AQA Economics Vocabulary

What is a positive statement?

• A view about what is right or wrong, good or bad in a moral sense.

• A statement that includes a value judgement and cannot be refuted just by looking at data or evidence.

• A statement that often contains the words 'should' or 'ought'.

• A statement that does not include a value judgement and can be tested against the facts or evidence.

What is the definition of economic resources?

• The production, consumption, exchange and distribution of goods and services.

• The inputs into the production process that are needed to produce the goods and services that satisfy people’s wants.

• The factor of production that includes all the natural resources that are available on the earth.

• The human-made factor of production.

What does the term 'scarcity' refer to?

• The production, consumption, exchange and distribution of goods and services.

• The next best alternative foregone when a choice is made.

• A factor of production that is limited in supply.

• The fundamental economic problem that results from limited resources and unlimited wants.

What is 'opportunity cost'?

• The amount by which the quantity demanded exceeds the quantity supplied at the current price.

• The change in total utility that results from the consumption of one more, or one fewer, goods or services.

• The next best alternative foregone when a choice is made.

• The satisfaction that is derived from consuming a good or service.

What is 'bounded rationality'?

• Mental shortcuts, based on experience, that enable individuals to make decisions more quickly and easily.

• The idea that human limitations mean that people’s decision making is not completely rational.

• When people’s decision making is unduly influenced by recent events or how easily an event comes to mind.

• The idea that people do not have sufficient willpower or self-discipline to resist choices that may be tempting but are not in their self-interest.

What is 'price elasticity of demand'?

• The relationship between the price and quantity supplied of a good or service, in a given period of time, when other things that affect supply are held constant.

• A measure of the extent to which the quantity demanded of a product changes in response to a change in the price of the product.

• A measure of the extent to which the quantity demanded of a product changes in response to a change in income.

• A measure of the extent to which the quantity demanded of a product changes in response to a change in the price of a different product.

What is 'composite demand'?

• When the demand for one product increases the demand for another product decreases.

• When two products are demanded together so that the demand for one product is directly related to the demand for the other product.

• When the demand for a product, or factor of production, is determined by the demand for a different product.

• When a product has more than one use so that an increase in the demand for one use leads to a fall in the supply of the product that is available to use elsewhere.

What is 'labour productivity'?

• The process of using factors of production to create goods and services.

• A measure of how much a factor of production can produce in a given period of time.

• A measure of how much a worker can produce in a given period of time.

• The time period when there is at least one fixed factor of production.

What is 'division of labour'?

• The time period when all factors of production are variable.

• When the production of a good is broken down into many separate tasks and each worker performs one task, or a narrow range of tasks, as part of the production process.

• Where firms, regions, countries or factors of production concentrate on producing a particular good or service, or carrying out a particular task.

• The law that states that as more of a variable factor of production is used in combination with a fixed factor of production, both the marginal and average returns to the variable factor of production will initially increase but will eventually decrease.

What is 'equilibrium market price'?

• The price at which the quantity demanded equals the quantity supplied and there is no tendency for the price to change.

• The amount by which the quantity supplied exceeds the quantity demanded at the current price.

• A price at which there is either excess demand, and a tendency for the price to rise, or there is excess supply, and a tendency for the price to fall.

• The amount by which the quantity demanded exceeds the quantity supplied at the current price.