Chapter 8: Macroeconomic Policy: Fiscal, Monetary and Supply-Side Choices

A-level EconomicsAQA / OCR / Pearson Edexcel / WJEC Eduqas12 topicsHigher

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Edexcel A-level Economics Business Revenues, Costs and Profits - Authored Long Answer Questions

Examiner-style long-answer practice with automatic marking, improvement advice and ProofCoach tracking.

4 questions47 marks70.5 min

standard / hard / synoptic

4 markscalculatestandardEdexcel

E33: Evidence for Business Revenues, Costs and Profits

Evidence measure with unit	2020 value	2024 value	Context or unit
total revenue, total cost and output figures	100.0	108.5	index or percentage as stated
a UK manufacturer facing higher energy and wage costs	baseline	changed	UK or global context
changes in marginal cost and average cost affecting normal and supernormal profit	lower impact	higher impact	directional evidence

E33A Calculate or define the key economic measure in Business Revenues, Costs and Profits, using the data evidence provided for a UK manufacturer facing higher energy and wage costs.

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9 marksanalysehardEdexcel

Profit-maximising output: MC = MR for a competitive firm

Profit is maximised at Q* where MC = MR. At Q*, price (AR) exceeds ATC, so the firm earns supernormal profit. The area between P and ATC, multiplied by Q*, represents total supernormal profit.

E33B Using Figure 1 and your knowledge, analyse the economic effects shown by the diagram below in relation to a UK manufacturer facing higher energy and wage costs. In your answer, identify the model, curve labels, any shift shown and the likely impact.

Label the horizontal axis and vertical axis precisely with units.
Label the relevant curves and show the direction of shift.
Label the new equilibrium point and explain the change.

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9 marksexplainstandardEdexcel

E33: Evidence for Business Revenues, Costs and Profits

Evidence measure with unit	2020 value	2024 value	Context or unit
total revenue, total cost and output figures	100.0	108.5	index or percentage as stated
a UK manufacturer facing higher energy and wage costs	baseline	changed	UK or global context
changes in marginal cost and average cost affecting normal and supernormal profit	lower impact	higher impact	directional evidence

E33C Explain how changes in marginal cost and average cost affecting normal and supernormal profit could affect economic agents in the UK economy or global economy.

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25 marksevaluatesynopticEdexcel

E33: Evidence for Business Revenues, Costs and Profits

Evidence measure with unit	2020 value	2024 value	Context or unit
total revenue, total cost and output figures	100.0	108.5	index or percentage as stated
a UK manufacturer facing higher energy and wage costs	baseline	changed	UK or global context
changes in marginal cost and average cost affecting normal and supernormal profit	lower impact	higher impact	directional evidence

E33D Evaluate the extent to which changes in marginal cost and average cost affecting normal and supernormal profit is likely to improve economic performance, using total revenue, total cost and output figures and your wider economic knowledge.

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7. Macroeconomic Objectives, AD/AS and National Income

9. International Economics: Trade, Exchange Rates and Globalisation

Key learning objectives

Understand the key principles behind Macroeconomic Policy: Fiscal, Monetary and Supply-Side Choices.
Apply these ideas to exam-style questions.
Recall the essential definitions and key terms.