A-Level Economics Lecture Notes Review

A comprehensive set of vocabulary flashcards covering key concepts and terms from A-Level Economics lecture notes.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Specialisation

The process of concentrating on and becoming expert in a particular subject or skill.

Division of Labour

The separation of tasks in any economic system so that participants may specialize.

Command Economy

An economic system in which the government makes all decisions regarding the production and distribution of goods.

Free Market Economy

An economic system where prices for goods and services are determined by the open market and by consumers.

Mixed Economy

An economy that incorporates elements of both capitalism and socialism.

Inferior Good

A type of good whose demand increases when consumer incomes fall.

Normal Good

A good that experiences an increase in quantity demanded as consumer income rises.

Luxury Good

A good that is not necessary for basic survival and is associated with wealth.

Price Elasticity of Demand (PED) Inelastic Good

A good for which demand is not significantly impacted by price changes.

Price Elasticity of Demand (PED) Elastic Good

A good for which demand significantly changes with price changes.

Cross Elasticity of Demand (XED)

A measure of how much the quantity demanded of one good responds to a change in the price of another good.

Price Elasticity of Supply (PES) Elastic Good

A good for which supply is responsive to price changes.

Price Elasticity of Supply (PES) Inelastic Good

A good for which supply is not responsive to price changes.

Negative Production Externalities

Costs incurred by a third party due to production activities.

Negative Consumption Externalities

Costs incurred by a third party due to consumption activities.

Positive Consumption Externalities

Benefits enjoyed by third parties as a result of consumption.

Positive Production Externalities

Benefits enjoyed by third parties as a result of production.

Asymmetric Information

A situation in which one party in a transaction has more or better information than the other.

Inertia

A tendency to remain unchanged or resist change.

Herd Behaviour

The tendency of individuals to follow the actions of a larger group.

Habitual Behaviour

Actions that are performed automatically in response to specific cues.

Government Intervention

Actions undertaken by the government to influence economic activity.

Unintended Consequences

Outcomes that are not the ones intended by a purposeful action.

Inflationary Spiral

A situation in which rising prices lead to expectations of future increases, prompting further increases.

Structural Unemployment

A form of unemployment that occurs when workers' skills do not match job requirements.

Frictional Unemployment

Short-term unemployment that occurs when people are between jobs.

Seasonal Unemployment

Unemployment linked to seasonal work.

Cyclical Unemployment

Unemployment that results from economic recessions.

National Well Being

A measure of the happiness and life satisfaction of a population.

Wealth Effect

The increase in spending that accompanies rising asset prices.

Market-Based Supply Side Policy

Policies aimed at increasing economic production through free-market incentives.

Demand Side Policy

Economic strategies that focus on increasing demand for goods and services.

Technological Advancement

Improvements in technology that increase productivity.

Moral Hazard

The risk that a party has an incentive to take excessive risks because the costs will not be borne by that party.

National Debt

The total amount of money that a country's government has borrowed.

Time Lag

The delay between an economic change and its effects on the economy.

Multiplier Effect

The proportional amount of increase in final income that results from an injection of spending.

Dynamic Efficiency

The ability of a firm to improve its production processes over time.

Absolute Advantage

The ability of a party to produce a greater quantity of a good or service than competitors, using the same amount of resources.

Comparative Advantage

The ability to produce a good at a lower opportunity cost than another producer.

Tariff

A tax imposed by a government on imported goods.

Quota

A limit on the amount of a specific good that can be imported or exported.

Trade War

A situation in which countries impose tariffs or other trade barriers against each other.

Foreign Currency Gap

The shortage of foreign exchange which raises the cost of essential imports.

Property Rights

Legal rights to use and manage property.

Aid (for development)

Assistance given by one country to another to support economic development.