Candidates must be able to demonstrate apt knowledge of the following topics in micro-economic decision makers.
| Topic | Candidates should be able to: |
| Money & Banking | • analyse the forms, functions and characteristics of money • evaluate the role and importance of central banks and commercial banks for government, producers and consumers |
| Households | • evaluate the influences of spending, saving and borrowing including income, the rate of interest and confidence between different households and over time |
| Workers | • evaluate the factors affecting an individual’s choice of occupation • analyse how wages are determined including the influences of demand and supply, relative bargaining power and government policy • evaluate the reasons for differences in earnings including differences in demand and supply, relative bargaining strength, discrimination and government policy • evaluate the advantages and disadvantages of division of labour for workers, firms and the economy |
| Trade Unions | • define a trade union • analyse the role of trade unions in the economy including engaging in collective bargaining on wages, working hours and working conditions, protecting employment and influencing government policy • analyse the factors influencing the strength of trade unions • evaluate the advantages and disadvantages of trade union activity from the viewpoint of workers, firms and the government |
| Firms | • classify firms in terms of primary/secondary/tertiary sectors, private/public sector and the relative size • evaluate the advantages and disadvantages of small firms and reasons for their existence • analyse the causes and forms of the growth of firms • evaluate the advantages and disadvantages of different types of mergers: horizontal, vertical and conglomerate • evaluate how internal and external economies and diseconomies of scale can affect a firm/industry as the scale of production changes |
| Firms & Production | • evaluate the influences on demand for factors of production including demand for the product, the price of different factors of production, their availability and their productivity • evaluate the reasons for adopting labour-intensive and capital-intensive production and their advantages and disadvantages • explain the difference between and influences on production and productivity |
| Firms’ Costs, Revenue & Objectives | • define total cost, average total cost, fixed cost, variable cost, average fixed cost and average variable cost • calculate total cost, average total cost, fixed cost, variable cost, average fixed cost and average variable cost • draw and interpret diagrams that show how changes in output affect costs of production • define total revenue and average revenue • calculate total revenue and average revenue • analyse the influence of sales on revenue • evaluate the objectives of firms including survival, social welfare, profit maximisation and growth |
| Market Structure | • evaluate the effect of a high number of firms on price, quality, choice and profit • analyse the characteristics of monopoly • evaluate the advantages and disadvantages of monopoly |