Business Behavior

Worked examples (6)

• 1Match each objective to its rule
• 2Identify the objective from the description
• 3Read the three output levels off the diagram
• 4Calculate the revenue-maximising output
• 5Two reasons a firm may not profit-maximise
• 6Evaluate a CSR objective

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Calculate/state (2 marks, point-marked)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks, point-marked)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), Levels 1–3, KAA only
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks), KAA 8 + Evaluation 6, diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Public sector, private sector — or a plc?
• 2Match the business to its legal form and liability
• 3Explain how limited liability protects a shareholder
• 4Why turn a sole trader into a partnership?
• 5Explain the principal–agent problem in a plc
• 6Examine two effects of a firm becoming a plc

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Knowledge/definition (2 marks, point-marked)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — 'Explain what is meant by' (4 marks, point-marked)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Calculate a firm's market share
• 2Calculate market capitalisation
• 3Identify and classify a measure of size
• 4Classify organic vs inorganic growth
• 5Analyse why a firm stays small
• 6Evaluate whether large firms are always more successful

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Calculate (2 marks, point-marked)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks, point-marked)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks), KAA (8) + Evaluation (6), best-fit levels
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Calculate MR from a revenue table
• 2Calculate TR and AR, and confirm AR = price
• 3Draw the price-taker's revenue diagram
• 4Why a price-maker's MR lies below AR
• 5Find the revenue-maximising output (MR = 0)
• 6Link MR to elasticity along the AR curve

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Calculate (2 marks, AO2)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks, AO1/AO2)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks) = KAA (8) + Evaluation (6), diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Classify an economy of scale as internal or external
• 2Identify the type of internal economy of scale (RPETFM)
• 3Draw the LRAC curve and mark the minimum efficient scale
• 4Explain two internal diseconomies of scale
• 5Economies of scale vs falling AFC vs diminishing returns
• 6Use the MES to compare market structures

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Define (2 marks)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks), KAA 8 + Evaluation 6, diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Classify fixed and variable costs
• 2Complete a cost table (TC, AFC, AVC, ATC, MC)
• 3Calculate marginal cost from total cost
• 4Draw and explain U-shaped short-run cost curves
• 5Show MC cutting AVC and ATC at their minima
• 6Short run vs long run and diminishing returns

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Calculate (2 marks)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks), KAA 8 + Evaluation 6, diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Identify a perfectly competitive feature
• 2State why AR = MR for a price-taker
• 3Draw short-run supernormal profit
• 4Show the move to long-run normal profit
• 5Classify the efficiency of perfect competition
• 6Distinguish perfect competition from a contestable market

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Define/state (2 marks, AO1)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks, AO1/AO2)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks) = KAA (8) + Evaluation (6), diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Identify an oligopoly and calculate a concentration ratio
• 2Classify collusive vs non-collusive; overt vs tacit
• 3Find the dominant strategy in a prisoner's dilemma
• 4Draw the kinked demand curve and explain price stability
• 5Explain a form of non-price competition
• 6Explain why a cartel tends to be unstable

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Define (2 marks, AO1)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks, AO1/AO2)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine two (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks) = KAA (8) + Evaluation (6)
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Identify and classify the type of efficiency
• 2Match each efficiency to its condition
• 3Draw productive and allocative efficiency on a diagram
• 4Dynamic efficiency versus X-inefficiency in monopoly
• 5Static versus dynamic efficiency across structures
• 6Pareto efficiency and the efficiency–equity distinction

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Define (2 marks, point-marked)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks), KAA 8 + Evaluation 6, diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Calculate profit from total revenue and total cost
• 2Calculate supernormal profit from AR and AC
• 3Classify normal profit, supernormal profit or loss
• 4Find the profit-maximising output (MC = MR)
• 5Draw a supernormal profit diagram
• 6Apply the short-run shut-down condition

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Calculate (2 marks, AO2)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks, AO1)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks) = KAA (8) + Evaluation (6), diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Match each market to its structure
• 2Classify the barrier to entry
• 3Calculate a 3-firm concentration ratio
• 4Interpret two concentration ratios
• 5Analyse two characteristics distinguishing monopoly from perfect competition
• 6Examine two barriers to entry in a concentrated market

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Calculate (2 marks)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks), KAA (8) + Evaluation (6), best-fit levels
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8, best-fit levels

Worked examples (6)

• 1Identify and classify a monopolistically competitive market
• 2State why MR lies below AR
• 3Draw short-run supernormal profit
• 4Show the long-run tangency (normal profit)
• 5Identify excess capacity on the long-run diagram
• 6Contrast monopolistic and perfect competition

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Define (2 marks, AO1)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks, AO1/AO2)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks) = KAA (8) + Evaluation (6), diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Identify market power: monopoly or monopsony?
• 2Explain a barrier to entry
• 3Draw a monopoly setting price and output
• 4Draw a monopsony setting the wage
• 5Classify monopoly efficiency
• 6Check the conditions for price discrimination

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Define (2 marks, AO1)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain (4 marks, AO1/AO2)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks) = KAA (8) + Evaluation (6), diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Explain why the supply of labour to a job slopes upward
• 2Identify and classify a labour-supply shifter
• 3Explain the income and substitution effects of a wage rise
• 4Draw the backward-bending individual labour supply curve
• 5Analyse two factors that shift the supply of labour
• 6Analyse the wage elasticity of supply of labour

Model answers (6)

• ✓Model answer — WEC13/01 Section B(a) style — Definition (2 marks, AO1)
• ✓Model answer — WEC13/01 Section B(b) style — Knowledge and application (4 marks)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks = KAA 8 + Evaluation 6), diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks = KAA 12 + Evaluation 8), answer two of three, best-fit levels

Worked examples (6)

• 1Classify markets: contestable vs non-contestable
• 2Identify u0026 classify: sunk vs non-sunk costs
• 3Explain hit-and-run entry
• 4Analyse the threat of entry on an incumbent
• 5Examine two determinants of contestability
• 6Distinguish a contestable market from perfect competition

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Define (2 marks, AO1)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain what is meant by (4 marks, AO1/AO2)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks) = KAA (8) + Evaluation (6)
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Calculate the marginal revenue product
• 2Explain derived demand for labour
• 3Draw the MRP labour demand curve and hire at MRP = wage
• 4Show a rightward shift of labour demand
• 5Examine two factors that shift the demand for labour
• 6Analyse the elasticity of demand for labour

Model answers (6)

• ✓Model answer — WEC13/01 Section B(a) style — Calculation (2 marks, AO2)
• ✓Model answer — WEC13/01 Section B(b) style — Knowledge and application (4 marks)
• ✓Model answer — WEC13/01 Section B(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B(e) style — Discuss (14 marks = KAA 8 + Evaluation 6), diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks = KAA 12 + Evaluation 8), best-fit levels

Worked examples (6)

• 1Nail the definition of labour-market failure
• 2Classify geographical vs occupational immobility
• 3Explain a skills gap and structural unemployment
• 4Analyse two causes of occupational immobility
• 5Examine how discrimination causes labour-market failure
• 6Explain how monopsony power causes labour-market failure

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Knowledge (2 marks, point-marked)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain (4 marks, point-marked)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — KAA (8 marks) + Evaluation (6 marks), best-fit levels
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Competitive or non-competitive? Classify the labour market
• 2Explain how a trade union raises the wage
• 3Draw a competitive labour market setting the wage
• 4Draw a trade-union wage floor causing unemployment
• 5The monopsony exception: does a minimum wage cost jobs?
• 6Explain a wage differential from MRP and supply

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Define (2 marks, AO1)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain (4 marks, AO1/AO2)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks) = KAA (8) + Evaluation (6), diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Identify u0026 classify the type of intervention
• 2Explain why a cartel is banned
• 3Explain RPI − X price regulation
• 4Draw a price cap on a monopoly raising output
• 5Classify measures that promote competition
• 6Privatisation vs nationalisation: identify the case

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Define (2 marks, AO1)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain (4 marks, AO1/AO2)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks) = KAA (8) + Evaluation (6), diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8

Worked examples (6)

• 1Identify the type of labour-market intervention
• 2Define the national minimum wage
• 3Draw a minimum wage in a competitive labour market
• 4Draw a minimum wage in a monopsony
• 5Show how training shifts labour supply
• 6Analyse a maximum wage (pay cap)

Model answers (6)

• ✓Model answer — WEC13/01 Section B, Q7(a) style — Define (2 marks, AO1)
• ✓Model answer — WEC13/01 Section B, Q7(b) style — Explain (4 marks, AO1/AO2)
• ✓Model answer — WEC13/01 Section B, Q7(c) style — Analyse (6 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(d) style — Examine (8 marks), diagram expected, KAA Levels 1–3
• ✓Model answer — WEC13/01 Section B, Q7(e) style — Discuss (14 marks) = KAA (8) + Evaluation (6), diagram expected
• ✓Model answer — WEC13/01 Section C style — Evaluate (20 marks), answer two of three, KAA 12 + Evaluation 8