Year 10 Economics Examination Revision Guide

Comprehensive vocabulary flashcards covering key definitions, market concepts, macroeconomics indicators, and examination command terms from the Year 10 Economics Revision Guide.

Relative scarcity

Resources are limited relative to people’s unlimited needs and wants.

Needs

Goods and services essential for survival (e.g. food, water, shelter). Needs are limited.

Wants

Non-essential goods and services that improve quality of life. Wants are unlimited.

Factors of production

The resources used to produce goods and services: land, labour, capital and enterprise.

Opportunity cost

The value of the next best alternative given up when a choice is made.

Trade-off

Giving up some of one thing to get more of another.

Economic activity

The production, exchange and consumption of goods and services to satisfy needs and wants.

Production Possibility Frontier

A curve showing the maximum combinations of two goods an economy can produce when all resources are used fully and efficiently.

Market capitalism

An economic system based on private ownership, where markets and the price mechanism mainly decide how resources are used.

Microeconomics

The study of individual markets, consumers and businesses.

Macroeconomics

The study of the economy as a whole (e.g. GDP, unemployment, inflation).

Positive statement

A statement of fact that can be tested with evidence.

Normative statement

A statement of opinion or value judgement (often uses ‘should’).

Specialisation

Concentrating on producing a narrow range of goods or tasks to increase efficiency.

Productivity

The amount of output produced per unit of input (e.g. per hour worked).

Market

Any place or arrangement where buyers and sellers interact to exchange goods and services.

Law of demand

As price rises, quantity demanded falls (inverse relationship), ceteris paribus.

Law of supply

As price rises, quantity supplied rises (direct relationship), ceteris paribus.

Ceteris paribus

Latin for ‘all other things remaining equal’: only one factor is assumed to change at a time.

Equilibrium

The price and quantity where quantity demanded equals quantity supplied.

Shortage

Quantity demanded is greater than quantity supplied (price is below equilibrium).

Surplus

Quantity supplied is greater than quantity demanded (price is above equilibrium).

Market (price) mechanism

The interaction of demand and supply that sets prices, which signal to buyers and sellers and allocate resources.

Consumer sovereignty

The idea that consumers’ spending decisions determine which goods and services are produced.

Complements

Goods that are used together (e.g. printers and ink).

Substitutes

Goods that replace each other (e.g. tea and coffee).

Monopoly

A market structure that has one seller.

Oligopoly

A market structure dominated by a few large sellers.

Perfectively Competitive Market

A theoretical economic model where many buyers and sellers trade identical products, and no single participant has the power to influence the market price. This is rarely occurring in the real world.

GDP

The total market value of all final goods and services produced in an economy over a period.

Nominal GDP

GDP measured at current prices, not adjusted for inflation.

Real GDP

GDP adjusted for inflation.

GDP per capita

GDP divided by population: average output (income) per person.

Recession

Commonly defined as two consecutive quarters of negative real GDP growth.

Unemployment

People aged $15$ and over who are not working but are available for, and actively looking for, work.

Underemployment

People who have a job but want and are available to work more hours.

Cyclical unemployment

Caused by a downturn in economic activity, when spending falls.

Structural unemployment

Caused by a mismatch between workers’ skills and the jobs available, due to long-term changes in the economy.

Frictional unemployment

Short-term unemployment while people move between jobs.

Seasonal unemployment

Caused by regular, seasonal changes in demand for workers (e.g. after harvest).

Inflation

A sustained increase in the general level of prices over time, measured by the Consumer Price Index (CPI).

Deflation

A sustained decrease in the general level of prices over time.

Material living standards

Refers to one’s ability to access goods and services based on their income and national production levels.

Non-material living standards

Refer to the intangible, non-financial factors that affect a person's overall quality of life and well-being.

Non-price factors of demand

Factors that cause the demand curve to shift, including income, tastes and preferences, price of substitutes and complements, population, interest rates, consumer confidence, and advertising.

Non-price factors of supply

Factors that cause the supply curve to shift, including costs of production, technology, number of sellers, weather and natural events, government taxes and subsidies, and availability of resources.

Three basic economic questions

What, how and for whom to produce.

Key motivation of buyers

Utility.

Key motivation of sellers

Profit.

Identify / State

Name or list the point. No explanation needed.

Define

Give the precise meaning of a term.

Outline

Give a brief summary of the main points.

Describe

Give the features or characteristics in some detail.

Explain

Give reasons for something: how or why it happens. Use ‘because’ and ‘this leads to’.

Distinguish

Define concept $1$, define concept $2$ and provide a clear difference between the two concepts.

Calculate

Work out a number. Show your working and include units.

Draw

Produce a fully labelled diagram.