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Every spec point, and what actually teaches it
The real numbered content list from the official Pearson specification, each point matched to the lesson that covers it. Click through to a lesson from its spec point below, or rate how confident you feel — saved in this browser so it’s there next time you come back. Any point with no matching lesson is flagged, not hidden.
21 spec points · 21 covered
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3.3.1 — Types and sizes of businesses
- 3.3.1.1
Types of business
- a) Types of businesses: private sector organisations; state-owned enterprises (public sector); for-profit and not-for-profit organisations; co-operatives; joint ventures.
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- 3.3.1.2
Size of businesses
- a) The size of businesses: SMEs (small- and medium-size enterprises); large corporations.
- b) How businesses grow: organic growth; merger/takeover (forward vertical integration, backward vertical integration, horizontal integration, conglomerate integration).
- c) Advantages and disadvantages of each type of merger/takeover.
- d) Constraints on business growth: size of market; access to finance; owner objectives; government regulation and bureaucracy.
- e) Reasons some firms tend to remain small and others grow.
- f) Impact of growth of firms on businesses, workers and consumers.
- g) Demergers: reasons for demergers; impact of demergers on businesses, workers and consumers.
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- 3.3.1.3
Business objectives
- a) Different business objectives: profit maximisation; revenue maximisation; sales volume maximisation; behavioural theories: satisficing.
- b) The significance of the divorce of ownership from control for business objectives: the principal-agent problem.
- c) Formulae for different business objectives: profit maximisation; revenue maximisation; sales volume maximisation.
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3.3.2 — Revenue, costs and profits
- 3.3.2.1
Revenue
- a) Formulae to calculate and understand the relationship between: total revenue; average revenue; marginal revenue.
- b) Price elasticity of demand and its relationship to revenue concepts, including calculations.
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- 3.3.2.2
Costs
- a) Derivation of short-run cost curves from the assumption of diminishing marginal productivity.
- b) The law of diminishing returns.
- c) Formulae to calculate and understand the relationship between: total cost; total fixed cost; total variable cost; average (total) cost; average fixed cost; average variable cost; marginal cost.
- d) The relationship between: marginal product and marginal costs; average products and average cost; total product and total cost; short-run and long-run costs.
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- 3.3.2.3
Economies and diseconomies of scale
- a) The relationship between long-run cost curves and economies/diseconomies of scale.
- b) Minimum efficient scale.
- c) Distinction between internal/external economies of scale.
- d) Sources of internal economies of scale: financial; technical; managerial; marketing; purchasing; risk bearing.
- e) Sources of external economies of scale: availability of skilled labour; access to transport links; sharing knowledge.
- f) Sources of diseconomies of scale: communication problems; coordination problems; X-inefficiency.
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- 3.3.2.4
Profits and losses
- a) The distinction between normal profit, supernormal profit and losses.
- b) Short-run and long-run shutdown points.
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3.3.3 — Market structures and contestability
- 3.3.3.1
Efficiency
- a) The concepts of: allocative efficiency; productive efficiency; dynamic efficiency; X-inefficiency; efficiency/inefficiency in different market structures.
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- 3.3.3.2
Concentration ratio
- a) Calculation of n-firm concentration ratios.
- b) The significance of concentration ratios.
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- 3.3.3.3
Perfect competition
- a) Assumptions of perfect competition.
- b) Profit-maximising equilibrium in the short run and long run.
- c) The short-run shutdown point.
- d) Productive and allocative efficiency in the short run and long run.
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- 3.3.3.4
Monopolistic competition
- a) Assumptions of monopolistic competition.
- b) Types of product differentiation: physical – product features; marketing – advertising, packaging; distribution – shop, online, telephone.
- c) Profit-maximising equilibrium in the short run and long run.
- d) Productive and allocative efficiency in the short run and long run.
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- 3.3.3.5
Oligopoly
- a) Assumptions of oligopoly.
- b) Barriers to entry and exit: economies of scale; limit pricing; patents; branding; sunk costs; legal.
- c) Interdependence of firms: simple game theory – two firm/two outcome model; reasons for collusive and non-collusive behaviour; cartels; price leadership; price wars.
- d) Costs and benefits of collusion to producers, consumers, workers and governments.
- e) Price competition: price wars; predatory pricing; limit pricing.
- f) Non-price competition: advertising and branding; quality; endorsement; product placement; after-sales service.
- g) Costs and benefits of price and non-price competition to firms, consumers, employees and suppliers.
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- 3.3.3.6
Monopoly
- a) Assumptions of monopoly.
- b) Barriers to entry and exit.
- c) Profit-maximising equilibrium.
- d) Costs and benefits of monopoly to firms and consumers.
- e) The concept of 'natural monopoly' and its implications.
- f) Conditions necessary for third-degree price discrimination.
- g) Costs and benefits of price discrimination to firms and consumers.
- h) Productive, allocative and dynamic efficiency.
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- 3.3.3.7
Monopsony
- a) Assumptions and conditions for a monopsony to operate.
- b) Costs and benefits of a monopsony to firms, consumers and employees.
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- 3.3.3.8
Contestability
- a) Characteristics of contestable markets.
- b) Implications of contestable markets for behaviour of firms on: profitability; pricing decisions (limit pricing).
- c) Costs and benefits of contestability for firms and consumers.
- d) The significance of sunk costs for contestability.
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3.3.4 — Labour markets
- 3.3.4.1
The demand for labour
- a) Factors that influence the demand for labour to a particular occupation: demand for the final product (labour as a derived demand); productivity of labour; price of the product; wage rate relative to price of capital.
- b) Factors that influence the elasticity of demand for labour.
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- 3.3.4.2
The supply of labour
- c) Factors that influence the supply of labour to a particular occupation: size of population; net migration; income tax rates; level of welfare benefits; government regulations; trade unions.
- d) Factors that influence the elasticity of supply of labour.
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- 3.3.4.3
The determination of wage rates in competitive and non-competitive markets
- a) Labour market equilibrium.
- b) Causes of changes in the equilibrium wage rate and quantity of labour as a result of shifts in demand curves and supply curves.
- c) Wage setting in the public sector/state-owned enterprises.
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- 3.3.4.4
Market failure in the labour market
- a) Causes and consequences of the geographical immobility of labour.
- b) Causes and consequences of the occupational immobility of labour.
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3.3.5 — Government intervention
- 3.3.5.1
Government intervention in product markets
- a) The case for government intervention.
- b) Measures to control monopolies and mergers: price regulation; profit regulation; quality standards; performance targets; referral to regulatory authorities; legislation to control mergers and takeovers.
- c) Measures to promote competition and contestability: tax incentives and grants to promote small businesses and FDI; deregulation; privatisation; competitive tendering for public sector contracts; trade liberalisation.
- d) Measures to protect suppliers and employees: local sourcing of raw materials and components; employment legislation to protect workers from exploitation; barriers to entry of foreign firms; restrictions on the monopsony power of firms; nationalisation.
- e) The impact of each measure on: price; profit; efficiency; quality; choice.
- f) Limits to government intervention: regulatory capture; asymmetric information/information gaps; inadequate resources; lack of regulatory power.
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- 3.3.5.2
Government intervention in labour markets
- a) The case for government intervention.
- b) Types of government intervention in labour markets and their effects: maximum wage controls; minimum wage controls; direct taxes e.g. national insurance contributions, corporation tax; measures to reduce geographical and occupational immobility of labour; measures to reduce discrimination and exploitation.
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