AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
Q: Positive externality
Answer:
which is the same as an external benefit, occurs when the consumption
or production of a good causes a benefit to a third party, where the social benefit is
greater
than the private benefit
Q: Predatory pricing
Answer:
temporarily reducing the price of a good to below average cost to drive
smaller firms or new marker entrants out of the market
this can happen in oligopolies to new entrant so they can retain their SNP in the long
run
,AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
Q: Negative externality
Answer:
which is the same as an external cost, occurs when consumption or
production of a good costs to a third party, where the social cost is greater than the
private cost
Q: Production externality
Answer:
an externality (which may be positive or negative) generated in the
course of producing a good or service
Q: Consumption externality
Answer:
an externality (which may be positive or negative) generated in the
course of consuming a good or service
,AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
Q: Missing market
Answer:
a situation in which there is no market because the functions prices have
broken down this is complete market failure
Q: Social benefit
Answer:
the total benefit of an activity, including the external benefit as well as the
private benefit. Expressed as an equation: social benefit= private benefit + external
benefit
Q: Merit good
Answer:
a good such as healthcare, for which the social benefits of consumption exceed
the private benefits. Value judgements are involved in deciding that a good is a merit
good
, AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
Q: Subsidy
Answer:
a payment made by government or other authority, usually to producers, for each
unit of the subsidised good that they produce
Q: Demerit good
Answer:
a good, such as tobacco, for which the social costs of consumption exceed the
private costs. Value judgements are involved in deciding that a good is a demerit
good
Q: Information problem
Answer:
occurs when people make wrong decisions because they don't possess
or they ignore the relevant information. Very often they are myopic (short-sighted)
about the
future
Verified Solutions | Latest 2026 Update
Q: Positive externality
Answer:
which is the same as an external benefit, occurs when the consumption
or production of a good causes a benefit to a third party, where the social benefit is
greater
than the private benefit
Q: Predatory pricing
Answer:
temporarily reducing the price of a good to below average cost to drive
smaller firms or new marker entrants out of the market
this can happen in oligopolies to new entrant so they can retain their SNP in the long
run
,AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
Q: Negative externality
Answer:
which is the same as an external cost, occurs when consumption or
production of a good costs to a third party, where the social cost is greater than the
private cost
Q: Production externality
Answer:
an externality (which may be positive or negative) generated in the
course of producing a good or service
Q: Consumption externality
Answer:
an externality (which may be positive or negative) generated in the
course of consuming a good or service
,AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
Q: Missing market
Answer:
a situation in which there is no market because the functions prices have
broken down this is complete market failure
Q: Social benefit
Answer:
the total benefit of an activity, including the external benefit as well as the
private benefit. Expressed as an equation: social benefit= private benefit + external
benefit
Q: Merit good
Answer:
a good such as healthcare, for which the social benefits of consumption exceed
the private benefits. Value judgements are involved in deciding that a good is a merit
good
, AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
Q: Subsidy
Answer:
a payment made by government or other authority, usually to producers, for each
unit of the subsidised good that they produce
Q: Demerit good
Answer:
a good, such as tobacco, for which the social costs of consumption exceed the
private costs. Value judgements are involved in deciding that a good is a demerit
good
Q: Information problem
Answer:
occurs when people make wrong decisions because they don't possess
or they ignore the relevant information. Very often they are myopic (short-sighted)
about the
future
