Look inside the Edexcel A-Level Economics A guide (9EC0)

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Edexcel · A-Level · 9EC0
Economics A
Active Recall Guide
2,508 questions
Economics AContents
Contents
21 topics, 179 subtopics
  1. The Nature of Economics139
  2. How Markets Work224
  3. Market Failure69
  4. Government Intervention65
  5. Measures of Economic Performance188
  6. Aggregate Demand104
  7. Aggregate Supply62
  8. National Income112
  9. Economic Growth98
  10. Macroeconomic Objectives and Policies131
  11. Business Growth87
  12. Business Objectives22
  13. and 9 more
ii
How Markets WorkQuestions
How Markets Work
Rational decision making
  1. According to the rational decision-making model, what do consumers aim to maximise?
  2. Why does the assumption of rationality lead economists to predict that consumers will choose the option giving them the greatest satisfaction?
  3. Define utility in economics.
  4. What objective does the rational decision-making model assume firms pursue?
  5. Explain why a rational firm would expand output if the additional revenue from selling one more unit exceeds the additional cost of producing it.
  6. What does profit maximisation mean for a firm?
  7. State the two components a firm compares when determining its profit-maximising level of output.
  8. What process do rational economic agents undertake before making a decision?
  9. If a consumer decides not to purchase a product, what does the rational decision-making model imply about their assessment of that product?
12
How Markets WorkAnswers
Answers
Rational decision making
  1. Utility
  2. Because rational consumers are assumed to weigh up alternatives and select the one that maximises their utility from consumption
  3. The satisfaction or benefit derived from consuming a good or service
  4. Profit maximisation
  5. Because doing so increases the positive difference between total revenue and total costs, moving the firm closer to maximum profit
  6. Seeking the greatest positive difference between total revenue and total costs
  7. Total revenue and total costs
  8. They weigh up the costs and benefits of each option to make an optimal choice
  9. The perceived costs (e.g. price, opportunity cost) outweigh the expected benefits (utility), so the purchase would not be optimal
13
Economic GrowthQuestions
Economic Growth
Actual against potential growth, and export-led growth
  1. Define actual economic growth.
  2. Define potential economic growth.
  3. How is actual growth represented in terms of the production possibility frontier?
  4. What happens to the production possibility frontier when potential growth occurs?
  5. Can an economy experience actual growth without potential growth? Explain.
  6. Can an economy experience potential growth without experiencing actual growth? Explain how this is possible.
  7. What condition must be present for potential growth to translate into actual growth?
  8. If an economy invests heavily in new capital equipment but firms see no increase in orders, what type of growth has occurred and what type has not?
  9. Why might an increase in the labour force not lead to higher real GDP in the short term?
34
Economic GrowthAnswers
Answers
Actual against potential growth, and export-led growth
  1. The percentage annual increase in real GDP, representing the rate at which output is increasing.
  2. The increase in the productive capacity of the economy, shown by an outward shift of the production possibility frontier or long-run aggregate supply curve.
  3. Actual growth occurs when the economy moves towards the production possibility frontier by making greater use of existing resources.
  4. The production possibility frontier shifts outward as the productive capacity of the economy expands.
  5. Yes, if the economy uses previously unemployed resources to increase output without expanding its productive capacity.
  6. Yes. Potential growth can occur without actual growth if new productive capacity remains unused because aggregate demand is insufficient to utilise that capacity.
  7. Aggregate demand must be sufficient to utilise the new productive capacity that has been created.
  8. Potential growth has occurred (productive capacity has expanded), but actual growth has not occurred because the new capacity remains unused due to insufficient aggregate demand.
  9. If aggregate demand is insufficient, the additional workers may remain unemployed, meaning the expanded productive potential is not utilised and actual output does not increase.
35
Government Intervention in MarketsQuestions
Government Intervention in Markets
Controlling mergers, and price, profit and quality regulation
  1. What is the role of regulatory bodies in controlling mergers?
  2. What outcome occurs when a regulatory body determines a merger would severely harm competition?
  3. Under what circumstances might a merger be approved unconditionally?
  4. What does it mean when a merger is approved with conditions?
  5. Define price regulation as a method of controlling monopolies.
  6. What is the primary aim of price regulation for monopolies?
  7. What is profit regulation?
  8. Why might profit regulation reduce productive efficiency in monopoly firms?
  9. Define quality standards in the context of monopoly regulation.
56
Government Intervention in MarketsAnswers
Answers
Controlling mergers, and price, profit and quality regulation
  1. Regulatory bodies assess proposed mergers to determine whether they would substantially lessen competition in a market.
  2. The merger is blocked outright and cannot proceed.
  3. When the regulatory body determines the merger will not substantially lessen competition or harm consumers.
  4. The merger can proceed but with requirements attached, such as divestment of certain assets, to address competition concerns.
  5. A method where government or a regulator sets maximum prices that a monopolist can charge consumers.
  6. To prevent monopolists from exploiting consumers by charging prices significantly above marginal cost.
  7. Limiting the rate of return or total profits that a monopoly firm can earn, preventing excessive supernormal profits.
  8. It may reduce incentives for cost efficiency if firms are guaranteed a certain profit level regardless of their performance.
  9. Minimum requirements set by government that monopolies must meet, ensuring consumers receive adequate service or product quality.
57
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2,508 questions
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