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1. A2 Micro
Strong Exam Techniques
Stepping stones to great A2 grades
Geoff Riley, FRSA
Tutor2u

2. I love answers that.......
Current
Use the data
well
knowledge
Please! Use A2 Evaluate the Critical
concepts! point made evaluation!
Everything in Have great
Put things in
analysis This is A2 not
economics is context
diagrams AS!
contextual

3. http://www.scoop.it/t/unit-3-micro-business-economics

4. Get help from fellow
students, teachers and
tutor2u on Twitter:
#econ3
@tutor2u_econ

5. Quick Advice on EdExcel Unit 3

6. Quick Advice on EdExcel Unit 3
1. Define term
2. Explain answer
3. Draw or annotate diagram
4. One knock-out (rejection)

7. Another structured MC example
P38

8. Another structured MC example
1. Define term
2. Explain answer
3. Draw or annotate diagram
4. One knock-out (rejection)
1. Revenue maximised when MR = zero
Price
2. Unsold flowers can be offered at a price
discount to run down stocks. This is a form
of second-degree price discrimination P1 MC
3. Likely to be elastic demand, flowers have
to be disposed of anyway P2
4. Draw a diagram to illustrate. P1 is profit
maximising price, P2 is a revenue
maximising price – Q1-Q2 sold at the
AR
lower price adding to revenue
5. One knock-out, predatory pricing is illegal
in UK
Q1 Q2 MR Qty P38

9. Explain how both a firm and its consumers may be
affected by economies of scale
P40

10. Explain how both a firm and its consumers may be
affected by economies of scale
P40

11. Explain how both a firm and its consumers may be
affected by economies of scale
Define • Internal EoS
your terms • External EoS
Internal
Economies
External
Economies
P40

12. Explain how both a firm and its consumers may be
affected by economies of scale
Define • Internal EoS
your terms • External EoS
• Falling long
Internal run unit cost
• Increasing
Economies returns to
scale
External
Economies
P40

13. Explain how both a firm and its consumers may be
affected by economies of scale
Define • Internal EoS
your terms • External EoS
• Falling long
Internal run unit cost
• Increasing
Economies returns to
scale
• Growth of
an industry
External • Lowers unit
Economies costs for
most
businesses P40

14. Explain how both a firm and its consumers may be
affected by economies of scale
Analyse
No evaluation
needed in this
question!
Impact on • Lower average costs
firms • Higher profits (producer surplus)
• Real price
Impact on levels
consumers • Consumer
surplus
P40

15. Explain how both a firm and its consumers may be
affected by economies of scale
Price Economies of Scale – Benefits
for Businesses and Consumers
AR =
demand
LRAC
Output (Q)
P40

16. Explain how both a firm and its consumers may be
affected by economies of scale
Price Economies of Scale – Benefits
for Businesses and Consumers Profit at
output Q1
P1
AR =
demand
C1
LRAC
Q1 Output (Q)
P40

17. Explain how both a firm and its consumers may be
affected by economies of scale
Price Economies of Scale – Benefits
for Businesses and Consumers Profit at
output Q1
P1
Profit at
output Q2
AR =
P2 demand
C1
LRAC
C2
Q1 Q2 P40

18. Explain how both a firm and its consumers may be
affected by economies of scale
Price Economies of Scale – Benefits
for Businesses and Consumers Profit at
output Q1
P1
Profit at
output Q2
AR =
P2 demand
Gain in
consumer
C1 surplus
LRAC
C2
Q1 Q2 P40

19. Explain how both a firm and its consumers may be
affected by economies of scale
Price Economies of Scale – Benefits
for Businesses and Consumers Profit at
output Q1
P1
Profit at
output Q2
AR =
P2 demand
Gain in
consumer
C1 surplus
LRAC
C2 Economies of scale have
the potential to benefit
both producers and
consumers – higher
profits and lower prices
Q1 Q2 P40

20. Explain how both a firm and its consumers may be
affected by economies of scale
Price Economies of Scale – Benefits
for Businesses and Consumers Profit at
output Q1
P1
Profit at
output Q2
AR =
P2 demand
Gain in
consumer
C1 surplus
LRAC
C2
LRAC2
External
economies of
scale here
Q1 Q2 P40

21. Explain how both a firm and its consumers may be
affected by economies of scale
Price Economies of Scale – Benefits
for Businesses and Consumers Profit at
output Q1
P1
Profit at
output Q2
AR =
P2 demand
Gain in
consumer
C1 surplus
LRAC
C2
LRAC2
C2 External
economies of
scale here
Q1 Q2 P40

23. Discuss whether utilities such as train operating companies, water, and
telecoms businesses are better left in the private sector or whether all, or
some, should be taken back into public ownership

24. Deeper evaluation (4+1 approach)
Outline (explain/analyse) and then evaluate 4 separate
points with a brief final reasoned evaluative paragraph
• Profit motive
1/ Case for
private sector • Dynamic
efficiency
2/ State • Objectives?
ownership
option • Outcomes?
• Consumers
3/ Impact on
stakeholders
• Employees
• Taxpayers
• Competition
4/ Alternatives policy
to public sector
• Business taxation

25. Evaluate the case for stronger action by governments to protect
consumers from the monopoly power of firms involved in
supplying gas and electricity to UK homes and businesses
Please note
the error in
the workbook
Significant rise in average energy bills in the UK –
this is a major policy issue – directly affects millions
of consumers and businesses.

26. Evaluate the case for stronger action by governments to protect
consumers from the monopoly power of firms involved in
supplying gas and electricity to UK homes and businesses
One main point per paragraph
Build an argument, support, then evaluate
Evaluation must relate to the point that has already been made
Case for
Action
Rising fuel
High prices
Supernorma poverty /
/allegations
l profits complex
of collusion
prices
Create
Using
competition Windfall Cheapest
Tougher State windfall tax
in the Tax on tariff as
price caps? Ownership to fund
wholesale profits default
insulation
market?
Evaluation Evaluation Evaluation
1. Large barriers to entry 1. Abnormal profits used to 1. Fewer tariffs but higher
2. Huge economies of scale fund capital investment average prices
3. Limited contestability is a 2. Long term energy security 2. Windfall tax discourages
feature of the market 3. Nationalisation & investment & research
inefficiency 3. Government failure when
using revenues

27. Build the
economic
case for
action
Rising fuel
High prices /
Supernormal poverty /
allegations
profits complex
of collusion
prices
Create
Using
competition Cheapest
Tougher Windfall Tax State windfall tax
in the tariff as
price caps? on profits Ownership to fund
wholesale default
insulation
market?