AQA ECONOMICS KNOWLEDGE ORGANISER: YEAR 1

These flashcards cover essential vocabulary and concepts from the AQA Economics Year 1 Knowledge Organiser.

Scarcity

The basic economic problem that arises because resources are limited while wants are infinite.

Opportunity Cost

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

Microeconomics

The branch of economics that studies the behavior of individuals and firms in the market.

Macroeconomics

The branch of economics that considers the economy as a whole.

Factors of Production

The resources used in the production process: land, labour, capital, and enterprise.

Positive Statements

Objective statements that describe the world as it is, without value judgments, and can be proven or disproven.

Normative Statements

Subjective statements that express opinions about what ought to be and carry value judgments.

Production Possibility Frontier (PPF)

A curve showing the maximum possible output combinations of two goods an economy can achieve with full resource employment.

Law of Diminishing Returns

The principle that adding more of a factor of production, while holding others constant, will eventually yield lower per-unit returns.

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and what they actually pay.

Producer Surplus

The difference between what producers are willing to supply a good for and the price they actually receive.

Price Elasticity of Demand (PED)

A measure of the responsiveness of quantity demanded to a change in the price of a good.

Income Elasticity of Demand (YED)

The responsiveness of demand for a good to a change in income.

Cross Price Elasticity of Demand (XED)

The responsiveness of demand for one good to a change in the price of another related good.

Free Market Economy

An economic system with minimal government intervention, characterized by private ownership and consumer sovereignty.

Command Economy

An economic system where the government directs the allocation of resources and makes production decisions.

Mixed Economy

An economic system that incorporates elements of both free markets and government intervention.

Specialisation

The concentration of individuals or firms on producing a limited range of goods or services.

Division of Labour

The partitioning of tasks necessary to produce a good among different workers.