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AQA A Level Microeconomics Notes: Methodology, Market Prices, Costs, Revenues PDF

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El

06/04/2023

Economics

AQA A Level Microeconomics: Economic Methodology & the Economic Problem; Price Determination in a Competitive Market; Production Costs & Revenues

AQA A Level Microeconomics Notes: Methodology, Market Prices, Costs, Revenues PDF

Microeconomics: Key Concepts and Economic Methodology

This document covers essential microeconomics concepts, including economic methodology, scarcity, production possibility frontiers, demand and supply, and elasticity. It's an invaluable resource for students studying AQA A Level Microeconomics.

  • Explores positive vs. normative statements in economics
  • Discusses the basic economic problem of scarcity
  • Explains production possibility frontiers (PPFs)
  • Covers demand, supply, and various types of elasticity
  • Provides insights into market dynamics and economic decision-making
...

06/04/2023

498

Microeconomics Jan PPES (AS)
positive statements objective, reved on facts
is can be tested.
Normative statements- based on value judgements

View

Page 2: Demand and Price Elasticity

This page delves into the concepts of demand and price elasticity, crucial components of microeconomic theory. It provides a comprehensive explanation of demand, factors affecting demand, and the law of demand.

The page begins by defining demand as the quantity of goods or services that consumers are able and willing to buy at a given price during a specific period. It emphasizes the inverse relationship between price and quantity demanded, known as the law of demand.

Definition: The law of demand states that there's an inverse relationship between price and quantity demanded, ceteris paribus allotherfactorsremainingconstantall other factors remaining constant.

Factors affecting demand are listed, including population, income, related goods, advertising, tastes/fashion, expectations, and seasons. The page explains how changes in these factors can cause shifts in the demand curve.

Highlight: Movements along the demand curve are caused by changes in price, while shifts of the entire curve are caused by changes in other factors affecting demand.

The concept of price elasticity of demand PEDPED is introduced, defined as the responsiveness of change in quantity demanded to a change in price. The page provides a formula for calculating PED and explains different types of elasticity:

  1. Price inelastic goods PED<1PED < -1
  2. Price elastic goods PED>1PED > -1
  3. Perfectly inelastic goods PED=0PED = 0
  4. Unitary elastic goods PED=1PED = -1
  5. Perfectly elastic goods PED=PED = ∞

Example: Air and water are given as examples of inelastic goods because they have no substitutes.

Factors influencing PED are discussed, including the number of substitutes, percentage of income spent, whether the good is a luxury or necessity, addictive or habitual consumption, and time period.

Vocabulary: A Giffen good is defined as a low-income, inferior good where demand increases as price increases.

Microeconomics Jan PPES (AS)
positive statements objective, reved on facts
is can be tested.
Normative statements- based on value judgements

View

Page 3: Income Elasticity, Cross Elasticity, and Supply

This page covers income elasticity of demand YEDYED, cross elasticity of demand XEDXED, and the concept of supply in microeconomics. These concepts are crucial for understanding market dynamics and consumer behavior.

The page begins by defining income elasticity of demand YEDYED as the responsiveness of demand to changes in consumer income. It explains how YED can be used to classify goods:

  • Normal goods: YED > 0
  • Luxury goods: YED > 1
  • Inferior goods: YED < 0

Example: Television sets are given as an example of a luxury good with YED > 1.

Cross elasticity of demand XEDXED is introduced as the responsiveness of demand for one product to changes in the price of another product. The page explains how XED can be used to identify relationships between goods:

  • Substitutes: Positive XED
  • Complements: Negative XED
  • Unrelated goods: XED = 0

Highlight: The strength of the relationship between goods can be determined by the magnitude of XED.

The concept of supply is defined as the quantity of goods or services that a firm is able and willing to supply at a given price during a specific period. The law of supply, which states that price and quantity supplied are in a direct relationship, is explained.

Definition: The law of supply states that there is a direct relationship between price and quantity supplied.

Factors causing shifts in supply are listed, including productivity, technology, indirect taxes, subsidies, number of firms, weather, and costs of production. The page emphasizes that changes in price cause movements along the supply curve, while changes in other factors cause shifts of the entire curve.

Vocabulary: Profit incentive is highlighted as a key factor in the upward slope of the supply curve.

Microeconomics Jan PPES (AS)
positive statements objective, reved on facts
is can be tested.
Normative statements- based on value judgements

View

Page 4: Price Elasticity of Supply

This final page focuses on the concept of price elasticity of supply PESPES, an important aspect of microeconomic analysis. It provides a brief overview of PES and its implications for market dynamics.

The page defines price elasticity of supply PESPES as the responsiveness of quantity supplied to a change in price. It provides the formula for calculating PES:

PES = % Change in Quantity Supplied / % Change in Price

Definition: Price elasticity of supply PESPES measures how responsive the quantity supplied is to a change in price.

The page notes that PES is always likely to be positive, reflecting the direct relationship between price and quantity supplied as described by the law of supply.

Highlight: Unlike price elasticity of demand, which is typically negative, price elasticity of supply is usually positive due to the profit incentive for firms.

The concept of perfectly inelastic supply is briefly mentioned, where PES = 0. This represents a situation where supply remains constant regardless of price changes.

Example: While not explicitly stated in the text, an example of a good with perfectly inelastic supply in the short run might be tickets to a sold-out concert, where the quantity cannot be increased regardless of price increases.

Although the page is brief, it provides a foundation for understanding how supply responds to price changes, which is crucial for analyzing market behavior and predicting outcomes in various economic scenarios.

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Economics

498

6 Apr 2023

4 pages

AQA A Level Microeconomics Notes: Methodology, Market Prices, Costs, Revenues PDF

user profile picture

El

@wls.065

Microeconomics: Key Concepts and Economic Methodology

This document covers essential microeconomics concepts, including economic methodology, scarcity, production possibility frontiers, demand and supply, and elasticity. It's an invaluable resource for students studying AQA A Level Microeconomics.

  • Explores positive vs. normative... Show more

Microeconomics Jan PPES (AS)
positive statements objective, reved on facts
is can be tested.
Normative statements- based on value judgements

Sign up to see the contentIt's free!

Access to all documents

Improve your grades

Join milions of students

By signing up you accept Terms of Service and Privacy Policy

Page 2: Demand and Price Elasticity

This page delves into the concepts of demand and price elasticity, crucial components of microeconomic theory. It provides a comprehensive explanation of demand, factors affecting demand, and the law of demand.

The page begins by defining demand as the quantity of goods or services that consumers are able and willing to buy at a given price during a specific period. It emphasizes the inverse relationship between price and quantity demanded, known as the law of demand.

Definition: The law of demand states that there's an inverse relationship between price and quantity demanded, ceteris paribus allotherfactorsremainingconstantall other factors remaining constant.

Factors affecting demand are listed, including population, income, related goods, advertising, tastes/fashion, expectations, and seasons. The page explains how changes in these factors can cause shifts in the demand curve.

Highlight: Movements along the demand curve are caused by changes in price, while shifts of the entire curve are caused by changes in other factors affecting demand.

The concept of price elasticity of demand PEDPED is introduced, defined as the responsiveness of change in quantity demanded to a change in price. The page provides a formula for calculating PED and explains different types of elasticity:

  1. Price inelastic goods PED<1PED < -1
  2. Price elastic goods PED>1PED > -1
  3. Perfectly inelastic goods PED=0PED = 0
  4. Unitary elastic goods PED=1PED = -1
  5. Perfectly elastic goods PED=PED = ∞

Example: Air and water are given as examples of inelastic goods because they have no substitutes.

Factors influencing PED are discussed, including the number of substitutes, percentage of income spent, whether the good is a luxury or necessity, addictive or habitual consumption, and time period.

Vocabulary: A Giffen good is defined as a low-income, inferior good where demand increases as price increases.

Microeconomics Jan PPES (AS)
positive statements objective, reved on facts
is can be tested.
Normative statements- based on value judgements

Sign up to see the contentIt's free!

Access to all documents

Improve your grades

Join milions of students

By signing up you accept Terms of Service and Privacy Policy

Page 3: Income Elasticity, Cross Elasticity, and Supply

This page covers income elasticity of demand YEDYED, cross elasticity of demand XEDXED, and the concept of supply in microeconomics. These concepts are crucial for understanding market dynamics and consumer behavior.

The page begins by defining income elasticity of demand YEDYED as the responsiveness of demand to changes in consumer income. It explains how YED can be used to classify goods:

  • Normal goods: YED > 0
  • Luxury goods: YED > 1
  • Inferior goods: YED < 0

Example: Television sets are given as an example of a luxury good with YED > 1.

Cross elasticity of demand XEDXED is introduced as the responsiveness of demand for one product to changes in the price of another product. The page explains how XED can be used to identify relationships between goods:

  • Substitutes: Positive XED
  • Complements: Negative XED
  • Unrelated goods: XED = 0

Highlight: The strength of the relationship between goods can be determined by the magnitude of XED.

The concept of supply is defined as the quantity of goods or services that a firm is able and willing to supply at a given price during a specific period. The law of supply, which states that price and quantity supplied are in a direct relationship, is explained.

Definition: The law of supply states that there is a direct relationship between price and quantity supplied.

Factors causing shifts in supply are listed, including productivity, technology, indirect taxes, subsidies, number of firms, weather, and costs of production. The page emphasizes that changes in price cause movements along the supply curve, while changes in other factors cause shifts of the entire curve.

Vocabulary: Profit incentive is highlighted as a key factor in the upward slope of the supply curve.

Microeconomics Jan PPES (AS)
positive statements objective, reved on facts
is can be tested.
Normative statements- based on value judgements

Sign up to see the contentIt's free!

Access to all documents

Improve your grades

Join milions of students

By signing up you accept Terms of Service and Privacy Policy

Page 4: Price Elasticity of Supply

This final page focuses on the concept of price elasticity of supply PESPES, an important aspect of microeconomic analysis. It provides a brief overview of PES and its implications for market dynamics.

The page defines price elasticity of supply PESPES as the responsiveness of quantity supplied to a change in price. It provides the formula for calculating PES:

PES = % Change in Quantity Supplied / % Change in Price

Definition: Price elasticity of supply PESPES measures how responsive the quantity supplied is to a change in price.

The page notes that PES is always likely to be positive, reflecting the direct relationship between price and quantity supplied as described by the law of supply.

Highlight: Unlike price elasticity of demand, which is typically negative, price elasticity of supply is usually positive due to the profit incentive for firms.

The concept of perfectly inelastic supply is briefly mentioned, where PES = 0. This represents a situation where supply remains constant regardless of price changes.

Example: While not explicitly stated in the text, an example of a good with perfectly inelastic supply in the short run might be tickets to a sold-out concert, where the quantity cannot be increased regardless of price increases.

Although the page is brief, it provides a foundation for understanding how supply responds to price changes, which is crucial for analyzing market behavior and predicting outcomes in various economic scenarios.

Microeconomics Jan PPES (AS)
positive statements objective, reved on facts
is can be tested.
Normative statements- based on value judgements

Sign up to see the contentIt's free!

Access to all documents

Improve your grades

Join milions of students

By signing up you accept Terms of Service and Privacy Policy

Page 1: Economic Methodology and Scarcity

This page introduces fundamental concepts in economic methodology and the economic problem of scarcity. It covers positive and normative statements, needs versus wants, and the basic economic problem.

The page begins by distinguishing between positive and normative statements in economics. Positive statements are objective and based on facts, while normative statements are subjective and based on value judgments.

Definition: Positive statements are objective and can be tested, while normative statements are based on opinions and value judgments.

The concept of scarcity is introduced as the fundamental economic problem. Resources are limited, but human wants are unlimited, necessitating choices in resource allocation.

Highlight: The basic economic problem is defined as unlimited wants but limited resources, requiring efficient resource allocation.

The page also covers the factors of production land,labor,capital,andenterpriseland, labor, capital, and enterprise and their respective rewards rent,wages,interest,andprofitrent, wages, interest, and profit. It explains how different economic systems planned,mixed,andmarketeconomiesplanned, mixed, and market economies address the basic economic questions of what to produce, how to produce, and for whom to produce.

Example: North Korea is given as an example of a planned economy where the government controls economic decisions.

The Production Possibility Frontier PPFPPF is introduced as a tool to illustrate scarcity, efficiency, opportunity cost, and gains from trade. The PPF shows the maximum potential output of an economy using two goods or services when all resources are fully and efficiently employed.

Vocabulary: Opportunity cost is defined as the cost of the next best alternative forgone when a choice is made.

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Stefan S

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This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

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Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

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Sudenaz Ocak

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In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

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