IGCSE Economics Flashback

These flashcards cover key concepts and definitions in economics relevant for IGCSE exams.

Scarcity

A situation where there are unlimited wants but limited resources, leading to not enough resources to satisfy all wants.

Opportunity Cost

The next best alternative forgone when a choice is made; it is the sacrifice made in order to attain something.

Production Possibility Curve (PPC)

A graphical representation showing the maximum output combinations of two goods that an economy can produce when all resources are fully and efficiently utilized.

Economic Problem

The challenge of allocating limited resources to satisfy unlimited wants.

Inward Shift of PPC

A decrease in an economy's production capacity due to factors like war, natural disasters, or depletion of resources.

Outward Shift of PPC

An increase in an economy's production capacity resulting from factors such as an increase in labor force or technological advances.

Law of Demand

When the price of a good increases, the quantity demanded decreases, and when the price decreases, the quantity demanded increases.

Demand Curve

A graph that shows the amount of goods and services demanded by consumers at different price levels.

Substitute Goods

Goods that can be used in place of one another; if the price of one rises, demand for the substitute rises.

Complementary Goods

Goods that are typically purchased together; an increase in demand for one leads to an increase in demand for the other.

Price Elasticity of Demand (PED)

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

Price Elasticity of Supply (PES)

A measure of how much the quantity supplied of a good responds to a change in its price.

Income Elasticity of Demand (YED)

Measures how the quantity demanded of a good responds to changes in consumer income.

Minimum Price

A price floor set by the government, below which suppliers cannot sell.

Maximum Price

A price ceiling set by the government, above which prices cannot rise.

Public Goods

Goods characterized by non-rivalry and non-excludability, such as streetlights and national defense.

Merit Goods

Goods that are considered beneficial for society and are often underprovided in a free market, such as education and healthcare.

Demerit Goods

Goods considered socially harmful and over-consumed when left to the private market, like cigarettes and alcohol.

Market Failure

A situation where the allocation of goods and services is not efficient, often due to externalities, lack of public goods, or information asymmetry.

Economies of Scale

The cost advantages that a firm can achieve due to an increase in the scale of production, leading to lower average costs.

Diseconomies of Scale

The rise in long-run average costs due to the firm's growth leading to inefficiencies.

Monopoly

A market structure characterized by a single supplier dominating the market, with high barriers to entry.

Oligopoly

A market structure dominated by a few large firms, with interdependent pricing and high barriers to entry.

Trade Union

An association of workers formed to protect and advance their rights and interests.

Collective Bargaining

The process of negotiation between representatives of a trade union and employers regarding employment terms.

National Minimum Wage (NMW)

A legally mandated minimum wage that employers can pay their workers, aimed at improving living standards for low-paid workers.

Price Mechanism

The process by which supply and demand interact to determine prices in a market.