Exam (elaborations)
A-LEVEL AQA ECONOMICS KEY TERMS AND DEFINITIONS
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A-LEVEL AQA ECONOMICS KEY TERMS AND DEFINITIONS
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A-LEVEL AQAECONOMICS KEY TERMS
AND DEFINITIONS
Allocative mefficiency m- m mcorrect manswer-This moccurs mwhen mthe mavailable meconomic
mresources mare mused mto mproduce mthe mcombination mof mgoods mand mservices mthat mbest
mmatches mpeoples' mtastes mand mpreferences.
Division mof mlabour m- m mcorrect manswer-The mspecialisation mof mindividuals mthrough mthe
mseparation mof mtasks min mthe mproduction mprocess mand mtheir mallocation mto mdifferent
mgroups mof mworkers.
Factors mof mproduction m- m mcorrect manswer-Inputs minto mthe mproduction mprocess
mnamely mland, mlabour, mcapital mand menterprise.
Normative mstatement m- m mcorrect manswer-A mstatement mthat mincludes ma mvalue
mjudgement, mis msubjective mand mtherefore mcannot mbe mrefuted mjust mby mlooking mat mthe
mevidence.
Opportunity mcost m- m mcorrect manswer-The mnext mbest malternative mforegone mwhenever
man meconomic mdecision mis mmade. mIt mis malso mthe mgradient mof mthe mPPF.
Positive mstatement m- m mcorrect manswer-A mstatement mwhich mis mvalue mfree, mobjective
mand mcan mbe mempirically mtested mto msee mwhether mor mnot mit mis mcorrect.
,Productive mefficiency m- m mcorrect manswer-This moccurs mwhen mit mis mimpossible mfor man
meconomy mto mproduce mmore mof mone mgood mwithout mproducing mless mof manother. mThe
meconomy mwould mbe moperating msomewhere mon mits mPPF.
Production m- m mcorrect manswer-A mprocess, mor mset mof mprocesses, mthat mconverts
minputs m(factors mof mproduction) minto moutputs m(goods mor mservices).
Production mpossibility mfrontier m(PPF) mor mProduction mpossibility mboundary m(PPB) m- m
mcorrect manswer-A mcurve mshowing mthe malternative mcombinations mof mtwo mgoods m(or
mtypes mof mgood) mthan man meconomy mcan mproduce mwhen mall mthe mavailable mresources
mare mfully mand mefficiently memployed.
Productivity m- m mcorrect manswer-Output mper munit mof minput mper mtime mperiod.
Scarcity m- m mcorrect manswer-Linked mto mthe mfundamental meconomic mproblem mscarcity
mis mthe mresult mof mfinite mresources min mthe meconomy mbeing munable mto mproduce
menough mgoods mand mservices mto mfulfil msociety's minfinite mwants.
Specialisation m- m mcorrect manswer-This moccurs mwhen man meconomic magent mchooses
mto mconcentrate mon mproducing ma mparticular mgood mor mservice mand mthen mtrades mwith
mothers min morder mto msurvive.
Capital mgood m- m mcorrect manswer-A mgood mwhich mis mused min mthe mproduction mof mother
mgoods mor mservices. mAlso mknown mas ma mproducer mgood.
Complementary mgood m- m mcorrect manswer-A mgood mwhich mis min mjoint mdemand mor mis
mdemanded mat mthe msame mtime mas mthe mother mgood me.g. mhot mdog mand mbun.
Competing msupply m- m mcorrect manswer-Raw mmaterials mthat mare mused mto mproduce
mone mgood mcannot mbe mused mto mproduce manother mgood me.g. mwheat mfor mflour mor mfor
mbiofuel.
Composite mdemand m- m mcorrect manswer-Demand mfor ma mgood mwhich mhas mmore mthan
mone muse me.g. mland mfor mhousing mor ma mfactory.
Condition mof mdemand m- m mcorrect manswer-A mdeterminant mof mdemand, mother mthan
mprice, mthat mshifts mthe mdemand mcurve.
Condition mof msupply m- m mcorrect manswer-A mdeterminant mof msupply, mother mthan mprice,
mthat mshifts mthe msupply mcurve.
Consumer mgood m- m mcorrect manswer-A mgood mwhich mis mconsumed mby mindividuals mand
mhouseholds mto msatisfy mtheir mwants mand mneeds.
Consumer msurplus m- m mcorrect manswer-The mdifference mbetween mthe mmaximum mprice
mwhich ma mconsumer mis mwilling mand mable mto mpay mfor ma mgood mand mthe mactual mprice
mthey mhave mto mpay min mthe mmarket. mIt mis mthe marea mbelow mthe mdemand mcurve mand
mabove mthe mequilibrium mprice mline.
, Contraction mof mdemand mor msupply m- m mcorrect manswer-A mmovement malong mthe
mdemand mor msupply mcurve.
Cross melasticity mof mdemand m- m mcorrect manswer-The mpercentage mchange min mthe
mquantity mdemanded mof mGood mA mdivided mby mthe mpercentage mchange min mthe mprice
mof mGood mB.
Derived mdemand m- m mcorrect manswer-An mindirect mdemand mfor ma mgood mor mservice
m(e.g. mlabour) mwhich mis man minput minto mthe mproduction mof manother mgood m(e.g. mcars).
Demand m(effective mdemand) m- m mcorrect manswer-The mquantity mof ma mgood mor mservice
mthat mconsumers mare mwilling mand mable mto mbuy mat mgiven mprices min ma mgiven mtime
mperiod.
Elasticity m- m mcorrect manswer-The mproportionate mresponsiveness mof mone mvariable
m(e.g. mquantity mdemanded) mwith mrespect mto ma mproportionate mchange min manother
mvariable m(e.g. mprice).
Equilibrium mprice m- m mcorrect manswer-The mprice mat mwhich mplanned mdemand mfor ma
mgood mor mservice mexactly mequals mplanned msupply mfor mthat mgood mor mservice.
Expansion mof mdemand mor msupply m- m mcorrect manswer-A mmovement malong mthe
mdemand mor msupply mcurve.
Income melasticity mof mdemand m- m mcorrect manswer-The mpercentage mchange min
mquantity mdemanded mdivided mby mthe mpercentage mchange min mincome.
Inferior mgood m- m mcorrect manswer-A mgood mfor mwhich mdemand mrises mas mincome mfalls
mand mdemand mfalls mas mincome mrises.
Joint msupply m- m mcorrect manswer-When mone mgood mis mproduced manother mgood mis malso
mproduced mfrom mthe msame mraw mmaterials me.g. mbeef mand mleather.
Law mof mDemand m- m mcorrect manswer-The minverse mrelationship mbetween mprice mand
mquantity mdemanded.
Law mof mSupply m- m mcorrect manswer-The mpositive mcorrelation mbetween mprice mand
mquantity msupplied.
Market m- m mcorrect manswer-A mvoluntary mmeeting mof mbuyers mand msellers mwhere mboth
mparties mare mwilling mto mparticipate min man mexchange.
Normal mgood m- m mcorrect manswer-A mgood mfor mwhich mdemand mincreases mwhen
mincome mrises mand mdemand mfalls mwhen mincome mfalls.
Price melasticity mof mdemand m- m mcorrect manswer-The mpercentage mchange min mquantity
mdemanded mdivided mby mthe mpercentage mchange min mits mprice.
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