Edexcel Economics A: Theme 1.2 Questions & Answers 100% Updated!

Market - ANSWERSWhere consumers and producers come into contact with each other to exchange goods and services Utility - ANSWERSThe amount of satisfaction obtained from consuming a good or service Rational decision making - ANSWERSWhere consumers allocate their expenditure on goods and services to maximize utility, and producers allocate their resources to maximize profits Demand - ANSWERSThe quantity of a good or service purchased at a given price over a given period of time Demand curve - ANSWERSShows the quantity of a good or service that would be bought over a range of different price levels in a given period of time Marginal utility - ANSWERSThe utility or satisfaction obtained from consuming one extra unit of a good or service Diminishing marginal utility - ANSWERSAs successive units of a good are consumed , the utility gained from each extra unit will fall Price elasticity of demand - ANSWERSThe responsiveness of demand for a good or service to a change in its price Income elasticity of demand - ANSWERSThe responsiveness of demand for a good or service to a change in income Normal good - ANSWERSA good with a positive income elasticity of demand. As income rises, so too does demand for the good Cross elasticity of demand - ANSWERSThe responsiveness of demand for good B to a change in price of good A Supply - ANSWERSThe quantity of a good or service that firms are willing to sell at a given price and over a given period of time Supply Curve - ANSWERSShows the quantity of a good or service that firms are willing