IGCSE Economics (Edexcel) Definitions
Economics - ANS The study of how society manages its scare resources to satisfy unlimited wants
Economy - ANS A system that attempt to solve the basic economic problem.
Micro-economics - ANS The study of how households (buyers) and firms (sellers) make decisions
regarding the allocation of limited resources and how they interact in specific markets as individuals
Macro-economics - ANS The branch of economics that examines the behaviour of the whole economy
Scarcity - ANS Society has limited resources and therefore cannot produce enough goods and services to
satisfy everyone's wants.
Opportunity Cost - ANS The next best alternative forgone when an economic decision is made
Wants - ANS Anything you would like irrespective of whether you have the resources to purchase it.
Needs - ANS Basic requirements for human survival
Choice - ANS The selection of appropriate alternatives.
Ceteris Paribus - ANS 'other things being equal' It is used as a reminder that all variables other than the
one(s) being studied are assumed to be constant
Production Possibility Curve - ANS This shows maximum quantities of different combinations of two
products an economy can produce given current resources and the state of technology.
, Exporters - ANS Firms that sell overseas.
Market - ANS A place or situation where buyers and sellers communicate with exchange in mind.
Market Failure - ANS Market failure occurs when freely functioning markets fail to deliver an efficient
allocation of resources. The result is a loss of economic and social welfare.
Price - ANS The amount of money that goods are exchanged for a transaction.
Price Mechanism/Market System - ANS The automatic determination of prices and the allocation of
resources by the operation of markets in the economy.
Subsidy - ANS A grant given to producers, usually to encourage production of a certain good.
Demand - ANS The quantity of a product that consumers are willing and able to purchase at various
prices over a period of time.
Notional Demand - ANS The desire for a product.
Effective Demand - ANS Only when a consumers desire to buy a product is backed up by an ability to pay
for it does demand actually have an effect on the market.
Derived Demand - ANS Demand that arises because there is demand for another good.
Demand Curve - ANS A line or curve drawn on a graph which shows how much of a good will be bought
at different prices.
Economics - ANS The study of how society manages its scare resources to satisfy unlimited wants
Economy - ANS A system that attempt to solve the basic economic problem.
Micro-economics - ANS The study of how households (buyers) and firms (sellers) make decisions
regarding the allocation of limited resources and how they interact in specific markets as individuals
Macro-economics - ANS The branch of economics that examines the behaviour of the whole economy
Scarcity - ANS Society has limited resources and therefore cannot produce enough goods and services to
satisfy everyone's wants.
Opportunity Cost - ANS The next best alternative forgone when an economic decision is made
Wants - ANS Anything you would like irrespective of whether you have the resources to purchase it.
Needs - ANS Basic requirements for human survival
Choice - ANS The selection of appropriate alternatives.
Ceteris Paribus - ANS 'other things being equal' It is used as a reminder that all variables other than the
one(s) being studied are assumed to be constant
Production Possibility Curve - ANS This shows maximum quantities of different combinations of two
products an economy can produce given current resources and the state of technology.
, Exporters - ANS Firms that sell overseas.
Market - ANS A place or situation where buyers and sellers communicate with exchange in mind.
Market Failure - ANS Market failure occurs when freely functioning markets fail to deliver an efficient
allocation of resources. The result is a loss of economic and social welfare.
Price - ANS The amount of money that goods are exchanged for a transaction.
Price Mechanism/Market System - ANS The automatic determination of prices and the allocation of
resources by the operation of markets in the economy.
Subsidy - ANS A grant given to producers, usually to encourage production of a certain good.
Demand - ANS The quantity of a product that consumers are willing and able to purchase at various
prices over a period of time.
Notional Demand - ANS The desire for a product.
Effective Demand - ANS Only when a consumers desire to buy a product is backed up by an ability to pay
for it does demand actually have an effect on the market.
Derived Demand - ANS Demand that arises because there is demand for another good.
Demand Curve - ANS A line or curve drawn on a graph which shows how much of a good will be bought
at different prices.
