IGCSE Economics 0455 Study Guide Flashcards

A set of 10 practice question and answer flashcards covering key concepts from the IGCSE Economics 0455 last minute study guide.

What is the definition of opportunity cost?

Opportunity cost is the next best alternative foregone.

What are the four factors of production and their respective rewards?

Land (reward: rent), Labour (reward: wages/salary), Capital (reward: interest), and Enterprise (reward: profit).

What formula is used to calculate the Price Elasticity of Demand (PED)?

$$\text{Price elasticity of demand} = \frac{\% \text{ change in Quantity demanded}}{\% \text{ change in price}}$$

What are the two key characteristics of public goods?

Public goods are non-rival and non-excludable.

What is the formula used to calculate the Unemployment rate?

$$\text{Unemployment rate} = \frac{\text{unemployed population}}{\text{labour force}} \times 100$$

What are the four components of the current account of the balance of payment?

1. Trade in goods, 2. Trade in services, 3. Primary income, and 4. Secondary income.

What is the formula for calculating the Dependency ratio?

$$\text{Dependency ratio} = \frac{\text{No. of dependent age group}}{\text{No. in working age group}} \times 100$$

According to the 2006 census data mentioned in the text, what were the life expectancy and infant mortality rate of Maldives?

The life expectancy was $72.5\,\text{years}$ and the infant mortality rate was $16$.

What is the difference between an extension of demand and an increase in demand?

An extension of demand is a rise in quantity demanded caused by a fall in the price of the product itself, while an increase in demand is a rise in demand at any given price, causing the demand curve to shift to the right.

What is the definition of a recession?

A recession is a reduction in real GDP over a period of six months or more.