A Level Economics (AQA) Exam Questions and Answers |Complete Solutions Graded A+
|100% Correct
Non-Collusive Oligopoly Where firms in an oligopoly do not resort to agreements to fix
prices or output. Competition tends to be non-price. Prices tend to be stable.
Kinked Demand Curve the demand curve for a noncollusive oligopolist, which is based on
the assumption that rivals will match a price decrease and will ignore a price increase
Cartels an association of manufacturers or suppliers with the purpose of maintaining prices
at a high level and restricting competition.
Price War successive price cutting by competitors to increase or maintain their unit sales or
market share
Price Leadership a form of implicit collusion in which one firm in an oligopoly announces a
price change and the other firms in the industry match the change
interdependence the dependence of two or more people, businesses or things on each
other.
legal monopoly A firm with 25% or more of the market share
Hit and Run Competition When firms can enter a market at low cost attracted by high
profits and then leave the market at low cost when profits fall
Contestable Market a market in which firms can enter and leave so easily that firms in the
market face competition from potential entrants
Static Efficiency the most efficient combination of existing resources at a given point in time
,Dynamic Efficiency Dynamic efficiency is concerned with the productive efficiency of a firm
over a period of time.
A firm which is dynamically efficient will be reducing its cost curves by implementing new
production processes. Dynamic efficiency will enable a reduction in both SRAC and LRAC.
Consumer Surplus the difference between the highest price a consumer is willing to pay for
a good or service and the actual price the consumer pays
Producer Surplus the difference between the lowest price a firm would be willing to accept
for a good or service and the price it actually receives
Deadweight Loss of Monopoly The consumer and producer surplus that is lost due to the
monopolist charging a price in excess of marginal cost
Marginal Physical Product of Labour The addition to a firm's total output brought by
employing one more worker.
Marginal Revenue Product the extra revenue the firm gets from hiring an additional unit of a
factor of production
Labour Demand Curve The number of workers firms are willing and able to employ at a
given wage rate.
Monopsony a market structure in which there is only a single buyer of a good, service, or
resource
Monopsony Characteristics -One firm hiring workers
-Workers are relatively immobile
, -Firm is wage maker
Elasticity of Demand for Labour Measures the change in demand for labour when the wage
level changes. % change in quantity demanded of labour / % change wage rate
Labour Supply Curve A curve that shows the quantity of labour supplied at different wage
rates. Its shape depends on how households react to changes in the wage rate
Wage Determination The wage rate in a labour market is determined by the interaction of
supply and demand for labour.
Perfectly Competitive Labor Market -Many small firms are hiring workers
-Many workers with identical skills
-Wage is constant
-Workers are wage takers
Trade Union A trade body who represent the interests of their members by seeking to
promote better working conditions and higher wages through negotiations with employers.
Wage Discrimination people getting paid less based on gender/race/age e.g.: wage gap for
women
National Minimum Wage A pay floor introduced by the government, which sets a wage level
below which producers cannot legally go
The Lorenz Curve A Lorenz curve shows the % of income earned by a given % of the
population.
|100% Correct
Non-Collusive Oligopoly Where firms in an oligopoly do not resort to agreements to fix
prices or output. Competition tends to be non-price. Prices tend to be stable.
Kinked Demand Curve the demand curve for a noncollusive oligopolist, which is based on
the assumption that rivals will match a price decrease and will ignore a price increase
Cartels an association of manufacturers or suppliers with the purpose of maintaining prices
at a high level and restricting competition.
Price War successive price cutting by competitors to increase or maintain their unit sales or
market share
Price Leadership a form of implicit collusion in which one firm in an oligopoly announces a
price change and the other firms in the industry match the change
interdependence the dependence of two or more people, businesses or things on each
other.
legal monopoly A firm with 25% or more of the market share
Hit and Run Competition When firms can enter a market at low cost attracted by high
profits and then leave the market at low cost when profits fall
Contestable Market a market in which firms can enter and leave so easily that firms in the
market face competition from potential entrants
Static Efficiency the most efficient combination of existing resources at a given point in time
,Dynamic Efficiency Dynamic efficiency is concerned with the productive efficiency of a firm
over a period of time.
A firm which is dynamically efficient will be reducing its cost curves by implementing new
production processes. Dynamic efficiency will enable a reduction in both SRAC and LRAC.
Consumer Surplus the difference between the highest price a consumer is willing to pay for
a good or service and the actual price the consumer pays
Producer Surplus the difference between the lowest price a firm would be willing to accept
for a good or service and the price it actually receives
Deadweight Loss of Monopoly The consumer and producer surplus that is lost due to the
monopolist charging a price in excess of marginal cost
Marginal Physical Product of Labour The addition to a firm's total output brought by
employing one more worker.
Marginal Revenue Product the extra revenue the firm gets from hiring an additional unit of a
factor of production
Labour Demand Curve The number of workers firms are willing and able to employ at a
given wage rate.
Monopsony a market structure in which there is only a single buyer of a good, service, or
resource
Monopsony Characteristics -One firm hiring workers
-Workers are relatively immobile
, -Firm is wage maker
Elasticity of Demand for Labour Measures the change in demand for labour when the wage
level changes. % change in quantity demanded of labour / % change wage rate
Labour Supply Curve A curve that shows the quantity of labour supplied at different wage
rates. Its shape depends on how households react to changes in the wage rate
Wage Determination The wage rate in a labour market is determined by the interaction of
supply and demand for labour.
Perfectly Competitive Labor Market -Many small firms are hiring workers
-Many workers with identical skills
-Wage is constant
-Workers are wage takers
Trade Union A trade body who represent the interests of their members by seeking to
promote better working conditions and higher wages through negotiations with employers.
Wage Discrimination people getting paid less based on gender/race/age e.g.: wage gap for
women
National Minimum Wage A pay floor introduced by the government, which sets a wage level
below which producers cannot legally go
The Lorenz Curve A Lorenz curve shows the % of income earned by a given % of the
population.
