OCR A-Level Economics
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01 Microeconomics
Introduction to microeconomics
1.1 - The economic problemEconomics explains how people use limited resources when they cannot satisfy every want. Learn how scarcity creates choices, how households, firms and governments make those choices, and how economists distinguish evidence from judgements about what should happen.
1.2 - Resource allocation and incentivesEvery economy must decide what to produce, how to produce it and who receives the output. Learn how incentives and different economic systems answer these questions, and why producing cheaply is different from producing the combination society values.
1.3 - Opportunity cost and production possibilitiesChoosing more of one activity can mean giving up another. Learn how opportunity cost reveals that sacrifice and how a production possibility curve distinguishes changing an output mix, using idle resources and increasing productive capacity.
The role of markets
2.1 - Specialisation and exchangePeople rarely produce everything they consume. Learn how specialisation and division of labour can raise output, why they create a need for exchange, and how money helps people trade without eliminating the risks of dependence.
2.2 - Demand and related goodsDemand means willingness and ability to buy, rather than simply wanting a product. Learn how prices and other influences change purchasing decisions, how individual demands become market demand, and how demand for related goods is connected.
2.3 - Supply and related productionSupply describes what producers are willing and able to offer for sale at different prices. Learn how incentives and production costs affect that relationship, how firms' supplies form market supply, and why producing one good can change the supply of another.
2.5 - Market equilibrium and connected marketsDemand and supply together explain how a market price coordinates buyers and sellers. Learn why shortages and surpluses create pressure for adjustment, how shifts change equilibrium, and why effects across related markets depend on which relationships actually apply.
2.4 - Consumer and producer surplusA purchase can benefit both a buyer and a seller even though they pay and receive the same market price. Learn how demand and supply represent these gains, how to calculate surplus areas, and why the cause of a price change matters when judging who gains.
2.6 - Price elasticity of demand and revenueA price rise earns more on each sale but may lose customers. This part of 2.6 teaches how price elasticity of demand measures that response, how it affects revenue, and how a firm can judge whether an estimate is useful. Income elasticity, cross elasticity and price elasticity of supply are taugh...
2.6 - Income and cross elasticity of demandDemand changes when incomes or the prices of related goods change, even if a product's own price stays the same. This part of 2.6 teaches how income and cross elasticity measure those responses, how to interpret their signs and diagrams, and when a business can use them to forecast demand.
2.6 - Price elasticity of supplyA higher price gives producers an incentive to sell more, but their ability to respond varies. This part of 2.6 teaches how to calculate price elasticity of supply, represent different values on diagrams, and judge how capacity, stocks and time affect its usefulness.
2.7 - Marginal decisions and utilityMany economic decisions concern one more unit rather than the whole amount already produced or consumed. In 2.7, learn how to calculate marginal values, distinguish total from marginal utility, and use diminishing marginal utility to explain willingness to pay and demand.
2.8 - Externalities and welfareA transaction can affect people who neither buy nor sell the product. In 2.8, you will distinguish private and social costs and benefits, use diagrams to explain production and consumption externalities, and locate the welfare lost when the market produces the wrong quantity. The aim is to explai...
2.9 - Information failure and merit goodsMarkets work less well when buyers or sellers misunderstand the costs and benefits of their choices. In 2.9, distinguish missing from asymmetric information, explain moral hazard, and use merit- and demerit-good models to judge how better information could change consumption and production.
2.10 - Public goods and free ridersSome benefits cannot easily be sold to individual paying users, even though providing them uses scarce resources. In 2.10, distinguish public, private and quasi-public goods, explain the free rider problem, and judge how funding and provision can overcome it.
2.11 - Taxes, subsidies and price controlsGovernments can change market incentives or constrain the price at which trades occur. This part of 2.11 explains taxes, subsidies and price controls, including who bears their effects and the conditions that determine their success. Other 2.11 lessons cover the remaining intervention instruments...
2.11 - Regulation, permits and public provisionGovernment can address market failures through provision, rules, tradable rights and better information as well as prices. This part of 2.11 explains those mechanisms, including buffer stocks and competition policy, and judges when each can improve outcomes under real capacity, monitoring and inf...
2.11 - Government failure and policy choiceAn intervention can address a market failure yet introduce costs or incentives that reduce its value. This part of 2.11 explains government failure, its causes and consequences, and how to compare policies using evidence and a credible alternative rather than assuming intervention must always imp...
Business objectives
3.1 - Business objectives and agencyA business can sell more without earning more profit, and its managers may want something different from its owners. Learn how maximising and non-maximising objectives change decisions, and how ownership, incentives and constraints affect the objective a firm actually pursues.
3.2 - Short-run costs and diminishing returnsProducing more can reduce the cost per item at first, then make each extra item increasingly expensive. Learn to calculate total, average and marginal costs, and to explain their shapes using fixed factors and diminishing returns in the short run.
3.2 - Economies of scale and efficient sizeA larger factory can reduce cost per unit, yet a larger organisation can also become harder to coordinate. Learn how long-run cost curves represent these possibilities, how industry growth differs from firm growth, and why efficient size varies between activities.
3.3 - Revenue, profit and marginal choicesHigh sales revenue can coexist with a loss, while an accounting profit can leave an owner no better off than the best alternative use of their resources. Learn to calculate total, average and marginal revenue and profit, then use marginal comparisons to explain different output choices.
Market structures
4.1 - Perfect competition in the short and long runWhy might a business have no control over the price it charges, even though it chooses how much to produce? This lesson uses the assumptions of perfect competition to explain a firm's output, short-run profit or loss, and the adjustment towards normal profit in the long run. It also shows which e...
4.2 - Monopoly, output and efficiencyA monopolist can influence its price, but buyers still decide how much to purchase. This part of 4.2 explains how monopoly power affects revenue, output, profit and efficiency, then weighs possible cost and innovation gains against market power. Price discrimination and natural monopoly are devel...
4.2 - Price discrimination and natural monopolyWhy can the same service have different prices for different customers, and why can splitting one network into competing firms raise costs? This part of 4.2 explains price discrimination and natural monopoly using revenue and cost diagrams. It then compares the distribution, access and incentive...
4.3 - Monopolistic competitionMany cafés can compete without selling exactly the same experience. This lesson explains how differentiated products give each firm some pricing power while entry limits persistent profit. It uses short- and long-run diagrams to compare cost efficiency with the value of choice and innovation.
4.4 - Oligopoly and strategic rivalryWhen a few large firms dominate a market, each must consider how its rivals will respond. This lesson measures concentration and explains strategic interdependence, price rigidity, collusion and non-price competition. It then uses these mechanisms to judge why similar market structures can produc...
4.5 - Contestability and competitive pressureAn incumbent can face pressure even before a rival enters. This lesson distinguishes competition from contestability and explains how the threat of entry can affect price, cost and quality. It also tests the demanding assumptions behind perfectly contestable outcomes.
The labour market
5.1 - Labour demand and productivityAn employer wants workers because their work helps produce something customers will buy. This lesson develops that derived demand into a hiring decision, then explains how productivity, output demand and substitution change demand for labour. It also shows why a wage rise can cause very different...
5.2 - Labour supply, rent and transfer earningsWorkers compare pay with the alternatives available to them and the conditions of a job. This lesson explains supply to an industry, why its response changes over time, and how earnings divide into the minimum needed to retain labour and economic rent. The distinction helps explain why equally pa...
5.3 - Wage determination and labour mobilityWages differ because employers' demand and workers' available alternatives differ. This part of 5.3 explains competitive wage determination, changes in demand and supply, and the benefits and costs of making labour more mobile and flexible. Monopsony, unions and bilateral bargaining are developed...
5.3 - Monopsony, unions and bargainingA labour market can contain a powerful employer, organised workers, or both. This part of 5.3 explains how employer buying power changes the hiring decision and how unions can change wages and employment. It then evaluates bargaining between the two sides without assuming that one wage follows au...
02 Macroeconomics
Aggregate demand and aggregate supply
1.1 - Circular flow and national incomeOne person's spending becomes another person's income, but some income leaves the immediate spending stream. Learn how production, incomes and expenditure fit together, why injections and leakages affect activity, and how national accounts avoid counting the same output twice.
1.2 - Aggregate demand and consumptionAggregate demand links household decisions to spending on the whole economy's output. Learn why the price level causes a movement along AD, why other changes shift it, and why the same rise in income can produce different changes in consumption.
1.3 - Short-run and long-run aggregate supplyAggregate supply explains how firms respond to spending and why higher demand sometimes raises output and sometimes mainly raises prices. Compare short-run costs with long-run productive capacity, then use the Keynesian and neo-classical models to make conditional predictions.
1.4 - Macroeconomic equilibrium and shocksAn increase in spending can raise output, prices or both, depending on the economy's ability to supply more. Learn to locate macroeconomic equilibrium, trace demand and supply shocks, and compare what Keynesian and neo-classical assumptions imply for employment and the price level.
1.5 - The multiplier and acceleratorAn initial spending change can generate further rounds of income and spending, while changing sales can alter firms' investment plans. Learn to calculate average and marginal propensities, work out the national income multiplier, and explain how multiplier and accelerator effects can magnify fluc...
1.5 - Output gaps and economic fluctuationsAn economy can produce below its sustainable capacity or temporarily push output above it. Learn to measure output gaps, represent spare capacity on AD–AS and PPC diagrams, and explain why demand shocks, supply shocks and spending feedback create different risks.
Economic policy objectives
2.1 - Measuring growth and living standardsGDP can rise because an economy produces more, because prices rise, or both. Learn to distinguish nominal from real output, calculate growth and GDP per person, and judge what these measures reveal about changing living standards.
2.1 - Growth, capacity and the economic cycleOutput fluctuates around a changing sustainable capacity, rather than growing at a constant pace. Learn to identify cycle stages, distinguish recovery from capacity expansion on AD–AS and PPC diagrams, and weigh the causes and consequences of short-run and long-run growth.
2.2 - Development and sustainabilityProducing more is one part of development, but it does not show whether people are healthier, educated or able to sustain their lives. Learn how an economy's sectors change, how growth can support or undermine sustainable development, and how GDP, HDI and wider indicators answer different questions.
2.3 - Employment and unemploymentHaving no paid job does not always mean being unemployed. Learn how the labour market is measured, why different kinds of unemployment need different remedies, and how full employment can improve welfare while creating pressure elsewhere.
2.4 - Inflation, price indices and real valuesA falling inflation rate can leave prices much higher than before. Learn to separate rates from levels, calculate price and real-value changes, and explain why demand-driven and cost-driven inflation have different consequences.
2.5 - The balance of paymentsBuying imports, earning foreign investment income and purchasing overseas assets are different international transactions. Learn how the accounts separate them, calculate balances, and judge whether an external deficit is sustainable rather than treating every deficit as a policy failure.
2.6 - UK performance in a changing worldMacroeconomic performance depends on which outcome, period and population you measure. Use twenty years of UK evidence to connect shocks with economic mechanisms, then compare recent UK results with developed, emerging and developing economies without mistaking a growth rate for a standard of liv...
2.7 - Income, wealth, poverty and inequalityAverage income can rise while some households become poorer. Learn to distinguish income from wealth, read distributions and Lorenz curves, and evaluate why poverty and inequality matter without treating every difference in income as the same problem.
2.8 - The Phillips curve and policy expectationsLower unemployment and higher inflation sometimes occur together, but the relationship is not a permanent policy menu. Learn how capacity, expectations and supply shocks change the Phillips curve, and why policymakers must combine the model with evidence.
Implementing policy
3.1 - Taxation and the government budgetA government's budget brings together the money it receives and the spending it plans. Learn how to classify taxes and spending, calculate budget balances and tax rates, and explain why changing a tax rate need not change revenue in the same proportion.
3.1 - Fiscal transmission and public debtFiscal policy changes taxes and public expenditure to influence economic activity. Trace how discretionary decisions and automatic stabilisers affect demand, distinguish an annual deficit from accumulated debt, and judge when fiscal policy can achieve growth, employment and other objectives witho...
3.2 - Monetary policy and transmissionMonetary policy influences spending, borrowing and expectations to pursue macroeconomic objectives. Trace interest rates, money supply, exchange rates and quantitative easing through to output and inflation, then judge their effectiveness using the source of the problem and the time needed for po...
3.3 - Supply-side policy and productive capacitySupply-side policy aims to improve the economy's ability to produce, rather than relying only on higher spending. Connect changes in competition, investment and labour markets to costs and capacity, then judge whether their benefits arrive soon enough and outweigh their financial, social and envi...
3.4 - Policy conflicts and economic trade-offsEconomic policies can improve one objective while making another harder to achieve, but conflicts depend on conditions and time horizons. Compare growth, employment, price stability, the external balance, distribution and environmental sustainability, then explain how an appropriate policy mix ca...
The global context
4.1 - International trade and changing patternsInternational trade connects what an economy produces with what its residents can consume. You will explain why countries trade, interpret changes in trade patterns and judge how the gains and adjustment costs differ across developed, emerging and developing economies.
4.2 - Exchange rates and currency systemsAn exchange rate links prices expressed in different currencies, so its movement can change spending, costs and investment. You will calculate conversions, explain how floating and fixed rates are determined, and judge the consequences of currency changes and the choice of exchange-rate system.
4.3 - Comparative advantage and trading gainsAn economy can gain from trade even when another economy can produce more of every good with the same resources. You will calculate opportunity costs, find exchange ratios that benefit both countries and judge how well comparative advantage explains actual trade patterns.
4.3 - Globalisation and international competitivenessGlobalisation links economies through trade, investment, technology and production networks. You will explain competitiveness, calculate the terms of trade, use elasticities to analyse currency changes and judge how global links and emerging economies affect living standards elsewhere.
4.4 - Protectionism, tariffs and quotasTrade barriers change prices, production and the distribution of gains. You will explain protectionism, construct and interpret tariff and quota models, and judge when a case for protection is stronger than a case for free trade.
4.4 - Economic integration and trade negotiationsRemoving trade barriers between a group of economies can increase trade without necessarily reducing every resource cost. You will distinguish forms of integration, interpret trade creation and diversion, and judge how international negotiations and WTO rules can support freer trade.
The financial sector
5.1 - Money, liquidity and interest ratesMoney makes exchange easier, but creating more money does not automatically create more goods or wealth. Learn how money is supplied, how its liquidity matters, and how a money-market model explains interest rates under stated assumptions.
5.2 - Finance, saving and developmentThe financial sector helps households and firms make payments, manage risk and fund investment. Learn why better financial access can support development, and why more lending or more saving is not sufficient by itself to improve living standards.
5.2 - Harrod-Domar, microfinance and developmentThe Harrod-Domar model explains one route from saving to productive capacity, while microfinance addresses financial access at household and small-business level. Learn to calculate the model's predictions and judge when either approach can improve development.
5.3 - Financial regulation and global institutionsFinancial regulation aims to preserve useful services while limiting harm to customers and the wider economy. Learn how central banks and other authorities use different tools, and why the IMF and World Bank support global stability without acting as a single world banking regulator.
03 Themes in economics
Evidence and economic connections
H460/03 - Evidence in unseen economiesAn unseen source can contain accurate figures but support an inaccurate conclusion. Learn to put measures on comparable bases, connect a market change to the wider economy, and judge how strongly the evidence supports a claim about living standards.
H460/03 - Work, productivity and living standardsA more productive firm can produce more with the same labour, yet its workers need not all gain. Connect productivity and labour demand to productive capacity, real incomes and inequality, then judge which policies help households share in the improvement.
H460/03 - Competition, trade and industrial changeAn expanding industry can gain lower costs and export opportunities while becoming more concentrated. Connect firms' scale and competitive behaviour to comparative advantage and trade, then judge whether industrial support creates lasting benefits or protects inefficient producers.
H460/03 - Climate, resources and economic policyClimate policy changes incentives in individual markets and affects spending, investment and living standards across the economy. Connect externalities and intervention from H460/01 2.8 and 2.11 with development, fiscal policy and productive capacity from H460/02 2.2, 3.1 and 3.3. The purpose is...
H460/03 - Inflation, shocks and distributionAn energy shock can change a particular market, the general price level and the distribution of purchasing power. Link market interaction and elasticity from H460/01 2.5–2.6 with equilibrium, inflation, inequality and monetary policy from H460/02 1.4, 2.4, 2.7 and 3.2. Follow each mechanism befor...
H460/03 - Finance, development and instabilityFinance can support productive investment while also spreading shocks through an economy. Connect information failure from H460/01 2.9 with aggregate demand, development, the financial sector and regulation from H460/02 1.2, 2.2, 5.2 and 5.3. Judge finance by the investment and opportunities it s...