Summary AQA Economics A Level - Individuals, Firms, Markets and Market Failure Notes

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A LEVEL ECONOMICS: INDIVIDUALS, FIRMS, MARKETS
AND MARKET FAILURE
4.1.1 – Economic Methodology and the economic problem
4.1.1.1 Economic methodology
Statement types
Positive statements Statements that can be tested against real-world data
Normative statements Opinions that require value judgements to be made
Value judgements Statements or opinions that are not testable/verifiable
- Depend on views of individual

Economic models
Economic models Models used to show the essential characteristics of
complicated economic conditions in order to analyse them
and predict the result of changes of variables

4.1.1.2 The nature and purpose of economic activity
Nature and purpose of economic activity
Central purpose of - To produce goods and services to meet needs and wants
economic activity - Increased economic welfare for citizens
Economic welfare Benefit or satisfaction an individual or society gets from
allocation of resources judged by:
- How well off people feel
- How much people have
- Standard of living
- Physical wellbeing
Key economic - What to produce
decisions - How to produce
- Who is to benefit from the goods and services produced

Economic objectives of various members
Consumers Rational choices designed to maximise own welfare
Workers Maximise gain from working
- Higher wages
- Better working conditions
Firms Maximise profits (where total firm revenue > total costs)
Governments - Increase welfare of people
- Increase own popularity




1|T. Chaudhary