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EnglandEconomics

1.4-1.7 How markets work

6 dot points across 6 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

How does competition between firms affect prices, choice and efficiency?

The meaning of competition and its economic impact on producers and consumers, including effects on price, choice, quality and efficiency.
An OCR J205 answer on what competition means and its economic impact on producers and consumers: lower prices, more choice, better quality, innovation and efficiency, with the limits of competition.
9 min answer →

What determines how much of a good consumers want to buy at each price?

The law of demand, why the demand curve slopes downwards, movements along versus shifts of demand, and the factors that shift demand.
An OCR J205 answer on the law of demand, the downward-sloping demand curve, movements versus shifts, and the non-price factors that shift demand.
9 min answer →

What happens to prices and choice when one or a few firms dominate a market?

The meaning of monopoly and oligopoly, how they differ from competitive markets, and their effects on prices, choice and efficiency.
An OCR J205 answer on monopoly and oligopoly: their meaning, how they differ from competition, and their effects on prices, choice, efficiency and innovation, with arguments for and against.
9 min answer →

How do demand and supply interact to set the price and quantity in a market?

Market equilibrium, how price is determined by demand and supply, surpluses and shortages, and how shifts in demand or supply change price and quantity.
An OCR J205 answer on market equilibrium, how demand and supply set price and quantity, surpluses and shortages, and how shifts move the equilibrium.
10 min answer →

How responsive is the quantity demanded or supplied to a change in price?

Price elasticity of demand and supply, how to calculate and interpret it, the factors affecting it, and the link between elasticity and total revenue.
An OCR J205 answer on price elasticity of demand and supply: the formulae, how to calculate and interpret values, the factors affecting elasticity, and the link to total revenue.
10 min answer →

What determines how much of a good firms are willing to produce at each price?

The law of supply, why the supply curve slopes upwards, movements along versus shifts of supply, and the factors that shift supply.
An OCR J205 answer on the law of supply, the upward-sloping supply curve, movements versus shifts, and the non-price factors that shift supply.
9 min answer →