1 A-level Economics Edexcel keywords

Set 1

what is the assumption of supply and demand models

consumer and producers are economic agents who aim to maximise their utility

what is the rational choice model

consumers choose independently (others preference doesn’t affect yours)

what is the rational action model

people maximise their own utility by making objective calculations

what is intuition

using feelings or instincts

what is the administrative model (bounded rationality)

first satisfactory alternative is selected, the world is simple, comfortable decision making, heuristics

what is heuristics

a technique that people use to help them make a decision or solve a problem more quickly

what is total utility

total satisfaction from a given level of consumption

what is marginal utility

the change in satisfaction from consuming an extra unit

what is standard economic theory

diminishing returns

what is utility

total satisfaction derived from consumption of a good or service

what is the law of diminishing marginal utility

as an extra unit of the good is consumed the marginal utility falls

what is demand

quantity of a good or service than consumers are able and willing to buy at a given price at a given time

what is a market

where buyers and sellers come together and a price is agreed

what is a product market

exchange of goods and services

what is a commodity market

where raw materials are bought and sold

what are hard commodities

extracted goods including oil, steel and gold

what are soft commodities

those which are grown and include items such as wheat or sugar

what causes movements along the demand curve

changes in price

what does a left shift in the demand curve cause

an inwards shift

what does a right shift in the demand curve cause

an outwards shift