtopics: specialisation, the division of labour and barter, money as a medium of exchange and the gains from specialisation, individual and market demand and joint, competitive and composite demand, movements along and shifts of the demand curve, individual and market supply and joint and competitive supply, movements along and shifts of the supply curve, consumer surplus and producer surplus, how changes in price affect consumer and producer surplus, ceteris paribus and market equilibrium and disequilibrium, changes in demand and supply and their effects on related markets, price and income elasticity of demand and total revenue, cross elasticity, price elasticity of supply and the uses of elasticity, marginal utility, marginal cost and decisions at the margin, market failure and marginal social cost and benefit, positive and negative production and consumption externalities, information failure, asymmetric information and merit and demerit goods, merit and demerit good diagrams and correcting information failure, public, private and quasi-public goods, the free rider problem and the provision of public goods, indirect taxes and subsidies to correct market failure, state provision, price controls, buffer stocks and legislation and regulation, tradable pollution permits and government failure. Each one has its own page with questions and model answers.

How is Microeconomics: The Role of Markets organised?

By the OCR H460 specification, subtopic by subtopic, so it matches the order you are taught it in.