What does the production, labour and money module cover in OCR GCSE Economics?

This module covers OCR J205 topics 1.8 to 1.10: the role of producers, the difference between production and productivity, the division of labour, calculating total and average cost, total and average revenue and profit or loss, economies of scale, how the labour market sets wages through the demand for and supply of labour, and the functions of money and the role of banks and financial markets.

Which calculations appear in this module?

You must be able to calculate total cost (fixed plus variable), average cost (total cost divided by quantity), total revenue (price times quantity), average revenue (revenue per unit, equal to price), and profit or loss (total revenue minus total cost). You should also calculate labour productivity (output per worker) and show how economies of scale lower average cost as a firm grows.

How are wages determined in OCR GCSE Economics?

Wages are set in the labour market by the demand for and supply of labour. Demand for labour comes from employers and is a derived demand, depending on how productive and valuable workers are. Supply comes from workers and depends on the skills and training needed. Jobs needing rare skills (low supply) that produce high value (high demand) pay the most, which explains wage differentials between occupations.

What are the functions of money?

Money has four functions: a medium of exchange (accepted for goods, removing the need for barter), a store of value (saved now and spent later), a unit of account (a common measure of value for comparing prices), and a standard of deferred payment (debts set and repaid over time). Good money is durable, portable, divisible, acceptable, scarce and hard to forge.

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Production, the labour market and money - OCR GCSE Economics (J205) module overview

An overview of the firms and finance module of OCR GCSE Economics (J205): production and productivity, the division of labour, costs, revenue and profit, economies of scale, the labour market and wages, and money and financial markets.

Generated by Claude Opus 4.89 min read1.8-1.10Updated 2026-06-02

Reviewed by: AI editorial process; not yet individually human-reviewed

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What this module covers
The calculations to master
How it is assessed
How to revise this module
For the official specification

Production, the labour market and money (OCR J205 topics 1.8 to 1.10) completes the microeconomics component. It moves from how firms produce and measure their performance, to how the labour market sets wages, to the role of money and the financial system. It is examined in J205/01: Introduction to economics. This page maps the module and links to a focused answer for each dot point.

What this module covers

The module covers firms, workers and finance, the three things that make production possible.

Production and productivity. The role of producers, the difference between production and productivity, why productivity matters, and the division of labour.
Costs, revenue and profit. Calculating total and average cost, total and average revenue, and profit or loss, and economies of scale.
The labour market. How the demand for and supply of labour set wages, and why some jobs pay more than others.
Money and financial markets. The functions and characteristics of money, and how banks channel savings into borrowing and investment.

The calculations to master

This is a quantitative module. Practise each formula until it is automatic:

$TC = \text{fixed costs} + \text{variable costs}$
$AC = \dfrac{TC}{Q}$
$TR = P \times Q$ and $AR = P$
$\text{profit} = TR - TC$
labour productivity $= \dfrac{\text{total output}}{\text{number of workers}}$

How it is assessed

This module is examined in J205/01: Introduction to economics, which is 1 hour 30 minutes, 80 marks and 50% of the GCSE. Expect multiple choice and short calculation questions on costs, revenue and profit, and longer Explain and Discuss questions on the division of labour, wage differentials and the role of money. A calculator is allowed.

How to revise this module

Drill the formulae. Be able to calculate cost, revenue, profit and productivity quickly and correctly.
Link profit to supply. Higher profit raises supply; lower profit reduces it, connecting back to the supply curve.
Apply demand and supply to labour. Explain wage differences using the supply of and demand for each type of worker.
Know money cold. Learn the four functions and the barter problem, and how banks turn savings into investment.

For the official specification

OCR publishes the full specification (J205), past papers and mark schemes at ocr.org.uk. Always revise from the current specification and OCR's own past papers.

Sources & how we know this

OCR GCSE (9-1) Economics J205 specification — OCR (2017)