AQA ECONOMICS STUDY GUIDE
✔✔Restricted Choice - ✔✔Where the number of choices made available to an individual
is limited.
✔✔Mandated Choice - ✔✔Form of choice architecture where the individual must make
a decision. Mandated choices are required by law
✔✔Income elasticity of demand - ✔✔A measure of the extent to which the quantity
demanded of a product changes in response to a change in income
✔✔Price Elasticity of Demand - ✔✔A measure of the extent to which the quantity
demanded of a product changes in response to a change in the price of the product
✔✔Cross elasticity of demand - ✔✔A measure of the extent to which the quantity
demanded of a product changes in response to a change in the price of a different
product
✔✔Normal good - ✔✔A product where there us a positive relationship between income
& quantity demanded of the product
✔✔Inferior good - ✔✔A product where there is an inverse relationship between income
& quantity demanded of product
✔✔Price elasticity of supply - ✔✔M measure of the extent to which the quantity supplied
of a product changes in response to a change in the price of the product
✔✔Equilibrium market price - ✔✔The price at which the quantity demanded equals the
quantity supplied & there is no tendency for the price to change
✔✔Disequilibrium market price - ✔✔At price at which there is either excess demand,
and a tendency for the price to rise, so there is excess supply, and a tendency for the
price to fall
✔✔Joint demand/COmplementary goods - ✔✔When two products are demanded
together so that the demand for one good is directly related to the demand for the other
product
✔✔Competitive demand/ Substitute goods - ✔✔When the demand for one product
increases, the demand for another good decreases
, ✔✔Composite demand - ✔✔When a product has more than one use so that an
increase in the demand for one use leads to a fall in the supply of a production that is
available to use elsewhere
✔✔Derived Demand - ✔✔When demand for a product, or factor of production, is
determined by the demand for a different product.
✔✔Joint supply - ✔✔When the output of one product also results in the output of a
different product.
- e.g Sheep farm supply meat & wool
✔✔Production - ✔✔Process of using FOP to create goods & services
✔✔Productivity - ✔✔Output per unit of input of shit
✔✔Specialisation - ✔✔Where firms, regions, countries or factors of production
concentrate on producing a particular good or service
✔✔Division of labour - ✔✔When the production of a good is broken down into many
separate tasks & each worker performs one task, or a narrow range of tasks, as part of
production process
✔✔Short Run - ✔✔Time period when there is at least 1 fixed FOP
✔✔Long Run - ✔✔Time period when all FOP are variable
✔✔Law of diminishing returns - ✔✔More variable factor of production is added to the
production process lead initial increase Marginal/Average Returns BUT eventually
decrease
✔✔Marginal Returns - ✔✔The Change in total output that results from employing one
more unit of a variable factor of production when the amount employed of all other
factors of production is change
✔✔Average returns - ✔✔Total output /n. Of units of variable factor employed
✔✔Fixed Costs - ✔✔Constant that do not change when output changes
✔✔Variable costs - ✔✔Costs that change when output changes
✔✔Marginal Cost - ✔✔Change in total cost when one more or one fewer unit of output
is produced
✔✔Average Cost - ✔✔Total cost divided by output
✔✔Restricted Choice - ✔✔Where the number of choices made available to an individual
is limited.
✔✔Mandated Choice - ✔✔Form of choice architecture where the individual must make
a decision. Mandated choices are required by law
✔✔Income elasticity of demand - ✔✔A measure of the extent to which the quantity
demanded of a product changes in response to a change in income
✔✔Price Elasticity of Demand - ✔✔A measure of the extent to which the quantity
demanded of a product changes in response to a change in the price of the product
✔✔Cross elasticity of demand - ✔✔A measure of the extent to which the quantity
demanded of a product changes in response to a change in the price of a different
product
✔✔Normal good - ✔✔A product where there us a positive relationship between income
& quantity demanded of the product
✔✔Inferior good - ✔✔A product where there is an inverse relationship between income
& quantity demanded of product
✔✔Price elasticity of supply - ✔✔M measure of the extent to which the quantity supplied
of a product changes in response to a change in the price of the product
✔✔Equilibrium market price - ✔✔The price at which the quantity demanded equals the
quantity supplied & there is no tendency for the price to change
✔✔Disequilibrium market price - ✔✔At price at which there is either excess demand,
and a tendency for the price to rise, so there is excess supply, and a tendency for the
price to fall
✔✔Joint demand/COmplementary goods - ✔✔When two products are demanded
together so that the demand for one good is directly related to the demand for the other
product
✔✔Competitive demand/ Substitute goods - ✔✔When the demand for one product
increases, the demand for another good decreases
, ✔✔Composite demand - ✔✔When a product has more than one use so that an
increase in the demand for one use leads to a fall in the supply of a production that is
available to use elsewhere
✔✔Derived Demand - ✔✔When demand for a product, or factor of production, is
determined by the demand for a different product.
✔✔Joint supply - ✔✔When the output of one product also results in the output of a
different product.
- e.g Sheep farm supply meat & wool
✔✔Production - ✔✔Process of using FOP to create goods & services
✔✔Productivity - ✔✔Output per unit of input of shit
✔✔Specialisation - ✔✔Where firms, regions, countries or factors of production
concentrate on producing a particular good or service
✔✔Division of labour - ✔✔When the production of a good is broken down into many
separate tasks & each worker performs one task, or a narrow range of tasks, as part of
production process
✔✔Short Run - ✔✔Time period when there is at least 1 fixed FOP
✔✔Long Run - ✔✔Time period when all FOP are variable
✔✔Law of diminishing returns - ✔✔More variable factor of production is added to the
production process lead initial increase Marginal/Average Returns BUT eventually
decrease
✔✔Marginal Returns - ✔✔The Change in total output that results from employing one
more unit of a variable factor of production when the amount employed of all other
factors of production is change
✔✔Average returns - ✔✔Total output /n. Of units of variable factor employed
✔✔Fixed Costs - ✔✔Constant that do not change when output changes
✔✔Variable costs - ✔✔Costs that change when output changes
✔✔Marginal Cost - ✔✔Change in total cost when one more or one fewer unit of output
is produced
✔✔Average Cost - ✔✔Total cost divided by output
