Economics AQA A Level Practice Questions and Answers

Positive Statement A statement that can be tested to see if it's correct or not Normative Statement A statement that has a value judgement and can't be refuted by looking at evidence Need Something necessary for human survival Want Something that is desirable Economic welfare The economic wellbeing of an individual or group of people (Human happiness) Capital good A good used in the production of other good and services Factors of production Land, Labour, Capital, Enterprise Fundamental Economic Problem is scarcity and that it results from limited resources and unlimited wants Scarcity Choices have to made how scarce resources are going to be allocated Opportunity cost The cost of giving up the next best alternative Productive efficiency When the average total costs of production is minimised Allocative efficiency Available resources are used to produce the best combination of goods and services that best match people's preferences Demand The quantity of a good or service that consumers are willing and able to buy at a given time Normal good A good for which demand increases when income increases IED 1 Inferior good A good for which demand increases when income falls IED 1