igcse economics

• Decrease in demand

  Price rising as a result of an increase in costs of production
• Merit good

  • Has an absence of external benefits
  • Has higher private benefits than consumers realise
  • Imposes costs on those who are not involved in its production directly
  • Is both non-excludable and non-rival
• Types of goods

  • Basic necessities
  • Capital goods
  • Demerit goods
  • Public goods
• 'Money enables people to borrow and lend'
• Function of money

  Standard for deferred payment
• Function of a commercial bank

  To lend to individuals and firms
• Low income groups

  Save more, in percentage terms, than high income groups
• More people visit the cinema

  Demand for actors increases, wages of actors increase
• Labour productivity decreases, unemployment increases

  Trade union's ability to negotiate a wage rise for its members increases
• Land

  Geographically immobile, not possible to move a section of land from one country to another. Some forms of land can be moved to a certain extent, e.g. the course of rivers can be diverted and wildlife can be moved.
• Mobility of labour

  The ability of labour to change where it works or in which occupation
• Causes of geographical immobility of labour

  • Differences in the price and availability of housing in different areas and countries
  • Family ties
  • Differences in educational systems in different areas and countries
  • Lack of information
  • Restrictions on the movement of workers
• Occupational immobility

  Lack of appropriate skills and qualifications
• Mobility of enterprise

  The ability to change where enterprise is used or in which occupation
• Entrepreneur

  A person who bears the risks and makes the key decisions in a business
• The amount of physical land in existence does not change much with time. There is a certain degree of soil erosion which reduces the supply of agricultural land, but also a certain amount of land reclamation which increases its supply.
• Some natural resources are renewable whilst others are non-renewable. Renewable resources, for example wind power, are replaced by nature and can be used again and again. In contrast, non-renewable resources, for example gold and oil, are reduced by use.
• There is a risk that renewable resources can be turned into non-renewable resources if they are over-exploited, that is used at a faster rate than they are replenished.
• The quality of land can be improved through the use of fertilisers, stopping pollution, and providing good drainage.
• Factors influencing the quantity of labour

  • Size of the population
  • Age structure of the population
  • Retirement age
  • School leaving age
  • Attitude to working women
• Labour force

  People in work and those actively seeking work
• Productivity

  Output per factor of production in an hour
• Labour productivity

  Output per worker hour
• Output

  Goods and services produced by the factors of production
• Investment

  Spending on capital goods
• Gross investment

  Total spending on capital goods
• Depreciation (capital consumption)

  The value of capital goods that have worn out or become obsolete
• Net investment

  Gross investment minus depreciation
• Negative net investment

  A reduction in the number of capital goods caused by some obsolete and worn out capital goods not being replaced
• The quantity of enterprise will increase if there are more entrepreneurs. A good education system, lower taxes on firms' profits, and a reduction in government regulations may encourage more people to set up their own businesses.
• Production possibility curve (PPC)

  A curve that shows the maximum output of two types of products and combination of those products that can be produced with existing resources and technology
• The productive potential of an individual, firm or a country can be shown on a production possibility curve (PPC) diagram
• A point inside the PPC curve means there is not full use of resources
• A point anywhere on the PPC curve means that maximum use is being made of resources, which is an efficient output
• A point outside the PPC curve is not currently attainable
• Movement along a PPC

  Shows that resources are being reallocated and the opportunity cost of that decision
• PPCs are usually bowed outwards because the best resources are used first to produce a particular type of product
• If resources are equally suited to producing both types of products, the PPC is shown as a straight line</b>
• Shift in a PPC

  Caused by a change in the quantity or quality of resources
• A shift to the right of the PPC increases a country's productive potential and is referred to as potential economic growth