A-LEVEL AQA ECONOMICS KEY TERMS AND DEFINITIONS.

A-LEVEL AQA b




ECONOMICS KEY TERMS
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AND DEFINITIONS b b




Allocative mefficiency m- m mcorrect manswer-This moccurs mwhen mthe mavailable meconomic
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mresources mare mused mto mproduce mthe mcombination mof mgoods mand mservices mthat
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mbest mmatches mpeoples' mtastes mand mpreferences.
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Division mof mlabour m- m mcorrect manswer-The mspecialisation mof mindividuals mthrough mthe
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mseparation mof mtasks min mthe mproduction mprocess mand mtheir mallocation mto mdifferent
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mgroups mof mworkers.
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Factors mof mproduction m- m mcorrect manswer-Inputs minto mthe mproduction mprocess
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mnamely mland, mlabour, mcapital mand menterprise.
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Normative mstatement m- m mcorrect manswer-A mstatement mthat mincludes ma mvalue
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mjudgement, mis msubjective mand mtherefore mcannot mbe mrefuted mjust mby mlooking mat mthe
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mevidence.
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Opportunity mcost m- m mcorrect manswer-The mnext mbest malternative mforegone mwhenever
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man meconomic mdecision mis mmade. mIt mis malso mthe mgradient mof mthe mPPF.
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Positive mstatement m- m mcorrect manswer-A mstatement mwhich mis mvalue mfree, mobjective
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mand mcan mbe mempirically mtested mto msee mwhether mor mnot mit mis mcorrect.
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,Productive mefficiency m- m mcorrect manswer-This moccurs mwhen mit mis mimpossible mfor man
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meconomy mto mproduce mmore mof mone mgood mwithout mproducing mless mof manother. mThe
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meconomy mwould mbe moperating msomewhere mon mits mPPF.
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Production m- m mcorrect manswer-A mprocess, mor mset mof mprocesses, mthat mconverts
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minputs m(factors mof mproduction) minto moutputs m(goods mor mservices).
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Production mpossibility mfrontier m(PPF) mor mProduction mpossibility mboundary m(PPB) m- m
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mcorrect manswer-A mcurve mshowing mthe malternative mcombinations mof mtwo mgoods m(or
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mtypes mof mgood) mthan man meconomy mcan mproduce mwhen mall mthe mavailable mresources
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mare mfully mand mefficiently memployed.
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Productivity m- m mcorrect manswer-Output mper munit mof minput mper mtime mperiod. b b b b b b b b b b b




Scarcity m- m mcorrect manswer-Linked mto mthe mfundamental meconomic mproblem mscarcity
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mis mthe mresult mof mfinite mresources min mthe meconomy mbeing munable mto mproduce
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menough mgoods mand mservices mto mfulfil msociety's minfinite mwants.
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Specialisation m- m mcorrect manswer-This moccurs mwhen man meconomic magent mchooses b b b b b b b b b b




mto mconcentrate mon mproducing ma mparticular mgood mor mservice mand mthen mtrades mwith
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mothers min morder mto msurvive.
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Capital mgood m- m mcorrect manswer-A mgood mwhich mis mused min mthe mproduction mof mother
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mgoods mor mservices. mAlso mknown mas ma mproducer mgood.
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Complementary mgood m- m mcorrect manswer-A mgood mwhich mis min mjoint mdemand mor mis b b b b b b b b b b b b b




mdemanded mat mthe msame mtime mas mthe mother mgood me.g. mhot mdog mand mbun.
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Competing msupply m- m mcorrect manswer-Raw mmaterials mthat mare mused mto mproduce
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mone mgood mcannot mbe mused mto mproduce manother mgood me.g. mwheat mfor mflour mor mfor
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mbiofuel.
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Composite mdemand m- m mcorrect manswer-Demand mfor ma mgood mwhich mhas mmore mthan
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mone muse me.g. mland mfor mhousing mor ma mfactory.
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Condition mof mdemand m- m mcorrect manswer-A mdeterminant mof mdemand, mother mthan
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mprice, mthat mshifts mthe mdemand mcurve.
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Condition mof msupply m- m mcorrect manswer-A mdeterminant mof msupply, mother mthan mprice,
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mthat mshifts mthe msupply mcurve.
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Consumer mgood m- m mcorrect manswer-A mgood mwhich mis mconsumed mby mindividuals
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mand mhouseholds mto msatisfy mtheir mwants mand mneeds.
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Consumer msurplus m- m mcorrect manswer-The mdifference mbetween mthe mmaximum mprice
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mwhich ma mconsumer mis mwilling mand mable mto mpay mfor ma mgood mand mthe mactual mprice
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mthey mhave mto mpay min mthe mmarket. mIt mis mthe marea mbelow mthe mdemand mcurve mand
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mabove mthe mequilibrium mprice mline.
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, Contraction mof mdemand mor msupply m- m mcorrect manswer-A mmovement malong mthe
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mdemand mor msupply mcurve.
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Cross melasticity mof mdemand m- m mcorrect manswer-The mpercentage mchange min mthe
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mquantity mdemanded mof mGood mA mdivided mby mthe mpercentage mchange min mthe mprice
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mof mGood mB.
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Derived mdemand m- m mcorrect manswer-An mindirect mdemand mfor ma mgood mor mservice
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m(e.g. mlabour) mwhich mis man minput minto mthe mproduction mof manother mgood m(e.g. mcars).
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Demand m(effective mdemand) m- m mcorrect manswer-The mquantity mof ma mgood mor mservice
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mthat mconsumers mare mwilling mand mable mto mbuy mat mgiven mprices min ma mgiven mtime
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mperiod.
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Elasticity m- m mcorrect manswer-The mproportionate mresponsiveness mof mone mvariable
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m(e.g. mquantity mdemanded) mwith mrespect mto ma mproportionate mchange min manother
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mvariable m(e.g. mprice).
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Equilibrium mprice m- m mcorrect manswer-The mprice mat mwhich mplanned mdemand mfor ma
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mgood mor mservice mexactly mequals mplanned msupply mfor mthat mgood mor mservice.
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Expansion mof mdemand mor msupply m- m mcorrect manswer-A mmovement malong mthe
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mdemand mor msupply mcurve.
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Income melasticity mof mdemand m- m mcorrect manswer-The mpercentage mchange min
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mquantity mdemanded mdivided mby mthe mpercentage mchange min mincome.
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Inferior mgood m- m mcorrect manswer-A mgood mfor mwhich mdemand mrises mas mincome mfalls
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mand mdemand mfalls mas mincome mrises.
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Joint msupply m- m mcorrect manswer-When mone mgood mis mproduced manother mgood mis
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malso mproduced mfrom mthe msame mraw mmaterials me.g. mbeef mand mleather.
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Law mof mDemand m- m mcorrect manswer-The minverse mrelationship mbetween mprice mand
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mquantity mdemanded.
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Law mof mSupply m- m mcorrect manswer-The mpositive mcorrelation mbetween mprice mand
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mquantity msupplied.
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Market m- m mcorrect manswer-A mvoluntary mmeeting mof mbuyers mand msellers mwhere mboth
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mparties mare mwilling mto mparticipate min man mexchange.
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Normal mgood m- m mcorrect manswer-A mgood mfor mwhich mdemand mincreases mwhen
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mincome mrises mand mdemand mfalls mwhen mincome mfalls.
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Price melasticity mof mdemand m- m mcorrect manswer-The mpercentage mchange min mquantity
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mdemanded mdivided mby mthe mpercentage mchange min mits mprice.
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