Edexcel A-level Economics Theme 3 Questions & Correct Answers/ Graded A+

Backwards vertical integration : a joining together into one firm of two or more firms where the purchaser merges with/takes over one or more of its suppliers Conglomerate integration : a joining together into one firm of two or more firms producing unrelated products Demerger : when a firm splits into two or more independent businesses Divorce of ownership from control : when managers and directors of a business are different from the owners of a business (the shareholders) Forward vertical integration : a joining together into one firm of two or more firms where the supplier merges with/takes over one or more of its buyers 2 Horizontal integration : a joining together of two firms in the same industry at the same stage of production Niche market : a small segment of a larger market Merger/integration : the joining together of two or more firms under common ownership Not-for-profit organisations : organisations that do not aim to make a profit; rather, they use any profit or surplus they generate to support their aims (eg. a charity) Organic or internal growth : a firm increasing its size through investment in capital equipment/an increased labour force Private sector organisations : organisations owned by individuals or companies rather than the state 3 Public sector organisations : organisations owned and controlled by the state Synergy : when two or more activities/firms put together can lead to greater outcomes than the sum of the individual parts Vertical integration : a joining together into one firm of two or more firms in the same industry at different stages of production Average revenue : the average receipts per unit sold // TR÷Q Marginal revenue : the addition to total revenue of an extra unit sold // ΔTR÷ΔQ Total revenue : the total amount of money received from the sale of any given quantity of output // AR*Q 4 Average product : the quantity of output per unit of factor input // total product÷level of output Law of diminishing marginal returns : if increasing quantities of a variable input are combined with a fixed input, eventually the marginal product and then the average product of that variable input will decline. Long run : the period of time when all factors of production can vary, as does the number of firms in the market, but the level of technology remains constan