EDEXCEL AS MICROECONOMICS PAPER 1 MARK SCHEME DEFINITIONS

all definitions are from past papers 2016-2024👌

Define ‘ceteris paribus’

• all other factors remain unchanged.

Define ‘price level’

• cpi.

Define ‘command economy’

• government controls all resources.

Define ‘consumer surplus’

• measure of the welfare (utility) that people gain from consuming goods or services.

Define ‘asymmetric information’

• providers know more than consumers or vice versa.

Define ‘external benefits’

• positive externality.

Define ‘diminishing marginal utility’

• a decline in the additional satisfaction a person derives from consuming an additional unit of that product.

Define ‘base year’

• benchmark year.

Define ‘subsidies’

• government grant designed to encourage production.

Define ‘equilibrium price’

• market clearing price.

Define ‘specialisation’

• concentrates on one good/service.

Define ‘mixed economy’

• public and private sectors existing within an economy.

Define ‘minimum price’

• the lowest price a good is allowed to be sold for.

Define ‘market failure’

• the price mechanism leads to a net welfare loss.