1.3.1 Types of Market Failure a) Understanding Market Failure Market failure occurs when the free market fails to allocate resources efficiently, leading to a loss of economic and social welfare. b) Types of Market Failure * Externalities – Costs or benefits affecting third parties not involved in the transaction. * Under-provision
1.1.1 Economics as a social science a) Thinking like an economist: the process of developing models in economics, including the need to make assumptions b) The use of the ceteris paribus assumption in building models Ceteris Paribus: When we assume only one variable changes and all others are
3.6.1 Government intervention a) Government intervention to control mergers * The competition and Markets Authority (CMA) is the main competition regulator in the UK. They have objectives to ensure that markets remain competitive and efficient as possible. This will ensure that consumers benefit in the form of lower prices
3.5.1 Demand for Labour * The demand curve for labour shows the quantity of labour that employers would wish to hire at each possible wage rate. * When firms want to hire workers/ demand workers it is because they need them to make the goods that are demanded by customers.
3.4 Market structures 3.4.1 Efficiency PLEASE NOTE: The way I managed to do really well in Micro was my ability to link my analysis points to the efficiencies. My chains of analysis and thought process was all under the envelope of efficiencies. For example, if i wanted
3.3.1 Revenue a) Formulae to calculate and understand the relationship between: o total revenue: Total receipt from the sale of all goods and services. o average revenue: Total revenue/quantity = (Price x Quantity) / Quantity: Price (corresponding to the demand curve). o marginal revenue: Additional revenue gained from producing
PROFIT MAXIMISATION Profit maximisation → Marginal Cost(MC) : Marginal Revenue (MR) Profit maximization occurs at MC = MR because: * Marginal Cost (MC) is the cost of producing one more unit. * Marginal Revenue (MR) is the revenue gained from selling one more unit. * If MR > MC, the firm should produce more to
STRONG A STAR CHAINS OF ANALYSIS PROVIDED THROUGHOUT: 3.1.1 Sizes and Types of firms Why do firms remain small? * Concentrate on niche markets → less competition for the business → can be more profitable → link to dynamic efficiency analysis points (covered in Efficiencies section) * Focus on a small range of
THEME 1: Introduction to markets and market failure * 1.1 Nature of economics * 1.2 How markets work * 1.3 Market failure * 1.4 Government intervention THEME 3 (MICRO) * 3.1 Business Growth * 3,2 Business Objectives * 3.3 Revenues, costs, profits * 3.4 Market Structures * 3.5 Labour Market