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Exploring Economic Behaviour (A2 Unit 3)

6 dot points across 6 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 what does profit maximisation require?

Short-run and long-run costs, revenues, the profit-maximising rule and the distinction between normal and abnormal profit.
A focused answer to the WJEC A-Level Economics topic of costs, revenues and profit, covering short-run and long-run costs, the law of diminishing returns, total, average and marginal revenue, the MC equals MR profit-maximising rule, and normal and abnormal profit, with worked analysis.
13 min answer →

What are the different types of economic efficiency, and which market structures achieve them?

Productive, allocative, dynamic and X-efficiency, Pareto efficiency, and how different market structures compare.
A focused answer to the WJEC A-Level Economics topic of economic efficiency, covering productive, allocative, dynamic and X-efficiency and Pareto efficiency, and how different market structures perform against them, with worked analysis and examples.
12 min answer →

How and why do governments intervene to control firms with market power?

Government intervention in markets: competition policy, the regulation of monopoly and privatised industries, and privatisation.
A focused answer to the WJEC A-Level Economics topic of government intervention in markets, covering competition policy, the regulation of monopoly and privatised utilities (price caps and performance targets), privatisation and nationalisation, and their effects, with UK examples.
13 min answer →

Why and how do firms grow, and what economies and diseconomies of scale result?

The growth of firms through internal and external growth and mergers, economies and diseconomies of scale, and reasons firms stay small.
A focused answer to the WJEC A-Level Economics topic of the growth of firms, covering internal and external growth, types of merger and integration, internal and external economies and diseconomies of scale, minimum efficient scale, and why some firms stay small, with UK examples.
13 min answer →

How do firms with market power behave through price discrimination, collusion, contestability and strategic interaction?

Price discrimination, collusion and cartels, the theory of contestable markets, and game theory and oligopoly behaviour.
A focused answer to the WJEC A-Level Economics topic of firm behaviour, covering price discrimination and its conditions, collusion and cartels, the theory of contestable markets, and game theory and the prisoner's dilemma in oligopoly, with UK examples.
13 min answer →

How do the main market structures differ, and how does each affect price, output and profit?

Perfect competition, monopoly, oligopoly and monopolistic competition: their characteristics and effects on price, output and profit.
A focused answer to the WJEC A-Level Economics topic of market structures, covering perfect competition, monopoly, oligopoly and monopolistic competition, their key characteristics, barriers to entry, and effects on price, output and profit in the short and long run, with UK examples.
13 min answer →