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EnglandEconomics

Microeconomics: Business economics and market structures

5 dot points across 5 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

How do a firm's costs, revenues and profit behave, and how do they drive the profit-maximising output decision?

Costs, revenues and profit: fixed and variable costs, marginal, average and total cost and revenue, the law of diminishing returns, normal and supernormal profit, and the profit-maximising condition.
An Eduqas A520 answer to business costs, revenues and profit, covering fixed and variable costs, the relationship between marginal, average and total measures, the law of diminishing returns, the distinction between normal and supernormal profit, and the profit-maximising rule that marginal revenue equals marginal cost.
12 min answer →

Why do average costs fall as firms grow, and what drives and limits business growth?

Economies and diseconomies of scale and business growth: internal and external economies of scale, the minimum efficient scale, the causes of diseconomies of scale, and organic versus integrated growth and the divorce of ownership from control.
An Eduqas A520 answer to economies of scale and business growth, covering internal and external economies of scale, the long-run average cost curve and minimum efficient scale, the causes of diseconomies of scale, organic and integrated growth (mergers and takeovers), and the principal-agent problem.
12 min answer →

How do oligopolies and monopolies set price and output, and what are the consequences for consumers?

Oligopoly and monopoly: concentration and barriers to entry, interdependence and collusion in oligopoly, the kinked demand curve and game theory, monopoly equilibrium, price discrimination, and the costs and benefits of monopoly.
An Eduqas A520 answer to the two market structures with the most market power, covering concentration and barriers to entry, oligopolistic interdependence, collusion, the kinked demand curve and game theory, the profit-maximising monopoly, price discrimination, and the costs and benefits of monopoly power.
13 min answer →

How do perfectly competitive and monopolistically competitive firms behave in the short and long run?

Perfect competition and monopolistic competition: their assumptions and characteristics, short-run and long-run equilibrium, the role of entry and exit, and the efficiency of each market structure.
An Eduqas A520 answer to the two more competitive market structures, covering the assumptions of perfect competition and monopolistic competition, short-run and long-run equilibrium, how free entry and exit competes away supernormal profit, and the allocative, productive and dynamic efficiency of each.
12 min answer →

How are wages determined, and how do monopsony, trade unions and the minimum wage change the outcome?

The labour market: the demand for and supply of labour, wage determination in competitive labour markets, wage differentials, monopsony and trade unions, and the effects of a national minimum wage.
An Eduqas A520 answer to the labour market, covering the derived demand for labour and its determinants, the supply of labour, wage determination in a competitive market, wage differentials, the effects of monopsony and trade unions, and the impact of a national minimum wage on pay and employment.
12 min answer →