Edexcel A-Level Economics

• Changes in technology can lead to an increase in the efficiency of production and result in an increase in supply.
• Economies of scale occur when average costs decrease as output increases due to spreading fixed costs over a larger number of units produced.
• The law of diminishing returns states that as more resources are added to a fixed factor, marginal productivity decreases until it reaches zero or becomes negative.
• Increased demand leads to higher prices, while increased supply results in lower prices.
• Expansionary fiscal policy involves increasing government expenditure (spending) or reducing taxes to stimulate demand and increase aggregate demand.
• The law of supply states that the higher the price, the greater the quantity supplied, while the law of demand states that the higher the price, the lower the quantity demanded.
• An increase in demand coupled with lower supply will lead to higher prices, while a decrease in demand with lower supply will result in lower prices.
• Fiscal policy is used when there are fluctuations in economic activity such as recessions or booms.
• The government can use fiscal policy to influence the economy by changing tax rates, spending levels, or both.
• Supply and demand is an economic model of price determination based on the interaction between the supply of a good or service and demand for it.
• The equilibrium price is the price at which the quantity supplied equals the quantity demanded.
• Changes in the cost of production inputs, such as raw materials or labor, can impact the profitability of production and influence the quantity supplied.
• Marginal utility


  The utility gained from consuming one more unit of a good.
• Marginal revenue


  The extra revenue received from selling one more unit of output.
• Marginal propensity to consume (MPC)


  The proportion of an increase in income that is spent and not saved.
• Marginal product


  The extra output produced when one extra unit of input is used.
• Marginal cost


  The cost of producing the final unit of output.
• Long-Run Aggregate Supply (LRAS)


  The productive potential of economy operating at full capacity.
• Liquidity


  How easily an asset can be spent.
• Law of diminishing returns


  If a firm increases one variable factor of production while others remain fixed, the marginal returns will eventually decrease.
• Labour immobility


  When labour cannot move to new jobs, or cannot switch between occupations.
• Investment


  The increase of the capital stock of a firm or economy.
• Interest


  The money paid to a lender by a borrower.
• Inorganic growth


  A firm growing through mergers and takeovers.
• Infrastructure


  The basic facilities and services required for a country's economy to function.
• Inflation


  The sustained rise in the average price of goods and services in an economy over a period of time.
• Inequity


  Unfairness
• Income elasticity of demand (YED)

  A measure of the responsiveness of demand to changes in real income.
• Income


  Money a person or firm receives for providing a good or service.
• Imperfect information


  A situation where buyers and/or sellers do not have complete information about the goods and services in a market.
• Human Development Index

  A measure of a country's economic development that takes into account health (life expectancy), education (average and expected years of schooling), and standards of living (real GNI per capita).
• Human capital


  The economic value of a person's skills, experience and training.
• Horizontal integration


  Where a firm merges with or takes over a firm that is at the same stage of production of a similar product.
• Horizontal equity


  Where people in identical circumstances are treated equally.
• Hit-and-run tactics


  When a firm enters a market while supernormal profits can be made, and then leaves once prices have been driven down to normal profit levels.
• Gross National Product (GNP)


  The total output of the citizens of a country, regardless of whether or not they are resident in that country.
• Gross National Income (GNI)


  The GDP of an economy, plus any income earned on investments/assets abroad, minus any income paid to foreigners on domestic investments/assets.
• Gross Domestic Product (GDP)


  The total value of all the goods and services produced in an economy in a year.
• Government failure


  When a government intervention to correct a market failure results in a misallocation of resources.
• Globalisation


  The increasing integration of economies internationally.