AS Edexcel Unit 2 Economics (Micro)

Notes made from the specification .... I havent miss out anything, if its on the specification its in this document! I hate mind maps so i much prefer this layout!! 

Edexcel Unit 2 Economics - Microeconomics/ competitive markets

Hope it helps :) 

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  • Created by: Elizabeth
  • Created on: 11-03-14 18:19

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Page 1

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Nature of economics
PPC and OC
Scarcity ­ use of our limited resources to provide for our material wants
There are insufficient resources to provide for everyone's wants
Renewable and non ­ renewable
Who, what and how to produce
PPF (Production possibility frontiers) ­ shows concepts of scarcity and OC…

Page 2

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One form of specialisation where a individual firm concentrate on the production of
a particular good or service
Production is broken down into a series of tasks, conducted by different workers
(the assembly line).
Advantages
Quickly becomes highly skilled
No time is wasted
Capital equipment used more
Less time to…

Page 3

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Valued judgments
Non-scientific
Expression that something is right or wrong
Ought, should, fair, unfair, better or worse
What determines the demand for a good or service in a market?
Movement along the demand curve due to a change in price
Shifts in the demand curve due to increases or decreases…

Page 4

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% change in D of good B
X ED = % change in P of good A
Substitute goods ­ competitive demand, P and D increases ­ positive XED




PES

% change in s
P ES =% change in P
PED >1 Elastic
PED<1 Inelastic
PED = 1 Unit elasticity…

Page 5

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Shifts in the supply curve
Improvements in technology
A reduction in labour costs
A reduction in capital costs
A reduction in transport
Discovering new oil fields
Increase in number of firms in the industry
Decrease in the market influences
Weather conditions

Page 6

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Reduction in indirect tax on oil
Increase in government subsidies
Market Equilibrium
Equilibrium means there is a balance in the market, with no tendency towards
price or output to change
Equilibrium is achieved when supply and demand are equal
Changes in supply and/ or demand will change equilibrium point

Consumer…

Page 7

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corporation tax
Indirect tax ­ usually levied on the purchase of goods and services
- a tax on expenditure
Specific tax is charged as a fixed amount per unit of good; per litre of wine or
a packet of cigarettes
Ad valorem taxes ­ charged as a percentage of the…

Page 8

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Demand and Supply of Labour
Wage determination ­ in competitive labour markets the wage rate is determined
by the interaction of demand and supply
Firms ­ demand labour - to help produce goods and services
General population ­ supply labour ­ the work force of an economy
The Demand for…

Page 9

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Occurs when the price mechanism causes insufficient allocation of resources the
forces of demand and supply lead to a net welfare loss in society
There are different types of market failure:
Externalities
The costs or benefits, which are external to an exchange
They are third party effects ignored by the…

Page 10

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Free market consumers- only concerned with private benefits from
consuming a good or service
The price consumers are prepared to pay for a good or service
Private benefits also referred to as the revenue that a firm obtains
from selling
Social Benefits
Private benefits + external benefits = Social benefits…

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Amy Mattu

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this is unit 1!

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