AQA AS Economics Study Guide
⏹ positive statement. Answer: a statement of fact that can be
scientifically tested to see if it is correct or incorrect
⏹ normative statement. Answer: a statement that includes a value
judgement and cannot be refuted just by looking at the evidence
⏹ need. Answer: something that is necessary for human survival, such
as food, clothing, warmth, or shelter
⏹ want. Answer: something that is desirable, such as fashionable
clothing, but is not necessary for human survival
⏹ economic welfare. Answer: the economic well-being of an individual,
a group within society, or an economy
⏹ production. Answer: a process, or set of processes, that converts
inputs into output of goods
⏹ capital good. Answer: a good which is used in the production of other
goods or services. also known as a producer good
⏹ consumer good. Answer: a good which is consumed by individuals or
households to satisfy their needs or wants
,⏹ factors of production. Answer: inputs into the production process,
such as land, labour, capital, and enterprise
⏹ finite resource. Answer: a resource, such as oil, which is scarce and
runs out as it is used. also known as a non-renewable resource
⏹ renewable resource. Answer: a resource, such as timber, that with
careful management can be renewed as it is used
⏹ fundamental economic problem. Answer: how best to make decisions
about the allocation of scarce resources among competing uses so as to
improve and maximise human happiness and welfare
⏹ scarcity. Answer: results from the fact that people have unlimited
wants but the resources needed to meet these wants are limited. people
would like to consume more goods and services than the economy is
able to produce with its limited resources
⏹ opportunity cost. Answer: the cost of giving up the next best
alternative
⏹ production possibility frontier. Answer: a curve depicting the various
combinations of two products (or types of products) that can be
produced when all the available resources are fully and efficiently
employed
, ⏹ economic growth. Answer: the increase in the potential level of real
output the economy can produce in a period of time
⏹ full employment. Answer: when all who are willing and able to work
are employed
⏹ unemployment. Answer: when not all of those who are willing and
able to work are employed
⏹ productive efficiency. Answer: for the economy as a whole this
occurs when it is impossible to produce more of one good without
producing less of another. For a firm it occurs when the average total
cost of production is minimised
⏹ allocative efficiency. Answer: occurs when the available economic
resources are used to produce the combination of goods and services that
best matches people's tastes and preferences
⏹ competitive market. Answer: a market in which a large number of
buyers and sellers possess good market information and can easily enter
or leave a market
⏹ equilibrium price. Answer: the price at which planned demand for a
good or service exactly equals planned supply
⏹ supply. Answer: the quantity of a good or service that firms are
willing and able to sell at given prices in a given period of time
⏹ positive statement. Answer: a statement of fact that can be
scientifically tested to see if it is correct or incorrect
⏹ normative statement. Answer: a statement that includes a value
judgement and cannot be refuted just by looking at the evidence
⏹ need. Answer: something that is necessary for human survival, such
as food, clothing, warmth, or shelter
⏹ want. Answer: something that is desirable, such as fashionable
clothing, but is not necessary for human survival
⏹ economic welfare. Answer: the economic well-being of an individual,
a group within society, or an economy
⏹ production. Answer: a process, or set of processes, that converts
inputs into output of goods
⏹ capital good. Answer: a good which is used in the production of other
goods or services. also known as a producer good
⏹ consumer good. Answer: a good which is consumed by individuals or
households to satisfy their needs or wants
,⏹ factors of production. Answer: inputs into the production process,
such as land, labour, capital, and enterprise
⏹ finite resource. Answer: a resource, such as oil, which is scarce and
runs out as it is used. also known as a non-renewable resource
⏹ renewable resource. Answer: a resource, such as timber, that with
careful management can be renewed as it is used
⏹ fundamental economic problem. Answer: how best to make decisions
about the allocation of scarce resources among competing uses so as to
improve and maximise human happiness and welfare
⏹ scarcity. Answer: results from the fact that people have unlimited
wants but the resources needed to meet these wants are limited. people
would like to consume more goods and services than the economy is
able to produce with its limited resources
⏹ opportunity cost. Answer: the cost of giving up the next best
alternative
⏹ production possibility frontier. Answer: a curve depicting the various
combinations of two products (or types of products) that can be
produced when all the available resources are fully and efficiently
employed
, ⏹ economic growth. Answer: the increase in the potential level of real
output the economy can produce in a period of time
⏹ full employment. Answer: when all who are willing and able to work
are employed
⏹ unemployment. Answer: when not all of those who are willing and
able to work are employed
⏹ productive efficiency. Answer: for the economy as a whole this
occurs when it is impossible to produce more of one good without
producing less of another. For a firm it occurs when the average total
cost of production is minimised
⏹ allocative efficiency. Answer: occurs when the available economic
resources are used to produce the combination of goods and services that
best matches people's tastes and preferences
⏹ competitive market. Answer: a market in which a large number of
buyers and sellers possess good market information and can easily enter
or leave a market
⏹ equilibrium price. Answer: the price at which planned demand for a
good or service exactly equals planned supply
⏹ supply. Answer: the quantity of a good or service that firms are
willing and able to sell at given prices in a given period of time
