AQA Economics A Level Year 1 – Microeconomics.Final Test 2026\2027.
Allocative Efficiency
Occurs when the available economic resources are used to produce the
combination of goods and services that best matches people's tastes and
preferences
Positive Statements
A statement of fact that can be tested to see if it is incorrect or correct
Normative Statements
A statement that includes a value judgement and cannot be disproved just by
looking at evidence
Need
Something that is essential for human survival e.g. food and water
Want
Something that is desirable e.g. fashionable accessories
Economic Welfare
The economic well-being of an individual, a group within society, or an economy
Production
A process, or a set of processes that converts inputs into output of goods
Capital Goods
Goods used in the production of other goods or services (also known as a
producer good)
Consumer Goods
A good which is consumed by individuals or households to satisfy their needs or
wants
Factors of Production
Inputs into the production process
,AQA Economics A Level Year 1 – Microeconomics.Final Test 2026\2027.
CELL - the four factors of production
Capital
Enterprise
Land
Labour
Capital
Equipment used in producing goods and services
Enterprise
Refers to the decision makers and the risk takers in the firm
Labour
The human input into the production process
Land
The actual land and the natural resources in and on it
Interest
The reward for capital
Rent
The reward for land
Wages
The reward for labour
Profit
The reward for enterprise
Finite Resources
Resources which are scarce and run out as they are used, such as oil (also known
as a non-renewable resource)
Renewable Resources
Resources which with careful management can be renewed as they are used, such
as timber
, AQA Economics A Level Year 1 – Microeconomics.Final Test 2026\2027.
Fundamental Economic Problem
How best to make decisions about the allocation of scarce resources among
competing uses so as to improve and maximise human happiness and welfare
Fundamental Questions
What to produce?
How to produce it?
Who to produce it for?
Scarcity
Results from the fact that wants are unlimited but resources to meet these wants
are limited
Opportunity Cost
The next best alternative forgone when making a decision
Good
A physical and tangible product
Service
Intangible things
Economic Good
A good that has an opportunity costs in consumption because it uses up scarce
resources
Free Good
A good that doesn't have an opportunity cost in consumption because it doesn't
use up scarce resources
Production Possibility Frontier
A curve that depicts the various combinations of two products that can be
produced when all the available resources are fully and efficiently employed
Economic Growth
Allocative Efficiency
Occurs when the available economic resources are used to produce the
combination of goods and services that best matches people's tastes and
preferences
Positive Statements
A statement of fact that can be tested to see if it is incorrect or correct
Normative Statements
A statement that includes a value judgement and cannot be disproved just by
looking at evidence
Need
Something that is essential for human survival e.g. food and water
Want
Something that is desirable e.g. fashionable accessories
Economic Welfare
The economic well-being of an individual, a group within society, or an economy
Production
A process, or a set of processes that converts inputs into output of goods
Capital Goods
Goods used in the production of other goods or services (also known as a
producer good)
Consumer Goods
A good which is consumed by individuals or households to satisfy their needs or
wants
Factors of Production
Inputs into the production process
,AQA Economics A Level Year 1 – Microeconomics.Final Test 2026\2027.
CELL - the four factors of production
Capital
Enterprise
Land
Labour
Capital
Equipment used in producing goods and services
Enterprise
Refers to the decision makers and the risk takers in the firm
Labour
The human input into the production process
Land
The actual land and the natural resources in and on it
Interest
The reward for capital
Rent
The reward for land
Wages
The reward for labour
Profit
The reward for enterprise
Finite Resources
Resources which are scarce and run out as they are used, such as oil (also known
as a non-renewable resource)
Renewable Resources
Resources which with careful management can be renewed as they are used, such
as timber
, AQA Economics A Level Year 1 – Microeconomics.Final Test 2026\2027.
Fundamental Economic Problem
How best to make decisions about the allocation of scarce resources among
competing uses so as to improve and maximise human happiness and welfare
Fundamental Questions
What to produce?
How to produce it?
Who to produce it for?
Scarcity
Results from the fact that wants are unlimited but resources to meet these wants
are limited
Opportunity Cost
The next best alternative forgone when making a decision
Good
A physical and tangible product
Service
Intangible things
Economic Good
A good that has an opportunity costs in consumption because it uses up scarce
resources
Free Good
A good that doesn't have an opportunity cost in consumption because it doesn't
use up scarce resources
Production Possibility Frontier
A curve that depicts the various combinations of two products that can be
produced when all the available resources are fully and efficiently employed
Economic Growth
