3/16/25, 10:48 PM OCR A Level Economics
OCR A Level Economics REAL EXAM QUESTIONS AND
CORRECT DETAILED ANSWERS WITH
RATIONALES|ALREADY GRADED A+||COMPREHENSIVE
DOCUMENT FOR PEDS CMS||BRAND NEW
Terms in this set (243)
advantages of specialisation more efficient, less training, lower wages, standardised product,
automation
less transferable skills, absent worker stops production,
disadvantages of
specialisation lower motivation due to boredom
determinants of pes how much surplus the producer has, availability of factors of
production, time period
cross elasticity of demand responsiveness of demand for one product to a change in price
of another
xed formula %change in qd of good A/%change in price of good B
xed value of a substitute >1
xed value of a complementary <1
good
large divergence of xed from strong relationship between two products
0
indirect tax a tax passed onto consumers by producers
incidence of a tax if ped>pes less incidence on consumers
incidence of a tax if pes>ped less incidence on producers
monetary policy policy which influences the supply of money in an economy
fiscal policy policy that controls spending and taxation in an economy
increasing ad/as and expanding real output through
expansionary fiscal policy
government spending and/or a decrease in net taxes
expansionary monetary policy increasing ad, output and employment by reducing interest rates
contractionary monetary reducing ad, output by increasing interest rates
policy
contractionary fiscal policy decreasing ad/as by decreasing government spending and/or
increasing net taxes
foreign direct investment a foreign company spends money in a country for a return,
influenced by confidence
confidence the degree of optimism that a consumer has in an economy and
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,3/16/25, 10:48 PM OCR A Level Economics
its future
every good or service is produced to the point where
allocative efficiency
the last unit provides an msb=msc of production. p =
mc
productive efficiency production at the lowest possible cost
dynamic efficiency where supernormal profits are reinvested
social efficiency occurs where msc=msb, production has a net benefit on society
corporate social responsibility a business's concern for society's welfare
marginal social cost the extra cost to society of producing one additional unit
marginal social benefit the extra benefit to society of consuming one additional unit
government spends more on public firms, private firms
crowding out
have lower confidence and lower output
resource crowding out private sector firms lend to the government so have less to
spend on themselves
government spending boosts ad so private firms can
crowding in
make money by producing the goods
two or more goods derived from a single product, eg
joint supply
milk produces both yoghurt and cheese
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, 3/16/25, 10:48 PM OCR A Level Economics
monopsonist the only buyer in a market
barriers to entry what prevents firms from entering a market
barriers to entry examples start up costs, production technology, advertising campaigns
supernormal profits profits above the level required to keep a firm in an industry
normal profits profits required to satisfy investors and keep the firm in the
market
hot money short term speculative investment. Money in savings chasing the
highest interest rate
monopsony a market with only one buyer
oligopoly a market with a few large firms selling a similar product, high
barriers to entry
a large number of firms produce homogenous products
perfect competition
for the same price with no barriers to entry
a large number of firms produce similar products at
monopolistic competition
similar prices with low barriers to entry
monopoly a single firm sells at set prices with total barriers to entry
short run - when variable factors of production are
law of diminishing returns
added to fixed factors of production total/margnial
product will rise and then fall
short run at least one fixed factor of production
long run all factors of production are variable
explicit costs what a business has to spend to function
-difficult to set at the right level
disadvantages of national -workers earning just above will want a raise
minimum wage -has no effect on those who don't work
implicit cost a businesses opportunity cost
fixed costs do not vary with output - must always be paid
variable costs business costs that vary with output
TFC = AFC x Q
AFC = TFC / Q
economic growth on a ppf outward shift
-incentive to produce the best products possible
pros of free market -innovation, risk taking rewarded
-increased choice for consumers
-those who cannot work receive no income
cons of free market -unprofitable goods such as drugs would not be made
-monopolies
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OCR A Level Economics REAL EXAM QUESTIONS AND
CORRECT DETAILED ANSWERS WITH
RATIONALES|ALREADY GRADED A+||COMPREHENSIVE
DOCUMENT FOR PEDS CMS||BRAND NEW
Terms in this set (243)
advantages of specialisation more efficient, less training, lower wages, standardised product,
automation
less transferable skills, absent worker stops production,
disadvantages of
specialisation lower motivation due to boredom
determinants of pes how much surplus the producer has, availability of factors of
production, time period
cross elasticity of demand responsiveness of demand for one product to a change in price
of another
xed formula %change in qd of good A/%change in price of good B
xed value of a substitute >1
xed value of a complementary <1
good
large divergence of xed from strong relationship between two products
0
indirect tax a tax passed onto consumers by producers
incidence of a tax if ped>pes less incidence on consumers
incidence of a tax if pes>ped less incidence on producers
monetary policy policy which influences the supply of money in an economy
fiscal policy policy that controls spending and taxation in an economy
increasing ad/as and expanding real output through
expansionary fiscal policy
government spending and/or a decrease in net taxes
expansionary monetary policy increasing ad, output and employment by reducing interest rates
contractionary monetary reducing ad, output by increasing interest rates
policy
contractionary fiscal policy decreasing ad/as by decreasing government spending and/or
increasing net taxes
foreign direct investment a foreign company spends money in a country for a return,
influenced by confidence
confidence the degree of optimism that a consumer has in an economy and
1/20
,3/16/25, 10:48 PM OCR A Level Economics
its future
every good or service is produced to the point where
allocative efficiency
the last unit provides an msb=msc of production. p =
mc
productive efficiency production at the lowest possible cost
dynamic efficiency where supernormal profits are reinvested
social efficiency occurs where msc=msb, production has a net benefit on society
corporate social responsibility a business's concern for society's welfare
marginal social cost the extra cost to society of producing one additional unit
marginal social benefit the extra benefit to society of consuming one additional unit
government spends more on public firms, private firms
crowding out
have lower confidence and lower output
resource crowding out private sector firms lend to the government so have less to
spend on themselves
government spending boosts ad so private firms can
crowding in
make money by producing the goods
two or more goods derived from a single product, eg
joint supply
milk produces both yoghurt and cheese
2/20
, 3/16/25, 10:48 PM OCR A Level Economics
monopsonist the only buyer in a market
barriers to entry what prevents firms from entering a market
barriers to entry examples start up costs, production technology, advertising campaigns
supernormal profits profits above the level required to keep a firm in an industry
normal profits profits required to satisfy investors and keep the firm in the
market
hot money short term speculative investment. Money in savings chasing the
highest interest rate
monopsony a market with only one buyer
oligopoly a market with a few large firms selling a similar product, high
barriers to entry
a large number of firms produce homogenous products
perfect competition
for the same price with no barriers to entry
a large number of firms produce similar products at
monopolistic competition
similar prices with low barriers to entry
monopoly a single firm sells at set prices with total barriers to entry
short run - when variable factors of production are
law of diminishing returns
added to fixed factors of production total/margnial
product will rise and then fall
short run at least one fixed factor of production
long run all factors of production are variable
explicit costs what a business has to spend to function
-difficult to set at the right level
disadvantages of national -workers earning just above will want a raise
minimum wage -has no effect on those who don't work
implicit cost a businesses opportunity cost
fixed costs do not vary with output - must always be paid
variable costs business costs that vary with output
TFC = AFC x Q
AFC = TFC / Q
economic growth on a ppf outward shift
-incentive to produce the best products possible
pros of free market -innovation, risk taking rewarded
-increased choice for consumers
-those who cannot work receive no income
cons of free market -unprofitable goods such as drugs would not be made
-monopolies
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