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AQA Economics Complete Glossary
(All Key Terms & Definitions) – Level 1 & 2
Fundamental Concepts
1. Positive Statement: A statement that can be tested to determine if it is correct or not.
2. Normative Statement: A statement that contains a value judgment and cannot be refuted by examining
evidence.
3. Need: Something necessary for human survival.
4. Want: Something that is desirable.
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5. Economic Welfare: The economic well-being of an individual or group of people; human happiness.
6. Capital Good: A good used in the production of other goods and services.
7. Factors of Production: Land, Labour, Capital, and Enterprise.
8. Fundamental Economic Problem: Scarcity resulting from limited resources and unlimited wants.
9. Scarcity: The requirement that choices must be made about how scarce resources will be allocated.
10. Opportunity Cost: The cost of giving up the next best alternative.
Efficiency and Demand
11. Productive Efficiency: When the average total cost of production is minimized.
12. Allocative Efficiency: Available resources are used to produce the best combination of goods and services
that best match people's preferences.
13. Demand: The quantity of a good or service that consumers are willing and able to buy at a given time.
14. Normal Good: A good for which demand increases when income increases.
15. Inferior Good: A good for which demand increases when income falls.
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Elasticity
16. Price Elasticity of Demand: Measures the extent to which the demand for a good changes in response to a
change in the price of that good.
17. Income Elasticity of Demand: Measures the extent to which the demand for a good changes in response to
a change in income.
18. Cross Elasticity of Demand: Measures the extent to which the demand for a good changes in response to a
change in the price of another good
19. Price Elasticity of Supply: Measures the extent to which the supply of a good changes in response to a
change in the price of that good.
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Market Concepts
20. Market Equilibrium: Planned demand equals planned supply. There is no excess demand or supply, and
no reason for the price to change.
21. Joint Supply: When one good is produced, another good is simultaneously produced from the same raw
material. Example: Beef and Leather.
22. Competing Supply: When a raw material used to produce one good cannot be used to produce
another. Example: Biofuels and Wheat.
23. Joint Demand: Occurs when demand for two goods is interdependent. Example: A printer is of no use
without ink.
24. Complementary Good: A good in joint demand or demanded at the same time as another good.
25. Supply: The quantity of a good or service that all firms plan to sell at given prices at a given time.
26. Substitute Good: A good in competing demand; a good that can take the place of another good.
27. Composite Demand: Demand for a good that has more than one use.
28. Derived Demand: Demand for a good that is an input into the production of another. Example: Labour.
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AQA Economics Complete Glossary
(All Key Terms & Definitions) – Level 1 & 2
Fundamental Concepts
1. Positive Statement: A statement that can be tested to determine if it is correct or not.
2. Normative Statement: A statement that contains a value judgment and cannot be refuted by examining
evidence.
3. Need: Something necessary for human survival.
4. Want: Something that is desirable.
Smart Study HQ
5. Economic Welfare: The economic well-being of an individual or group of people; human happiness.
6. Capital Good: A good used in the production of other goods and services.
7. Factors of Production: Land, Labour, Capital, and Enterprise.
8. Fundamental Economic Problem: Scarcity resulting from limited resources and unlimited wants.
9. Scarcity: The requirement that choices must be made about how scarce resources will be allocated.
10. Opportunity Cost: The cost of giving up the next best alternative.
Efficiency and Demand
11. Productive Efficiency: When the average total cost of production is minimized.
12. Allocative Efficiency: Available resources are used to produce the best combination of goods and services
that best match people's preferences.
13. Demand: The quantity of a good or service that consumers are willing and able to buy at a given time.
14. Normal Good: A good for which demand increases when income increases.
15. Inferior Good: A good for which demand increases when income falls.
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Elasticity
16. Price Elasticity of Demand: Measures the extent to which the demand for a good changes in response to a
change in the price of that good.
17. Income Elasticity of Demand: Measures the extent to which the demand for a good changes in response to
a change in income.
18. Cross Elasticity of Demand: Measures the extent to which the demand for a good changes in response to a
change in the price of another good
19. Price Elasticity of Supply: Measures the extent to which the supply of a good changes in response to a
change in the price of that good.
Smart Study HQ
Market Concepts
20. Market Equilibrium: Planned demand equals planned supply. There is no excess demand or supply, and
no reason for the price to change.
21. Joint Supply: When one good is produced, another good is simultaneously produced from the same raw
material. Example: Beef and Leather.
22. Competing Supply: When a raw material used to produce one good cannot be used to produce
another. Example: Biofuels and Wheat.
23. Joint Demand: Occurs when demand for two goods is interdependent. Example: A printer is of no use
without ink.
24. Complementary Good: A good in joint demand or demanded at the same time as another good.
25. Supply: The quantity of a good or service that all firms plan to sell at given prices at a given time.
26. Substitute Good: A good in competing demand; a good that can take the place of another good.
27. Composite Demand: Demand for a good that has more than one use.
28. Derived Demand: Demand for a good that is an input into the production of another. Example: Labour.
