#ECON3 – Business Economics And The Distribution Of Income Planner
How well do you think you could do the following?
1 – Easily
2 – with some revision
3 – Not brilliantly, I’d like to go over it
4 – I didn’t understand it and haven’t got a clue
The Firm: Objectives, Costs and Revenues
Understand how and why firms try to profit maximise
Be able to explain the concept of profit satisficing
Be able to explain other objectives that firms may have and why they may conflict or
support each other of the long run
Be able to apply the concept of the separation of ownership and control to modern
firms and be able to understand why there is a conflict, whilst being able to explain
what outcomes this may cause
Distinguish between the long run and the short run and apply these principles to
Marginal Returns and Economies of Scale
Explain how costs of production are affected by productivity and change in prices of
factors of production, and, how, subsequently, this can affect firms’ choice of
production methods
Appreciate the differences between Fixed, Variable, Marginal, Average and Total
costs, and the differences between long and short run costs
You should be able to draw a number of cost curves, showing different situations and
be aware of what the MES is
Understand how changing relative costs affect decision making by firms
Explain how EoS can affect the market structure of an industry and how they
constitute a BtE
Understand how technological change has affected market structure as well as
production and consumption
Know the difference between invention and innovation and be able to link these to
efficiencies and cost
Be aware of the differences between Total, Average and Marginal Revenue, be able
to draw the curves and understand their relationship, as well as linking them to firms’
objectives
Competitive Markets - PC
Construct short and long run diagrams for Perfect Competition, understanding the
impact on price and quantity that changes in the market have
Understand the various assumptions that are made when talking about Perfect
Competition
Be able to critically evaluate the advantages and disadvantages of the model of
perfect competition, in respect of EoS/DoS and efficiency
Concentrated Markets – Monopoly/Oligopoly
Understand the effect that these market structures have on the behaviour of the
firms involved
Be able to explain why firms are able to maintain these positions and why they want
to
Know the characteristics of a firm operating in an oligopolistic market and how they
compete with the other firms in the market
Know what allows firms to set prices in the market and what could cause this to fail,
whilst being able to explain the consequences for consumers
Be able to draw a diagram that explains the principles of monopoly, and being able to
highlight the firm’s objective, and how this affects the consumer when compared to
#ECON3 – Business Economics And The Distribution Of Income Planner
How well do you think you could do the following?
1 – Easily
2 – with some revision
3 – Not brilliantly, I’d like to go over it
4 – I didn’t understand it and haven’t got a clue
other objectives on the diagram
Be able to explain the conditions necessary for firms to be able to Price Discriminate
and use this to critically evaluate whether PD can be positive for consumers and
producers
Be able to use the examples of the following: non-price competition, cartels, price
leadership, price agreements and price wars
Understand the KDC diagram and use it to explain price stickiness
Be able to apply the concepts of interdependence and uncertainty to the model of
oligopoly
The impact of these market structures on consumer and producer surplus, DWL and
efficiencies
Be able to explain sunk costs and hit-and-run competition and the impact that market
contestability has upon them
Be able to contrast and compare, whilst critically evaluating the competitive markets
against the concentrated markets
Be able to explain how and why firms grow and what problems and solutions may
arise
Labour Markets
Explain why labour is a derived demand and how MRP and productivity affect the
demand for labour
Understand both the monetary and non-monetary factors that influence supply
Use diagrams to explain why wage differentials exist and be able to explain why there
are differing elasticities of supply and demand for labour in different occupations
Use diagrammatic analysis to explain the impact that Trade Unions, Monopsonists
and the NMW have upon labour markets, both on wage and numbers employed
Be able to explain the effects of discrimination on labour markets, both positive and
negative
The Distribution of Income and Wealth
Be able to explain the causes, effects and types of poverty
Be able to explain the causes, effects and types of inequality
Be able to critically evaluate solutions to these issues
Government Intervention In The Market
Be able to critically evaluate types of government intervention in the market failures
addressed in Unit 1
Be able to explain how the absence of property rights leads to market failure
Understand how and when competition policy, privatisation, nationalisation,
regulation and deregulation should be used and be prepared to evaluate them
Be able to explain the difference between equity and equality
Be able to explain the concept of CBA and critically evaluate it