A Level candidates also study these additional topics

a) Policies to achieve efficient resource allocation and correct market failure

• application of indirect taxes and subsidies
• price and output decisions under nationalisation and privatisation
• prohibitions and licences
• property rights
• information
• regulatory bodies, deregulation and direct provision of goods and services
• pollution permits
• behavioural insights and ‘nudge’ theory

b) Equity and policies towards income and wealth redistribution

• equity versus efficiency
• price stabilisation
• means tested benefits
• transfer payments
• progressive income taxes, inheritance and capital taxes
• negative income tax
• poverty trap analysis
• Gini coefficient and the Lorenz curve
• inter-generational equity

c) Labour market forces and government intervention:

(i) demand for and supply of labour

(ii) wage determination in perfect markets

(iii) wage determination in imperfect markets

• factors affecting demand for labour
• derivation of individual firm’s demand for using marginal revenue product theory
• factors affecting supply for labour
• net advantages and the long-run supply of labour
• competitive product and factor market forces determining wage differentials, transfer earnings and economic rent
• influence of trades unions on wage determination
• influence of government on wage determination
• monopsony

d) Government failure in microeconomic intervention

• effectiveness of government policies