Economics AQA A LEVEL Exam Questions and Answers |Complete Solutions
Graded A+ |100% Correct
Specialisation A worker only doing one task or a narrower range of tasks but only makes
sense if there is a system of trade.
Division of labour Different workers perform different tasks in producing a good or service
Short run production The time period in which at least one factor of production is fixed and
can't be varied
Long run production The time period in which no one factors of production are fixed and in
which all the factors of production can be varied
Fixed cost Cost of production which in the short run does not change with output
Variable cost Cost of production which changes with the amount that is produced
Total cost The whole cost( fixed and variable) of producing at a particular level of outout
Average costs Total cost of production divided by output
ATC = AFC+AVC
Economy of scale As output increases the LONG RUN average cost falls
Diseconomy of scale As output increase the LONG RUN average costs rises
, Internal economies of scale Cost saving resulting from the growth of the firm itself
External economies of scale Cost saving from the growth of the industry or market of which
the firm is a part
Total revenue All the money received by a firm from selling its total output
Average revenue Total revenue divided by output; in a singular firm average revenue is the
price of the product
Profit The difference between total sales revenue and total cost of production
Total profit = total revenue - total costs
Price taker A firm which passively accepts the ruling market set by market conditions
outside its control
Price maker A firm possessing the power to set the price within the market
Monopoly power The power a firm has to act as a price maker rather than a price taker
Profit maximisation Occurs when a firms total sales revenue is furthest above total cost of
production
Entry barrier Makes it difficult for a new firm to join the market
Exit barrier Makes it difficult for a firm to leave the market
Graded A+ |100% Correct
Specialisation A worker only doing one task or a narrower range of tasks but only makes
sense if there is a system of trade.
Division of labour Different workers perform different tasks in producing a good or service
Short run production The time period in which at least one factor of production is fixed and
can't be varied
Long run production The time period in which no one factors of production are fixed and in
which all the factors of production can be varied
Fixed cost Cost of production which in the short run does not change with output
Variable cost Cost of production which changes with the amount that is produced
Total cost The whole cost( fixed and variable) of producing at a particular level of outout
Average costs Total cost of production divided by output
ATC = AFC+AVC
Economy of scale As output increases the LONG RUN average cost falls
Diseconomy of scale As output increase the LONG RUN average costs rises
, Internal economies of scale Cost saving resulting from the growth of the firm itself
External economies of scale Cost saving from the growth of the industry or market of which
the firm is a part
Total revenue All the money received by a firm from selling its total output
Average revenue Total revenue divided by output; in a singular firm average revenue is the
price of the product
Profit The difference between total sales revenue and total cost of production
Total profit = total revenue - total costs
Price taker A firm which passively accepts the ruling market set by market conditions
outside its control
Price maker A firm possessing the power to set the price within the market
Monopoly power The power a firm has to act as a price maker rather than a price taker
Profit maximisation Occurs when a firms total sales revenue is furthest above total cost of
production
Entry barrier Makes it difficult for a new firm to join the market
Exit barrier Makes it difficult for a firm to leave the market
