Microeconomics – Individuals, Firms, Markets & Market Failure

This topic is examined in A-Level Paper 1 for AQA Economics. You can find notes for it below:

Economic Methodology and the Economic Problem

a) Economic methodology
b) The nature and purpose of economic activity
c) Economic resources
d) Scarcity, choice and the allocation of resources
e) Production possibility diagrams

Individual Economic Decision Making

a) Consumer behaviour
b) Imperfect information
c) Aspects of behavioural economic theory
d) Behavioural economics and economic policy

Price Determination in a Competitive Market

a) The determinants of the demand for goods and services
b) Price, income and cross elasticities of demand
c) The determinants of the supply of goods and services
d) Price elasticity of supply
e) The determination of equilibrium market prices
f) The interrelationship between markets

Production Costs and Revenues

a) Production and productivity
b) Specialisation, division of labour and exchange
c) The law of diminishing returns and returns to scale
d) Costs of production
e) Economies and diseconomies of scale
f) Marginal, average and total revenue
g) Profit
h) Technological change

Perfect Competition, Imperfectly Competitive Markets and Monopoly

a) Market structures
b) The objectives of firms
c) Perfect competition
d) Monopolistic competition
e) Oligopoly
f) Monopoly and monopoly power
g) Price discrimination
h) Dynamics of competition and competitive market processes
i) Contestable and non-contestable markets
j) Market structure, static and dynamic efficiency, resource allocation
k) Consumer and producer surplus

The Labour Market

a) The demand for labour, marginal productivity theory
b) Influences upon the supply of labour to different markets
c) The determination of relative wage rates and levels of employment in perfectly competitive labour markets
d) The determination of relative wage rates and levels of employment in imperfectly competitive labour markets
e) The influence of trade unions in determining wages and levels of employment
f) The national minimum wage
g) Discrimination in the labour market

Distribution of Income and Wealth, Poverty and Inequality

a) The distribution of income and wealth
b) The problem of poverty
c) Government policies to alleviate poverty and to influence the distribution of income and wealth

Market Mechanism, Market Failure and Government Intervention in Markets

a) How markets and prices allocate resources
b) The meaning of market failure
c) Public goods, private goods and quasi-public goods
d) Positive and negative externalities in consumption and production
e) Merit and demerit goods
f) Market imperfections
g) Competition policy
h) Public ownership, privatisation, regulation and deregulation of markets
i) Government intervention in markets
j) Government failure