IGCSE Economics Revision Vocabulary

Vocabulary flashcards covering official IGCSE Economics terms and definitions from Chapters 1, 2, and 3.

Privatisation

The sale of public sector firms / assets to the private sector / owners / individuals.

Finite resource

A resource is an aid to production which is limited in supply, it cannot be replaced over time or fast enough and will run out to keep pace with consumption.

Investment

Spending on capital goods to increase output.

Productivity

Output per worker; a measure of efficiency.

Saving

Income not spent for future use.

Free good

A good with no opportunity cost, naturally abundant in supply and takes no scarce resources or factors of production to produce.

Price mechanism

The process by which the forces of supply and demand determine the price and quantity of goods and services in a market.

Private sector

Economic activity of private individuals and firms. The private sector’s main aim is to earn profit for its owners.

Indirect tax

A tax on spending where the burden can be passed on to someone other than the original payer, such as VAT and sales tax.

Wealth

Stock of assets, for example property, shares and savings.

Specialisation

Concentration and focus on particular products or tasks.

Ceteris paribus

All other things being equal.

Labour force

People who are economically active, including all employed and unemployed individuals who are willing and able to work.

Market failure

A situation where the market mechanism or price mechanism based on demand and supply does not lead to an efficient allocation of resources.

Trade union

An organisation of workers that protects workers’ rights and negotiates working terms and conditions for members.

Vertical integration

The merger of firms operating at different production stages within the same industry.