Edexcel Economics A Level Theme 1 Questions & Correct Answers/ Graded A+

scarce resources : resources that are limited or finite opportunity cost : the value of the next best alternative forgone economic problem : resources are scarce but wants are unlimited production possibility frontier : a diagram that shows all the combinations of two goods that can be produced when all factors of production are being used normative statement : an economic statement based on a value judgement and therefore cannot be tested positive statement 2 : an economic statement that can be tested in order to determine whether or not it is true land : natural resources that are used for production. payment is rent labour : human resources that are used for production. value of labour is human capital, payment is wages/salaries capital : manufactured goods that are used for production. payment is interest enterprise : risk taking in the production process. payment is profit command economy : an economy in which what, how and for whom to produce are determined by a state planning process free market economy 3 : an economy in which what, how and for whom to produce are determined through the forces of supply and demand without state intervention mixed economy : an economy in which what, how and for whom to produce are determined partly through planning and partly through market forces economy : a system through which factors of production are converted into goods and/or services market : any place where the sellers of a particular good or service can meet with the buyers of that good or service where there is a potential for a transaction to take place non-renewable resources : resources which once used, will never be replaced renewable resources : resources which can be replaced as they are use