AQA ECONOMICS A STUDY GUIDE 2026 QUESTIONS AND
ANSWERS RATED A+
✔✔Total Cost - ✔✔Fixed costs + Variable costs
✔✔Average Cost - ✔✔Total Cost / Output
✔✔Long-run Average Cost (LRAC) - ✔✔Long-run total costs / output
✔✔Economies of Scale - ✔✔As output increases, long run average costs fall
✔✔Diseconomies of Scale - ✔✔As output increases, long-run average costs rise
✔✔Types of economies of scale - ✔✔Technical Economies of Scale
Marketing Economies of Scale
Managerial Economies of Scale
Bulk-buying Economies of Scale
Financial Economies of Scale
Risk-bearing Economies of Scale
Economies of Scope
✔✔Reasons for Diseconomies of Scale - ✔✔Managerial Diseconomies of Scale
Communicational Failure
Motivational Diseconomies of Scale
✔✔Internal Economies of Scale - ✔✔Cost saving resulting from the growth of the firm
itself
✔✔External Economies of Scale - ✔✔Cost saving resulting from the growth of the
industry or market of which the firm is a part
✔✔Average Revenue - ✔✔Total Revenue / Output
✔✔Market Structure - ✔✔The organisation of a market in terms of the number of firms
in the market and the ways in which they behave
✔✔Price Taker - ✔✔A firm which passively accepts the ruling market prices set by
market conditions outside its control
✔✔Price Maker - ✔✔A firm possessing the power to set the price within the market
✔✔Perfect Competition - ✔✔A market that displays the following conditions:
o A large number of buyers and sellers in the market
, o Each buyer and seller possesses perfect information
o Each consumer is able to buy and each producer is able to sell as much as they want
at the market ruling price
o The market price is determined by the interaction of all the buyers and sellers in the
market, but a single group/person isn't able to influence the price
o Only one good or service is being traded in the market and each item is uniform
o There are no barriers to entry or exit
✔✔Concentrated Market - ✔✔A market where there are very few firms, in extreme only
one firm
✔✔Pure Monopoly - ✔✔Where there is only one firm in the market
✔✔Monopoly Power - ✔✔The power of a firm to act as a price maker rather than a price
taker
✔✔Imperfect competition - ✔✔Any market structure lying between the extremes of
perfect competition and pure monopoly
✔✔Profit Maximisation - ✔✔Occurs when a firm's total sales revenue is furthest above
total costs of production
✔✔Sales Maximisation - ✔✔Occurs when sales revenue is maximised
✔✔Market Share Maximisation - ✔✔Occurs when a firm maximises its percentage
share of the market in which it sells its product
✔✔Entry Barrier - ✔✔Makes it difficult or impossible for new firms to enter the market
✔✔Exit Barrier - ✔✔Makes it difficult or impossible for firms to leave a market
✔✔Consumer Sovereignty - ✔✔Through exercising their spending power, consumers
collectively determine what is produced in a market. Consumer sovereignty is strongest
in a perfectly competitive market
✔✔Producer Sovereignty - ✔✔Producers or firms in a market determine what is
produced and what prices are charged
✔✔Sources of monopoly power - ✔✔Natural Monopoly
Geographical monopoly
Government-created monopoly
✔✔Natural Monopoly - ✔✔When a country or firm has complete control of natural
resources
ANSWERS RATED A+
✔✔Total Cost - ✔✔Fixed costs + Variable costs
✔✔Average Cost - ✔✔Total Cost / Output
✔✔Long-run Average Cost (LRAC) - ✔✔Long-run total costs / output
✔✔Economies of Scale - ✔✔As output increases, long run average costs fall
✔✔Diseconomies of Scale - ✔✔As output increases, long-run average costs rise
✔✔Types of economies of scale - ✔✔Technical Economies of Scale
Marketing Economies of Scale
Managerial Economies of Scale
Bulk-buying Economies of Scale
Financial Economies of Scale
Risk-bearing Economies of Scale
Economies of Scope
✔✔Reasons for Diseconomies of Scale - ✔✔Managerial Diseconomies of Scale
Communicational Failure
Motivational Diseconomies of Scale
✔✔Internal Economies of Scale - ✔✔Cost saving resulting from the growth of the firm
itself
✔✔External Economies of Scale - ✔✔Cost saving resulting from the growth of the
industry or market of which the firm is a part
✔✔Average Revenue - ✔✔Total Revenue / Output
✔✔Market Structure - ✔✔The organisation of a market in terms of the number of firms
in the market and the ways in which they behave
✔✔Price Taker - ✔✔A firm which passively accepts the ruling market prices set by
market conditions outside its control
✔✔Price Maker - ✔✔A firm possessing the power to set the price within the market
✔✔Perfect Competition - ✔✔A market that displays the following conditions:
o A large number of buyers and sellers in the market
, o Each buyer and seller possesses perfect information
o Each consumer is able to buy and each producer is able to sell as much as they want
at the market ruling price
o The market price is determined by the interaction of all the buyers and sellers in the
market, but a single group/person isn't able to influence the price
o Only one good or service is being traded in the market and each item is uniform
o There are no barriers to entry or exit
✔✔Concentrated Market - ✔✔A market where there are very few firms, in extreme only
one firm
✔✔Pure Monopoly - ✔✔Where there is only one firm in the market
✔✔Monopoly Power - ✔✔The power of a firm to act as a price maker rather than a price
taker
✔✔Imperfect competition - ✔✔Any market structure lying between the extremes of
perfect competition and pure monopoly
✔✔Profit Maximisation - ✔✔Occurs when a firm's total sales revenue is furthest above
total costs of production
✔✔Sales Maximisation - ✔✔Occurs when sales revenue is maximised
✔✔Market Share Maximisation - ✔✔Occurs when a firm maximises its percentage
share of the market in which it sells its product
✔✔Entry Barrier - ✔✔Makes it difficult or impossible for new firms to enter the market
✔✔Exit Barrier - ✔✔Makes it difficult or impossible for firms to leave a market
✔✔Consumer Sovereignty - ✔✔Through exercising their spending power, consumers
collectively determine what is produced in a market. Consumer sovereignty is strongest
in a perfectly competitive market
✔✔Producer Sovereignty - ✔✔Producers or firms in a market determine what is
produced and what prices are charged
✔✔Sources of monopoly power - ✔✔Natural Monopoly
Geographical monopoly
Government-created monopoly
✔✔Natural Monopoly - ✔✔When a country or firm has complete control of natural
resources
