EDEXCEL A-LEVEL ECONOMICS A (DEFINITIONS) WITH
100% CORRECT ANSWERS.
1) Trade diversion -- Answer ✔✔ When trade barriers imposed on non-members means
_ _ _ _ _ _ _ _ _ _ _ _
that trade is diverted away from cheaper non-members.
_ _ _ _ _ _ _
2) Trade liberalisation -- Answer ✔✔ The reduction or removal of protectionist
_ _ _ _ _ _ _ _ _ _ _
measures.
3) Trade union -- Answer ✔✔ An organisation that represents the interests of its worker
_ _ _ _ _ _ _ _ _ _ _ _ _
members.
_
4) Concentration ratio -- Answer ✔✔ A measure of the dominance of firms in a market.
_ _ _ _ _ _ _ _ _ _ _ _ _ _
5) Conglomerate integration -- Answer ✔✔ Where a firm merges with or takes over a
_ _ _ _ _ _ _ _ _ _ _ _ _ _
firm in a completely different market.
_ _ _ _ _
6) Consumer surplus -- Answer ✔✔ The difference between the price a consumer pays
_ _ _ _ _ _ _ _ _ _ _ _ _
and the price they were willing to pay.
_ _ _ _ _ _ _
7) Consumption -- Answer ✔✔ The purchase of goods and services.
_ _ _ _ _ _ _ _ _
8) Contestability -- Answer ✔✔ The degree to which new entrants find it easy to enter
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
the market.
_
9) Cost-push inflation -- Answer ✔✔ Inflation caused by rising costs of production.
_ _ _ _ _ _ _ _ _ _ _
10) Trading blocs -- Answer ✔✔ Associations between the governments of countries that
_ _ _ _ _ _ _ _ _ _ _ _
promote and manage trade between those countries.
_ _ _ _ _ _
,11) Unemployment level -- Answer ✔✔ The number of people who are looking for a job _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
but cannot find one.
_ _ _
12) Absolute advantage -- Answer ✔✔ When a country's output of a product per unit of
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
input is greater than that of any other country.
_ _ _ _ _ _ _ _
13) Absolute poverty -- Answer ✔✔ When a person does not have the income or wealth
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
to fulfil their basic needs.
_ _ _ _
14) Aggregate Demand (AD) -- Answer ✔✔ The total demand/spending in an economy at
_ _ _ _ _ _ _ _ _ _ _ _ _
a given price level over a given period of time. Made up of consumption, investment,
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
government spending and net external demand. _ _ _ _ _
15) Aggregate Supply (AS) -- Answer ✔✔ The total amount of goods and services that can
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
be supplied in an economy at a given price level over a given period of time.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
16) Unemployment rate -- Answer ✔✔ The unemployment level as a proportion of the _ _ _ _ _ _ _ _ _ _ _ _ _
labour force. _
17) Utility -- Answer ✔✔ The benefit/wellbeing/happiness gained from an action.
_ _ _ _ _ _ _ _ _
18) Variable costs -- Answer ✔✔ Costs that vary with the level of output of a firm.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
19) Vertical equity -- Answer ✔✔ Where people with different circumstances are treated
_ _ _ _ _ _ _ _ _ _ _ _
differently but fairly. _ _
20) Wage differentials -- Answer ✔✔ The differences in wages between different groups of
_ _ _ _ _ _ _ _ _ _ _ _
_workers, or workers in the same occupation. _ _ _ _ _ _
21) Wage rate -- Answer ✔✔ The rate of pay of an employer to a worker.
_ _ _ _ _ _ _ _ _ _ _ _ _ _
22) Wealth -- Answer ✔✔ The value of one's assets.
_ _ _ _ _ _ _ _
, 23) World Trade Organisation (WTO) -- Answer ✔✔ An international organisation that
_ _ _ _ _ _ _ _ _ _ _
provides a forum for its members to discuss trade agreements and settle disputes, with
_ _ _ _ _ _ _ _ _ _ _ _ _
_ the aim of making trade as free as possible.
_ _ _ _ _ _ _ _
24) X-inefficiency -- Answer ✔✔ Inefficiency caused by unnecessary costs and waste.
_ _ _ _ _ _ _ _ _ _
25) Aid -- Answer ✔✔ The transfer of resources from one country to another.
_ _ _ _ _ _ _ _ _ _ _ _
26) Allocative efficiency -- Answer ✔✔ Where the price of a good is equal to the price
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
consumers are willing to pay. This occurs when all resources are allocated efficiently.
_ _ _ _ _ _ _ _ _ _ _ _
27) Asymmetric information -- Answer ✔✔ Where buyers have more information than
_ _ _ _ _ _ _ _ _ _ _
sellers in a market, or vice versa.
_ _ _ _ _ _
28) Automatic stabilisers -- Answer ✔✔ Parts of fiscal policy that automatically react to
_ _ _ _ _ _ _ _ _ _ _ _ _
changes in the economic cycle. _ _ _ _
29) Average Cost (AC) -- Answer ✔✔ The cost of production per unit of output.
_ _ _ _ _ _ _ _ _ _ _ _ _
30) Average Revenue (AR) -- Answer ✔✔ The revenue per unit sold.
_ _ _ _ _ _ _ _ _ _
31) Backward vertical integration -- Answer ✔✔ Where a firm merges with or takes over
_ _ _ _ _ _ _ _ _ _ _ _ _ _
a firm further back in the production process.
_ _ _ _ _ _ _
32) Balance of payments -- Answer ✔✔ A record of the international transactions of an
_ _ _ _ _ _ _ _ _ _ _ _ _ _
economy.
33) Bank rate -- Answer ✔✔ The official rate of interest set by the central bank (e.g. by
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
the Monetary Policy Committee of the Bank of England)
_ _ _ _ _ _ _ _
34) Barriers to entry -- Answer ✔✔ Potential difficulties that make it hard for firms to
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
enter a market. _ _
35) Barriers to exit -- Answer ✔✔ Potential difficulties that make it hard for firms to leave
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
a market.
_
100% CORRECT ANSWERS.
1) Trade diversion -- Answer ✔✔ When trade barriers imposed on non-members means
_ _ _ _ _ _ _ _ _ _ _ _
that trade is diverted away from cheaper non-members.
_ _ _ _ _ _ _
2) Trade liberalisation -- Answer ✔✔ The reduction or removal of protectionist
_ _ _ _ _ _ _ _ _ _ _
measures.
3) Trade union -- Answer ✔✔ An organisation that represents the interests of its worker
_ _ _ _ _ _ _ _ _ _ _ _ _
members.
_
4) Concentration ratio -- Answer ✔✔ A measure of the dominance of firms in a market.
_ _ _ _ _ _ _ _ _ _ _ _ _ _
5) Conglomerate integration -- Answer ✔✔ Where a firm merges with or takes over a
_ _ _ _ _ _ _ _ _ _ _ _ _ _
firm in a completely different market.
_ _ _ _ _
6) Consumer surplus -- Answer ✔✔ The difference between the price a consumer pays
_ _ _ _ _ _ _ _ _ _ _ _ _
and the price they were willing to pay.
_ _ _ _ _ _ _
7) Consumption -- Answer ✔✔ The purchase of goods and services.
_ _ _ _ _ _ _ _ _
8) Contestability -- Answer ✔✔ The degree to which new entrants find it easy to enter
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
the market.
_
9) Cost-push inflation -- Answer ✔✔ Inflation caused by rising costs of production.
_ _ _ _ _ _ _ _ _ _ _
10) Trading blocs -- Answer ✔✔ Associations between the governments of countries that
_ _ _ _ _ _ _ _ _ _ _ _
promote and manage trade between those countries.
_ _ _ _ _ _
,11) Unemployment level -- Answer ✔✔ The number of people who are looking for a job _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
but cannot find one.
_ _ _
12) Absolute advantage -- Answer ✔✔ When a country's output of a product per unit of
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
input is greater than that of any other country.
_ _ _ _ _ _ _ _
13) Absolute poverty -- Answer ✔✔ When a person does not have the income or wealth
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
to fulfil their basic needs.
_ _ _ _
14) Aggregate Demand (AD) -- Answer ✔✔ The total demand/spending in an economy at
_ _ _ _ _ _ _ _ _ _ _ _ _
a given price level over a given period of time. Made up of consumption, investment,
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
government spending and net external demand. _ _ _ _ _
15) Aggregate Supply (AS) -- Answer ✔✔ The total amount of goods and services that can
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
be supplied in an economy at a given price level over a given period of time.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
16) Unemployment rate -- Answer ✔✔ The unemployment level as a proportion of the _ _ _ _ _ _ _ _ _ _ _ _ _
labour force. _
17) Utility -- Answer ✔✔ The benefit/wellbeing/happiness gained from an action.
_ _ _ _ _ _ _ _ _
18) Variable costs -- Answer ✔✔ Costs that vary with the level of output of a firm.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
19) Vertical equity -- Answer ✔✔ Where people with different circumstances are treated
_ _ _ _ _ _ _ _ _ _ _ _
differently but fairly. _ _
20) Wage differentials -- Answer ✔✔ The differences in wages between different groups of
_ _ _ _ _ _ _ _ _ _ _ _
_workers, or workers in the same occupation. _ _ _ _ _ _
21) Wage rate -- Answer ✔✔ The rate of pay of an employer to a worker.
_ _ _ _ _ _ _ _ _ _ _ _ _ _
22) Wealth -- Answer ✔✔ The value of one's assets.
_ _ _ _ _ _ _ _
, 23) World Trade Organisation (WTO) -- Answer ✔✔ An international organisation that
_ _ _ _ _ _ _ _ _ _ _
provides a forum for its members to discuss trade agreements and settle disputes, with
_ _ _ _ _ _ _ _ _ _ _ _ _
_ the aim of making trade as free as possible.
_ _ _ _ _ _ _ _
24) X-inefficiency -- Answer ✔✔ Inefficiency caused by unnecessary costs and waste.
_ _ _ _ _ _ _ _ _ _
25) Aid -- Answer ✔✔ The transfer of resources from one country to another.
_ _ _ _ _ _ _ _ _ _ _ _
26) Allocative efficiency -- Answer ✔✔ Where the price of a good is equal to the price
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
consumers are willing to pay. This occurs when all resources are allocated efficiently.
_ _ _ _ _ _ _ _ _ _ _ _
27) Asymmetric information -- Answer ✔✔ Where buyers have more information than
_ _ _ _ _ _ _ _ _ _ _
sellers in a market, or vice versa.
_ _ _ _ _ _
28) Automatic stabilisers -- Answer ✔✔ Parts of fiscal policy that automatically react to
_ _ _ _ _ _ _ _ _ _ _ _ _
changes in the economic cycle. _ _ _ _
29) Average Cost (AC) -- Answer ✔✔ The cost of production per unit of output.
_ _ _ _ _ _ _ _ _ _ _ _ _
30) Average Revenue (AR) -- Answer ✔✔ The revenue per unit sold.
_ _ _ _ _ _ _ _ _ _
31) Backward vertical integration -- Answer ✔✔ Where a firm merges with or takes over
_ _ _ _ _ _ _ _ _ _ _ _ _ _
a firm further back in the production process.
_ _ _ _ _ _ _
32) Balance of payments -- Answer ✔✔ A record of the international transactions of an
_ _ _ _ _ _ _ _ _ _ _ _ _ _
economy.
33) Bank rate -- Answer ✔✔ The official rate of interest set by the central bank (e.g. by
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
the Monetary Policy Committee of the Bank of England)
_ _ _ _ _ _ _ _
34) Barriers to entry -- Answer ✔✔ Potential difficulties that make it hard for firms to
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
enter a market. _ _
35) Barriers to exit -- Answer ✔✔ Potential difficulties that make it hard for firms to leave
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
a market.
_
