A-Level Economics: Firms & Labour Markets Revision

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In the standard prisoner's dilemma, the Nash equilibrium is:

Firms & Labour Markets is a core part of A-Level Economics. Revise the key concepts and common mistakes below, then lock them in with the free games.

Key concepts

Game TheoryStudy of strategic interaction among rational agents.

Prisoner's DilemmaGame where both confess despite mutual silence being better.

Dominant StrategyBest move regardless of what the rival does.

Nash EquilibriumNo player gains by changing strategy alone.

Payoff MatrixTable showing outcomes for each strategy combination.

Cooperative OutcomeBest joint outcome if both cooperate.

Kinked DemandDemand curve with a kink at the prevailing price.

Price LeaderDominant firm setting price followed by rivals.

Price WarMutual price cutting that destroys margins.

Non-Price CompetitionCompeting on quality, advertising, loyalty.

Tacit CollusionCooperation without formal agreement.

Overt CollusionFormal price-fixing cartel - usually illegal.

CartelGroup of firms colluding to raise prices.

Cheating IncentiveEach member can profit by undercutting privately.

What your exam board covers

Where Firms & Labour Markets sits in each exam board's specification. Tap a board to see what it lists.

AQAThe labour marketSpec 7136

Part of: Individuals, firms, markets and market failure

Source: AQA A-level Economics (7136) specification — Subject content, accessed 23 June 2026.

Edexcel3.5 Labour marketSpec 9EC0

Part of: Theme 3 — Business behaviour and the labour market

Source: Pearson Edexcel A-Level Economics A (9EC0) specification, accessed 23 June 2026.

Edexcel3.4 Market structuresSpec 9EC0

Part of: Theme 3 — Business behaviour and the labour market

Source: Pearson Edexcel A-Level Economics A (9EC0) specification, accessed 23 June 2026.

OCRMarket structuresSpec H460

Part of: Microeconomics

Source: OCR A Level Economics (H460) specification, accessed 23 June 2026.

OCRThe labour marketSpec H460

Part of: Microeconomics

Source: OCR A Level Economics (H460) specification, accessed 23 June 2026.

Learn Firms & Labour Markets step by step

Free interactive mini-lessons: short screens, worked examples and quick checks. Pick your exam board:

Common mistakes to avoid

Questions where students often pick the tempting wrong answer — make sure you know the right one:

In the standard prisoner's dilemma, the Nash equilibrium is:✗ Both stay silent ✓ Both confess

A dominant strategy means:✗ Must be played first ✓ Best move regardless of opponent's choice

Practise Firms & Labour Markets — free games

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Firms & Labour Markets

Key concepts

What your exam board covers

Common mistakes to avoid

Practise Firms & Labour Markets — free games

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