AQA ECONOMICS A FINAL EXAM 2026 ACTUAL QUESTIONS
AND ANSWERS RATED A+
✔✔Managerial Economies of Scale - ✔✔Reductions in average cost as a result of being
able to employ specialist managers who are more productive
✔✔Technical Economies of Scale - ✔✔reductions in average costs of production due to
the use of more advanced machinery.
✔✔Financial Economies of Scale - ✔✔A situation where large firms are able to borrow
money on better terms than smaller firms which makes the cost of financing investment
and therefore unit costs lower.
✔✔Marketing Economies of Scale - ✔✔A situation where larger firms are able to lower
the unit cost of advertising and promotion perhaps through access to more effective
marketing media.
✔✔Risk Bearing Economies of Scale - ✔✔The ability of large firms to spread the costs
of uncertainty over a wider range of activities and therefore reduce their unit cost.
✔✔Examples of Diseconomies of Scale - ✔✔Coordination & Control
Communication
Motivation
✔✔External Economies of Scale - ✔✔The cost benefits that all firms in the industry can
enjoy when the industry expands
✔✔Profit - ✔✔total revenue minus total cost
✔✔Product Differentiation - ✔✔A positioning strategy that some firms use to distinguish
their products from those of competitors
✔✔Barriers to Entry - ✔✔business practices or conditions that make it difficult for new
firms to enter the market
✔✔Barriers to Exit - ✔✔Factors which make it difficult or impossible for firms to cease
production and leave an industry
✔✔Sunk Costs - ✔✔Costs that have already been incurred and cannot be recovered
✔✔Spectrum of Competition - ✔✔A range of market structures with the two extremes of
monopoly and perfect competition at each end. Somewhere in between lie all markets.
, ✔✔Survival Objective - ✔✔In some instances, profits, sales, and market share are less
important objectives of the firm than mere survival
✔✔Profit Maximisation - ✔✔Occurs when a firms total sales revenue is furthest above
total cost of production
✔✔Profit Satisficing - ✔✔Making just enough profit to satisfy the demands of business
owners
✔✔Shareholders - ✔✔The owners of a company
✔✔Stakeholders - ✔✔Any individual or group who hold a vested interest in the activities
of a business.
✔✔Growth Objective - ✔✔Aims to increase the product's market share.
✔✔Perfectly Competitive Market - ✔✔A market that meets the conditions of (1) many
buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new
firms entering the market.
✔✔Monopoly - ✔✔A market in which there are many buyers but only one seller.
✔✔Monopolistic Competition - ✔✔A market structure in which barriers to entry are low
and many firms compete by selling similar, but not identical, products. It is characterised
as having a downwards sloping demand curve.
✔✔Pure Monopoly - ✔✔the only supplier of a unique product with no close substitutes
✔✔Monopoly Power - ✔✔In the UK a firm is said to have monopoly power if it has more
than 25% of the market share. For example, Tesco at 30% market share or Google 90%
of search engine traffic. They seek to profit maximise and produce where MR=MC.
✔✔Natural Monopoly - ✔✔A monopoly that arises because a single firm can supply a
good or service to an entire market at a smaller cost than could two or more firms e.g.
water suppliers
✔✔Oligopoly - ✔✔A market structure in which a few large firms dominate a market
✔✔Nth Firm Concentration Ratio - ✔✔How much market share is held by the top N
firms in the market.
✔✔Characteristics of a Monopoly - ✔✔-A single producer
-No close substitutes
-Barriers to entry
AND ANSWERS RATED A+
✔✔Managerial Economies of Scale - ✔✔Reductions in average cost as a result of being
able to employ specialist managers who are more productive
✔✔Technical Economies of Scale - ✔✔reductions in average costs of production due to
the use of more advanced machinery.
✔✔Financial Economies of Scale - ✔✔A situation where large firms are able to borrow
money on better terms than smaller firms which makes the cost of financing investment
and therefore unit costs lower.
✔✔Marketing Economies of Scale - ✔✔A situation where larger firms are able to lower
the unit cost of advertising and promotion perhaps through access to more effective
marketing media.
✔✔Risk Bearing Economies of Scale - ✔✔The ability of large firms to spread the costs
of uncertainty over a wider range of activities and therefore reduce their unit cost.
✔✔Examples of Diseconomies of Scale - ✔✔Coordination & Control
Communication
Motivation
✔✔External Economies of Scale - ✔✔The cost benefits that all firms in the industry can
enjoy when the industry expands
✔✔Profit - ✔✔total revenue minus total cost
✔✔Product Differentiation - ✔✔A positioning strategy that some firms use to distinguish
their products from those of competitors
✔✔Barriers to Entry - ✔✔business practices or conditions that make it difficult for new
firms to enter the market
✔✔Barriers to Exit - ✔✔Factors which make it difficult or impossible for firms to cease
production and leave an industry
✔✔Sunk Costs - ✔✔Costs that have already been incurred and cannot be recovered
✔✔Spectrum of Competition - ✔✔A range of market structures with the two extremes of
monopoly and perfect competition at each end. Somewhere in between lie all markets.
, ✔✔Survival Objective - ✔✔In some instances, profits, sales, and market share are less
important objectives of the firm than mere survival
✔✔Profit Maximisation - ✔✔Occurs when a firms total sales revenue is furthest above
total cost of production
✔✔Profit Satisficing - ✔✔Making just enough profit to satisfy the demands of business
owners
✔✔Shareholders - ✔✔The owners of a company
✔✔Stakeholders - ✔✔Any individual or group who hold a vested interest in the activities
of a business.
✔✔Growth Objective - ✔✔Aims to increase the product's market share.
✔✔Perfectly Competitive Market - ✔✔A market that meets the conditions of (1) many
buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new
firms entering the market.
✔✔Monopoly - ✔✔A market in which there are many buyers but only one seller.
✔✔Monopolistic Competition - ✔✔A market structure in which barriers to entry are low
and many firms compete by selling similar, but not identical, products. It is characterised
as having a downwards sloping demand curve.
✔✔Pure Monopoly - ✔✔the only supplier of a unique product with no close substitutes
✔✔Monopoly Power - ✔✔In the UK a firm is said to have monopoly power if it has more
than 25% of the market share. For example, Tesco at 30% market share or Google 90%
of search engine traffic. They seek to profit maximise and produce where MR=MC.
✔✔Natural Monopoly - ✔✔A monopoly that arises because a single firm can supply a
good or service to an entire market at a smaller cost than could two or more firms e.g.
water suppliers
✔✔Oligopoly - ✔✔A market structure in which a few large firms dominate a market
✔✔Nth Firm Concentration Ratio - ✔✔How much market share is held by the top N
firms in the market.
✔✔Characteristics of a Monopoly - ✔✔-A single producer
-No close substitutes
-Barriers to entry
