Economics Edexcel Note Unit 1

Front 1

define PED

Back 1

% change of QD ÷ % change of price

Front 2

define YED

Back 2

% change of QD ÷ % change of income

Front 3

define XED

Back 3

% change of QD of good A ÷ % change of price of good B

Front 4

define a normative statement

Back 4

it is a value judgement which is not provable

Front 5

define a positive statement

Back 5

A statement about what is (i.e. about facts) is provable can be tested to be true or false

Front 6

what is asymmetric information?

Back 6

it is a situation in which some participants in a market have better information about market conditions than others.

Front 7

Buffer stock

Back 7

surplus stock that is bought up when the harvest is good with a view to selling when it is poor, in an attempt to stabilise commodity prices.

Front 8

define a capital good

Back 8

goods that are produced In order to be used as inputs into the production process, such as factories, machinery etc.

Front 9

centrally planned economy

Back 9

an economy in which decisions on resource allocation are guided by the state eg East Germany before 1988

Front 10

competitive market

Back 10

is a market in which individual firms cannot influence the price of the good or service they are selling, because of competition from other firms.

Front 11

complements

Back 11

two goods are said to be complements if an increase in the prices of one good causes the demand for the other good to fall.

Front 12

consumer good

Back 12

a good that are produced in order to satisfy the consumption demands of the present

Front 13

consumer surplus

Back 13

the value that consumer gain from consuming a good or service over and above the price paid

Front 14

consumption or production externality

Back 14

an externality that affects the consumption or production side of a market, which may be either positive or negative

Front 15

demand

Back 15

the quantity of a good or service that consumers choose to buy at any possible price in a given period

Front 16

demand curve

Back 16

a graph showing how much of a good will be demanded by consumers at any given price

Front 17

derived demand

Back 17

demand for a good or service not for its own sake, but for what it produces. for example, labour is demanded for the output that it produces

Front 18

division of labour

Back 18

A process whereby the production procedure is broken down into a sequence of stages, and workers are assigned to particular stages.

Front 19

elasticity

Back 19

a measure of the sensitivity of one variable to change in another variable

Front 20

external cost

Back 20

a cost that is associated with an individual's ( a firm or household's) production or other economic activities, which is borne by a third party and is not reflected in the market prices. e.g passive smoking