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EnglandEconomics

Component 1: Microeconomics - Business economics and competition

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

What objectives do firms pursue beyond profit maximisation, and why might managers and owners disagree?

1.4 Business objectives: profit maximisation, revenue and sales maximisation, growth, satisficing and corporate social responsibility, and the principal-agent problem from the divorce of ownership and control.
An OCR H460 answer to business objectives, covering profit maximisation at MC equals MR, revenue and sales maximisation, growth, satisficing and corporate social responsibility, and the principal-agent problem that arises from the divorce of ownership and control.
9 min answer →

How do costs, revenues and profit behave in the short and long run, and what are economies of scale?

1.4 Costs, revenues and profit: fixed and variable costs, marginal, average and total cost, the law of diminishing returns, economies and diseconomies of scale, total, average and marginal revenue, and normal and supernormal profit.
An OCR H460 answer to costs, revenues and profit, covering fixed and variable costs, marginal, average and total cost, the law of diminishing returns, internal and external economies and diseconomies of scale, the revenue concepts, and normal versus supernormal profit.
12 min answer →

How does the degree of competition shape price, output and efficiency, from perfect competition to contestable markets?

1.4 Market structures: the spectrum of competition, the characteristics and outcomes of perfect competition, barriers to entry and exit, and the theory of contestable markets.
An OCR H460 answer to market structures, covering the spectrum from perfect competition to monopoly, the assumptions and short-run and long-run outcomes of perfect competition, barriers to entry and exit, and the theory of contestable markets.
11 min answer →

How do monopoly, oligopoly and monopolistic competition set price and output, and are they good or bad for welfare?

1.4 Imperfect competition: monopolistic competition, oligopoly and interdependence, monopoly and price discrimination, and the costs and benefits of monopoly power.
An OCR H460 answer to imperfect competition, covering monopolistic competition, oligopoly and interdependence (collusion, price wars and non-price competition), monopoly and price discrimination, and the costs and benefits of monopoly power.
12 min answer →

How are wages set by the demand for and supply of labour, and how do monopsony, trade unions and the minimum wage change the outcome?

1.4 The labour market: the demand for and supply of labour, wage determination in competitive labour markets, monopsony, trade unions, and the effect of a national minimum wage.
An OCR H460 answer to the labour market, covering the derived demand for and supply of labour, wage determination in a competitive labour market, monopsony employers, trade unions and collective bargaining, and the employment effects of a national minimum wage.
11 min answer →