The eight richest people on the planet hold as much wealth as the poorest half of the world’s population put together. The richest of these, Elon Musk, has a level of wealth that you wouldn’t match if you earned $180,000 every day from when Jesus was born up until the time you read this article.

It is easy to see that larger firms benefit from additional customers, market share and sales. Less obvious may be the impact on their costs of production, more specifically their cost per unit. The existence of internal and external economies and diseconomies of scale can help to explain this.

There are four components of aggregate demand, which simply refers to the summation of all demand in the economy. Households purchase consumer goods; businesses invest in capital goods; governments make purchases to provide key services; and exports to foreign consumers inject demand into the system, with domestic consumers buying imports causing a leakage. This leaves us with the formula AD=C+I+G+(X-M).

Whether the issue is the number of tickets sold at a theatre or how many pieces of furniture roll off a production line, capacity utilisation is something that concerns all businesses. By carefully matching the number of items it produces to the demand for its output, a business can improve its efficiency and become more competitive.

Mastering price, income, cross elasticity of demand and price elasticity of supply is key to success in microeconomics.

Discrimination unfortunately occurs in all walks of life, but one of the areas where it can be most damaging is in labour markets. This is because it negatively affects not only individuals, their prospects for obtaining jobs at a fair wage and grasping promotion opportunities, but also the firms taking the decisions as well as the wider economy.

The infographic at the top of the page can be downloaded here:

If you asked someone living in the 19th century to tell you the rate of economic growth, they would be slightly bemused. It is only in the last century that we have started measuring the state of the economy, primarily using Gross Domestic Product (GDP). Many economists believe that we have become obsessed by this measure, and need to broaden our horizons.

In 1981, the actress Jane Birkin boarded an Air France flight to London. She didn’t know it at the time, but Birkin had taken her seat next to Jean Louis Dumas, the chief executive of Hermes, a French maker of luxury goods. This chance encounter would lead to the creation of a product which would call into question a supposed ‘law’ that is one of the first things that budding economics students the world over are taught as gospel.

In this excellent Cautionary Tale, Tim Harford perfectly illustrates the versatility of a two by two grid to guide strategic decision making. 

Essay 2 of the 2021 AQA Economics Paper 1 asked students to discuss the extent to which economic agents are entirely rational in their decision making. Here is a model answer to that question:

Section A of the 2022 AQA A level economics paper 1 was all about market concentration in the supermarket sector. The 25 mark question asked the extent to which this was serving customer interests well. Here is a model answer, with diagrams, showing how to address this type of question: