Microeconomics: the Role of Markets | OCR A-Level Economics (H460)

Microeconomics: the Role of Markets

257 questions
22 subtopics
Component 01: Microeconomics
Component 01 and Component 03

The Role of Markets is examined on component 01 of OCR Economics, Microeconomics.

250 recall questions across 22 subtopics.

Sample questions from Microeconomics: the Role of Markets

Answer each one closed book first, then open the answer.

Specialisation, the division of labour and barter

Why does the division of labour reduce average costs?

Show the answer
Higher output per worker spreads fixed costs over more units and makes specialised machinery worth installing.
Individual and market demand and joint, competitive and composite demand

What is competitive demand?

Show the answer
Demand for goods that are substitutes for one another, so a consumer buys one instead of the other.
Movements along and shifts of the supply curve

Which way does the supply curve shift if wages in an industry rise sharply?

Show the answer
It shifts to the left, because higher costs mean less is supplied at every price.
How changes in price affect consumer and producer surplus

What is the deadweight welfare loss triangle?

Show the answer
The consumer and producer surplus lost on transactions that no longer take place, which is not transferred to anyone.
Price and income elasticity of demand and total revenue

Which three factors make demand for a good more price elastic?

Show the answer
The availability of close substitutes, the good taking up a large share of income, and a longer time period over which consumers can adjust.
Marginal utility, marginal cost and decisions at the margin

Total cost of producing 20 units is £850 and of 21 units is £890. Calculate the marginal cost of the 21st unit.

Show the answer
Marginal cost is £890 − £850 = £40.
Information failure, asymmetric information and merit and demerit goods

What is adverse selection?

Show the answer
The tendency for the worst risks or lowest quality goods to be the ones most likely to enter a market when one side is better informed than the other.
Public, private and quasi-public goods

What is an example of a private good, and why does it qualify?

Show the answer
A sandwich qualifies, because only one person can eat it and the seller can withhold it from anyone who does not pay.

The 22 subtopics

One subtopic is one session. Work down the list.

Subtopic	What it covers	Questions
Specialisation, the division of labour and barter	Recall questions on specialisation and the division of labour, their advantages and drawbacks for firms, workers and economies, and barter and the double coincidence of wants.	10
Money as a medium of exchange and the gains from specialisation	Recall questions on money as a medium of exchange and its other functions, why specialisation depends on exchange, and why individuals, regions and countries specialise.	9
Individual and market demand and joint, competitive and composite demand	Recall questions on the demand curve and its downward slope, income and substitution effects, effective and market demand, and joint, competitive and composite demand.	14
Movements along and shifts of the demand curve	Recall questions on extensions and contractions of demand, the factors that shift the demand curve, inferior goods, expectations, and the difference between a change in demand and in quantity demanded.	9
Individual and market supply and joint and competitive supply	Recall questions on the supply curve and why it slopes upwards, market supply from individual firms, and joint and competitive supply with worked market examples.	10
Movements along and shifts of the supply curve	Recall questions on extensions and contractions of supply, the factors that shift supply, how specific taxes, ad valorem taxes and subsidies appear, and short run versus long run supply.	13
Consumer surplus and producer surplus	Recall questions on defining and locating consumer and producer surplus on a diagram, total community surplus, and calculating each surplus from linear demand and supply equations.	12
How changes in price affect consumer and producer surplus	Recall questions on how price rises, shifts in demand and supply, and indirect taxes change consumer and producer surplus, deadweight welfare loss, and problems measuring consumer surplus.	10
Ceteris paribus and market equilibrium and disequilibrium	Recall questions on the ceteris paribus assumption, market equilibrium, excess demand and excess supply, and how the price mechanism removes disequilibrium.	10
Changes in demand and supply and their effects on related markets	Recall questions on how changes in demand and supply move price and quantity, the rationing function of price, knock-on effects in related markets, and derived demand.	12
Price and income elasticity of demand and total revenue	Recall questions on price elasticity of demand and income elasticity of demand calculations, their determinants and signs, perfectly and unit elastic demand curves, and how price elasticity affects total revenue.	17
Cross elasticity, price elasticity of supply and the uses of elasticity	Recall questions on cross elasticity of demand and price elasticity of supply calculations and determinants, and how firms, governments and competition authorities use elasticity estimates.	17
Marginal utility, marginal cost and decisions at the margin	Recall questions on marginal thinking, total and marginal utility and the law of diminishing marginal utility, the water-diamond paradox, and calculating marginal cost and marginal revenue.	19
Market failure and marginal social cost and benefit	Recall questions on market failure and its causes, externalities, marginal private, external and social costs and benefits, and the socially optimum level of output.	11
Positive and negative production and consumption externalities	Recall questions on diagrams and examples of negative and positive production and consumption externalities, welfare loss triangles, and internalising an externality.	13
Information failure, asymmetric information and merit and demerit goods	Recall questions on information failure, asymmetric information, adverse selection and moral hazard, and the definition, examples and normative nature of merit and demerit goods.	13
Merit and demerit good diagrams and correcting information failure	Recall questions on merit and demerit good diagrams under information failure, welfare loss, policies to raise or reduce consumption, and the limits of correcting information failure.	10
Public, private and quasi-public goods	Recall questions on the characteristics of pure public goods including non-excludability and non-rivalry, private goods, and quasi-public goods such as roads and beaches.	12
The free rider problem and the provision of public goods	Recall questions on the free rider problem, missing markets, how public goods are financed and provided, technology's effect on public goods, and public versus merit goods.	9
Indirect taxes and subsidies to correct market failure	Recall questions on why governments intervene, indirect taxes on goods with external costs, tax incidence calculations, and per-unit subsidies with their costs and drawbacks.	9
State provision, price controls, buffer stocks and legislation	Recall questions on direct state provision, maximum and minimum prices, buffer stock schemes and why they fail, public-private partnerships, and legislation to correct market failure.	8
Regulation, tradable pollution permits and government failure	Recall questions on regulation, tradable pollution permits, information provision, competition policy tools, and the causes and consequences of government failure.	10

Microeconomics: the Role of Markets is 257 of the 1,226 questions in the guide.Get the guide, £8

How the guide is worked

Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.

Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.

Read the full method, the return schedule and the research behind it.