AQA Unit 3 Economics: Business Economics and the Distribution of Income

notes for the AQA spec for economics: econ3.

Laid out in the order of the specification.

**JUST REALISED THAT I HAVE GOT CONFUSED WITH THE DIAGRAMES THAT SHOW ABNORMAL AND SUBNORMAL PROFITS. EVERYTHING ELSE SHOULD BE RIGHT BUT I HAVE GOT THESE DIAGRAMS THE OTHER WAY ROUND**

good luck!

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Economics
Unit 3
Revision




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Page 2

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3.
3.1
The
fi
rm:
Obj
ect
ives,
cost
s and
revenues
The Objectives of firms
The
mo del
s t
hat
comp r
ise
the
tr
adi
ti
onal
t
heory
of
the
fi
rm ar
e based
upon
t
he assumpti
on t
hat
fi
rms ai
m…

Page 3

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The Divorce of Ownership and Control


Many comp ani
es have
a di
vorce
of
ow nershi
p and
con t
rol
,
me ani
n g
the
owners
an d
those
w ho
contr
ol
the
fi
rm (mana ger
s)
a r
e di
ff
erent
groups wi…

Page 4

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var
iabl
e i
nput
(i
.e.
l
abour
or
raw mat
eri
als)
t
o f
ixed
amo unt
s of
l
and
and
capi
tal
,
the
change i
n t
otal
out
put
wi
ll
at
f
ir
st
ri
se
a nd
then
fal
l.




Long…

Page 5

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Fixed and variable costs, marginal, average and total costs,
shortrun and longrun costs and economies and
diseconomies scale
Shor
t
run
cost
s

I
n t
he
short
run,
a f
i
rm's t
otal
cost
s of
producti
on di
vi
d e
int
o f
ixed
costs
(…

Page 6

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assuming
all
workers
are
paid
the same wage r
ate,
the
cost
of
producing
an
extr
a
unit
of
output
f
all
s.
H ence
ma rgi
nal
cost
s f
all
at
l
ow
level
s of

out
put.
But
a s
soon as
the
law of
di
min…

Page 7

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The
d i
agram show s
how
the f
ir
m's average total cost (ATC) curve
is
ar
ri
ved
at
by adding
up the
A FC and AVC
cu r
ve s. The AT C cur
ve i
s
U shaped showing
that
average t
otal
costs
p er…

Page 8

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MES

The
min i
mu m eff
ici
ent
scale
(ME S)
is
the out
put
for
a busi
ne ss
i
n
the
long
r
un where t
he
i
n t
ernal
economies of
scale
have been f
ull
y expl
oit
e d.
I
t
cor
responds…

Page 9

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ar
e l
imit
e d
and
ther
e
is
room for
ma ny
se par
ate busi
nesses t
o
achieve t
he
ME S.
With
a natur
a l
mono pol
y,
the cost
st
ructur
e i
s di
ffer
ent.
For examp l
e,
i
n…

Page 10

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Aspect
s of
t
echnol
ogy




A
p at
ent
can
be used
to
prot
ect
the
invent
ion.
I
ntel
lect
ual
pr
oper
ty
ri
ght
s
can
prot
ect
the
name ,
br
and and
tr
adema rk.

What
det
ermi
nes
the
speed
of
change
of…

Comments

davidsalter

This is a 92 page summary of the AQA unit 3 course. It starts with the theory of the firm which would be useful for all exam boards. Well written and comprehensive with required graphs as well.

izzy

AMAZING! THANK YOU!

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