Pages in this set

Page 1

Preview of page 1
Economics Revision.

What is an economy?
An economy is a system which tries to balance the available resources of a country (land,
labour, capital and enterprise) against the wants and needs of consumers.

Economic problem.
Scarcity is a situation that arises because people have unlimited wants in the face of…

Page 2

Preview of page 2
Disposable Income.
Fashions, personal preferences.

Factors which affect supply are:
Production costs.
Economic climate.

Goods ­ Normal, inferior, substitutes and compliments.
1. Normal goods are goods which the demand for increases in response to an increase in
2. Inferior goods are goods which the demand for decreases…

Page 3

Preview of page 3
Consumption externalities are externalities that affect the consumption side of a
market, which may be positive or negative.
Production externality: an externality that affects the production side of a market,
which may be positive or negative.

Internalising an externality is an attempt to deal with an externality by bringing an…

Page 4

Preview of page 4
Government failure is a misallocation of resources arising from government intervention.
Market failure: is a situation in which the free market mechanism does not lead to an optimal
allocation of resources ­ for example, where there is a divergence between marginal social
benefit and marginal social cost.

Taxation ­ Direct…


No comments have yet been made

Similar Economics resources:

See all Economics resources »