igcse revision notes

Scarcity

The basic economic problem that arises because resources are limited and human wants are unlimited.

Opportunity Cost

The benefit that is lost in making a choice between two competing uses of scarce resources; it is the next best alternative.

Factors of Production

Resources used to produce goods and services, including land, labor, capital, and enterprise.

Economic Choice

Deciding between different uses of scarce resources.

Total Output

The value of total production in an economy.

Primary Industry

Industry that extracts raw materials from the earth, such as coal, fish, and wheat.

Secondary Industry

Industry that processes primary products into manufactured goods.

Tertiary Industry

Businesses that provide services either to individuals or to other businesses.

Specialisation

A system where workers concentrate on performing a few tasks and exchange their production for other goods and services.

Division of Labour

A method of production where workers focus on specific tasks to improve efficiency.

Economic Systems

Ways in which economies are organized to solve the basic problems of what to produce, how to produce, and for whom to produce.

Mixed Economy

An economic system that includes both private and government decision-making.

Private Limited Company (Ltd)

A company owned by shareholders where shares are not publicly traded.

Public Limited Company (Plc)

A company that offers shares to the public and has limited liability.

Elasticity of Demand

Measures the responsiveness of demand to changes in price.

Price Inelastic Goods

Goods for which demand does not significantly change as price changes.

Price Elastic Goods

Goods for which demand significantly changes as price changes.

Income Elasticity of Demand

Measures the relationship between changes in income and changes in demand for a product.

Cross Elasticity of Demand

Measures how the change in the price of one good affects the level of demand for another good.

Equilibrium Price

The price at which the quantity of goods supplied equals the quantity of goods demanded.

Tax

A charge placed by the government on the production of a good or service.

Subsidy

A payment by the government to a producer to encourage them to produce a certain good or service.

Diseconomies of Scale

Increased per-unit costs that occur when a firm becomes too large and inefficient.

Inflation

The sustained increase in the average price level in an economy.

Poverty Cycle

The cycle where low income leads to low savings, which leads to low investment, resulting in low income.

Developing Economy

An economy with low income per person and lower standards of living compared to developed economies.

Developed Economy

An economy with higher income per person and generally higher standards of living.

Absolute Advantage

The ability of a country to produce a good using fewer resources than another country.

Comparative Advantage

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

Protectionism

Government policies that restrict international trade to protect local industries.

Free Trade

International trade left to its natural course without tariffs, quotas, or restrictions.

Monopoly

A market structure where a single seller dominates, leading to less competition.

Competition

The rivalry among businesses to attract customers and increase market share.

Consumer Expenditure

Spending by consumers on goods and services.

Social Factors

Factors that affect individual decisions and preferences, such as social status and peer influence.

Economic Growth

An increase in the production of goods and services in an economy.

Unemployment

The situation when individuals who are willing and able to work cannot find a job.

Market Demand

The total amount of a good that consumers are willing and able to purchase at a given price.

Market Supply

The total amount of a good that producers are willing and able to sell at a given price.

Law of Demand

The principle stating that, all else being equal, as the price of a good decreases, consumer demand increases.

Law of Supply

The principle stating that, all else being equal, as the price of a good increases, the quantity supplied increases.