An Overview of A Level H2 Economics Part 2: Markets

A Level H2 economics is a popular school subject. It is a mixture of economics and mathematics, and its popularity is derived from the fact that it offers students a wide range of career opportunities. This article will reveal the curriculum requirements of the A Level H2 economics course. 

What Has Been Covered

In Part 1, we looked at the differences between H1 and H2 economics, and also summarised the three major themes of the A Level syllabus. We also went through in detail what was covered in the first theme, the Central Economic Problem. 

In this article, we will continue by discussing the second theme of the H2 economics syllabus: Markets.

Theme 2: Markets

The second theme builds upon the central economic problem and discusses how economic agents make market decisions. This theme gives us insights regarding how markets operate and how they could fail to achieve proper required outcomes. Students will learn how governments can mediate by public policy to enhance efficiency and equity while acknowledging limitations, unpredictable results and possible disadvantages of such mediations. This part provides insights into practical microeconomic issues and deepens a student’s analytical and economic reasoning. The purpose of teaching these concepts is to allow students to use these skills and apply them to the Singaporean and global economy. 

Theme 2.1 Price Mechanism and its Applications

In this chapter, students will learn the real-world applications of the price mechanism in free markets, as well as how they are decided by, or impact, demand and supply. Some of the terms and things you’ll need to know by the end of the chapter are as follows:

Concepts and Tools of Analysis:

• Price mechanism
• Consumer sovereignty 
• Ceteris paribus 
• Effective demand 
• Law of diminishing marginal utility* 
• Demand curve 
• Change in demand vs change in quantity demanded
• Supply curve 
• Change in supply vs change in quantity supplied 
• Determinants of demand – non-price factors 
• Determinants of supply – non-price factors 
• Market equilibrium – equilibrium price and quantity 
• Market disequilibrium – shortage and surplus 
• Price elasticity of demand 
• Income elasticity of demand – Normal and inferior goods 
• Price elasticity of supply 
• Consumer expenditure and producer revenue 
• Consumer and producer surplus 
• Taxes and subsidies 
• Price controls – maximum and minimum prices 
• Quantity controls – quotas 

Theme 2.2 Firms and Decisions

In this chapter, students will learn about firms, and what their economic objectives are, and how they, the government, and the market affect one another through decisions, strategies and responses. We will also be studying the concepts of cost and revenue, and how these impact the behaviour of firms.

Concepts and Tools of Analysis:

• Profit maximisation: Marginal Revenue = Marginal Cost
• Entry deterrence, revenue maximisation, profit satisficing, market share dominance
• Short-run vs long run
• Fixed cost vs variable cost
• Total cost, average cost, marginal cost
• Total revenue, average revenue, marginal revenue
• Internal and external economies and diseconomies of scale
• Barriers to entry
• Concentration ratio*
• Market structures (Perfect competition, monopolistic competition, oligopoly) monopoly
• Price discrimination
• Shut-down condition
• Product differentiation
• Competition versus collusion
• Cartels, contestable markets
• Efficiency
• Allocative, productive and dynamic efficiency

Theme 2.3 Market Failure

In this chapter, students will learn what happens when markets fail, in other words, when they stop working. We will look at the causes of such failures, how market failure manifests itself, and the role and impact of government intervention in markets. We will also be looking at the concepts of efficiency and equity, and how they impact the concept and behaviour of markets.

Concepts and Tools of Analysis:

• Market failure 
• Allocative efficiency 
• Deadweight loss 
• Equity 
• Marginal private benefit and cost 
• Marginal external benefit and cost 
• Marginal social benefit and cost 
• Social versus private (market) optimum 
• Over-consumption and production 
• Under-consumption and production 
• Public goods – Non-excludability and non-rivalry 
• Positive and negative externalities 
• Merit and demerit goods 
• Market dominance 
• Information failure/Imperfect information – Asymmetric information – moral hazard, adverse selection* 
• Factor immobility

Now, if you are an up and coming JC student, all these technical terms might sound like hieroglyphs, but you don’t have to worry at all.

At JC Economics Tuition Centre in Singapore, we have one of Singapore’s best A Level Economics tuition teachers, Mr Anthony Fok. Sign up for one of his group economics tuition classes to start your journey towards acing A Level H2 economics!