Specification Reference - Micro

This uses the AQA specification from here. You should read through it and then come to here to discover the topics you want more information on.

Economic methodology / Economic Problem

• PPFs

Individual economic decision making (Y2)

• Consumer Behaviour - Utility
• Imperfect information
• Behavioural Economics

Price determination in a competitive market

• Demand
• Supply
• Elasticities
• Determination of equilibrium market prices
• Connections between markets - Types of demand

Production, costs and revenue

• Specialisation and division of labour
• Law of diminishing returns and returns to scale?
• Costs of production
  • Types of costs
• Economies of Scale
• Profit, accounting, normal and supernormal
• Technological change
  • Creative destruction

Market Structures (Perfect competition, imperfectly competitive markets and monopoly) (Y2)

• Types of markets
• Objectives of firms
• Price Discrimination
• Dynamics of competition
  • SR and LR benefits of competition
  • Non-price competition
  • Creative destruction
• Contestable Markets
• Static efficiency
• Dynamic efficiency
• Consumer and producer surplus

The Labour Market

• Demand for labour, MRP
• Influences upon the supply of labour
  • Monetary non-monetary factors
• Imperfectly competitive labour markets - Summary
  • Monopsony
  • Trade Unions
  • NMW
  • Discrimination

Distribution of wealth (Y2)

• Income / Wealth inequality
• Poverty

The market mechanism, market failure and government intervention in markets

• How markets and prices allocate resources
  • The price mechanism
• The meaning of market failure
• Externalities
• Types of goods
  • Public / Quasi-public
  • Private goods (basically not public)
  • Merit and demerit goods
• Market imperfections
  • Imperfect / asymmetric information
  • How monopolies can lead to market failure
  • How immobility of factors of production can lead to market failure
• Competition Policy
  • General principles of UK / EU competition policy
  • Costs / Benefits of such policies
• Public vs Private ownership and deregulation
  • Privatisation
  • Deregulation
  • Regulatory Capture
• Government intervention in markets
  • Market failure provides an argument for government intervention
• Government Failure
  • Occurs when intervention causes a misallocation of resources
  • Can be due to insufficient information or conflicting objectives
  • Can lead to unintended consequences