Firms and How They Operate

A focused answer to the H2 Economics learning outcome on costs. Fixed and variable costs, the law of diminishing returns and the U-shaped short-run curves, and economies and diseconomies of scale shaping the long-run average cost curve.

A focused answer to the H2 Economics learning outcome on competition policy. How governments regulate monopoly and abuse of market power through price controls, scrutiny of mergers and anti-competitive conduct, and the trade-offs involved.

A focused answer to the H2 Economics learning outcome on monopolistic competition and oligopoly. Differentiation and long-run normal profit in monopolistic competition, and interdependence, collusion, price rigidity and non-price competition in oligopoly.

A focused answer to the H2 Economics learning outcome on monopoly. How a monopolist sets price and output where MR equals MC, the barriers that sustain supernormal profit, the welfare loss, and the case for and against monopoly including price discrimination.

A focused answer to the H2 Economics learning outcome on perfect competition. The assumptions, the price-taking firm's short-run profit or loss, the long-run drive to normal profit through entry and exit, and why it is allocatively and productively efficient.

A focused answer to the H2 Economics learning outcome on revenue and profit. Total, average and marginal revenue, the MR equals MC profit-maximisation rule, and the difference between normal and supernormal profit.