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3.2 – AS 91400
Demonstrate understanding of the efficiency of different market structures using marginal analysis.
Achievement |
Achievement with Merit |
Achievement with Excellence |
Demonstrate |
Demonstrate in-depth |
Demonstrate comprehensive |
External – 4 Credits.
Demonstrate understanding involves:
providing an explanation of:
− pricing and output decisions for perfectly competitive and/or monopolist firms
using marginal analysis
− efficiency of a market structure
− impact of a change in a market on the short and/or long run pricing and/or
output decisions of a firm using marginal analysis
− a government policy to improve the efficiency of a monopoly market
using an economic model(s) to illustrate concepts relating to the efficiency of
different market structures.
Demonstrate in-depth understanding involves:
providing a detailed explanation of:
− pricing and output decisions for perfectly competitive and/or monopolist firms
using marginal analysis
− the efficiency of a market structure
− the impact of a change in a market on the short and/or long run pricing and/or
output decisions of a firm using marginal analysis
− a government policy to improve the efficiency of a monopoly market
using an economic model(s) to illustrate complex concepts and/or support
detailed explanations relating to the efficiency of different market structures.
Demonstrate comprehensive understanding involves:
comparing and/or contrasting:
− the efficiency of market structures
− the impact of a change in a market on the short and long run pricing and/or
output decisions of a firm using marginal analysis
− the effectiveness of government policies to improve the efficiency of a
monopoly market
integrating an economic model(s) into explanations relating to the efficiency of
different market structures.
3 Efficiency refers to allocative efficiency of market equilibrium which occurs when the sum of consumer and producer surpluses are maximised (so ‘total surpluses’ are
maximised). This includes recognising that deadweight loss indicates a market is
allocatively inefficient.
4 A market structure refers to monopolies (including natural monopoly) and perfectly
competitive firms. This may include the distinguishing features of monopoly and/or
perfectly competitive markets.
5 Marginal analysis refers to using marginal revenue and marginal cost to determine
the output and pricing decisions of firms. This includes demonstrating
understanding:
that perfectly competitive firms operate at the profit maximising output where
P(=MR) = MC and are allocatively efficient; and/or
that monopoly firms operate at the profit maximising output where marginal
revenue equals marginal cost (MR = MC) but are allocatively inefficient.