AQA AS Economics Assessment
◉ 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
◉ Productive Efficiency. Answer: Goods are being produced at lowest
possible cost. To be productively efficient means the economy must be
producing on its production possibility frontier.
◉ Allocative Efficiency. Answer: When the mix of goods being
produced represents the mix that society most desires. A more precise
definition of is at an output level where the price equals the Marginal
Cost (MC) of production. This is because the price that consumers are
willing to pay is equivalent to the marginal utility that they get
◉ Economic Good. Answer: Things people want that are scarce - there
is an opportunity cost involved.
◉ 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
◉ Productive Efficiency. Answer: Goods are being produced at lowest
possible cost. To be productively efficient means the economy must be
producing on its production possibility frontier.
◉ Allocative Efficiency. Answer: When the mix of goods being
produced represents the mix that society most desires. A more precise
definition of is at an output level where the price equals the Marginal
Cost (MC) of production. This is because the price that consumers are
willing to pay is equivalent to the marginal utility that they get
◉ Economic Good. Answer: Things people want that are scarce - there
is an opportunity cost involved.
