AQA Unit 3 Micro: Practice Paper

A selection of practice questions for this paper are shown below

• This paper is synoptic. It assesses your understanding of the relationship between the different aspects of Economics.
• You will be marked on your ability to:
(i) Use good English and organise information clearly
(ii) Use specialist vocabulary where appropriate

Essay Questions: Explanation Questions (15)

(i) Explain what is meant by the satisficing principle and how can affect price and output in an imperfectly competitive market (15 marks)

(ii) Explain the circumstances under which short run average cost for a business can be rising but long run average cost can be falling (15 marks)

(iii) Explain how a change in wage rates for a business can bring about a change in their costs of production and the choice of factor inputs (15 marks)

(iv) Explain the factors that will influence the rate of innovation in an industry (15 marks)

(v) Oligopolistic markets, such as supermarkets or car manufacturing, can be defined in terms of market structure or in terms of market conduct (behaviour).

Using examples of particular industries, explain this statement. (15 marks)

(vi) Explain some of the short run and long run benefits of an increase in market competition (15 marks)

(vii) Explain the difference between equality and equity and explain how market failures can lead to a loss of equity (15 marks)

(viii) Explain how cost-benefit analysis might be used to assess the impact of a government subsidy scheme for the installation of solar panels (15 marks)

Essay Questions: Evaluation Questions (25)

(i) Evaluate the view that providing a market is contestable, there is no need for government intervention (25 marks)

(ii) Discuss whether the objective of profit maximisation becomes less important than other possible objectives as a firm grows in size. (25 marks)

(iii) Is collusion in an oligopoly always good for producers and bad for consumers? Justify your answer. (25 marks)

(iv) Evaluate the view that the private sector should be encouraged to play a greater role in providing health care in the United Kingdom (25 marks)

(v) Evaluate the view that progress in reducing environmental market failures such as deforestation and rising carbon emissions is best left to market forces rather than government intervention (25 marks)