AQA Economics Year 12
(Microeconomics) Exam Questions
and Answers 2024 review
The Law of Demand - Answer>> consumers will buy more of a
good when its price is lower and less when its price is higher
The Law of Supply - Answer>> producers offer more of a good
as its price increases and less as its price falls
Equilibrium Price - Answer>> the price at which the quantity
demanded equals the quantity supplied
Excess Supply - Answer>> the amount by which quantity
supplied exceeds quantity demanded when the price of a good
exceeds the equilibrium price
Surplus - Answer>> A situation in which quantity supplied is
greater than quantity demanded
Excess Demand - Answer>> The situation that exists when
demand is greater than supply.
Deficit - Answer>> A situation in which quantity supplied is less
than the quantity demanded
Economics - Answer>> A social science that studies how
people seek to satisfy their needs and wants by making choices
Price Elasticity of Demand - Answer>> a measure of how much
the quantity demanded of a good responds to a change in the
price of that good.
,Income Elasticity of Demand - Answer>> a measure of the
responsiveness of the quantity demanded to changes in income.
Cross Price Elasticity of Demand - Answer>> measures the
response of demand for one good to changes in the price of
another good
PED Formula - Answer>> % change in quantity demanded / %
change in price
YED Formula - Answer>> % change in quantity demanded / %
change in income
XED Formula - Answer>> % change in quantity demanded of
good X / % change in price of good Y
Luxury Good - Answer>> a good with an income elasticity
greater than 1 for which demand rises by a greater amount than
the rise in income.
Normal Good - Answer>> a good for which the demand
increases as income rises and decreases as income falls
Veblen Good - Answer>> A good with a positively sloped
demand curve. As price increases people buy more of these
goods to demonstrate their social status.
Inferior Good - Answer>> a good for which, other things being
equal, an increase in income leads to a decrease in demand
, Substitute Good - Answer>> A good that can be used in place
of another good
Complementary Good - Answer>> Products and services that
are used together. When the price of one falls, the demand for the
other increases (and conversely).
Positive Economic Statement - Answer>> A statement that can
be proved or disproved by reference to facts
Normative Economic Statement - Answer>> A statement that
reflects on opinion, which cannot be proved or disproved by
reference to the facts.
Production Possibilities Frontier (PPF) - Answer>> a diagram
that shows the productively efficient combinations of two products
that an economy can produce given the resources it has available
Opportunity Cost - Answer>> The cost of the next best
alternative forgone.
Scarcity - Answer>> A situation in which unlimited wants
exceed the limited resources available to fulfill those wants
The Basic Economic Problem - Answer>> Resources have to
be allocated between competing uses because wants are infinite
whilst resources are scarce
Value Judgement - Answer>> An opinion based on a person's
individual values and beliefs
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