AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
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
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
,AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
Q: Consumption externality
Answer:
an externality (which may be positive or negative) generated in the
course of consuming a good or service
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
,AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
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
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
, AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
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
Q: Immobility of labour
Answer:
the inability of labour to move from one job to another, either for
occupational reasons or for geographical reasons
Q: Geographical immobility of labour
Answer:
occurs when workers find it difficult or impossible to
move to jobs in other parts of the country or in other countries for reasons such as
higher
housing costs in locations where the jobs exist
Verified Solutions | Latest 2026 Update
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
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
,AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
Q: Consumption externality
Answer:
an externality (which may be positive or negative) generated in the
course of consuming a good or service
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
,AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
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
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
, AQA A-level Economics (Microeconomics) Questions and Answers with
Verified Solutions | Latest 2026 Update
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
Q: Immobility of labour
Answer:
the inability of labour to move from one job to another, either for
occupational reasons or for geographical reasons
Q: Geographical immobility of labour
Answer:
occurs when workers find it difficult or impossible to
move to jobs in other parts of the country or in other countries for reasons such as
higher
housing costs in locations where the jobs exist
